Australian Real-Estate Company Lendlease Ends Development Agreement with Google

Australian real-estate company Lendlease has announced the mutual termination of its development agreement with Google for planned neighborhoods in the San Francisco Bay area. The decision comes as Google and other Silicon Valley companies reevaluate their real-estate investments in light of recent layoffs.

Lendlease confirmed that the existing agreements are no longer mutually beneficial given the current market conditions. In 2019, Google and Lendlease joined forces for a joint master-planning, entitlement, and development project spanning four neighborhoods over 15 years.

Under the initial agreement, Lendlease was responsible for the development, construction, and ownership of residential, retail, hospitality, and community components within the project. The assets were projected to have a development value of around $15 billion.

As part of the termination, Lendlease will receive a payment for the value created through the entitlement and master planning process. Construction, originally scheduled for Lendlease's 2026 fiscal year, will no longer proceed.

Office-vacancy rates in Silicon Valley have recently risen to 17% in June, up from 11% in 2019, according to data firm CoStar Group. Lendlease's contract encompassed sites in San Jose and Sunnyvale.