Google to invest $9.5B in US offices and data centers this year

Google plans to boost its real estate spending as offices reopen and the company's hybrid work strategy begins to roll out.

Google's Pier 57 office

Google plans to invest $9.5 billion in US offices and data centers this year, the company said Wednesday. That’s an increase from $7 billion spent on real estate in 2021.

The planned spending comes as the company begins to roll out its hybrid work strategy, which will allow many employees to work remotely part of the week.

“It might seem counterintuitive to step up our investment in physical offices even as we embrace more flexibility in how we work,” said Sundar Pichai, Google and Alphabet CEO, in a blog post. “Yet we believe it’s more important than ever to invest in our campuses and that doing so will make for better products, a greater quality of life for our employees, and stronger communities.”

Google highlighted investments in offices across the country, including the opening of new premises in Atlanta and ongoing construction of an office in Austin, with work also under way on existing offices in New York, as well as campuses in Boulder, CO., Cambridge, MA., Pittsburgh, and Seattle. The company also expects to create 12,000 additional jobs this year.

Google did not detail how much will be spent on offices specifically.

The increased investment in data centers is necessary as Google competes with other large cloud computing providers such as Microsoft and Amazon Web Services, said Jack Gold, president and principal analyst at J.Gold Associates, while investment in office space will help in several ways.

“First, they are trying to diversify their locations to be able to utilize people and resources in other places than just Silicon Valley,” said Gold. “And even though many Google employees will continue to work remotely at least part time, they still will need to get into offices on a regular basis to collaborate with other Googlers.”

He added that Google’s growing workforce will also require added office capacity. “Google continues to hire, so they have an expanding base of employees to house,” he said.

“Google’s plans to step up their investment in their physical offices are likely in support of — rather than counter to — embracing flexible work arrangements,” said Raúl Castañón, senior analyst at 451 Research, a division of S&P Global Market Intelligence.

Many businesses are rethinking their office planning post-pandemic, according to a 451 Research survey. A substantial number plans to reduce the number of individual offices and cubicles (24%), the research firm found, yet many will also add or expand collaboration spaces (27%) and social spaces (25%) for employees to come together.

Said Castañón: “Embracing a hybrid work model will require adapting the physical office, expanding technology investments for meeting room AV equipment; hot desking; mobile devices, laptops, and peripherals for remote work; and productivity, collaboration, and communication platforms that enable secure and compliant on-site and remote interactions.”

Google kicked off its hybrid work strategy with offices beginning to reopen fully last week, following closures due to the COVID-19 pandemic.

The majority of employees will now be required to work in the office three days a week, with two days of remote work.

The decision to end full-time home working has reportedly created tensions among employees who deem it unnecessary following huge profits during the pandemic. Meanwhile Google is said to be offering perks, such as free electric scooters, to lure staff back to the office.

A former Google Human Resources head recently told Bloomberg he believes the company’s hybrid strategy is likely to pave the way for an eventual full return to the office for staff. Laszlo Bock claimed a Google executive told him: “‘We’ll get everyone back into the office eventually. I just don't want to pick that fight now.’”

Google is one of several large technology companies requiring staff to return to the office at least part time, following two years of remote work for most employees. Apple and Microsoft have a similar strategy, though others such as Twitter have opted for a more flexible approach, with employees allowed to work from home despite reopening its offices last month.

In related news, Facebook parent company also is reported to be expanding its physical presence in New York, according to Bloomberg, leasing an additional 300,000 square feet of office space at its Manhattan premises.

Copyright © 2022 IDG Communications, Inc.

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