Google has terminated its partnership with real estate developer Lendlease for the San Francisco Bay Project, effectively abandoning its ambitions to create a campus with thousands of residences for employees and local residents. In 2019, Google announced this project with the pledge to develop “a minimum of 15,000 new homes across all income levels” on land valued at least $750 million, which it owned. Approximately 4,000 of these homes were designated for affordable housing, a significant boon for a region known for having one of the highest costs of living in the country.
The San Francisco Bay Project encompassed Google’s planned developments in San Jose (Downtown West), Sunnyvale (Moffett Park), and Mountain View (Middlefield Park and North Bayshore). The project in San Jose received approval in 2021 and entailed the construction of 4,000 homes, office spaces for around 20,000 employees, 300 hotel rooms, and ten parks. As part of the arrangement, Google had committed to allocating $200 million to supporting local businesses affected by the development and job readiness programs.
However, earlier this year, Google suspended construction on the Downtown West facility, despite demolition work having commenced to make way for construction originally scheduled to begin in 2026. At the time, the company mentioned to Engadget that it was reevaluating how to proceed with the San Jose campus, taking into account its evolving needs. Workplace dynamics have significantly evolved in recent years, partly due to the impact of the COVID-19 pandemic. Google, for example, introduced a hybrid work schedule that allowed employees to work from home a few days a week. Additionally, Google’s parent company, Alphabet, laid off 12,000 workers after a period of rapid growth.
Lendlease’s announcement revealed that both companies decided to dissolve their partnership following Google’s comprehensive review of its real estate investments. It appears that the existing agreements are no longer mutually beneficial in light of current market conditions. Nevertheless, Google has not entirely abandoned its housing projects, as a company spokesperson informed CNBC. Alexa Arena, a senior director of development at Google, emphasized that they have been optimizing their real estate investments in the Bay Area and are exploring various options to progress with their development projects and fulfill their housing commitment.
San Jose Mayor Matt Mahan also assured CNBC that this development does not alter Google’s commitment to San Jose or its timeline. In fact, it grants the company greater flexibility in selecting the most suitable developers for the project.