Google and Lendlease Abandon $15 Billion Silicon Valley Project

An official statement from the Australian construction behemoth, Lendlease, confirmed the discontinuation of the ambitious $15 billion initiative in the Silicon Valley region, a joint venture with Google. The decision was disclosed in the aftermath of media reports and detailed that both entities deemed the existing agreements to be no longer mutually beneficial in the prevailing market environment. The cancelation resulted from a thorough review of real estate investments by Google, ultimately leading to the project’s termination.

Financial Repercussions and Compensation

The project was supposed to feature four master planned communities with residential, commercial, and office spaces. Lendlease stated that it would be compensated for the work it had already completed in the master planning and entitlement processes. Although the San Francisco Bay Project has been withdrawn from the development pipeline, according to Lendlease its financial projections are still the same.

Rise and Fall of the Project

The initial blueprints of the project were revealed in July 2019 by the companies, which comprised development districts in Sunnyvale, Mountain View, and San Jose. Google was in charge of managing the construction of its own office space, and the project planned for 15 million square feet of residential, retail, hotel, and other projects in the San Francisco Bay Area.

But unfortunately after a span of six months, the COVID-19 pandemic severely damaged the world’s real estate markets.

The massive Australian construction company has now stated that both businesses decided the development was no longer advantageous to both of them, citing the state of the market.

Impacts on Lendlease and Market Conditions

Lendlease has been really badly impacted by the confluence of rising interest rates and uncertainties in the real estate market in the San Francisco area.

The company’s biggest US investment, the $1.2 billion, 47-story Hayes Point mixed-use development in the city was put on hold in August. This came after the company laid off almost 10% of its employees worldwide in July. As the company is attempting to shift to a  different business model, its earnings reports have suffered. But still the financial analysts stress how important a quick turnaround is right now for the company.