This article is from the Australian Property Journal archive
LENDLEASE and global technology giant Google have terminated their landmark US$15 billion deal to develop master-planned communities in the San Francisco Bay area in California.
In a statement to the ASX, Lendlease said the partners have mutually reached an agreement to end the Development Services Agreements for the four proposed districts in San Jose (Downtown West), Sunnyvale (Moffett Park), and Mountain View (Middlefield Park and North Bayshore), collectively referred to as the San Francisco Bay Project.
“The decision to end these agreements followed a comprehensive review by Google of its real estate investments, and a determination by both organisations that the existing agreements are no longer mutually beneficial given current market conditions,” Lendlease said in statement.
Lendlease said it will receive a payment in consideration for value created through the entitlement and master planning process.
Lendlease and Google signed an agreement in 2019 to develop Google-owned land in the San Francisco Bay area into 15,000 homes and mixed-use projects over the next 10 to 15 years. Google’s presence in the Bay Area has been perceived as bumping up house prices. At the time, more than 45,000 of its employees live in the region.
As part of the new, Lendlease was set to take over some Google’s large tracts of Silicon Valley land, in San Jose, Sunnyvale and Mountain View, and develop residential, retail and mixed-use parts of new neighbourhoods.
Lendlease said it will remove the San Francisco Bay Project, which was expected to commence construction in FY26, from its development pipeline.
“Lendlease and Google have enjoyed a productive and collaborative relationship in the San Francisco Bay area across the past four years.
“Lendlease’s market guidance for FY24 remains unchanged with core operating ROE at the lower end of the 8%-10% range.” the group confirmed.
Meanwhile Google’s senior director of development Alexa Arena, told the Wall Street Journal the company could bring in other developers or capital partners to pursue the project.
“As we’ve shared before, we’ve been optimizing our real estate investments in the Bay Area, and part of that work is looking at a variety of options to move our development projects forward and deliver on our housing commitment,” Arena said. “We appreciate Lendlease and the work the team has done to get us to this point.”
