Google ends partnership to build four San Francisco GoogleBurbs

UPDATED with clarification from Google. Google and real estate developer Lendlease have binned their scheme to create four master-planned California communities known as the San Francisco Bay Project.

"The decision to end these agreements followed a comprehensive review by Google of its real estate investments, and a determination by both organizations that the existing agreements are no longer mutually beneficial given current market conditions," read a filing [PDF] from Lendlease seen by The Register.

UPDATE: Google contacted The Register after this story was published to clarify that "While Google and Lendlease are ending their development agreement, Google still plans to move the developments forward by broadening its relationships and working with both developers and capital partners."

Lendlease said Google will compensate it for value already created, as the developer has already done plenty of planning.

Construction of the communities was planned to start in 2026, with completion predicted for 2038. The campuses included a San Jose location called Downtown West, one in Sunnyvale called Moffett Park, and others in Mountain View's North Bayshore and Middlefield Park.

The deal was agreed upon in 2019, with Google in charge of office-related matters while Lendlease would build residential, retail, hospitality and civic components. The mixed use neighborhoods would have brought in 15,000 total new housing units valued at around $15 billion.

A quarter of the units were promised to be "affordable" – an important factor for a community that would need baristas to make the single origin organic oat lattes required by Bay Area tech workers.

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"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," Google senior development director Alexa Arena explained in a statement to The Register.

Work on the 80-acre San Jose campus, Downtown West, has been on hiatus since early 2023, leaving both a giant construction eyesore and uneasy tension in the city.

Google had reportedly worked quite aggressively to win over local residents – offering up public use of its campus and $200 million towards displacement funds, plus job placements and other resources for the community. San Jose allegedly gave up a beloved dive bar and a few other landmarks to allow the construction of GoogleVille.

In September, Alphabet CFO Ruth Porat appeared at the San Jose site, pledging Google's commitment.

In 2022, Google CEO Sundar Pichai said the ads and search giant planned to invest $9.5 billion in US offices and datacenters that year. Building such offices is a curious real estate commitment for a tech org in the work-from-home era.

By March 2023, Pichai was quoted describing the office environments for its US cloud staff as a "ghost town." The Chocolate Factory was even having employees share desks across its shrunken real estate holdings.

But physical space isn't the only cost cutting measure Google is currently undergoing. In January it confirmed it was cutting 12,000 jobs to counter slowed revenue growth and to rightsize after a COVID-era hiring spree that took headcount from 120,000 to 186,000 in September 2022. It also cut some of its infamous perks – like cafés that weren't seeing much custom. ®