Google to Buy New York City Office Building for $2.1B
wsj.com
wsj.com
In a city like New York, living day to day life across many physical spaces is a core part the experience. In fact it's one of the major draws. The park is your front lawn, the cafe your breakfast nook, the theater your living room, and the office is... your office.
Remote work is great and all if that's not the lifestyle you want, and I think the pandemic has perhaps shown that many were living this lifestyle who didn't want it (especially if you were living the quasi-bedroom-city life of SFBay where you slept in SF but commuted out of the city daily for work), but Google embracing the deeply social and physically connected lifestyle of a functional city like New York isn't really a rejection of remote work being viable-- it's just accepting that to many, this type of city life is preferable and having a physical space to do your work provided by your employer is part of what makes that so.
why would someone rather not live in a countryside with expansive views and much lower stress and work remotely? (especially when tech like Starlink are going to remove the comms friction)
Each have their pros and cons, just like anything in life.
For one, in NYC I liked being able to walk everywhere and not owning a car.
Seriously, you couldn't pay me to live in the countryside.
You do you, I'll do me, and if we're lucky in life then we'll each find someone whose preferences are similar to our own to share a life with.
I love the countryside for weekend or longer trips when I'm not working and just want to relax all day or go for hikes.
I definitely see the appeal of owning a huge house and I might well consider it in the future, especially if I have children. But for now, I wouldn't know what to do with it. I own few things of the maximal quality I can afford. Even my city apartment is viewed as somewhat spartanic by some. So I prefer renting an entire place in different parts of the country with my girlfriend or friends for a couple of days at the time meanwhile living in my favorite part of the city where most everything I want to do or need is within 20 minutes walking distance.
The only stressed people are the ones coming from the suburbs to the city and back again every day and almost all of that stress is in the driving / transport part.
With two kids aged 10 and 12, I need access to a sports park for practices and games. I need space to park a car and roads wide enough to support them because I have a lot of things to haul. I need good public schools that don't break the bank to provide my kids the support and community they need.
Everything smooth and convenient about living as a single person in an urban area quickly turns into living life on Hard Mode for families. As our working adult population ages, cities need to evolve to meet these needs, or expect people to move out as they outgrow the lifestyle.
I'm sure there are folks who live in places like SF with families and ride around in heavy urban traffic with 2 kids on an electric cargo bike, but that's just not for many of us. We're happier and way more stress free in the suburbs or even in the rural areas working remotely.
You don't need all that sports gear, it's an arbitrary choice. The most popular sport in the world is played with just a small ball.
Drawing the line of what conveniences of modern at "city apartment" but not "suburbs" is extremely arbitrary (I am also guessing you are saying that as a single city-living male, so your view is theoretical and not borne of experience - just a thought.)
https://www.urban.org/policy-centers/cross-center-initiative...
I have to assume at least a few of those folks will be New Yorkers!
For what it's worth, though ... I'm not sure Google buying a building it already leases means anything other than perhaps they are bullish NYC real estate?
Pluses of living in New York include not needing to drive, most things being close by, and generally more widespread things like elevators. Old people can become less able to drive cars over time, or climb the stairs in a suburban home, or carry an SUV's worth of groceries.
They can walk to do their errands and meet friends.
They have an abundance of access to world-class medical care and specialists.
They have plenty of options for culture and entertainment.
There's no need to worry about shoveling a driveway or house/yard maintenance.
> I'm sure there are folks who live in places like SF with families and ride around in heavy urban traffic with 2 kids on an electric cargo bike, but that's just not for many of us.
Maybe riding a cargo bike with your kids on the back is unpleasant because the suburban lifestyle you are talking about has bled into American urban planning. If American cities were designed around people instead of cars many of the problems with urban life you are talking about would be moot.
