Google shells out $633M to shrink office footprint

Tech giant also spends $2B on payroll cuts, cites over-hiring in pandemic

Google's Sundar Pichai; 1160 North Mathilda Avenue (Google Maps, Getty)
Google's Sundar Pichai; 1160 North Mathilda Avenue (Google Maps, Getty)


In an attempt to trim capital investments from its books, Google has spent more than half a billion dollars reducing its office footprint.

The Mountain View-based tech titan spent $633 million to shrink its office footprint in the first six months of 2023, as reported by SFGate, based on parent company Alphabet’s second-quarter report released last week. There still could be more costs coming this year, although the majority of the spending came during the first quarter of the year.

In an earnings call in February, Google Chief Financial Officer Ruth Porat, who is soon stepping away from the role, projected that existing leases would cost the company $500 million in the first quarter. 

“We’re working to ensure we invest in real estate efficiently and that our investments match the current and future needs of our hybrid workforce,” Google spokesperson Ryan Lamont told SFGate. 

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Last month, Google put more than 1.4 million square feet of Bay Area office space on the market for sublease, including a 736,000-square-foot parcel in Sunnyvale.

The company is not only reducing office space, but also halting major projects in the Bay Area. It paused the Downtown West project in San Jose as the city’s office market continues to stagnate with lagging return-to-office trends. 

However, not all large projects are standing still. Google got a green light from Mountain View to start developing a 153-acre mixed-use neighborhood, just south of its headquarters. The company plans to build 7,000 residential units and 3 million square feet of office space.

Along with rescuing office space, Google has paid out $2 billion for personnel layoffs. The company cut 12,000 workers in January; CEO Sundar Pichai blamed the mass layoffs on over-hiring during the pandemic. 

Pawan Naidu

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