Google said it is buying a Manhattan office building for $2.1 billion, one of the clearest signals yet of big technology comnpanies’ growing appetite for office space, even as these firms embrace remote work.
The deal for the new building on Manhattan’s West Side is the most expensive sale of a single U.S. office building since the start of the pandemic—and one of the priciest in U.S. history, according to data company Real Capital Analytics.
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.
Google, Facebook Inc., Apple Inc., Amazon.com Inc. and other tech giants have emerged in recent years as some of the biggest renters and buyers of office space throughout the U.S. Tech companies are taking advantage of lower office building prices and putting billions of dollars in cash reserves to use.
Tech’s soaring real-estate demand has helped offset office space being dumped by large financial firms, from JPMorgan Chase & Co. to HSBC Holdings. Cities usually welcome the arrival of big tech companies for bringing an influx of well-paid employees and a boost to property-tax revenue, though these companies’ presence has also fueled concerns over rising commercial and apartment rents.
Google has embraced remote work more aggressively than many large-company peers, letting employees work at home since the spring of 2020. Sundar Pichai, chief executive of Google parent Alphabet Inc., said last month that the company would delay its return to the office until January. But the Manhattan office purchase underscores how the company views office space as an important part of its long-term strategy.
“We know that our employees, in order to really be happy and productive, need to collaborate,” said William Floyd, Google’s director of public policy and government affairs. “Because of that need to collaborate, we’ve been investing more and more in office space.”
Mr. Floyd said Google wants to offer employees the flexibility to work from home or in an office. The Manhattan building is currently under construction and expected to open in mid-2023.