Google pulls back, halts construction on 80-acre mega-campus

Google's San Jose "Downtown West" development


As Google's fortunes collapsed, the company appears to have given up on building a “megacampus” in San Jose, California, for which it has been heavily lobbying since 2019.

The controversial “Downtown West” property has sparked protests from the start. Back in 2019, activists fought against the sale of state lands and lands with historic buildings to Google.

Finally, after a $200 million benefit package, San Jose approved the Google project. As part of that $200 million, the complex was supposed to have housing for thousands of families, 15 acres of public parks, and more.

Contractors were supposed to start construction in early 2023, but that date has already passed. In its current form, it is a wide, barren field adjoining downtown San Jose, with the demolition of historic sites and favorite local attractions nearly complete.

Friday's CNBC report reveals the gravity of the situation. Project lead cheerleader David Radcliffe left Google in 2022. Scott Foster, who replaced Radcliffe, is described in Friday's report as “more conservative in spending.”

At the end of 2022, contractors were told that the project might be delayed, and in February 2023, the project's lead developer laid off 67 employees, including people directly associated with the Google project.

CNBC carried out website visits by the publication. Construction machinery was present, but there was no sign of any work on site.

Big tech had a tough season reporting

Development seems to be the victim of Google's meager revenues over the past few quarters at the moment. The layoffs were the first blow, and real estate the second.

In February, the company said it would have to spend $500 million to reduce office space.

In addition, it said that other real estate developments were likely to take place.

“We are working to ensure that our real estate investments meet the future needs of our hybrid workforce, our business and our communities,” a Google spokesperson said in a statement emailed to CNBC. “While we are evaluating how best to move forward with Downtown West, we remain committed to San Jose for the long term and believe in the importance of development.”

The future of the site is unclear. The company says it could take decades to complete a project, so the window to meet that very long window of time remains open.

Other projects Google is working on are continued investments in New York; campus in Boulder, Colorado; data center expansion in The Dalles, Virginia; and a data center in Texas.

San Jose has the most to lose from a retreat, delay or cancellation, whichever may be. According to the report, the area is now a demolition zone, rather than what it used to be — productive city center. In addition, suppliers, construction companies and contractors waiting for construction work have nothing to show.

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