After years of unsuccessful efforts to land a subtenant, Silicon Valley tech giant Alphabet is preparing to offload a building near its global headquarters as its lease for the property heads toward its natural expiration.
The Google parent company appears to have opted against renewing its deal for an entire building near its sprawling headquarters in Mountain View, California. While the decision has yet to be formalized and could be reversed, Newmark has already started marketing the roughly 316,600-square-foot property at 1000 Enterprise Way that Google has occupied for nearly a decade.
If it decides against extending the lease, the building will be the latest addition to a long string of former office hubs the company has dumped as part of its yearslong U.S. real estate reduction streak.
The property is one of three at the Jay Paul Co.-developed Moffett Tower office campus that Google signed on for in the years leading up to the pandemic's 2020 outbreak. It signed the full-building deal at 1000 Enterprise Way in September 2017 with a term scheduled to expire in June 2026. The eight-story building is now being pitched as having immediate availability, according to marketing materials viewed by CoStar News, and was listed for lease this month.
The tech giant also leases the entirety of the Moffett Tower buildings at 1020 and 1050 Enterprise Way as part of deals slated to expire at the end of 2030 and in September 2027, respectively.
Google has been trying to sublease its space at all three properties since early 2023, when it collectively dumped about 1.5 million square feet across seven Silicon Valley buildings on the regional sublet market, a decision the company made as part of a widespread effort to rein in expenses by slashing its previously expansive real estate portfolios.
All told, Google's footprint at the Moffett Tower campus spans more than 815,525 square feet.
Google has vacated about 3 million square feet of leased office space in recent years. Still, it remains one of the Bay Area's largest corporate occupants. A company representative did not immediately respond to CoStar News' requests for comment.
Optimal timing
The anticipated downsizing underscores the gulf created between the hypercompetitive demand for Silicon Valley office space prior to the pandemic and the regional leasing volumes that are just now beginning to hint at stabilization.
The Silicon Valley and nearby San Francisco office markets were two of the tightest in the country before the 2020 COVID-19 outbreak, with office rents at record highs and vacancy rates at record lows.
While it still has a way to go before hitting those levels of activity and pricing, a flurry of blockbuster sales and leases has delivered a boost of momentum for the Silicon Valley market as it regains its pre-pandemic dominance as the world's most concentrated tech hub.
Over the past few months, companies such as Apple, LinkedIn, Walmart and Amazon have committed to larger blocks of space for longer periods as they appear willing to return to their pre-pandemic days of real estate expansion.
LinkedIn, for example, closed a $75 million deal in April to purchase a 120,000-square-foot property in Sunnyvale. Walmart last month inked one of the San Francisco Bay Area's largest post-pandemic office deals. And Amazon has rapidly ramped up its partnership with coworking operator WeWork to add roughly 141,000 square feet to its Silicon Valley footprint.
So while Google hasn't been able to sublease its three Moffett Tower buildings, Newmark's direct listing may be better timed to the region's office market rebound.
The burst of activity has meant the regional availability rate has fallen from a high of more than 20% to about 17%, according to CoStar data. That figure is expected to improve as the balance between offloading and taking on space continues to stabilize, a recovery process that could be sped along if demand among larger tenants builds.