In 2019, Google pledged $1 billion to help ease a housing shortage in the San Francisco Bay Area, a problem the tech giant acknowledged it had helped create. The area still lacks affordable housing.
The search engine provider made the promise six years ago as a response to two decades of extraordinary growth by tech companies that had sent rents skyrocketing in Silicon Valley — and other industry hot spots like Seattle and Austin, Texas. Google said it would repurpose $750 million of commercially zoned land it owned in Silicon Valley as mixed-use neighborhoods, plus a $250 million investment fund to provide incentives for developers to build affordable housing. It estimated it could facilitate the building of 20,000 homes in the Bay Area to help address "the chronic shortage of affordable housing options for longtime middle- and low-income residents,” CEO Sundar Pichai wrote in a blog post at the time.
Not only has none of the housing Google promised in Silicon Valley been built, it’s not clear if it ever will be.
The company confirmed this week that it is looking to sell a 40-acre site near its Mountain View headquarters that had been slated to become a dense, transit-oriented development with 1,900 homes, a light rail station and 10 acres of parks. The plan was part of a 2022 deal with the city in which Google had agreed to donate a 2.4-acre parcel valued at $53 million for the development of around 380 units of affordable housing.
But Google never proceeded with that project or any of several other ambitious mixed-use proposals for similar developments in the area, so Mountain View never got the land. In late 2023, as the Alphabet-owned company shed pieces of its formerly massive real estate holdings, the company cut ties with its partner on the projects, the Australian developer Lendlease. Google said at the time it would move forward on the proposals, through a new agreement with either Lendlease or a different firm. The latest listing, however, hints that Google may walk away from its housing plans altogether.
Still, Google spokesperson Ryan Lamont said the company remains "committed to our long-term presence in Mountain View," where the firm has been based for more than two decades.
“We continue to focus on investing in real estate efficiently to meet the needs of our hybrid workforce and business,” Lamont wrote in an email to CoStar News last week.
Not financially feasible
As Google has drastically curtailed its real estate expansion in the region in the wake of a gutted post-pandemic office market, the housing it promised has also been thrown into doubt.
California's stratospheric rents and home values have become as much a part of the state's identity as sunshine and freeways. In an attempt to address the housing crisis, the state now requires all cities and counties to come up with a plan to build a certain number of new housing units for people of all income levels. If they fail to comply, local governments risk lawsuits and the loss of state funding. They also risk being subjected to the "builder's remedy," a provision in the law that lets developers move forward with projects that bypass local height, density and zoning codes.
Mountain View, a well-appointed suburb dotted with business parks and bike paths, is required to add more than 11,000 homes by the end of 2031. Meanwhile, rents in the region — long one of most expensive places to live in the United States — are rising again after several years of decline due to the COVID-19 pandemic. The average rent for a one-bedroom apartment in Mountain View is about $3,200, nearly double the nation's average. Rents in San Francisco are rising faster than in any other American city, with San Jose close behind.
Mountain View Councilman Lucas Ramirez, who was the town’s mayor back in 2022 when the plans were approved for Middlefield Park, worries that without Google's nearly 2,000 promised new homes, Mountain View could end up with much less housing that's far less affordable.
“Google is saying they don’t need the office space, and high-density housing is not financially feasible,” he told CoStar News. “So, what does that leave us with?”
While he acknowledged "it’s not impossible that the master plan for the project would be developed by someone else,” high interest rates and building costs have made it unprofitable to build the kinds of high-density, multifamily housing that’s affordable to lower- and middle-income residents.
He's also concerned that even if Google sells to a landlord or developer interested in building housing on the site, it will end up being a significantly lower number of lower-density townhomes that developers can offer to buyers piecemeal as they come online.
"There is significant demand here for housing for families at all income levels, and we do need to find ways to meet that demand," he said.
No office, no housing
The three other ambitious mixed-use projects Google had planned to add thousands of residential units to its housing-starved home region included projects in Mountain View’s North Bayshore neighborhood and neighboring Sunnyvale. The largest of them is the $1 billion, 80-acre Downtown West proposal in San Jose, the region’s largest city.
Approved by San Jose officials in 2021, the long-awaited development proposed 4,000 housing units in addition to office, retail and hospitality properties situated around Diridon Station, a major downtown transit hub. Google put the project on hold after the first demolition phase in 2023, and since then little progress has been made, the Silicon Valley Business Journal reported this year, describing the site as resembling an "empty wasteland."
The firm's housing plans stalled as Google and other tech companies around the world cut office space in recent years. The cuts have reversed a decade of expansion that was fueled by soaring demand for its products and services, leading the company to lease, develop or acquire large swaths of space to accommodate its record growth in head count. Google said last year in a regulatory filing that it would save $640 million by cutting back on office real estate.
Google is not the only tech giant whose previously professed commitment to solving the Bay Area’s housing shortage appears to have lagged. Not to be outdone, Facebook and Instagram parent Meta touted its own pledge to spend $1 billion to help build more affordable housing at the height of the tech boom in 2019. But the firm appears to have done little on the initiative since 2022, the San Jose Mercury News reported last month.
In the face of similar criticism that its presence in communities has driven up housing costs, Amazon has committed more than $2 billion to the construction of affordable housing since early 2021, saying it has helped create or preserve more than 21,000 housing units that are within reach of people who earn between 30% and 80% of a neighborhood's median income. Much of the housing is concentrated in and around greater Seattle, where its main headquarters is located, and in Arlington, Virginia, and Nashville, Tennessee, where it has sizeable corporate operations.
Meanwhile, the firm has opposed efforts by Seattle government and housing advocates to impose payroll taxes on high-earning employees at the e-commerce company and other big businesses to raise revenue to buy, build and preserve affordable housing.
Harvard Business School Professor Debora Spar sees a mixed message in the approaches of Amazon and other big businesses to create more affordable housing.
“One of the complicated ironies here is that on one hand, Amazon and some other companies are stepping up to the plate to give a lot of charitable moneys to address [the housing and homelessness crisis] — but they’re fighting against the taxes which would enable the government to address homelessness," Spar said during a Harvard Business Review podcast in 2024 about the role of Amazon and other businesses in the lack of housing affordability. "Building housing and social services is expensive. There are no magic wands here."