Google’s $7 Billion Real Estate Plan for the Coming Year
Recovering From Pandemic Downturns
Google (GOOGL) plans to spend $7 billion on real estate in 2021, mostly in the form of office space and data centers. Last year, Google paused its real estate spending as the pandemic weighed on the company’s balance sheet. Google saw its first-ever year-over-year revenue drop during the second quarter of 2020.
Now, business is picking back up. Google wants to take advantage of the current real estate market to set itself up for success as the world begins to recover from the pandemic.
Planning a Return to the Office
Google plans to bring workers back to offices starting this fall. Google does not plan to offer permanent remote work, and most employees will be expected to come into the office at least three days per week. “Coming together in person to collaborate and build community is core to Google’s culture, and it will continue to be an important part of our future,” said Google CEO Sundar Pichai in an announcement about the company’s real estate investments.
$1 billion of Google’s budget will be invested in California. A number of other large tech companies have divested from California during the pandemic, but Google wants to maintain its presence in its home state. Google is also investing in offices and hiring people in cities like Atlanta and Washington DC in order to ensure that its workforce is geographically and racially diverse.
Google’s Goals for its Cloud Business
Google has big goals for its cloud business in the coming years, so it is making significant investments in data centers. In its most recent earnings report, Google shared that its cloud arm lost $5.61 billion on $13.06 billion in revenue last year.
Though Google’s real estate investments will raise expenses for its cloud business, Google says it is more focused on growth at the moment and will work to make its cloud operations profitable over time.
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