Lendlease and Alphabet, the parent of Google, have ended their agreement in the US to develop a $15bn (€14bn) precinct in San Francisco Bay Area.
Under the plan, first announced in 2019, Lendlease would have delivered around 15,000 homes on the four Google-owned sites in San Jose, Sunnyvale and Mountain View over a 10-to-15-year period. Google was to develop office space in the same mixed-used communities.
Construction was originally due to begin in 2021 but was delayed because of the COVID-19 pandemic.
As reported in IPE Real Assets, US cities with office markets dependent on the tech sector, like San Francisco, have been notably affected by post-pandemic working practices. Capital Economics had forecast a 40% fall in capital values in the San Francisco office market between 2023 and 2025.
Lendlease said that the decision to end these agreements followed a comprehensive review by Google of its real estate investments and a determination by both organisations that the existing agreements were no longer “mutually beneficial given the current market conditions”.
Lendlease said as part of the decision to end the joint venture, it would receive a payment in consideration for value created through the entitlement and master planning process.
Commenting on the decision, Alexa Arena, senior director of development at Google, told the US media that the company had been optimising its real estate investments in the Bay area and part of that work was looking at a variety of options to move its development projects forward and deliver on its housing commitment.
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