Google plans to buy an office building in Manhattan for $2.1 billion, as the Alphabet Inc-owned search engine giant joins fellow technology companies in investing in prime real estate, even as hybrid work models become common.
The deal for St. John's Terminal site in New York City, which Google currently leases, will complete in the first quarter of next year, Chief Financial Officer Ruth Porat said in a blog post https://blog.google/inside-google/company-announcements/increasing-googles-investment-in-new-york on Tuesday. The space is expected to open by mid-2023.
Tech giants, with billions of dollars in cash reserves, have been taking advantage of lower office building prices across cities in the United States.
Amazon.com Inc's $978 million purchase of the Lord & Taylor building on Fifth Avenue last year and Facebook Inc's leasing of the Farley Building across from Madison Square Garden are seen as prime examples for Manhattan's real estate prospects.
Tech was the top industry for the second straight year in Manhattan leasing activity, brokerage CBRE Group Inc said in January this year.
While Big Tech is growing its footprint, others are vacating office spaces as pandemic-led remote working has prompted companies to reassess the need for real estate.
Financial firms, including JPMorgan Chase & Co, were looking to sublet big blocks of office space in Manhattan, according to media reports https://www.reuters.com/article/us-jpmorgan-realestate-idUSKCN2AU2KS from earlier this year.
Google's latest investment "builds upon our existing plans to invest more than $250 million this year in our New York campus presence," Porat said.
The investment comes at a time when most of its employees are working remotely and it has extended its voluntary return-to-office policy through January.