Google Parent to Buy Manhattan's Chelsea Market Building -- 2nd Update
February 06 2018 - 6:23PM
Dow Jones News
By Keiko Morris
The parent company of Google is expanding its real estate
holdings in Manhattan, with plans to plow more than $2 billion into
one of the city's prime tech neighborhoods.
As Amazon.com Inc. narrows its search for a second headquarters,
the latest deal underscores New York City's ascendance as one of
the country's leading technology hubs, real-estate analysts
said.
Amazon has named New York City among the 20 finalists to host a
second headquarters.
Under the deal, Alphabet Inc. is in contract to buy the Chelsea
Market building at 75 Ninth Ave. from Jamestown LP, according to a
person familiar with the transaction.
The deal shows how beneficial tech spending can be to a city.
Technology companies have been increasing their share of office
space in the Manhattan market over the last several years, with
household names such as Amazon, Facebook Inc., Spotify USA and
others signing large lease deals.
In the San Francisco Bay Area, tech companies have been gobbling
up more space than they need in the short term to ensure they have
enough capacity for workers and equipment down the line.
That might be playing out in New York too. The Chelsea Market
deal "is a potential land grab, where these firms are competing
against one another, and you might see these firms take space
defensively to ensure that they will have the space even though
they don't need it now," said Sacha Zarba, vice chairman of real
estate services firm CBRE Inc.
Google already has offices in the 1.2 million-square-foot
building, which houses offices on the upper floors and shops and
restaurants on the ground and lower-level floors. The building is
home to other companies, including Major League Baseball Advanced
Media and the Food Network.
The web-search giant also owns the 2.9 million square foot
building at 111 Eighth Ave., which it bought in 2010. In addition,
it has leased more than 200,000 square feet at Pier 57, a former
freight terminal. The Chelsea neighborhood and Meatpacking District
are part of the Midtown South office submarket, which is a favorite
of the technology sector and has had vacancy rates that are among
the lowest in the U.S.
New York City's technology landscape has changed dramatically
over the last decade, when skeptics doubted whether its labor force
could support a large technology hub.
"Any further long-term real estate commitments by Google is
proof positive that New York is the present and future home for
technology innovation and the most fertile ground for talent
retention," said Doug Harmon, of Cushman & Wakefield, a
longtime adviser to Jamestown and the broker who worked on the sale
of 111 Eighth Ave. to Google.
The potential acquisition of the Chelsea Market building also
highlights some of the options that global companies, especially
tech companies, are now considering as the new tax law takes
effect. The law reduced the corporate tax rate to 21% from 35% and
included incentives for companies to bring offshore profits back to
the U.S.
"If you're bringing that much cash back, you are now probably
looking for ways to deploy it," Mr. Heller said.
Write to Keiko Morris at Keiko.Morris@wsj.com
(END) Dow Jones Newswires
February 06, 2018 18:08 ET (23:08 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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