Alphabet, the parent company of Google, is forking over hundreds of millions of dollars to reduce its office space across the globe, part of the company's ongoing effort to drastically scale back its real estate footprint.
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Through the end of the third quarter, the tech giant paid $607M in impairment charges to shed office properties it no longer needs and reallocate its capital to other top priorities like artificial intelligence, CoStar News reported. The company leases or owns roughly 50M SF of office and flexible space around the world, according to CoStar data.
“We see opportunities for further growth propelled by AI and think we are well positioned to deliver meaningful innovation, which will translate to revenue growth,” Anat Ashkenazi, Alphabet's chief financial officer, told analysts on the company's earnings call Tuesday.
Last year, Alphabet paid $1.8B to get out of leases globally, incurring $269M in accelerated rent and depreciation.
The continued reduction in office space is a reversal for the company from its prepandemic days when it scooped up real estate around its Mountain View, California, headquarters and elsewhere in the state and the country. The company employed roughly 181,270 people by the end of September, down from the more than 190,230-person workforce it had the year prior, according to CoStar.
Even so, Google continues to make calculated investments in the office sector.
In July 2022, Google announced plans to purchase the 1.2M SF Thompson Center in Chicago for $105M pending completion of renovations. Work began on the renovations earlier this year.
The company anticipates it will move into the building at 100 W. Randolph St. in 2026.
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