New York — Google Inc., owner of the world’s most popular search engine, on Wednesday disclosed that it has finally concluded the biggest real estate purchase of New York’s 111 Eighth Avenue building as the company expands its presence in Manhattan, which will house its more than 2,000-strong workforce in the city, for a reported $1.9 billion.
Rumor swirling for weeks, but yesterday’s transaction ennobles Google a permanent home in Manhattan’s Chelsea neighborhood. The 15-story Manhattan property covers a full block and has more office space than the Empire State Building.
Terms of the deal were not disclosed. But, according to New York Post put the cost at 1.77 billion dollars. The newspaper estimated the final price, including transfer, taxes and miscellaneous other fees, could be 1.9 billion dollars.
The 15-story Chelsea gargantuan is almost 3 million square feet and covers an entire New York City block, between Eighth and Ninth avenues from 15th and 16th streets — bigger than the Empire State Building, according to the Los Angeles Times. It is listed as the third largest building in Manhattan by square footage. The former Port Authority building at 111 Eighth Avenue, in Manhattan’s Chelsea district, was sold by Taconic Investment Partners, Jamestown Properties, and the New York State Common Retirement Fund.
“Google’s growth can now be organized without the normal Manhattan hindrance of space constraints that often interfere with expansion plans,” Douglas Harmon, the broker at Eastdil Secured, which represented the seller in the Google building purchase, told the Wall Street Journal.
Google agreed to disburse about $1.8 billion for the property, where it is the largest tenant, a person with knowledge of the deal said earlier this month. That would make it the biggest transaction this year involving a single U.S. building, according to Real Capital Analytics Inc., a New York-based real estate research firm.
“This is an outstanding real estate investment in a thriving neighborhood and fantastic city,” David Radcliffe, Google’s vice president of real estate and workplace services, wrote on the company’s blog. “We are excited to continue to build our presence there.”
Google, based in Mountain View, California, appointed Taconic’s management company to operate the building, Radcliffe said.
Google already has offices in the building, along with several large data centers. The company first established a Google Gotham office when it based one worker in a Starbucks office on 86th Street, according to the Wall Street Journal. Google plans to continue expand in the region, tapping its proximity to financial and advertising customers and its distance from Silicon Valley competitors, the Wall Street Journal said.
“Now we have more than 2,000 Googlers working on a variety of projects in both sales and engineering — and we are hiring across the board,” Radcliffe said in a blog post.
“The tech scenario is different here,” Alan Warren, a Google engineering director in New York, told the Wall Street Journal. “We are a lot more connected to business users, as opposed to consumer business.”
“Today, we are pleased to announce that we have finalized a deal with the partnership of Taconic Investment Partners, Jamestown Properties and the New York State Common Retirement Fund to purchase 111 Eighth Avenue,” he added.
The deal is reported to be the largest single-asset sale in the U.S. in 2010 and the largest-ever acquisition by a tenant/user.
“Google was allured by the unique features of the building, including the full-block sized floor plates, the 14.5-foot ceiling heights, the views, the easy access to transportation, and the building’s technology offering,” said Paul Pariser, co-chief executive officer of Taconic Investment Partners. “This purchase represents the opportunity to continue the storied history of 111 Eighth Avenue — the building is in the hands of an owner with the vision and capital to continue 111 Eighth Avenue’s leading role in Chelsea and the Manhattan commercial market.”
Google, with more than 2,000 employees in the vicinity, occupies about 550,000 square feet at 111 Eighth. The company intends to take more space as it becomes available, the person with knowledge of the deal said Dec. 2.
Poornima Gupta, a spokeswoman for Google, declined to comment on the occupancy plans.
Taconic acquired it in 1998 and did $68 million of capital improvements, the sellers said in their statement. As part of the deal, Google has retained Taconic Management Company to manage the current tenants in the building, which include advertising agency Deutsche, Barnes and Noble, Nike Inc., WebMD, Sprint, Lifetime Networks and Armani Exchange.
The building, completed in 1932, was originally a freight terminal serving the city’s Hudson River piers.
According to the Post, the Art Deco building has “numerous back-up generators, lots of electrical power, antennas, fiber optics and high-tech facilities available to tenants.”
The sellers were represented by Doug Harmon, senior managing director at Eastdil Secured LLC. Google was represented by Stephen Siegel, Darcy Stacom and William Shanahan of CB Richard Ellis Group Inc.
Of course, Google is not alone in its passion of New York. Emerging startups Foursquare and Hashable, among the few, call Manhattan home. And Mayor Michael Bloomberg frequently has interpreted upon his desire to motivate high-tech companies to move or open offices in this so-called Silicon Alley.
New York City’s temptation apparently is overcoming its reputation for high taxes and costly real estate. Within the past 12 months or so, Manhattan added 2,700 IT jobs, state labor statistics showed.
View Google’s NYC Office Slideshow Here: