By Reuters | Updated: 03 November 2023
Nov 3 (Reuters) – Australian developer Lendlease (LLC.AX) on Friday said it had reached a mutual agreement with Alphabet’s (GOOGL.O) Google to end development services agreements for four master-planned districts in the San Francisco Bay Area.
“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 a statement.
Google did not immediately reply to Reuters’ request for comment.
California’s commercial real estate market is one of the hardest hit globally as remote working culls demand for office space amid declining property values, and higher debt servicing costs on the back of rising rates.
In June, Unibail-Rodamco-Westfield (URW.PA), owner of one of the biggest shopping centers in the city decided to walk away after 20 years, hurt by declining sales, occupancy and foot traffic.
Lendlease had bagged the contract from Google to develop residential and retail space worth $15 billion in Sunnyvale, San Jose and Mountain View in 2019.
Under the project, Leandlease was to develop up to 15 million square feet of residential, retail and hospitality space and associated amenities, and Google was to develop office spaces.
Lendlease said it will remove the project, which was expected to commence construction in fiscal 2026, from its development pipeline.
The developer also retained its forecast for fiscal 2024, with core operating return on equity at the lower end of 8%-10% range.
© Thomson Reuters 2023
