Google has ended its agreement with Lendlease, the lead developer it had been working with on four major campus projects in Silicon Valley. The decision was made based on the current market conditions, which rendered the existing agreements no longer mutually beneficial. The deal covered Downtown West in San Jose, Moffett Park in Sunnyvale, and Middlefield Park and North Bayshore in Mountain View. The developments were expected to encompass over 15 million square feet of office, residential, retail, and other space.
The termination of the agreement comes as the COVID-19 pandemic has significantly impacted business real estate needs. Companies have shifted towards more hybrid modes of working, leading to increased office space vacancies. Figures from CoStar Group suggest that around 17 percent of office space in Silicon Valley was vacant as of June this year. In Mountain View, vacancy rates have reportedly surpassed 20 percent. Meanwhile, Google has been implementing belt-tightening measures, including job cuts and putting campus plans on hold.
Although Google is ending its agreement with Lendlease, it will continue working on the campus developments with other developers and capital partners. The company remains committed to its plans of developing new homes and affordable housing units. Google is exploring various options to meet its housing commitment and appreciates Lendlease’s work. San Jose Mayor Matt Mahan stated that the termination of the Lendlease deal gives Google the flexibility to engage with the best possible developers to build 4,000 new homes in the city’s downtown area.
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