Google has terminated its contracts with Australian developer Lendlease for four major Bay Area development projects.
According to a Nov. 2 CNBC report, the canceled deals include plans for new Google campuses in downtown San Jose, Mountain View, and Sunnyvale. Google and Lendlease had partnered over the past four years on ambitious development plans totaling $15 billion across the four sites.
However, Google decided to end the partnership amid a broader effort to optimize its real estate footprint and cut costs, according to a Google spokesperson.
“As we’ve shared before, we’ve been optimizing our real estate investments in the Bay Area, and part of that work is looking at a variety of options to move our development projects forward and deliver on our housing commitment,” said Alexa Arena, a senior director of development at Google. Lendlease said Google concluded the projects were “no longer mutually beneficial” after a comprehensive review.
The dissolution of the deals casts doubt over Google’s extensive development plans across the Bay Area.
The tech giant had planned to build thousands of residential units, including affordable housing, as well as new office space and public parks.
In San Jose, Google’s 80-acre Downtown West project was expected to transform the city’s downtown with up to 7.3 million square feet of office space, 4,000 homes, 15 acres of parks and trails, and 500,000 square feet of retail, cultural, and arts space.
But construction has yet to begin on Downtown West. Sources told CNBC that Google recently laid off much of the development team working on the project.
San Jose Mayor Matt Mahan remained optimistic about Downtown West. “It simply gives them the flexibility needed to get the best possible developers on the project to build 4,000 new homes in our thriving downtown,” Mahan said in a statement.
To advance its San Jose plans, Google had offered community benefits worth up to $200 million. However, most of those funds were tied to the development of office space. With the Lendlease deal dead, it’s unclear if or when those benefits will materialize.
Thursday’s announcement is the latest sign of Google downsizing its real estate footprint and overall workforce amid economic uncertainty. Earlier this year, the tech giant said it would lay off 12,000 employees worldwide, about 6% of its workforce.
Alphabet, Google’s parent company, is aiming to rein in costs and streamline operations after rapid hiring before and during the pandemic resulted in outpaced revenue growth. While sales have rebounded, Alphabet has continued making small cuts across its global workforce.
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