Google Spent Billions on Offices During the Pandemic. What’s the Future of Tech’s Mega Campuses?
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The pandemic sent legions of professionals home, but that didn't stop tech giants from spending billions building out swanky new offices complete with gourmet cafes, music studios and on-site masseuses. As hybrid work prevails, what will become of these brick-and-mortar monoliths?
How tech giants are now ramping up real estate investment
Google’s realtors have kept busy during the pandemic. In September 2021, they picked up another $2.1 billion space to build out its Hudson River campus in lower Manhattan. In January, the company said it would spend $1 billion to buy an office tower it already leased in central London. It just unveiled a new 1.1 million square-foot Bay View office building in Mountain View topped with a swooping metallic roof resembling a new-age circus tent, and it aims to finish up another nearby mega campus later this year. And that’s in addition to its existing infrastructure. The jewel of Google’s vast portfolio is its original 500,000 square-foot “Googleplex” headquarters in Mountain View, California, which opened its doors in 2003. (It’s almost the size of ten football fields put together.)
The company is not alone in its real estate outlay. Just a few months into the year, Silicon Valley’s office market is heating up again. In the first quarter of 2022, the region’s office vacancy rate decreased for the first time in two years, according to a report by real estate firm Colliers International. Some 7.3 million square feet of office space is under development and intended to be completed this year, 66% of which is pre-leased or corporate-owned, the report said. In addition to Google’s construction, Adobe has a 750,000 square-foot downtown San Jose expansion in the works.
“Alphabet is the largest owner of commercial real estate in Silicon Valley,” Lena Tutko, Colliers' research director covering the Silicon Valley market, told The Org. “So not only are they the biggest tech company, but they're also a huge real estate player, and they own a lot of their holdings.”
It’s full steam ahead for Google. In 2022, the company aims to create 12,000 new full-time jobs and invest a total of $9.5 billion into U.S. offices and data centers, CEO Sundar Pichai wrote in a blog post published on April 13--about one week after most Google employees began trekking back to their offices.
“It might seem counterintuitive to step up our investment in physical offices even as we embrace more flexibility in how we work,” Pichai wrote. “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.”
Fueling these purchases are the availability of office space at a discount and an influx of cash on hand. During the past two years, office space has been cheaper, and Google has had cash to burn. Alphabet’s revenue amounted to $441 billion across 2020 and 2021, representing its two most lucrative years ever. Meanwhile, average asking rent prices for office space in New York and San Francisco plummeted by nearly 10% between the first quarters of 2020 and 2021, per research by commercial real estate firm Newmark.
If these giants ever change their tune, selling is always an option. But who would buy a sprawling billion-dollar campus? Other tech companies are the likely buyers, according to Colliers' Tutko. In the past, some Silicon Valley tech shops have even sold their offices to private equity shops or other investment firms, she added.
What kind of amenities do tech campuses have?
Beyond the daily food and drink cornucopia, these tech meccas are known for offering amenities that can seem almost mythical to workers in other industries. The Hudson Square Google employee said their office also includes a gym, outdoor spaces, mother's rooms, free electric scooters (to commute to and from work) and visiting masseuses that offer discounted massages each week.
Silicon Valley campuses take it even further. Volleyball courts, valets, soccer fields, on-site doctors, music recording studios and eateries galore dot the Mountain View Googleplex. Apple’s ring-shaped Cupertino estate, which cost about $5 billion to open in 2017, boasts a $17 million wellness studio complete with a two-story yoga studio. Twitter’s San Francisco HQ sits in a historic downtown building and includes exercise rooms, a rooftop garden and a cafe serving “artisan fare and microbrews.”
Critics of these perks say they are simply a tool to lure workers into spending more time working than they otherwise would--and with fewer employees in the office at any given time, there are signs that over-the-top benefits could be on the decline. Meta, for example, recently told employees it was winding down free laundry and dry cleaning services and pushing back the time for gratis office dinners from 6 p.m. to 6:30 p.m., The New York Times reported.
What will the tech campuses of the future look like?
So, how exactly should tech giants design their next generation of campuses? Cristina Banks, a psychologist and professor at The University of California's Berkeley business school who’s studied healthy workplaces for more than four decades, has some ideas.
It’s a simple formula that boils down to satisfying our basic human needs, she said. Workplaces must first ensure the psychological and physical safety of workers, then foster autonomy and a sense of belonging to create an environment where people can “get their best work done in the time they dedicate to it,” Banks told The Org.
But companies can face roadblocks when they attempt to put these fundamentals into practice. There’s a gap between what most organizations would like do to improve retention and productivity and “what the real estate and facilities people are thinking about building, because they're not getting clear signals from organizations…and they want to hang onto their tenants,” said Banks, who also advises companies (including tech firms) on office design. “Without those clear signals, they don't know what to reinvent, so we've got a lot of trial and error going on out there.”
Banks encourages a few key office features to help minimize disruptions and frustrations. Private spaces where workers can do “focused, heads-down” type work that is free of smells, noises and other distractions. Separate spaces for socialization and for collaboration, situated far from focus areas. (Cafeterias and coffee bars can be good social space options.) Other important factors include: warm lighting, calming nature nods like plants and green walls, functioning reservation systems for conference rooms, cheerful wall art and furniture that invites people to gather. “The bottom line is that you've got to consider what the work is that needs to be done, and how spaces can sufficiently support those activities.”
What about the music studios, laundry services and soccer fields?
