Google Subleasing 1.4M SF of Silicon Valley Offices

Google, which in April postponed plans to start building this year an 80-acre Urban Village in downtown San Jose, dropped another big shoe this week: the company is listing for sublease 1.4M SF in Mountain View and Sunnyvale.

For any other company, an office footprint reduction of that size—along with 1,600 jobs the search giant has cut in the Bay Area since the beginning of the year—might signal a complete withdrawal from a regional market.

For Google, it represents a haircut of about 5%: the company’s total footprint spans an estimated 27M SF of office and R&D space in Silicon Valley, including 2.5M SF along the Peninsula and 1.6M SF in San Francisco, according to the San Francisco Business Times.

The lion’s share of the space being offloaded by Google is in the Moffett Park campus in Sunnyvale owned by Jay Paul Co.

The Sunnyvale property, which is being marketed by Cushman & Wakefield, includes 1000 Enterprise Way, a 228K building; 1020 Enterprise Way, a 317K SF building Google has been leasing since 2019; and 1050 Enterprise Way, a 193K SF building.

Also listed for sublease in Sunnyvale is a 27K SF building at 1215 Bordeaux Drive, which is being marketed for Google by CBRE, according to the report.

The space being listed in Mountain View includes 600 Clyde Avenue, a 190K SF building owned by Renault & Handley that Google has occupied since it was delivered in 2019. The five-story building, which is being marketed by Newmark, is vacant and available through August 2031.

Also listed for sublease in Mountain View is 620 National Avenue, a 151K SF building that also is vacant—the property, which is being marketed by Colliers is available through May 2029; 750 Moffett Boulevard, a 222K SF space in Ameswell, a mixed-use complex developed by Broadreach Capital Partners in 2020. Google has vacated the building at 750 Moffet, which is being marketed by Newmark.

In its first quarter earnings report, Google parent Alphabet reported $564M in expenses related to exiting leases.

The ongoing trend of tech giants subleasing big chunks of office space pushed sublease availability in Silicon Valley’s office market to record levels in Q1 2023. Sublease vacancies approached 3M SF in the first quarter in Silicon Valley, a quarter-to-quarter jump of 130 bps, while overall the vacancy rate crept up to 17.3%, according to JLL’s Q1 2023 office market report.

Google’s Urban Village project, known as Downtown West, was planned to include more than 4,000 homes, 7.3M SF of offices, 500K SF of shops and restaurants, as well as 15 acres of public parks.

Downtown West, with an estimated price tag of more than $19B, was expected to house 25,000 Google workers in a new neighborhood surrounding the planned Diridon Station, which will be built at the intersection of Amtrak, BART, Caltrain and new high-speed rail lines.

At the end of last year, Google began demolition work at the site in order to begin infrastructure improvements ahead of the development of the first phase of the new transit village.

According to CNBC, Google layoffs announced earlier this year included members of the Downtown West Development team. LendLease, the lead developer on the Downtown West project, also made cutbacks, the report said.

“We’re working to ensure our real estate investments match the future needs of our hybrid workforce, our business and our communities,” a Google spokesperson told CNBC, in a statement. “While we’re assessing how to best move forward with Downtown West, we’re still committed to San Jose for the long term and believe in the importance of the development,” the statement said.