Google’s $2.1 billion NYC building purchase is proof that offices aren’t dead

Jubilation swept the New York actual property world on Tuesday over Google’s announcement that it plans to purchase the large St. John’s Terminal building at West Houston Street and the Hudson River for $2.1 billion early subsequent year.

It was hailed as the town’s priciest single-building purchase since earlier than the pandemic — but it surely’s even higher information for the town’s slowly rising office occupancy rate, in keeping with the dealer who dealt with the property’s sale to its present homeowners.

Cushman & Wakefield investment-sale powerhouse Douglas Harmon identified that the purchase possibility was constructed into Google’s lease settlement three years in the past with the homeowners of St. John’s, an industrial-era landmark that’s being transformed into a sophisticated digital workplace. The Post first reported such an possibility in December 2018. 

Google wasn’t obligated to train its purchase proper regardless of expectations that it might. In selecting to take action, it clearly signaled its dedication to long-term, expanded office use even whereas many workers proceed to make money working from home.

The purchase enlarges Google’s burgeoning Manhattan stronghold, the place it already owns two smaller Hudson Square-area buildings in addition to the mammoth Chelsea Market and 111 Eighth Ave. in Chelsea.

Google already has a big presence downtown because of its Chelsea offices.
Getty Images

Three years in the past, Harmon additionally brokered the sale of St. John’s to present homeowners Oxford Properties and the Canada Pension Plan. That’s when the “real impact” of Google coming to the world got here, he stated. “Everybody said, ‘Wow, look at Google,”  when it promptly leased the entire building.

In some methods, the bought introduced Tuesday is now anticlimactic, he stated. Google at all times had the choice in its present lease to purchase the property — and it was at all times doubtless the company would train it, Harmon stated.

Still, it’s sign for the back-to-the-office motion, he stated, because the native economic system continues its gradual climb out of the depths of the pandemic.

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

The purchase of the St. John’s Terminal building didn’t come as a giant shock, however its significance is large.
COOKFOX architects

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

In truth, Manhattan bodily office occupancy lastly budged upward final week, from 19.5 % to twenty-eight.1 %, in keeping with Kastle Systems’ extensively adopted Back-to-Work Barometer that retains monitor of key card swipes to enter office buildings.

There’s nonetheless an extended technique to go earlier than office towers are anyplace close to to being crammed with individuals once more. But the 8.7-point advance was the most important such enhance because the pandemic largely emptied Manhattan’s half-billion sq. ft of offices.

Last week’s New York leap was the most important within the Top 10 markets adopted by Kastle.

An artist’s rendering reveals a rest space that’s a part of the mammoth project.
COOKFOX architects

Like Facebook and Amazon, Google has stated it might doubtless undertake a “hybrid” system to permit workers work partly in offices and partly from house.

But Google clearly doesn’t intend to let its complete 3.1 million sq. ft of Manhattan house — together with St. John’s when it’s prepared for occupancy in 2023 — for use for simply espresso bars. The company stated this week it’s going to add 2,000 extra workers within the metropolis on prime of 12,000 who already work there.

Mitchell Moss, professor of coverage and concrete planning at NYU, known as the St. John’s deal “the best vote of confidence that New York City may get. It’s a sign to each bold individual that the town is well-positioned for the twenty first Century and that the decrease West Side is the mental middle of gravity for NYC.

“The banks are [still] important as are the law firms and media companies,” he stated. “But there is only one Google.”

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