Business

Large tech helps save Manhattan’s actual property market

Google’s $ 2.1 billion deal to purchase an office building in Manhattan is helping Silicon Alley’s rapid growth despite the increase in remote work and the decline in New York’s office market.

Google buys the former St. John’s Terminal on the West Side of Manhattan, expanding its presence in the city center. The company had rented the 1.3 million square meter building but exercised a purchase option. According to commercial realtors, the price is the highest paid for a US office building since 2018.

It also signals the continued advance of the Big Three tech companies into Manhattan as the companies gobble up massive new buildings and entire neighborhoods to accommodate 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 grow as businesses look for more space.

“It’s certainly a positive sign,” said Danny Mangru, director of research for the New York and tri-state region of Savills.

Google’s latest deal brings the total Manhattan floor space to over 3.1 million square feet, brokers said. Along with the new building, it also bought 111 8th Avenue – where it occupies over 800,000 square feet – as well as the nearby Chelsea Market building.

An exterior view of the St. John’s Terminal building can be seen in New York on September 22, 2021. Google announced on September 21, 2021 that it would buy an office building in New York City for $ 2.1 billion, confirming its foray into America’s largest city despite the pandemic trend towards teleworking.

Hit by Betancur | AFP | Getty Images

Facebook has bought space in Hudson Yards and is renting 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 looking for more, brokers said.

Amazon is also expanding rapidly in Manhattan, although it has canceled plans for a massive “HQ2” in Long Island City after political backlash. With the purchase of the former Lord & Taylor department store building for $ 978 million, Amazon now has nearly 2 million square feet.

Big Tech’s rental activity has helped to spark early signs of recovery in the Manhattan office market, which has been badly hit by the Covid-19 pandemic and urban exodus. Letting volume in August more than doubled from July, with 1.46 million square feet of office space leasing in Midtown, according to Colliers International.

But while technology is spearheading the city’s new leasing activity, the broader market has a long recovery ahead of it. According to a survey by the Partnership for New York City, only about 23% of Manhattan workers returned to the office at the end of August. The Partnership survey found that 76% of workers plan to be back in the office in early 2022. There are approximately 86 million square feet of available office space in Manhattan, 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 have a rotating or “hybrid” office plan that allows employees to work remotely for part of the week.

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