Google’s 80-acre San Jose mega-campus is on hold as company reckons with economic slowdown
Google’s construction site on future San Jose megacampus sits idle as company halts development amid cost-cutting.
Jennifer Elias
In June 2021, Google won approval to build an 80-acre campus, spanning 7.3 million square feet of office space, in San Jose, California, the third-largest city in the country’s most populous state. The estimated economic impact: $19 billion.
The timing couldn’t have been worse.
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A decade-long bull market in technology had just about run its course, and the following year would mark the worst for tech stocks since the 2008 financial crisis. Rising interest rates and recessionary concerns led advertisers to reel in spending, shrinking Google’s growth and, for the first time in the company’s history, forcing management to implement dramatic cost cuts.
The city of San Jose may now be paying the price. What was poised to be a mega-campus called “Downtown West,” with thousands of new housing units and 15 acres of public parks, is largely a demolition zone at risk of becoming a long-term eyesore and economic zero. CNBC has learned that, as part of Google’s downsizing that went into effect early this year, the company has gutted its development team for the San Jose campus.
The construction project, which was supposed to break ground before the end of 2023, has been put on pause, and no plan to restart construction has been communicated to contractors, according to people familiar with the matter who asked not to be named due to non-disclosure agreements. While sources are optimistic that a campus will be built at some point and said Google representatives have expressed a commitment to it, they’re concerned the project may not reach the scale promised in the original master plan.
The Mercury News, one of Silicon Valley’s main newspapers, previously reported that Google was reassessing its timeline. Sources told CNBC that the company started signaling to contractors late last year that the project could face delays and changes.
In February, LendLease, the lead developer for the project, laid off 67 employees, including several community engagement managers, according to filings viewed by CNBC. Senior development managers, a head of business operations and other executives were among those let go.
Last month, Google also removed construction updates from its website for the project, according to internal correspondence viewed by CNBC.
LendLease didn’t immediately respond to a request for comment.
Alphabet-owned Google is embarking on its most severe cost cuts in its almost two decades on the public market. The company said in January that it was eliminating 12,000 jobs, representing about 6% of its workforce, to reckon with slowing sales growth after headcount swelled before and during the Covid pandemic.
About a year ago, Google announced that it would invest nearly $10 billion in at least 20 key real estate projects in 2022. By then, the company had already completed much of its multi-year land grab of downtown San Jose for the future campus.
Money coming ‘when the cranes are in the air’
Things changed in a hurry. On Alphabet’s fourth-quarter earnings call in February, finance chief Ruth Porat said the company expected to incur costs of about $500 million in the first quarter to reduce global office space, and she warned that other real estate charges were possible in the future.
While the tech industry broadly is struggling to adapt to a post-Covid world that appears to be more hybrid in nature and less centered around large campuses, Google is in a particularly precarious spot because of its massive commitment, financial and otherwise, to altering the landscape of a major urban area.
“We’re working to ensure our real estate investments match the future needs of our hybrid workforce, our business and our communities,” a Google spokesperson said in an emailed statement. “While we’re assessing how to best move forward with Downtown West, we’re still committed to San Jose for the long term and believe in the importance of the development.”
Google spent several years planning for the San Jose complex and invested significant resources in winning over the local community. Opposition in some corners was so fierce that, in 2019, activists chained themselves to chairs inside San Jose’s City Hall over the decision to sell public land to Google. A multi-year effort to address community concerns ended with support from some of the project’s stiffest early opponents.
To win over the locals, Google designated more than half its campus to public use and offered up a $200 million community benefits package that included displacement funds, job placement training, and power for community leaders to influence how that money would be spent.
While some community benefits have already been delivered, the bulk is to be dispersed upon the office space development. Google also promised to build 15,000 residential units in Silicon Valley, with 25% of them considered “affordable,” a critical issue in an area with one of the highest homeless populations in the country, according to government statistics. Some 4,000 of those housing units were set to be built at Downtown West.
“We all originally knew that it’s going to be a long-term plan,” San Jose councilmember Omar Torres, who represents the downtown area, told San Jose Spotlight in February. “But yes, it’s definitely concerning that a lot of the money is coming when the cranes are in the air.”
Google’s construction site sits idle on a Tuesday afternoon.
