Elgin Area Chamber Of Commerce: Google's Record Revenue Jump Primes Tech Giant For Real Estate Investments

Press release from the Elgin Area Chamber of Commerce:

July 28, 2021

Google is pushing forward on real estate expansion to make room for added workers as the search engine provider's growth accelerates faster than before the pandemic.

Alphabet Inc., Google's Mountain View, California-based parent company, told investors Tuesday the company would ramp up its hiring plans as it tries to keep up with a growth streak. Bolstered by its ability to avoid the economic hit some companies took during the pandemic, thanks to a surge in e-commerce and online shopping, Google's parent reported second-quarter revenue of $61.88 billion, an all-time-record 62% increase over the same time last year when its advertising business began to crack under coronavirus-induced pressure.

After a pause on commercial real estate investments last year, Google said it is accelerating its plans to develop, lease, purchase and build out new office space after capping another record-breaking quarter for net income and sales.

"We will increase the pace of investments in ground-up construction and fit-outs of office facilities, which were slowed due to COVID and are now focused on reopening," Ruth Porat, Alphabet's chief financial officer, said on a conference call to discuss the company's latest earnings results.

Porat added that the company expects to boost its capital expenditures to "support ongoing growth across Google. We are pleased the pace has picked up, and that relates to our plans to build across the [United States] and the globe to keep up with headcount growth."

Alphabet's operating expenditures climbed 22% over the course of the second quarter this year, primarily by adding more than 4,600 employees to its global workforce. The company now employs roughly 150,000 workers around the world, a substantial boost from the 100,000 before the pandemic.

As one of the world's most prominent businesses, Google's bet on its future expansion has served as a blueprint for other companies that have been wary of expanding their physical footprints amid the pandemic's uncertainty. For Google, its increased investment plan for additional office space is crucial to bolstering its fast-growing business, even as it adopts its own long-term flexible work model.

Alphabet CEO Sundar Pichai said Tuesday that the company was "reimagining the future of work," and that flexibility would be one of the company's guiding principles as it gradually reopens offices around the world.

"I was excited to see many people in person as we started a return to our California offices recently," the CEO said. "As we make our way back, we're giving our employees more flexibility in how and where they work, and will continue to invest in sites [and offices] in the U.S. and elsewhere."

The remarks anchor Google's recently unveiled expansion plans, which include at least $7 billion of investments in new offices and data centers across 19 states. The company intends to spend at least $1 billion of that in California to expand its already mammoth office portfolio and meet its pledge to support affordable housing.

Google has long been one of Silicon Valley's most prominent real estate investors, pumping billions of dollars into the market and driving both sales volume and price gains for the South Bay region.

The company is the largest occupant of real estate in the Bay Area and occupies more than 25 million square feet of office, flex and industrial space combined throughout the region.

This press release was produced by the Elgin Area Chamber of Commerce. The views expressed here are the author’s own.