Google halts development of Downtown West megaproject in San Jose

Google’s Downtown West, an 80-acre transit village proposed for Downtown San Jose, appears almost dead.

The development of thousands of homes, offices and shops and restaurants near Diridon Station, expected to break ground this year, has been put on pause by the Mountain View-based search giant, with no plan to restart construction, CNBC reported, citing unidentified sources.

While sources are optimistic it will be built – with Google representatives having expressed a commitment to it – they say the project may not reach the size outlined in its master plan.

Google’s interest in Downtown San Jose had become a centerpiece for the city’s plans. 

The Downtown West development was to include 4,000 homes, 7.3 million square feet of offices, 500,000 square feet of shops and restaurants, a community center and 15 acres of parks. Its economic impact was estimated at $19 billion.

Google, after laying off 1,600 workers across the Bay Area and announcing a $500 million cost to exit offices worldwide, said in February it was reassessing its timeline for Downtown West.

The project was expected to house up to 25,000 Google workers in the new neighborhood 15 miles east of the company headquarters. 

Diridon Station, where Amtrak, BART, Caltrain, high-speed rail and other forms of transit are slated to meet, was set to become the West Coast’s Grand Central.

Now the proposed mega-campus is poised to become a demolition zone at risk of becoming a long-term eyesore and economic zero, according to CNBC. As part of Google’s downsizing early this year, the company gutted its development team for Downtown West.

Sources told CNBC that the company started signaling to contractors late last year that the project could face delays and changes.

In February, LendLease, the lead developer for the project, laid off 67 employees, including several community engagement managers, according to filings viewed by CNBC. Senior development managers, a head of business operations and other executives were among those axed.

Last month, Google also removed construction updates from its website for the project, according to internal correspondence viewed by CNBC.

LendLease, based in Australia, didn’t immediately respond to a request for comment.

Alphabet-owned Google is embarking on its most severe cost cuts in its almost two decades on the public market. 

The company said in January that it was eliminating 12,000 jobs, or 6 percent of its workforce, to respond to slowing sales growth after hiring workers before and during the pandemic.

“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 an emailed 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.” 

— Dana Bartholomew