Jennifer Elias
The demolition phase of the project took out a number of historic San Jose landmarks and forced the relocation of others. A 74-year-old dancing pig sign for Stephen’s Meat Products had to be moved, and only a small part of an old bakery building remains.
Patty’s Inn, an 88-year-old beloved pub, didn’t survive the teardown.
“This is a dive bar, but I never thought of it as a dive bar. It was just Patty’s Inn,” Jim Nielsen, an executive at RBC Wealth Management and longtime patron of the bar, told the Mercury News at the time. “It’s tough to see these places go away because they can’t be replaced.”
The new campus was expected to bring some 20,000 jobs to the city.
Empty swaths of land
CNBC visited the site a couple times in April during the normal workday, to see swaths of land where old buildings have been replaced by cranes, tractors and other construction equipment in a fenced-off area. Nobody was working on site.
Construction projects of this scale take a long time. Google had originally said it would likely need between 10 and 30 years to build out the campus, so it still has a significant cushion to resume development.
LendLease said in 2019 that it struck a $15 billion deal with Google to spend the next 10 to 15 years redeveloping the company’s landholdings in San Jose as well as nearby Sunnyvale and Mountain View, where Google is headquartered.
“LendLease will play a key role in helping deliver at least 15,000 new homes on our land,” David Radcliffe, Google’s real estate lead at the time, said in a press release.
But Radcliffe left Google in late 2022 after 16 years at the company. He was replaced by Scott Foster, who previously led global real estate for financial firm RBC. Sources familiar with Google’s real estate projects described Foster as someone who is expected to be more conservative in spending, and more likely to slim down the scale of the campus, especially amid cost-cutting efforts.
With construction at the site currently stalled, San Jose sits without an expected anchor tenant in an empty swath of its downtown. Dozens of vendors and contractors that were expecting work are focusing on other projects as they wait to hear what happens next.
The mood is vastly different than it was less than two years ago, when Gov. Gavin Newsom stood beside Google Senior Vice President Kent Walker at an event in San Jose, ahead of a city council meeting that would determine whether the project got approved. Newsom used the occasion to sign SB 7, a bill to speed up construction of housing and development projects.
Newsom and officials cited Google’s proposed mega-campus several times as an example of the state’s economic “comeback” from the Covid pandemic.
Hinge Health’s TrueMotion feature.
Courtesy: Hinge Health
Digital physical therapy startup Hinge Health is gearing up to file for an initial public offering, potentially as soon as next week, CNBC has learned.
Hinge Health helps patients with musculoskeletal injuries ranging from minor sprains to chronic pain recover from the comfort of their own homes. Its IPO has been a highly-anticipated exit within the battered digital health sector, which has been reeling from the aftermath of the Covid-19 pandemic.
The IPO could happen as early as April, but timelines might still change due to uncertainty around tariffs, according to a person familiar with the matter. Hinge Health, which contracts with employers, generated $390 million in revenue in 2024, had $45 million in free cash flow and hit gross margins of about 78%, the person said.
The San Francisco startup has raised more than $1 billion from investors like Tiger Global and Coatue Management. Hinge Health had a $6.2 billion valuation as of October 2021. Physical therapy is estimated to be a roughly $70 billion market by the end of the decade.
A spokesperson for Hinge Health declined to comment.
Hinge Health CEO Daniel Perez and Executive Chairman Gabriel Mecklenburg co-founded the company in 2014 after they were frustrated by their own experiences with physical rehabilitation, according to the company’s website.
Members of Hinge Health can access virtual exercise therapy and an electrical nerve stimulation device called Enso that’s designed to serve as an alternative to pain medications like opiates. The company has been using generative artificial intelligence to scale its care team in recent years.
The company competes directly with other digital health startups like Sword Health, but Hinge Health is about four times larger than is closet competitor, the person said.
Investors will be watching closely to see whether Hinge Health’s IPO serves as a positive bellwether for the sector.
Bloomberg reported Hinge Health’s IPO plans earlier on Friday.
WATCH: The market is in a good environment for hedge funds, says Citi’s Mithra Warrier
Elon Musk speaks during the first cabinet meeting hosted by U.S. President Donald Trump, at the White House in Washington, DC, U.S., February 26, 2025.
