As Google retreats from real estate, will it still build the 15,000 homes it promised?

When Google made its $1 billion pledge to address the Bay Area’s housing shortage in 2019, the plan hinged on the company expanding its office presence in Silicon Valley.

The majority of the housing pledge wasn’t cash — though there was some of that — but land. Specifically, $750 million worth of suburban office parks the company controlled across Silicon Valley that were to be reimagined as four new mixed-use neighborhoods that would accommodate 15,000 homes at a range of income levels, built around transit, retail and parks. It was urbanism via corporate land banking.

But now, six years later, as Google pulls back from its plans to add to its Bay Area office footprint, the housing it promised may also be under threat.

Google confirmed this week it is looking to sell Middlefield Park, a 40-acre site near its Mountain View headquarters that had been slated to become a dense, transit-oriented district with 1,900 homes, a light rail station, and 10 acres of public parks. The plan was part of a 2022 development agreement, in which Google had also agreed to donate to the city 2.4 acres within the site worth $53 million, to build up to 380 units of affordable housing.

That land has yet to be handed over to the city. And now it’s unclear if it ever will be.

Any buyer would be beholden to Google’s current development agreement if they wanted to develop according to the 2022 plan — which stipulates the donation of the affordable housing site, plus an extra $19 million in community benefits, like a public parking garage and subsidies for retail.

But Lucas Ramirez, a city councilman who was mayor when the development agreement was approved, worries that without Google’s deep pockets, the project might become something more modest. He said he expects the new buyer to reduce the scope of the project, likely nixing the office buildings and instead pivoting to lower-density housing on the site, which would open the development agreement back up for renegotiation.

“The financial feasibility of high-density residential development isn’t there right now,” Ramirez said.

A Google spokesperson confirmed that the company is looking for buyers with the expertise and resources to build residential housing on the site. The company’s work is ongoing, and developments of this scale take time, she said.

Across Silicon Valley, developers are scaling back high-density projects approved during the pandemic, which they say don’t pencil out with today’s higher interest rates. In San Jose alone, developers’ pivot to lower-density, cheaper townhouse developments has erased 4,177 previously approved units from the city’s construction pipeline.

Middlefield Park is just one of several ambitious, mixed-use projects Google once touted as proof that big tech could be a part of the housing solution. The four others include:

—80 acres in San Jose’s Downtown West, 4,000 homes, approved in 2021

— 153 acres in Mountain View’s North Bayshore, 7,000 homes, approved in June 2023

— 350 acres in Sunnyvale’s Moffett Park, undetermined amount of homes.

These massive campus expansion plans were developed in 2019 — before the coronavirus pandemic completely upended office culture and reduced the need for physical space, as hybrid work has become a permanent fixture.

But in 2023, Google cancelled its $15 billion contract with Australian developer Lendlease, its development partner that was meant to build out the four neighborhoods. Even then, it insisted that its plans for its mixed-used neighborhoods would move forward, albeit with potentially scaled-back office components.

“We’ve been optimizing our real estate investments in the Bay Area,” then-Google Senior Development Director Alexa Arena said in November 2023. “Part of that work is looking at a variety of options to move our development projects forward and deliver on our housing commitment.”

But Google isn’t in the business of building housing. Much of its real estate team was laid off in 2023, according to a review of LinkedIn.

So far, six years into the $1 billion commitment, none of the housing it promised on Google-owned land has been built.

The only reason that Google might not be selling off some of its other real estate holdings in San Jose and Sunnyvale is because if it were, it would be at a loss, said one ex-Googler who spoke anonymously because he had signed a non-disclosure agreement.

Google isn’t the only tech company that’s seen momentum slow on its housing commitment. Meta, the parent company of Facebook, made its own $1 billion pledge to help solve housing affordability in 2019, which included building 1,730 homes on $225 million worth of land in Menlo Park. The company has yet to break ground on any vertical development, and it laid off most of its team working on the initiative in 2022.

Google’s housing pledge was connected to its need for office space, Ramirez said. Company officials told Mountain View leaders that it needed the city to sign off on its campus expansion to make the housing component financially viable.

Behind the scenes, some former employees blame bureaucratic inertia for the lack of progress. Two ex-Googlers, who spoke anonymously because they signed a non-disclosure agreement, said the company could have built more housing sooner if cities had moved more quickly to approve their master plans.

But the Mountain View of a decade ago isn’t the Mountain View of today. Ramirez said that Mountain View reviewed Google’s plans for Middlefield Park faster than it typically does for a master plan of that size. Lenka Wright, chief communications officer for the Mountain View, said the city “moved mountains to get this project completed.”

Google even agreed to provide funding for additional staff to help review permits on Google’s abbreviated timeline, Ramirez said.

“I’m speaking as someone who is aware of how tough it can be to get permits through the conventional process — but that was not the case for Google,” Ramirez said. “We bent over backwards to accommodate them.”

Mountain View officials are holding their breath to see whether Google will also sell more land around the city. In 2024, the company withdrew permits for office space it planned to construct at North Bayshore, just a year after getting the plan for its mixed-use space approved.

“We are looking to meet the needs of our housing crisis,” said Mountain View Mayor Ellen Kamei. “We want to not only generate housing but create community in Mountain View. That was the goal with Middlefield Park and North Bayshore.”