The developer set to convert the world surrounding Google’s San Francisco headquarters right into a 15,000-house residential campus complete with office space and hotels has backed out of the project, citing “current market conditions.”
Google, nevertheless, has confirmed to The Post that it’ll proceed with the project — which shouldn’t be delayed despite the corporate’s tie-up with the developer, Lendlease — and said it’s looking to broaden its relationships with other developers.
Lendlease issued a press release on Friday saying it decided won’t move forward with the tech behemoth’s so-called “San Francisco Bay Project” after “a determination by each organizations that the prevailing agreements aren’t any longer mutually helpful given current market conditions.”
“As a part of the choice to end these agreements, Lendlease will receive a payment in consideration
for value created through the entitlement and master planning process,” the corporate added, though it didn’t disclose how much Google shelled out.
Lendlease scored the contract in 2019 though the developer wasn’t set to break ground in 2026 to execute 4 master-planned districts price a combined $15 billion across Sunnyvale, San Jose and Mountain View.
“As we’ve shared before, we’ve been optimizing our real estate investments in the Bay Area, and a part of that work is taking a look at a wide range of options to move our development projects forward and deliver on our housing commitment,” Google’s senior director of development Alexa Arena told The Post. “We appreciate Lendlease and the work the team has done to get us to this point.”
However it’s now five years since Google has announced the project, and the actual estate market has modified immensely, threatening to price buyers out of the market with long-term borrowing rates hovering close to the 8% mark since September.
Last month, rates on a benchmark 30-year home loan hit 8% for the primary time since 2000, according to Mortgage Each day News, though as of Friday, the figure has come own to 7.51%.
Still, a mortgage rate this high adds lots of of dollars a month in costs for borrowers, limiting how much they’ll afford in a market already unaffordable to many Americans.
In a time of economic uncertainty, Google has continues to downsize, including when it laid off dozens of employees in its latest Google News division just two weeks ago.
Between 40 and 45 employees at Google News were laid off, a spokesperson for the Alphabet Employees Union told CNBC on the time.
The Alphabet-owned search engine has also slashed headcount at Verily, the health care analytics subsidiary, in addition to Waymo, the robotaxi unit, though it wasn’t immediately clear how many individuals were fired from each Google-owned brand.
The job cuts got here after Google laid off roughly 12,000 US employees earlier this yr, which CEO Sundar Pichai said in an internal memo affected employees at corporate parent “Alphabet, product areas, functions, levels and regions.”
Alphabet’s workforce ballooned in the course of the pandemic to nearly 187,000 people by late last yr from 119,000 at the top of 2019 — when it first announced the “San Francisco Bay Project” — according to essentially the most recent regulatory filings.
Axing the once-glittering project, which was set to break ground in 2026, strips the region of 15 million additional square feet of residential, retail and hospitality space.
Google said it committed $1 billion to the project that was intended to combat the Bay Area’s housing shortage, which has seen residents coughing up $700 per thirty days for 4-feet high by 3.5-feet wide “pod” spaces to sleep in because they’ll’t afford apartments.
The pods are lower than half the scale of an RV at Candlestick Point, which town opened in January 2022 for the homeless. The “secure parking site” called Bayview Triage Center has 30 RVs, each of which cost San Francisco $12,000 per thirty days, though residents live there rent-free with 24/7 security.
Nevertheless, it hasn’t been a smooth road for the “San Francisco Bay Project.” As of 2019 — 4 years after announcing the project — Google issued an update saying that 12,900 of the 15,000 planned housing units were approved for development by San Jose and Mountain View city officials.
It wasn’t immediately clear if there’s a possibility that Google and Lendlease could resume the project in the longer term.
Representatives for each firms didn’t immediately respond to The Post’s request for comment.