I point this out because you thesis seems to be that getting older and having kids is orthogonal to urban life. However, historically, and in many cities outside of north America, this is not the case. If you look at the Netherlands for example, where a deliberate effort to plan cities around people has been ongoing for 50 years, many people don't own cars, their kids bike to school and use public spaces for recreation, and they can pickup furniture from Ikea on their cargo bikes while never touching a road built for cars.
Uhhhhh I think this is also what hkarthik was saying with his first paragraph.
> I think European and Asian cities have done a much better job at this.
.... Either way it sounds like we all agree, urban family life in US is subpar to our economic counterparts.
Asian and European cities did not make themselves more hospitable to families by adding wider roads and providing parking spaces for cars like op was talking about, they did it by doing the opposite, which is what I was commenting on.
As Douglas Adams said about NYC.
"In the summer it's too darn hot. It's one thing to be the sort of life form that thrives on heat and finds, as the Frastrans do, that the temperature range between 40,000 and 40,004 is very equable, but it's quite another to be the sort of animal that has to wrap itself up in lots of other animals at one point in your planet's orbit, and then find, half an orbit later, that your skin's bubbling."
Highways are built with “levels of service.” There are no level of service standards for pedestrians: sidewalk availability, trees, protection from car traffic, directness of routes, etc. Bike lanes often don’t exist or are blocked by parked cars or trash. This would never be accepted for a road.
"Who else benefits from the Dutch cycling infrastructure" https://www.youtube.com/watch?v=xSGx3HSjKDo
"Why Great Cities Let You (Easily!) Cycle to IKEA" https://www.youtube.com/watch?v=CgvYgxo6UY8
"8 to 80, people of all ages cycling in the Netherlands" https://www.youtube.com/watch?v=swqaAIkGtpA
As you can see, you don't need "wide roads". Quite the opposite, in fact. When safe cycling infrastructure is present, traffic shifts to cycling, because it's faster, cheaper and more pleasant. This makes roads less congested for your car trips. Widening roads does not have this effect, as additional lanes simply fill up with more traffic if there is no faster, safe alternative. Also, wide lanes encourage high speeds, and you don't want that around your kids.
This is debatable. Tokyo lacks widespread European-style cycling facilities and still has quite high bike mode share.
Low stress roads can fill much of the same gap, as long as they are well connected.
Anglo or Japanese culture, you can't really blaze down this street at 80kph without hitting something. https://1.bp.blogspot.com/_9Wu_fv0DMXQ/TEbn2b8Hu4I/AAAAAAAAA...
"Minor repair and maintenance of vehicles and similar equipment shall include brake part replacement, minor tune-up, change of oil and filter, repair of flat tire, lubrication and other similar operations."
"It shall be unlawful for any person to engage in, or permit others to engage in, minor vehicle repair or maintenance under any of the following circumstances: - Using tools not normally found in a residence;"
At least one of the reasons give is "not readily believable"
In other words. It's much easier to find likeminded people closeby in dense, populated cities.
>With two kids aged 10 and 12, I need access to a sports park for practices and games.
[0] Park access is WAY higher in US urban areas vs. the suburbs. I think having a car and driving skews your view of this.
>I need space to park a car and roads wide enough to support them because I have a lot of things to haul.
Again, I think you just like driving.
>I'm sure there are folks who live in places like SF with families and ride around in heavy urban traffic with 2 kids on an electric cargo bike, but that's just not for many of us. We're happier and way more stress free in the suburbs or even in the rural areas working remotely.
Yeah, you just like driving. Which is fine, but don't shit on our cities because of it. It's the driving that's the PROBLEM.
[0] https://www.brookings.edu/blog/the-avenue/2019/08/21/parks-m...
For example, A 5 mile radius city has x baseball diamonds in it. That’s x per every 78.5 square miles.
Let’s say the suburbs of that city are a ring of width 25 miles with y baseball diamonds in it. That makes the baseball diamond density of the suburbs y per every 1885 square miles.
I’ll spare you the math x=24y give or take.
