Products You May Like
Google’s $2.1 billion deal to buy a Manhattan office building adds to the rapid growth of Silicon Alley, despite the growth of remote work and a decline in the New York office market.
Google is buying the former St. John’s Terminal on Manhattan’s West Side, expanding its footprint downtown. The company had been leasing the 1.3-million-square-foot building but exercised an option to buy the space. The price is the highest paid for a U.S. office building since 2018, according to commercial realtors.
It also signals the continued march of the Big Three tech firms into Manhattan, as the companies swallow up massive new buildings and entire neighborhoods to house a growing workforce. Google, Amazon and Facebook now have more than 8 million square feet of space in Manhattan, according to real estate experts. And that number is expected to continue to rise as the companies scout for more space.
“It’s certainly a positive sign,” said Danny Mangru, research director for the New York and Tri-State Region of Savills.
Google’s latest deal brings its total square footage in Manhattan to over 3.1 million square feet, brokers said. Along with the new building, it’s also purchased 111 8th Avenue — where it occupies over 800,000 square feet of space — as well as the nearby Chelsea Market building.
Facebook has been snapping up space in Hudson Yards and is leasing all 730,000 square feet of office space in the soon-to-be renovated James A. Farley Building in midtown. Facebook now has more than 3.2 million square feet of space in Manhattan and is currently scouting for more, brokers said.
Amazon is also expanding rapidly in Manhattan, even though it canceled plans for a massive “HQ2” in Long Island City after political backlash. With its $978 million purchase of the former Lord & Taylor department store building, Amazon now has nearly 2 million square feet of space.
The leasing activity from Big Tech has helped spark early signs of a recovery in the Manhattan office market, which has been hit hard by the Covid-19 pandemic and urban flight. Leasing volume in August more than doubled from July, with 1.46 million square feet of office space leased in midtown, according to Colliers International.
Yet while tech is leading the city’s new leasing activity, the broader market still has a long recovery ahead. Only about 23% of Manhattan workers have returned to the office as of late August, according to a survey by the Partnership for New York City. The Partnership survey found that 76% of workers plan to be back in the office in early 2022.Manhattan has about 86 million square feet of available office space, according to Savills. The availability rate is now over 18% and at or near a 30-year-record, according to Savills.
The Partnership survey found that 70% of employers are adopting a rotating or “hybrid” office schedule, where employees can work remotely for part of the week.