Lendlease advises Google on $14.5bn project

Lendlease has emerged as an adviser on a plan by Google to turn part of the San Francisco Bay Area into housing.

Google CEO Sundar Pichai. Picture: AFP

Development giant Lendlease has emerged as a behind-the-scenes adviser on a groundbreaking plan by Google to turn part of the San Francisco Bay Area into housing and community facilities.

Lendlease, which has built a global reputation for large mixed use communities from London to Singapore, has been working with the tech giant, positioning it to take on a larger role on the development, which could be worth $US10 billion ($14.45bn) on completion.

Tech giants are battling rising costs and seeking to address housing needs in the region.

The project could have up to 20,000 homes and would mark a dramatic expansion for Lendlease, which already has a substantial operation in the United States, where it is both a builder and developer of high-rise towers in New York, Chicago and on the west coast.

“For the past 18 months, our US business has advised Google on various aspects of its real estate strategy. We continue to work with Google in an advisory capacity,” a Lendlease spokesman said.

The company has not commented further on its role but investors had speculated that it was up against US rival Related Cos. for a major precinct-style development.

Google said this week it would commit $US1bn to boost housing construction in the area as it moves to help employees and support workers who are facing an affordability crisis.

Google chief executive Sundar Pichai said the group would repurpose about $US750 million of company-owned land from offices and data centres to homes, and about 15,000 units could be built.

Lendlease could follow the model it has adopted in London high-rise areas of housing luxury, mid-range and social tenants in blended complexes.

Google has said it would also set up a $US250m fund for loans and other types of financing aimed at the affordable spectrum, which could see another 5000 cheaper homes built.

The company is also giving away $US50 million to help deal with homelessness in areas where the surge in high-income tech jobs has left service workers struggling to find housing.

Macquarie Equities said Lendlease had a strong working relationship with Google and is building the tech firm’s European headquarters in London.

They also worked together on a bid for an Australian headquarters at Sydney White Bay Power Station site.

Lendlease has deep skills as a developer of large multifaceted projects and the project would be a major addition to its $70bn-plus pipeline. Macquarie estimated the project could have $US10bn end value and profits could hit $US2bn over its life.

“While difficult to be more precise and Lendlease may only capture a portion of this depending upon structure, the opportunity is clearly large,” Macquarie said.