Brian Snyder | Reuters
Tesla’s stock has never had a stretch this red.
For seven straight weeks, since Elon Musk went to Washington, D.C. to join the Trump administration, shares in his automaker have declined, closing on Friday at $270.48. It’s the longest such losing streak for Tesla in its 15 years as a public company.
Tesla shares finished the week down more than 10% and at their lowest level since Nov. 5, Election Day, when they closed at $251.44. Since the stock peaked at almost $480 on Dec. 17, Tesla has lost well over $800 billion in market cap.
Several Wall Street firms this week, including Bank of America, Baird and Goldman Sachs, cut their price targets on Tesla.
In slashing their target from $490 to $380, analysts at Bank of America cited concerns about the company’s falling new vehicle sales and the lack of a recent update from Musk on a “low-cost model.”
Goldman Sachs, which cut its price target on the stock to $320 from $345, also pointed to falling electric vehicle sales for Tesla in the first two months of the year across several markets in Europe, China and parts of the U.S.
The Goldman analysts noted that Tesla faces, “a tough competitive environment for FSD” in China, where key competitors “do not generally require a separate software purchase for smart driving features.” FSD, or Full Self-Driving (Supervised), is Tesla’s partially automated driving system, which the company sells as a premium option in the U.S.
Baird added Tesla to its “bearish fresh picks” this week, with analysts at the firm writing, “production downtime” will complicate “the supply-side of the equation” for Tesla as the company shifts to manufacturing the new version of its Model Y SUV.
Elon Musk stands as he is recognized by U.S. President Donald Trump during Trump’s address to a joint session of Congress at the US Capitol in Washington, DC, on March 4, 2025.
Saul Loeb | Afp | Getty Images
But Wall Street isn’t just concerned about fundamental metrics like sales and production figures. Investors are also trying to assess how much Musk’s politics and work in the White House will pressure Tesla, and for how long.
“Musk’s involvement with the Trump administration adds uncertainty to the demand-side,” Baird analysts wrote.
Before taking on his role as advisor to President Donald Trump, and the leader of the so-called Department of Government Efficiency (DOGE), Musk was already heading up his many private ventures, including artificial intelligence startup xAI, social media company X and aerospace and defense contractor SpaceX.
Concerned bulls
Now Musk, the world’s wealthiest person, has become the public face of the Trump administration’s effort to dramatically reduce the federal government’s workforce, spending and capacity. Meanwhile, he continues to post incendiary political rhetoric on X, slamming judges whose decisions he doesn’t like, and promoting false Kremlin talking points about Ukraine President Volodymyr Zelenskyy.
Anti-Musk and anti-Tesla sentiment have been rising in the U.S. and Europe, with an outburst of protests and suspected criminal acts of arson and vandalism at Tesla facilities.
Even the most bullish analysts, and many fans, have had to acknowledge the impact of Musk’s politics on the desirability of Tesla and its products to a wide swath of customers and investors.
EV advocates at Cleantechnica, which has long promoted Tesla on its site, ran an ethics-focused column on Thursday asking if Tesla owners should sell their cars, and contemplating whether the Tesla board should fire Musk as CEO.
Musk and Tesla didn’t immediately respond to requests for comment.
In a note out Friday, Wedbush Securities’ Dan Ives wrote, “Tesla bulls find themselves with their back against the wall facing global negative sentiment around Musk/DOGE and the Trump Administration.” He called it a “gut check moment for the Tesla bulls (including ourselves).”
Wedbush said it’s using the selloff as an opportunity to add Tesla to its “Best Ideas” list, and set its 12-month price target at $550.
“The best thing that ever happened to Musk and Tesla was Trump in the White House as this will create a deregulatory environment with a federal autonomous roadmap central to the Tesla golden strategic vision,” the firm wrote.
The Tesla bulls see the potential for the company to soon launch affordable new model EVs, a robotaxi and driverless ridehail service, and to deliver humanoid robots capable of factory work in the not-too-distant future. Ives said he expects Musk will become more focused on Tesla and his other companies in the second half of 2025.
Analysts at TD Cowen are also optimistic. In a note on Thursday, they wrote, “Tesla now appears to be in the early innings of a major 2025-26 product cycle, one that we believe could re-invigorate volume growth and boost overall share price sentiment.”
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