Depending on who you talk to, the issue of commercial real estate is either a ticking time bomb that will gut the entire economy or a tempest in a teapot. For Alphabet (NASDAQ:GOOG), it’s a minor inconvenience that it’s looking to get rid of. New plans to possibly offload another office campus sent Alphabet shares up fractionally in the process.
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Alphabet’s Google subsidiary recently listed a new office campus for subleasing. The campus in question features four different buildings and represents over 182,500 square feet in the total package. Located at 4001, 4005, 4009, and 4015 Miranda Ave, Alphabet is said to be putting up these buildings as a means to cut costs. Google only recently put over a million square feet out for sublease just a few months ago, and now, it’s taking further buildings out of its control and looking to turn them into cash generators.
Commercial real estate has been a problem all up and down the spectrum of late. With a possible resurgence of COVID-19 with the Eris submutation, and the specter of mask mandates and potential lockdowns bubbling up in some sectors, businesses are undoubtedly left wondering if commercial real estate is such a good idea anymore. Throw in rapidly increasing insurance costs—a Time report pointed to climate change as “part of the problem” behind surging costs just to insure a building—and employees’ increasing desire to continue working from home, and matters only get worse. Google subletting its buildings might be the best response it could have to such issues.
This minor hiccup isn’t putting much of a brake on Alphabet stock, though. With seven Buy ratings and two Hold, Alphabet stock is considered a Strong Buy by consensus. Meanwhile, Alphabet stock offers investors a 10.4% upside potential thanks to its average price target of $142.33.
