Google reportedly halts construction of its giant San Jose campus

Google’s long-planned 80-acre San Jose campus may be on hold, at least for now. CNBC sources say the Alphabet brand has halted construction of its Downtown West facility after an initial demolition phase. The company reportedly “gutted” the campus development team as part of its large-scale layoffs in January, and froze construction with no word to contractors on when it might resume.

In a statement to Engadget, a representative says the firm wants its office space to reflect the “future needs” of the business, hybrid workers and the community. Google is still determining “how to best move forward” with the San Jose campus but is “committed” to long-term development in San Jose, the spokesperson adds.

Google spent years negotiating and designing Downtown West, and received approval in 2021 after promising concessions that include 15,000 housing units across Silicon Valley, $200 million in community support (such as helping displaced businesses) and devoting more than half the campus to public uses. Construction was supposed to start in earnest later this year and take 10 to 30 years. Critics objected to the elimination or relocation of well-known businesses and landmarks, but the potential economic boon for the city was such that Governor Gavin Newsom touted the deal as playing a major role in recovering from the COVID-19 pandemic.

However, it’s the pandemic that ultimately put Google in its current position. The company has hired aggressively in previous years (its ranks have grown 20 percent since 2017), but is laying off around 12,000 employees this year as would-be ad and cloud service customers tighten their budgets. Google is also adopting a hybrid work strategy that lets staff stay home some of the time. Simply put, there’s not as much need for offices as there was before.

This doesn’t mean Downtown West is dead. The potentially decades-long timeframe for the project gives Google some flexibility. However, the uncertainty leaves San Jose in an awkward state. Google has cleared out a large area, but isn’t building the campus that’s supposed to bring jobs and economic activity to the region.