Another major data center is set to rise near San Antonio’s Far Westside, reinforcing Texas’s growing role as a tech hub. According to a new filing with the Texas Department of Licensing and Regulation, Microsoft is planning a $400 million facility in the small town of Castroville, home to just over 3,000 residents.
The project, called SAT 82, will cover about 195,000 square feet in Medina County. Though only a single-story structure, construction is expected to take nearly two years, with work scheduled to begin in August 2026 and finish around 2028. Early site visits show equipment already in place, even as the surrounding area remains largely residential and rural.
Like most data centers, the building is expected to resemble a windowless warehouse, surrounded by heavy fencing for security. SAT 82 will join several other Microsoft-operated facilities in the county, expanding the company’s regional footprint.
These centers form the backbone of everyday digital life — powering cloud services, video calls, mobile apps, online gaming, and Microsoft’s Azure and AI platforms.
Not everyone is welcoming the expansion. Some local residents have raised concerns about increased traffic and the large amounts of water data centers consume. In its latest sustainability report, Microsoft acknowledged that its water use rose sharply in 2023, driven by business growth, but said newer facilities are being designed to cut water consumption by more than half.
At the same time, Microsoft is accelerating its data center push nationwide. In Michigan, the company is proposing another large facility as part of a broader plan to invest more than $80 billion in AI and cloud infrastructure in fiscal 2026. CEO Satya Nadella recently said Microsoft expects its AI capacity to grow by more than 80% this year, with total data center space set to nearly double over the next two years.
Community concerns are shaping these projects too. In Michigan, local feedback about water use, energy demand, and light pollution has already slowed rezoning efforts while Microsoft works more closely with residents. The company says newer sites will rely on efficiency measures like closed-loop cooling systems and pre-paid energy infrastructure to limit environmental and economic strain on host communities.
Together, the projects show how Microsoft’s race to power AI is reshaping even the smallest towns — turning quiet rural areas into key nodes of the global digital economy.