Google paused the construction for its long-planned mega campus, located in San Jose, California, after an initial demolition phase. As per reports, the company does not have plans to revive the project in the near future.
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A bicyclist rides along a path at Googles Bay View campus in Mountain View, California on June 27, 2022.
Halting Construction of Downtown West Facility
Alphabet has paused construction for its Downtown West facility after an initial demolition phase. According to Engadget's report, the team under this project was affected by the large-scale layoffs last January, hence the paused construction.
The construction project is planned to break ground before the end of 2023. By starting later this year, the construction is supposed to take 10 to 30 years to finish. But since the company paused the construction, there is no confirmation from its contractors on when it might resume.
Some sources are still optimistic about this project while some are concerned that it may not reach the scale promised in the original plan. The company wants its office space to reflect the "future needs" of a business, its workers, and the whole community.
A Google spokesperson stated that as of the moment, they are still determining how to best move forward from this situation and made sure of their commitment to long-term development for the San Jose campus. "We're working to ensure our real estate investments match the future needs of our hybrid workforce, our business, and our communities," the spokesperson added.
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Downton West in San Jose, which was poised to be a mega campus, will come with thousands of new housing units and 15 acres of public parks. The area is considered a demolition zone as it becomes a long-term eyesore and economic zero.
This project was negotiated by Google for years and only received approval last 2021 after promising concessions. This includes the 15,000 housing units across Silicon Valley. $200 million in community support or businesses, and allocating half of the campus for its public uses.
Cutting Costs
As per CNBC, Google has been embarking on its most severe cost-cutting for being in the market in almost two decades. The company eliminated 12,000 jobs, affecting 6% of its workforce to reckon with the slowing sales growth after mass recruitment before and during the COVID-19 pandemic.
Google also announced about a year ago on investing in at least 20 key real estate projects in 2022, costing the company for almost $10 billion. Since then, the company had already finished much of its multiyear land grab of the Downtown West facility in San Jose as its future campus.
During Alphabets' Fourth Quarter Earnings Call, Chief Financial Officer Ruth Porat stated that the company is expecting to incur costs of about $500 million in the first quarter of this year, in order to reduce global office space with some of its real estate charges might also be affected.
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