Then I encourage you to go to google maps and look at America’s most notoriously crowded cities like nyc, sf, Boston, Chicago. There are dozens if not hundreds of baseball fields in city limits. Central park’s 26 fields alone would need to be offset by 624 in the suburbs to achieve equal density.
The “problem” is that most of those diamonds are difficult to drive to and park at, which is why OP considers them non-existent.
Basically everything that I needed as a kid was in walking distance. So from about the age of 7-8 I rarely needed to rely on my parents for anything, school/sports/friends/etc was all a less than a 30 minute walk away, and in turn, my parents never needed to plan around my schedule.
The caveat is that I didn't grow up in the US, where cities are usually sadly quite pedestrian hostile.
SF I'm with you. That city is just brutal on any family
The manhattan model is so strikingly effective that the rich have basically monopolized it. What needs to happen in many urban areas is to replicate this. Of course that would mean huge numbers of buybacks of individually owned blocks of city, an almost impossibility in US legal system practically speaking, even with eminent domain.
More importantly, this seems like it's mostly to hedge given that office building prices in NY are reaching new lows and they've already leased space in this building for a while.
That being said, Google does seem to snag big properties in a down market. They bought 111 Eighth Avenue back in 2010 around the financial crisis.
These companies hate not having their workers under their thumb, but won't come out and say it.
They know they will never have a hard time attracting workers. The 1 out of a thousand Rockstar might be another conversation, but the run of the mill worker--no problem.
They know they will be able to do whatever they want for years. I imagine Zuck, and the Google Boys, thanking their god, the dollar, they don't live in China.
(Xi is cracking down on certain big businesses. He, and his mates, don't like the extreme wealth disparity rearing it's head. He doesn't like companies that seem to exploit people. He doesn't like the fact that houses are rising in price so quickly, only the wealthy, and companies that buy up realestate, can afford them.
Xi is worried about the amount of credit certain businesses are taking on. I heard business debt is almost 3x ours. Business leverage that is, not governmental debt. This couldn't be right?
Xi is worried his unchecked Capitalistic experiment might come crashing down.)
Ok, back to employers salivating for the day they can demand everyone show up.
I've thought about it, and don't see an out. They will drag everyone back in. It doesn't matter if the tech works.
Maybe if we started using Global Warming as an excuse to not came back? All those extra cars on the roads couldn't be good.
(Sorry about bringing China in to the mix. I'm a tiny bit jealous just how quick they can move there. I liked city life when they were diverse, and then only for awhile. In all honesty, the only thing about city life I liked was the ratio of single women to men. I said it.)
I knew a lot of people like city life. I didn't. They say you are suspose to habituate to noise. I never did.
NYC isn't for me personally, but I absolutely see the appeal for others, and I can see why Google would want to expand proportionally there.
the problem is that offering remote work as an isolated option isn't feasible, because the cost of living when remote is lower (presumably), and thus, either they must be paid lower, or the office-working colleagues must be paid more to adjust for said cost of living.
I feel there would be social friction caused by this market-force mechanism.
It shouldn't matter where in the United States you live, NYC, Puerto Rico, Hawaii, Guam, or some forsaken place like Indiana, etc.. If you get your work done, you should have the same responsibilities and benefits.
Salaries are mostly controlled by market forces, opening up to remote work will result in a larger supply of potential employees, to include those who were previously not considered, but are good enough, and are willing to accept less than current Bay Area/coastal salaries.
I absolutely loathe going to the office.
Just because people like living in cities doesn't necessarily equate to people enjoying going to the office.
Only some 7 years ago, this very area was targeted to be the heart of a new stadium development for the Major League Soccer. It was going to be the West Village home....for NYC FC soccer franchise
It made sense: Pier40 city park, across the street from 550 washington St, was basically a decreipt property stuck in time as was the rest of the neighborhood. Then hurricane Sandy hit. The damage closed the Pier40 building for almost half a year. Some support did arrive from Sandy hurricane aid, which ironically did more to help the building than any other city park initiative.
