Google to pay $500M to exit offices, but San Jose project moves on

Tech giant demolishes buildings for Downtown West, a transit village of up to 6K homes

Google's Sundar Pichai and renderings of  its Downtown West megaproject
Google's Sundar Pichai and renderings of  its Downtown West megaproject (Getty; SITELAB/Google)

Google, despite laying off 1,600 workers across the Bay Area, is forging ahead on its Downtown West megaproject in San Jose.

While the tech giant expects to pay $500 million to shed offices related to 12,000 layoffs around the world, it’s pushing forward on building its transit village in Downtown San Jose, the San Jose Mercury News reported.

During a conference call to discuss fourth-quarter earnings for Alphabet and its Google subsidiary, Chief Financial Officer Ruth Porat outlined plans for major exits from offices.

“In the first quarter of 2023, we expect to incur approximately $500 million of costs related to exiting leases to align our office space with our adjusted global headcount,” Porat said during an earnings call this month. “This will be reflected in corporate costs. We will continue to optimize our real estate footprint.”

This downsizing from the Mountain View-based company will mean an exit by Google from building floors that the company hasn’t yet occupied, a company spokesperson told the Mercury News.

If the company hasn’t occupied rented floors, those are candidates for an exit.

But the real estate cutbacks outlined by Google’s CFO are not associated with the Downtown San Jose transit village.
Google plans to cut 1,608 jobs in the Bay Area, including 1,436 in Mountain View, 119 in San Bruno and 53 in Palo Alto, according to a Jan. 20 WARN notice Google sent to the state.

Despite the company’s effort to trim workers, cut costs and scale back offices, Google’s work proceeds in San Jose.
Google’s 80-acre Downtown West is being cleared for construction around Diridon Station — where Amtrak, BART, Caltrain, high-speed rail and other forms of transit are slated to meet — a project local leaders describe as the West Coast’s Grand Central, according to Cara Eckholm, co-founder of sustainable developer Nabr.

Sign Up for the undefined Newsletter

When finished, Downtown West will include up to 5,900 homes, 7.3 million square feet of offices, 500,000 square feet of shops and restaurants, a community center and 15 acres of parks.

The search giant has said it expects to employ up to 25,000 people in the new neighborhood 15 miles east of the company’s Mountain View headquarters.

In recent days, Google completely demolished a building at 140 South Montgomery Street where a vendor of industrial gasses had operated for decades.

Across the street, the demolition of the old Sunlite Bakery Bread Depot building at 145 South Montgomery is well underway. A Google contractor has completely removed the back half of the building, according to the newspaper.

The shuttered Patty’s Inn, a long-time watering hole at 102 South Montgomery Street, is expected to be completely bulldozed. The former Hellwig Iron Works building, built around 1935 at 150 South Montgomery, is slated to be reused.

“One or more additions and adaptive reuse of the building to accommodate new arts and cultural uses” are envisioned as part of the Hellwig’s future, city documents show.

— Dana Bartholomew