By Keiko Morris
Big technology companies are doubling down on New York City by
adding millions of square feet in office space and creating
thousands of new jobs, with few aftereffects from Amazon.com Inc.'s
nixing of a Queens headquarters.
Alphabet Inc.'s Google last week closed a deal to lease 1.3
million square feet in lower Manhattan, part of Google's plans to
add 7,000 in staff to the city over 10 years.
Facebook Inc. is in talks to lease one million square feet of
office space at 50 Hudson Yards, a skyscraper under construction on
Manhattan's far West Side, according to a person familiar with the
talks. Uber Technologies Inc. and Amazon have been looking for
large office space at the Farley Building, say people briefed on
the matter. Part of the former James A. Farley Post Office will be
used as a train hall for Penn Station.
New York is emerging as an East Coast hub for technology because
of the size of its labor force, its extensive transportation
infrastructure and the cultural and entertainment activities that
come with a big city, analysts and real-estate executives said.
"New York has lured the talent, and now the employers need to
set up shop to lure that talent," said Kevin Egan, an executive at
Oxford Properties Group, which is one of Google's Manhattan
landlords. "These tenants want to be here and need to be here."
The city's tech frenzy comes barely four months after Amazon
stunned developers and others in the business community by
canceling plans for a second-headquarters project in Long Island
City, Queens. Some elected officials had criticized a government
incentive package of as much as $3 billion to lure the retail
giant.
Amazon's abrupt reversal sent shock waves through the New York
real estate community, with some suggesting that the company's
decision to bolt could discourage other major tech companies from
considering the city.
Instead, interest among social media, e-commerce and
ride-hailing companies has been intensifying. Many of these
companies are willing to spend big dollars renting high-end
Manhattan real estate, rather than the older office stock in Queens
that Amazon was prepared to lease.
"A spat between Amazon and a faction of City Council is not
going to prevent the continued tech boom of New York," said Matthew
Harrigan, chief executive of Company, a venture that manages a
tech-centric serviced office building in Midtown Manhattan.
Tech-sector jobs have increased at a faster clip than the city's
overall job growth. The top tech-job categories, which include
software publishers, internet publishing and web search portals,
averaged 9.6% growth annually between 2009 and 2018 in New York
City, according to economist James Parrott at the New School. That
growth was almost four times as fast as the average annual
private-sector job growth.
New York's prominence as a global financial capital and center
of fashion, advertising and marketing makes it attractive for tech
companies looking to poach workers from these industries, analysts
said.
"Social media companies have to sell ads to have revenue
streams, and New York City is the advertising capital," Mr. Parrott
said. "If you want smart people in advertising, you have to come to
New York City for that."
Tech companies have had a presence in New York City, but now
they look eager to go bigger. Since 2015, Uber has more than
doubled its office space in New York City to about 160,000 square
feet, while Amazon has boosted its office space almost three times
to about 800,000 square feet, according to CoStar Group Inc.
Facebook's office space is now at least three times as large as it
was five years ago.
"A company like Facebook and others are expanding because they
are running out of talent in Silicon Valley and San Francisco,"
said Paul Leonard, a managing consultant at CoStar.
Technology, ad, media and information companies leased 74% more
space in the first half of 2019 than they did a year earlier,
according to Cushman & Wakefield PLC. That group of companies,
known as the TAMI sector, leased space at a faster clip than the
financial industry, which signed deals for 70% more office
space.
In 2018, Toronto-based Oxford Properties and a partner bought
St. John's Terminal on Manhattan's west side for $700 million, with
tech tenants in mind. The former freight terminal, which Google
will occupy, has floor sizes of over 100,000 square feet, high
ceilings and views of the Hudson River, enticing features for tech
and ad tenants, Mr. Egan said.
Oxford initially planned for a $2 billion development that would
add abundant outdoor terraces and decks before landing Google. It
is now redeveloping the property as the centerpiece of a campus in
the Hudson Square neighborhood, where Google will ultimately occupy
three buildings.
Konrad Putzier contributed to this article.
Write to Keiko Morris at Keiko.Morris@wsj.com
(END) Dow Jones Newswires
July 10, 2019 08:27 ET (12:27 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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