Post-Sandy, Pier 40 park seemed destined to stumble along.
Then came the MSL. They were convinced they could sell the idea to the site: redevelop moribund Pier40 and 550 Washington St next to it. Everyone seemed excited.
However, they did not count on a surprise rival: parents of the little league baseball kids that regularly play at Pier40 turf fields (as does DUSC soccer kids). They protested. Loudly. Some of them likely well connected.
The project then died and moved elsewhere.
Now, some of those parents live in the area. They are now looking to benefit enormously from this Google development.
Kudos for them. They earned it
The parent's protesting, while self interested (for their kids) benefited many groups, particularly teenagers and immigrants that often play pickup sports at Pier 40 like touch football, ultimate, or soccer, without park permits (because they can't afford field permits).
So, this is good because Google will bring more security and investment into a forgotten NYC area.
Coincidentally, Pier 40 is also the on-ramp spot where the terrorist truck driver started his post-Halloween drive that killed 8 tourists in the pedestrian walkway. [1]
[1] https://abcnews.go.com/US/witness-describes-chaotic-scene-dr...
During less busy times this isn't an issue. The permits more or less act as guaranteed reservations.
https://www.nycgovparks.org/permits/field-and-court/request/...
> When to Apply
> If you are a member of an organized league, you must request a field or court for any formal use. Otherwise, our fields and courts are available to the public for informal use (pickup games). If you would like to reserve a field or court in advance at a specific time, you should make a request to ensure your uninterrupted use of the field.
On the other extreme end of things, one person hitting golf balls in a park can make the park unsafe for everyone else. At some point, the government institutes regulations to keep the park fun/safe/useful for the largest number of people.
Most of the people paying taxes, actually love the government for it. They dont hate it. This is because Permits effectively put a price to use the field, and it shouldnt be surprising that teenagers and immigrants are the ones with the least means to pay and also the ones paying little to no taxes.
So office workers are able to afford playing , while the immigrants and teenagers get kicked out.
Kids of affluent parents have no problems booking fields. But that's due to poor incentives: little kid coaches have a racket setting up nonprofit 503(c) ( which gives permitholders priority ).
If there is a problem with permits, it is there. Permits are subject to capture
> When to Apply
> If you are a member of an organized league, you must request a field or court for any formal use. Otherwise, our fields and courts are available to the public for informal use (pickup games). If you would like to reserve a field or court in advance at a specific time, you should make a request to ensure your uninterrupted use of the field.
No one is getting kicked out of fields. You don't need a permit for informal games.
You added this part.
But yes, I would be against reducing park space.
In this case I thought GP was celebrating the move for preserving park space, perhaps because this building isn't on the pier but just land? But I am not sure.
Building being sold does not reduce park space. It fact that building was an eyesore before redevelopment. Now, I contend it makes it more likely that thanks to the new tenants,Pier40 will have a major facelift
In a similar vein, the Olympics 2012 bid for NYC would've been where Hudson Yards is now, but was rejected over concerns about bursty event traffic (the area already hosts the convention center.) This location is even less able to handle bursty traffic, it's not near any express subway lines or commuter rail terminals.
The MLS soccer field was long canceled at that point because of Hurricane Sandy, it seems. (Dunno, I don't follow Chelsea real estate. I live in Brooklyn.)
this Google building is across the street.
People are reading way too much into this.
I hate cities but have to think that they're good investments. Global warming will likely change the economics of suburbs and people are having a lot less kids, making cities less unattractive.
Though it's pretty ironic that virtually all of the software Google uses and creates facilitates virtual work, yet they insist on an in-person setting.
Believe it or not, there are people out there who find NYC to be a desirable place to live. Not everyone wants to live in a suburb.
> If you insist on living in NYC for any reason
Strongly suggests that living in NYC is only something people do if they have reason to _insist_ on it, and not because it's just a place where people want to live.
