Google's purchase of $ 2.1 billion New York building is proof offices aren't dead

Jubilation swept through the real estate world in New York on Tuesday after Google announced its intention to buy the huge S...

Jubilation swept through the real estate world in New York on Tuesday after Google announced its intention to buy the huge St. John’s terminal at West Houston Street and the Hudson River for $ 2.1 billion early next year.

It has been hailed as the most expensive single building purchase in the city since before the pandemic – but that’s even better news for the city’s slowly increasing office occupancy rate, according to the broker who handled the sale of the property to its current owners.

Douglas Harmon, Cushman & Wakefield’s investment selling powerhouse, pointed out that the call option was built into Google’s lease three years ago with owners in St. John’s, a point of industrial age landmark that is being converted into an advanced digital workplace. The Post first reported such an option in December 2018.

Google was not obligated to exercise its right to purchase despite the expectations that it would. By choosing to do so, she made clear her commitment to extended and long-term office use, even though many employees continue to work from home.

The purchase expands Google’s burgeoning stronghold in Manhattan, where it already owns two smaller buildings in the Hudson Square area as well as the gigantic Chelsea Market and 111 Eighth Ave. in Chelsea. These agreements negotiated by Harmon totaled nearly $ 6 billion.

Google Office in Chelsea
Google is already very present in the city center thanks to its offices in Chelsea.
Getty Images

Three years ago, Harmon also negotiated the sale of St. John’s to the current owners Oxford Properties and the Canada Pension Plan. That’s when the “real impact” of Google’s coming to the region arrived, he said. “Everyone said, ‘Wow, look at Google’, when he quickly rented the whole building.

Oxford and its partner paid $ 750 million for what was then an empty shell. He has since spent a fortune to rethink and modernize it.

In some ways, the Google purchase announced on Tuesday is now disappointing, he said. Google always had the option in its current lease to buy the property – and it was always likely the company would exercise that, Harmon said.

It’s still a good signal for the movement back to the office, he said, as the local economy continues to slowly rise from the depths of the pandemic.

“What is much clearer now is that it is a matter of time for everyone back to their offices. It’s about when, not if.

An artist rendering of the entire new building
The purchase of the St. John’s terminal was not a big surprise, but its importance is enormous.
COOKFOX Architects

“There were questions about this six or nine months ago, but not anymore,” he said.

In fact, the occupancy rate of physical offices in Manhattan finally increased last week, from 19.5% to 28.1%, according to the widely-tracked Kastle Systems Return to Work Barometer, which records visits from key cards to enter office buildings.

There is still a long way to go before the office towers are once again about to fill with people. But the 8.7-point lead was the biggest such increase since the pandemic mainly emptied Manhattan’s half-billion square feet of office space.

New York’s jump last week was the biggest in the Top 10 markets, followed by Kastle.

Artist's representation of an outdoor relaxation area
An artist rendering shows a relaxation space that is part of the mammoth project.
COOKFOX Architects

Like Facebook and Amazon, Google said it would likely be adopt a “hybrid” system allow employees to work partly in offices and partly at home.

But Google clearly has no plans to leave its total 3.1 million square feet of Manhattan – including St. John’s when it is ready for occupancy in 2023 – to be used just for bars. espresso. The company announced this week that it would add 2,000 more employees in the city in addition to the 12,000 who already work there.

Mitchell Moss, professor of politics and planning at New York University, called the St. John’s deal “the biggest vote of confidence New York City can get.” It’s a signal to anyone with ambition that the city is well positioned for the 21st century and that the Lower West Side is New York’s intellectual center of gravity.

“Banks are [still] important, as are law firms and media companies, ”he said. “But there is only one Google.”

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Newsrust - US Top News: Google's purchase of $ 2.1 billion New York building is proof offices aren't dead
Google's purchase of $ 2.1 billion New York building is proof offices aren't dead
Newsrust - US Top News
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