Google, in conjunction with Australian developer Lendlease, has decided to terminate their Development Services Agreements for what had been planned as a $15 billion housing project in the San Francisco Bay. This project was to include thousands of homes and office spaces spread across various districts in San Jose, Sunnyvale, and Mountain View, California, per the SF Chronicle.
Following Google's comprehensive review of its real estate investments, both companies determined the existing deals were not beneficial any longer, mostly due to current market shifts. Google and Lendlease signed the original agreement five years ago, in 2019.
The contribution of Lendlease to the master planning process will get a payment in consideration. The San Francisco Bay Project, originally set for construction start in FY26, will no longer be included in Lendlease's development pipeline, according to Lendlease ASX announcement.
Despite the recent turn of events, the projects will still proceed as planned according to Google, and the potential for re-engagement with Lendlease and other firms in the future remains. Alexa Arena, the company's senior director of development, emphasized the continued commitment of Google to these projects.
Influenced by high inflation, supply chain problems, and various pandemic-related disruptions, the termination of these agreements can be seen as a consequence of Google's extensive cost-cutting measures over the last year and Lendlease's experiences with recent financial upheavals.
As slow growth and remote work continue to be standard, Google, which once seemed to possess unlimited real estate ambitions, has heavily reduced its expansion plans and announced a series of layoffs in the prior two months.
San Jose Downtown West project—a centerpiece of Google's ambitious housing plan—still stands despite the current stall. San Jose Mayor Matt Mahan stated that Google's dedication to this project and the city of San Jose would not be affected by the termination of the Lendlease agreement. Instead, Mayor Mahan sees this decision as providing Google the flexibility to select the best developers for creating new homes in the city's burgeoning downtown area.