Someone could just as well say that "If you insist on living in a suburb for any reason, then working from home is probably more comfortable..."
Therefore one could insist on living in each for any reason, hence my comment.
> If you live in NYC
> If you insist on living in NYC for any reason
Google just bought another building in Boulder Colorado 4 days ago as well: https://www.dailycamera.com/2021/09/16/google-buys-the-reve-...
The price for it isn't listed yet, but my guess is in the $60m to $100m range.
Google bought the building I sit in now for $131m 4 years ago: https://www.denverpost.com/2017/09/21/google-buys-land-build...
Indeed. Google of all companies should have embraced the future that was exposed by the pandemic, i.e. remote working.
This is even more the case given 100% of their products are based around the internet and so inherently facilitating remote work:
- Android
- Chrome
- Docs
- Forms
- Google Search
- Gmail
- Google Meet/Chat
- etc.
Until recently, where a couple days in the office with the TL and a whiteboard and I feel way more connected and competent.
Honestly, I've been going in voluntarily 3 days a week recently because I like it -- it's a distraction free environment where I can focus, have better Internet, get free food, not have to do dishes, listen to my kids argue, etc;
HN has recently become an echo chamber of remote work advocates. Not everyone wants to work remote. Not every job is amenable to it. And as a software engineer I'm far more productive in the office than at home.
I'm glad Google is still investing in our offices.
[0] https://blog.google/inside-google/company-announcements/furt...
Edit: updated to clarify this was some building in Manhattan. My original post was confused with another purchase (probably their purchase of the Port Authority building).
Edit 2: Better link
Edit: forgot they also have bought the Milk building opposite Chelsea Market across 15th St, it’s the building the air bridge connects to.
- Remote Only
- Remote First
- Remote Optional, Office First
- No Remote, Office Only
Companies (especially large ones) are not gonna just go from No Remote or Remote Optional to Remote Only. Change takes time even in the face of a shock to the system like COVID-19.
1. They think that in-person work still has value.
2. They want a physical presence in a world-class city.
3. They think the property will appreciate in value to sell later
4. They intend to rent it out and generate income that way.
Right now, the city government seems very happy with the fucked up real estate market and the continued gutting of city centers, so maybe they are correct.
Reversing this trend is one of the most important things New Yorkers can do to ensure the long-term health of their city. It's already been bled out pretty badly by the real estate investment vampires.
Besides that, these companies wield so much cash it seems like a safe bet to park a couple billion in. NYC real estate is arguably one of the safest bets in the modern era
I think you mean desk space at NYC has always been tight? Assuming so, yes can confirm.
Uh huh. That's what they all said about commercial property in Western city-centres before the pandemic ... "a sure bet" they said .... "rents only going up" they said....
Now you walk through all these CBDs and they are shadow of what they were before because people discovered working from home either full-time or near enough (3-4 days a week) and the need for large chunks of commercial property is now being brought into question.
Respectfully disagree. All it will take is 1 dirty bomb going off in manhattan to make parts of the city unhabitable or unsafe.
If and when that happens, it will be pandemic-level exodus. NIMBY and all that
There are leaps of logic and then there are Olympic somersaults.
I imagined that with the pandemic and prospects of less employees in the office things would slow down.
But someone at Google is betting on a rebound after covid of office space demand, company growth or just real estate appreciation.
1: https://www.nytimes.com/2010/12/03/nyregion/03building.html
Edit: if I were Google, and I existed in the present absence of serious regulation, I would wield the ability to manipulate opinion in the favour of my business strategy. I'm not sure if that's an offensive notion, and that's why this comment is controversial?
Even if google is not directly building new , the cash they are paying will directly or indirectly fuel additional real estate investment in new buildings by the seller or reduce their debt load enabling them to invest in new development in the future etc .
If they plan on continuing to use the space long term, then the total cost of renting it might be higher than owning it.
To the extent that investors use EBITDA to evaluate stocks, getting rent off the books is probably good, too.
