NEW YORK CITY—Google appears poised to jump on the $2 billion worth of Manhattan real estate it bought almost four years ago.
The Internet search giant will be able to move into as much as 500,000 square feet of office space at 111 Eighth Ave.—the almost three million-square-foot office building it bought in 2010 as its New York headquarters—by the first quarter of next year, according to Crain’s New York Business.
Google already occupies hundreds of thousands of square feet at the 18-story, 2.9 million-square-foot property. But as the company has had explosive growth across Manhattan, it has had to grab office space elsewhere because most of 111 Eighth Ave. is leased to other office tenants.
Eastdil Secured senior managing director—and uber investment sales broker—Doug Harmon tells GlobeSt.com that the move is a very logical one. “With rents at 111 8th Ave. and in the surrounding area rising at a rapid clip, as well as vacancy in the area being almost nil, it makes sense that Google would expand in its own building.”
Harmon sold the building to Google and also has sold both the neighboring Chelsea Market and 85th 10th Ave. –buildings in which Google also has offices—several times over. “It would not surprise me if they didn’t occupy the entire building at some point in the future,” he says.
Now, several of those companies, including Nike, Barnes & Noble and the ad firm Deutsche Inc., either have leases that are expiring or the firms are being paid by Google to exit and not to exercise their rights to renew their leases at the massive property. The departures will set the stage for what likely will be the largest expansion by Google since it acquired the building.
Avison Young principal Greg Kraut, tells GlobeSt.com, “It doesn’t surprise me that Google would take more space in its existing building. One cohesive campus life is very important to the company and the market outside of its building is red hot.”
“Google bought the building with the intent of controlling its own destiny and now it appears the company can make additional space available. In Midtown South, you really have only a handful of large blocks of space that can accommodate a google-esque size user for near-term occupancy, which has made it challenging for tenants to find large space at a reasonable rent.”
In recent years, Google has expanded its operations in the city at various locations, including 85 10th Ave. and Chelsea Market, office buildings that neighbor 111 Eighth Ave., because of the lack of available space there.