In a significant development, Google has officially confirmed the termination of its partnership with Lendlease, the development partner that was actively engaged in four vital campus projects. The decision to end these contracts comes after four years of collaboration and impacts several key locations across the San Francisco Bay Area.
Lendlease, the global property and Infrastructure Company, disclosed that Google has decided to sever the agreements for the development of crucial campuses in four distinct districts. The affected projects include “Downtown West” in San Jose, “Moffett Park” in Sunnyvale, “Middlefield Park,” and “North Bayshore” in Mountain View, collectively known as the “San Francisco Bay Project.” This decision reflects Google’s effort to optimize its real estate investments in the Bay Area and explore alternative options to advance its development projects.
Alexa Arena, a senior director of development at Google, expressed gratitude to Lendlease for their contributions and stated, “We appreciate Lendlease and the work the team has done to get us to this point.” Google is now planning to diversify its relationships by collaborating with different developers and capital partners, which may also involve Lendlease.
Google’s Cost-Cutting Initiatives and Market Conditions
Alphabet-owned Google is currently implementing substantial cost-cutting measures, marking its most extensive effort to reduce expenses since going public nearly two decades ago. These measures come in response to slower sales growth and the need to address the surge in employee numbers before and during the COVID-19 pandemic. Despite witnessing a resurgence in growth, Google has continued to make cuts across various segments, including its real estate projects.
Lendlease’s partnership with Google in 2019 involved a $15 billion deal, with a commitment to redevelop Google’s landholdings over the next 10 to 15 years in the aforementioned locations. Google also pledged to collaborate with Lendlease in constructing 15,000 residential units in the region, with a notable focus on making 25% of these units “affordable,” a critical consideration in an area grappling with one of the highest homeless populations in the nation.
Impact on Mega-Campus Projects and Google’s Commitment to San Jose
One of the most significant casualties of this decision is the ambitious “Downtown West” project in San Jose, which was poised to become a mega-campus featuring thousands of new housing units and 15 acres of public parks. However, as part of Google’s ongoing downsizing efforts earlier this year, the company significantly reduced its development team assigned to the San Jose campus, casting doubt on the project’s future.
In its bid to gain community support in San Jose, Google had designated more than half of its proposed campus for public use and had offered a substantial community benefits package worth up to $200 million. This package included funds to address displacement issues, job placement training, and community involvement in the allocation of these resources. Notably, the majority of these funds were contingent on the development of office spaces.
San Jose Mayor Matt Mahan reassured the community, emphasizing that the termination of the partnership “doesn’t change Google’s commitment to San Jose or their timeline.” Instead, it provides Google with the flexibility needed to bring the best developers on board to realize the vision of constructing 4,000 new homes in downtown San Jose, a project that remains pivotal to the city’s thriving future.