“You can have all the perks in the world, but if people are frustrated because they don't have the quiet, or the privacy, or the autonomy, or the sense of the belonging or the resources they need to do their work, it doesn't matter if there's a coffee bar with 100 different coffees or a foosball table,” Banks said.
Will hybrid workplaces become the norm?
Sometimes, it seems like everyone’s a critic--including the original creator of the modern tech campus himself. In the 1990s, renowned architect Clive Wilkinson pioneered the tech campus as we know it today (with its abundant work nooks, couches, coworking spaces and snacks) when he conceptualized Google’s original HQ alongside founders Sergey Brin and Larry Page. But he’s since backtracked his line of thinking.
In a late 2020 interview with journalists Charlie Warzel and Anne Helen Peterson for their book Out of Office, Wilkinson proclaimed: “Making the work environment more residential and domestic is, I think, dangerous. It’s clever, seductive and dangerous. It’s pandering to employees by saying we’ll give you everything you like, as if this was your home, and the danger is that it blurs the difference between home and office.”
If the incumbents’ plans are any indication, however, hybrid arrangements will likely become the tech industry’s norm. Many workers now actively seek out hybrid workplaces, according to Alanah Mitchell, a business professor at Drake University in Iowa who researches the design and use of communication technologies for global virtual teams.
Even Banks believes it’s possible to build a healthy hybrid workplace--as long as it’s designed with intention. Companies should use technological tools and virtual community groups to enhance workers’ connection to the office when they do work remotely, she advised. (For any intrepid developers out there, Banks said she’s yet to find a favorite human-centered tech tool to recommend.)
“For people who tended to not be heard, who tended to be discounted or not fully accepted in the workplace, when they are in a virtual group, they have an equal voice,” Banks told The Org. “The virtual world has actually created a more level playing field.”
And workers are willing to make compromises. When it came to remote work pre-pandemic, “people were really worried about having their own space that they could personalize in an office, and ideas like drop-in desks were not super popular,” Mitchell told The Org. “But now, there are more people who are interested in the option of being able to come into the office when they want to … they still desire some of those fancier features when they come in, but I think that they're more open to not having their own personal space.”
It’s worth noting that not all tech behemoths embrace hybrid requirements. In May 2020, Twitter declared it would make remote work an option forever--and two years later, its new CEO Parag Agrawal just affirmed the policy.
The financial bottom line is likely a better motivator than worker preferences for companies embracing a remote-first environment for good, as Warzel and Peterson point out in their book. “For a CFO, the prospect of getting that expensive downtown real estate off the balance sheet is enticing, especially if you factor in cost-of-living decreases when employees move out of high-cost cities,” they wrote.
The Org’s Return to Office Tracker
| Tech giant | RTO policy (as of April 2022) | | ---------- | ---------- | | Amazon | Corporate employee schedules decided on a team-by-team basis | | Apple | At least three days per week in office, starting April 23 | | Google | At least three days per week in office, starting April 4 | | Meta | Employees must return to the office full-time, unless they are granted an exception, starting March 28 | | Microsoft | Most employees expected to work in office at least 50% of the time, starting February 28 | | Netflix | No official RTO date set, but CEO Reed Hastings has been outspoken critic of permanent remote work | | Twitter | Offices fully reopened on March 15, but full-time employees can work 100% remote if they prefer |
Resistance from tech workers
Even as big tech bets on an in-office future, scores of workers still prize the flexibility of remote work over free meals or cheap massages. Google’s new hybrid policy has met resistance from some employees, eliciting a response from the company’s Alphabet Workers Union.
"What's it been like for Googlers RTO today? Not enough desks for everyone (So musical chairs--COVID version)...Workers are forced to RTO in the midst of a pandemic even though WFH has not hurt Alphabet's profits AT ALL," the union tweeted.
Health is another obvious concern. Though nearly all U.S. cities have rolled back mask requirements in recent months (and face coverings are now optional on planes), COVID-19 cases keep mounting. As of April 26, an average of nearly 51,000 new cases are still reported each day across the country, and positive test results have jumped 61% over the last two weeks, according to government data compiled by The New York Times. For professionals with underlying health conditions, or those living with at-risk people, commuting to the office and working alongside maskless peers could put their physical and mental wellbeing in jeopardy--regardless of vaccination status. Plus, future variants could crop up and upend office reopening plans, just as the Delta and Omicron variants did in 2021.
Some tech workers are simply quitting as a result of return-to-office policies. Across industries, about 55% of remote workers say they would consider leaving their job if management told them to return to the office, according to a January poll conducted by Morning Consult. Big tech employers acknowledge the problem this could pose in today’s hot job market, albeit in the fine print.
“Changes we make to our current and future work environments may not meet the needs or expectations of our employees or may be perceived as less favorable compared to other companies’ policies, which could negatively impact our ability to hire and retain qualified personnel,” Amazon admitted in a Securities and Exchange Commission filing released in February.
Prior to joining Google more than a year ago, the Hudson Square employee said they strongly preferred remote work and were hesitant to work in environments that required in-person office days.
“You come to Google, and it’s like a playground, and you're just kind of like, ‘well, maybe this isn't the worst situation you could be in,’” they said. “Even though I'm here three to four days a week now, that's my choice to a certain extent. But I really do believe that for people who live far away, like some of my coworkers who have parents or children they need to take care of, it just should be their own choice and decision. And I don't think that should be dictated by the company.”
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