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Google’s Parent Alphabet to Spend $500M Cutting Office Space This Quarter

reprints


The world’s top tech companies are trimming their office footprints amid wider efforts to cut costs and readjust to the post-pandemic world.

Ruth Porat, the chief financial officer for Google (GOOGL) parent company Alphabet, announced in the company’s most recent earnings call that it expects to spend $500 million this quarter in “exit costs” to close offices and cut leases. The move aligns with a slowdown in hiring and labor cuts announced last month amounting to approximately 12,000 layoffs.

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“We will continue to optimize our real estate footprint,” Porat said. Alphabet’s fourth-quarter earnings report also stated the Mountain View, Calif.-based firm could incur more costs in the future “as we further evaluate our real estate needs.”

Google spokesperson Ryan Lamont said the planned reductions this quarter will mostly target unoccupied or under-utilized Bay Area leases where the company has a surplus of space.

“We’re ending leases for a number of unoccupied spaces, and will work to consolidate under-utilized spaces in the future,” Lamont said in a statement shared with Commercial Observer. “Our campuses remain a cornerstone of our culture, but we’re working to ensure we invest in real estate efficiently and that our investments match the current and future needs of our hybrid workforce.”

In Los Angeles, Hudson Pacific Properties and Macerich are nearly finished building the 584,000-square-foot One Westside office that is leased to Google on a long-term deal that started in 2022.

In addition to adapting to the rise of remote work, the tech industry has been marred by widespread layoffs following unprecedented hiring sprees in 2020 and 2021. Facebook parent Meta is spending at least $2.9 billion this year to shrink its office footprint around the world. And Amazon similarly cut thousands of office employees, put large office spaces on the market for sublease, and halted construction of new office buildings in Nashville and Bellevue, Wash.

Gregory Cornfield can be reached at gcornfield@commercialobserver.com.