Google stays committed to downtown San Jose, mayor and tech titan say

SAN JOSE — Google and San Jose Mayor Matt Mahan both said Friday the search giant remains fully committed to its ambitious new neighborhood in downtown San Jose although the project’s timeline is still being reassessed.

Speculation about the company’s ongoing development plans in Silicon Valley emerged ahead of the tech titan’s conference call, scheduled for next week on April 25.

The tech titan, as it has been doing for several months, continues to reassess the timeline for the vast development near the Diridon train station and SAP Center in downtown San Jose, a Google spokesperson said Friday.

“There is actually no news, which is good news,” Mayor Matt Mahan said Friday afternoon during a meeting with this news organization and other media outlets to discuss the current status of the project, which is known as Downtown West.

The mayor said he was in contact with key officials at Google on Friday to get the latest regarding Downtown West.

“Google remains fully committed to San Jose in the long term and San Jose is fully committed to Google,” Mayor Mahan said. “We are very excited about future prospects.”

The tech titan’s interest in the Downtown West neighborhood hasn’t wavered and is as solid as ever, the Google spokesperson said.

“The speed at which they move forward ebbs and flows, depending on the macroeconomic situation,” Mahan said. “They speed up when there is growth. When companies are contracting, pulling back a little bit after a period of over-hiring they slow down capital investments.”

Google’s last earnings call produced a flurry of updates regarding the company’s plans for the spaces that it leases and the properties that it owns.

During a conference call to discuss fourth-quarter financial results for Alphabet and its principal operating unit Google, Chief Financial Officer Ruth Porat said the company intends to leave some currently leased spaces.

One of the goals of right-sizing Google and Alphabet is “optimizing how and where we work,” Porat told Wall Street analysts and investors during Thursday’s call.

“In the first quarter of 2023, we expect to incur approximately $500 million of costs related to exiting leases to align our office space with our adjusted global headcount look,” Porat said. “We will continue to optimize our real estate footprint.”

It was not immediately clear exactly which leases the company is seeking to end. But as part of the real estate downsizing, Google will primarily exit office spaces that it had leased but has yet to occupy, a company spokesperson said.

Soon after that, this news organization reported that Google had launched a reassessment of the timeline for the Downtown West development. That reassessment is still ongoing, the company said Friday.

It’s unknown whether the next earnings report might similarly produce fresh updates regarding the company’s hiring plans, expansion, or cutbacks.

In a January filing with state labor officials, Google revealed plans to eliminate 1,608 jobs, in cutbacks affecting workers in Mountain View, Moffett Field, San Bruno and Palo Alto. Those job cuts occurred on March 31.

Mayor Mahan noted that during the fourth-quarter earnings call in February, Sundar Pichai, chief executive officer of Google and its owner Alphabet, indicated that the search giant would undertake space cutbacks primarily directed at rented office space and not in properties that the company owns.

“While they are shedding some of their leased property, they are doubling down on the property that they own,” Mahan said. “I would argue that as the company looks to future expansion, there is no owned property that is more strategically located than Downtown West.”

Downtown West would sprout on 80 acres on the western edges of San Jose’s urban core near an already busy Diridon train station that will someday accommodate a BART stop.

Google’s transit village would create a new neighborhood along a narrow stretch that’s dotted with older commercial and industrial buildings, homes, junkyards, former retail sites, warehouses, empty structures and vacant lots.

Downtown West is expected to accommodate up to 7.3 million square feet of offices, 4,000 residential units, 500,000 square feet of retail space that would include shops and restaurants, 300 hotel rooms and 15 acres of open space.

“This is a campus that we always knew would easily take 15 to 20 years to build out,” Mahan said. “The rationale for this is as strong as ever. Nothing has changed.”