Google and property developer Lendlease ended a deal on $15 billion of Bay Area real estate projects, as Big Tech continues to review the role of offices
- Google ended an agreement with Australian construction firm Lendlease to build four campuses in the Bay Area.
- Lendlease said the agreement was "no longer mutually beneficial given current market conditions."
Google ended its agreement with Australian construction firm Lendlease to develop $15 billion worth of master-planned districts in San Francisco amidst a major cost-cutting drive this year, Lendlease announced Friday.
The two companies were planning to develop four campuses across the Bay Area including a site called Downtown West in San José, Moffet Park in Sunnyvale, as well as Middlefield Park and North Bayshore in Mountain View, per Lendlease.
The developments were collectively known as the "San Francisco Bay Project," and were expected to commence in 2026. Lendlease secured its contract with Google in 2019.
"The decision to end these agreements follow a comprehensive review by Google of its real estate investments and a determination by both organisations that the existing agreements are no longer mutually beneficial given current market conditions," Lendlease said in the press release.
Google confirmed to Insider that it's working with developers and capital partners to move the project forward and that this may include Lendlease.
"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," Alexa Arena, Google's senior director of development told Insider in a written statement. "We appreciate Lendlease and the work the team has done to get us to this point."
Google said it's working with local governments to rezone $750 million worth of Google land to aid the development of at least 15,000 homes. It additionally worked with Lendlease to pave the way for 12,900 units to be built in San José and Mountain View.
Lendlease laid off 67 employees earlier this year including several community engagement managers, senior development managers, a head of business operations, and other executives, per CNBC. This was after Google halted construction of its Downtown West campus in San José. Google told Insider that it had no involvement in staffing changes at Lendlease.
Google has been scaling back on costs this year and laid off 12,000 employees in January due to difficult economic conditions.
The company also reduced some of its famous company perks including closing office cafes during slow periods, changing the schedule for some fitness classes, and replacing office equipment less frequently.
Big Tech has reassessed its relationship with in-person work since the pandemic, with the likes of Meta also cutting back on office space. In September, for instance, Facebook and Instagram's parent paid $181 million to end the lease on an office in London that it never moved into.