Another example would be Sun, I think Oracle sold off their Boulder campus for nearly what they paid for the entire company.
Or are you not understanding why they don't "just" have everyone work remotely? If that's the case, then try to understand that despite what you may see online, it may be that many people don't want to work remote all the time. Moreover, working remotely will have deleterious effects on managerial promotion as that is heavily influenced by interpersonal relationships. And higher level managers are the ones that make such decisions. Even if remote work is better for the bottom line, remember that people make decisions to benefit themselves (across a variety of dimensions and timeframes), not their organization.
So if you're a cashcow like Google, you want your bags in anything and everything except dollars.
And buying commercial real estate in New York in the midst of lockdowns and remote work while the city is going through a commercial real estate market crash.. is good.
So the implication is that Google is having trouble with comms. As if they think people will meet in the office to plan and go home and code.
My guess is that big companies will run in a hybrid model while startups will be fully remote. But eventually all software development will be WFH only, that's for sure
Big Tech: "We will continue promoting remote work." Real estate prices plunge. Big Tech buys real estate on the cheap. Big Tech: "In-person work is important." Real estate prices surge. Big Tech profits.
You failed at step 2.
- Opening a NYC office: $2.1B + upkeep.
Even ignoring the environmental impacts directly and for commuting, at what point are we allowed to suggest that senior management at these large companies acts in an irrationally impulsive way? Why aren't the shareholders flagging this?
It feels like Google are spending $2.1B here for an ego trip to contrast Apple's open plan "Apple Park." Microsoft almost looks modest by comparison for their boring looking Seattle offices (land value not withstanding). But why any tech company is opening new offices now is mind-boggling.
>Why aren't the shareholders flagging this?
Look how well the stock has done since IPO. I think management knows what it is doing
"Google is already leasing the 1.3 million-square-foot waterfront building, a former freight terminal dubbed St. John’s Terminal, in the Hudson Square neighborhood. The company has an option to buy, which it said it plans to exercise in the first quarter of 2022."
It’s also an asset on their books at this point and probably cheaper to own than to rent in the long run.
Even if 70% (made up number) of Apple or Google or Microsoft employees work from home 100% of the time, they'd still all need multiple $2.1 Billion office spaces.
If you consider a typical Manhattan condo to cost $500,000 (in reality, probably higher), multiply that price by 2,000 employees and you've got a $1 billion space. I know it's flawed napkin math, but if that's anywhere near the ballpark, 2,000 is not a lot of employees in a single office for a company like Google.
Don't forget that real estate is also an investment vehicle. Even with upkeep and expenses (which are tax-advantaged for any business), large companies like Google have no problem becoming a landlord, and a company with a long-term strategy is going to consider NYC real estate to be a safe investment.
Are we sure this is true? It's easy to put $0 on a balance sheet under the real estate column. But there are certainly other costs (including opportunity costs).
I don't believe the article said anything about not letting employees work from home or forcing people to go to this office building or others in NYC. Yes, some employees will inevitably have to go into the office some of the time, but extrapolating an entire policy from a building purchase is a big leap.
> Even ignoring the environmental impacts directly and for commuting, at what point are we allowed to suggest that senior management at these large companies acts in an irrationally impulsive way? Why aren't the shareholders flagging this?
As other commenters have said, this is a rounding error on Alphabet's business, and real estate is relatively inconsequential in priority to managing its core businesses.
They probably agree that it's better to own the building you are currently leasing (as per the article) to reduce costs and get an additional gain from any appreciation. It's not really any different than if you were to purchase the house that you've been living in and renting for the last 10 years, saving a couple hundred bucks a month in the form of a low interest rate mortgage coupled with no property management company/expenses, and then being able to sell it later, capturing any gain in the process. It's a solid business move. Essentially free money and adding a nice big chunk of additional revenue when/if they sell with essentially no change in business. Something they wouldn't be able to do if they continued leasing.