The days of Google's massive offloading of its real estate appear to be slowing as the company enforces stricter in-office mandates and renewed its lease for a large block of space near its global headquarters in Mountain View, California.
The tech giant plans to keep the nearly half a million square feet, easing concerns in Silicon Valley real estate circles that it would continue to dump space across the region and elsewhere around the world. Google, which has aggressively slashed its still-significant footprint in the Silicon Valley region over the past year, renewed its lease with landlord Peery Arrillaga for its extensive space at the Alta Plaza campus in Mountain View.
The tech company's footprint at the Mountain View campus spans roughly 411,000 square feet across three buildings at 1900, 1950 and 2000 Charleston Road, all of which were developed shortly after the dot-com bust in the late 1990s. Google initially moved into one of the properties in 2008, according to CoStar data, but eventually expanded to the remaining two a decade later.
Terms of the renewal agreement were not publicly disclosed. Neither Alphabet Inc.'s Google nor the Palo Alto, California-based developer responded to CoStar News' requests for comment.
Hints of a Turnaround
The renewal is a boost of confidence in Silicon Valley's office market as some of its largest occupants, including Google, have responded to a slowing economy and fears of recession by implementing widespread cuts to their vast real estate portfolios.
That has resulted in tech companies deciding to shutter office locations, sublease unwanted space, terminate prelease agreements, and walk away from future investments. Those decisions have loaded up the Bay Area's real estate market with millions of square feet of sublease space or have downsized offices as leases come due.
While Silicon Valley's office market has fared better than its counterpart in San Francisco, sublease space in the region has eclipsed record highs for the region. About 7.5 million square feet of sublet office space is up for grabs, according to CoStar data, a record-high figure that has pushed total availability past 19%.
Like other tech giants, Google has been on an aggressive cutting spree since the beginning of the year, reversing a decade-long expansion as demand for its products and services soared and the company had to lease, develop or acquire large swaths of space to accommodate its record headcount growth.
The tech giant pivoted quickly on its real estate stance after Google parent Alphabet responded to slowing revenue growth and mounting economic uncertainty by shifting priorities to profitability over expansion.
The company released plans earlier this year to lay off 12,000 employees — the largest round of job cuts in its history.
For Google, that has meant dumping roughly 1.6 million square feet across several offices near its headquarters in Mountain View, California. Just last month it listed more than 182,500 square feet across four buildings at the Foothill Research Center in Palo Alto, California.
Even with the listings, Google remains one of the largest commercial tenants in the San Francisco Bay Area. Its total footprint spans upward of 31 million square feet of office and flex space across the region, according to CoStar data.
What's more, executives for the tech giant are refuting speculation the company is backing away from its largest real estate investment to date and have clarified its commitment to the $1 billion Silicon Valley project. Google's plans for an 80-acre campus situated around Diridon Station, a major transit hub located on the western edge of downtown San Jose, California, will be moving forward despite the decision to reassess its development timeline.