Dive Brief:

• Google plans to invest $9.5 billion in offices and data centers in the U.S. this year, according to a company blog post.
• The scope includes existing office developments in Austin, Boulder, Cambridge and Pittsburgh, a new office project in Atlanta and data center development in Tennessee, Virginia and Oklahoma (pictured), among other regions in the U.S. 
• While the data center sector is booming with increased investment and frenzied construction activity, on a national scale, the office sector has struggled to welcome back employees in person during the COVID-19 pandemic.

Dive Insight:

Google is just the latest technology conglomerate to increase its investment in data centers. Its recommitment to office space, however, is a bit more surprising.

"It might seem counterintuitive to step up our investment in physical offices even as we embrace more flexibility in how we work," wrote Sundar Pichai, CEO of Alphabet, the parent company of Google, in the blog post. "Yet we believe it's more important than ever to invest in our campuses."

Google asked in March for its San Francisco Bay Area employees to return to the office at least three days a week starting this month. That reportedly frustrated some employees who wanted to move outside of the high-cost region, according to Bloomberg.

On the other hand, the data center sector was expanding even before the pandemic, but stay-at-home mandates and work-from-home trends accelerated the trend.

For example, Meta, parent company of Facebook, recently launched two new data center projects in Texas and Missouri, pushing its total investment in U.S. data center construction and operations past $16 billion. 

Relatively cheap land and power, coupled with record tax incentives are fueling the developments, especially outside primary markets, according to a CBRE report on North America data center trends. 

Google plans to build data centers in Texas, Tennessee, Virginia, Oklahoma, Iowa, Nebraska and Nevada. Its office market focus runs from Seattle to New York (see map), according to the blog post.

The $9.5 billion investment is expected to create about 12,000 new full-time jobs at Google by year-end, according to the company statement. 

This latest investment brings Google's total spend on offices and data centers to more than $37 billion in 26 states over the last five years. That’s in addition to the more than $40 billion in research and development in the U.S. in 2020 and 2021, according to the company.