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One of Silicon Valley’s largest office tenants, Alphabet Inc.’s Google, is once again attempting to reduce its real estate holdings. Google has listed 182,500 square feet across 4 buildings at the Foothill Research Center in Palo Alto, California for sublease. The brokerage Newmark posted the listings, and CoStar News has reviewed them. This move reflects Google’s ongoing effort to cut expenses by trimming its expansive real estate portfolio.
The buildings available for sublease are located at 4001, 4005, 4009, and 4015 Miranda Ave. Nearly a decade ago, Google initially moved into the office park, and over time, it gradually expanded its presence. As recently as 2020, Google added more than 56,000 square feet through a lease signed with landlord Hudson Pacific Properties. This expansion was part of Google’s strategy leading up to and during the early stages of the pandemic.
Tech giant Google, along with other industry leaders, has been aggressively cutting back on real estate since the start of the year. This marks a significant change from its previous expansion approach driven by high demand for its products and services. However, as revenue growth slowed and economic uncertainties mounted, Google’s parent company, Alphabet, shifted its priorities from expansion to profitability.
Alphabet plans layoffs due to these changes
Alphabet announced plans to lay off 12,000 employees due to these changes, making this the largest workforce reduction in the company’s history. Additionally, Google has put its $1 billion Downtown West development on hold. This ambitious 80-acre mixed-use campus project represents Google’s largest real estate investment.
Like its counterparts, such as Meta, Salesforce, and Amazon, Google experienced robust revenue growth, user engagement, and advertising during the early stages of the pandemic. However, the tech industry now faces a slower economy and concerns about a potential recession. Consequently, companies are taking measures to reduce property holdings, including closing office locations, subleasing unused space, and canceling pre-lease agreements.
Although Google’s sublease listings contribute to the Bay Area’s increased sublease space, the company remains one of the San Francisco Bay Area’s largest commercial tenants. With a total footprint spanning over 31 million square feet of office and flex space in the region, Google’s commitment to the area is evident. This shift towards a leaner real estate approach aligns with Google’s goal of ensuring its real estate investments match the needs of its hybrid workforce. The company remains dedicated to its presence in the Bay Area and continues to invest in the local community.