The developer set to convert the area surrounding Google’s San Francisco headquarters into a 15,000-house residential campus complete with office space and hotels has backed out of the project, citing “current market conditions.”
Google, however, has confirmed to The Post that it will proceed with the project — which shouldn’t be delayed despite the company’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 both organizations that the existing agreements are no longer mutually beneficial given current market conditions.”
“As part of the decision to end these agreements, Lendlease will receive a payment in consideration
for value created through the entitlement and master planning process,” the company 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 four master-planned districts worth 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 part of that work is looking at a variety 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.”
But it’s now five years since Google has announced the project, and the real estate market has changed 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 first time since 2000, according to Mortgage Daily News, though as of Friday, the figure has come own to 7.51%.
Still, a mortgage rate this high adds hundreds of dollars a month in costs for borrowers, limiting how much they can 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 workers in its new Google News division just two weeks ago.
Between 40 and 45 employees at Google News were laid off, a spokesperson for the Alphabet Workers Union told CNBC at the time.
The Alphabet-owned search engine has also slashed headcount at Verily, the health care analytics subsidiary, as well as Waymo, the robotaxi unit, though it wasn’t immediately clear how many people were fired from each Google-owned brand.
The job cuts came after Google laid off roughly 12,000 US workers earlier this year, 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 during the pandemic to nearly 187,000 people by late last year from 119,000 at the end of 2019 — when it first announced the “San Francisco Bay Project” — according to 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 month for 4-feet high by 3.5-feet wide “pod” spaces to sleep in because they can’t afford apartments.
The pods are less than half the size of an RV at Candlestick Point, which the city opened in January 2022 for the homeless. The “safe parking site” called Bayview Triage Center has 30 RVs, each of which cost San Francisco $12,000 per month, though residents live there rent-free with 24/7 security.
However, it hasn’t been a smooth road for the “San Francisco Bay Project.” As of 2019 — four 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 future.
Representatives for both companies did not immediately respond to The Post’s request for comment.
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