NEW YORK CITY-In what would be the largest single-asset sale inthe US this year, Google reportedly has signed a contract to buythe 2.9-million-square-foot office property at 111 Eighth Ave.,where it already occupies 500,000 square feet of East Coastheadquarters space. The $1.8-billion deal, rumored for the pastseveral weeks, is expected to close by year’s end, according topublished reports.

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The tech giant has put down a substantial deposit on its 111Eighth purchase, the New York Times and New YorkPost both reported late Thursday. Google’s balance sheetcurrently has about $11 billion in cash along with $22.1 billion inmarketable securities, according to the Mountain View, CA-basedcompany’s third-quarter financial statement.

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Dan Fasulo, managing director of Real Capital Analytics, callsthe deal “a bullish sign for the market overall.” However, he tellsGlobeSt.com that there are aspects of the transaction that make ita special case, including the property’s location in “a very hotsubmarket, the Meatpacking District,” its high-tech infrastructureand the buyer’s deep pockets.

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What Fasulo finds especially exciting about the deal is itslong-term implications for the city’s tech sector. Googlereportedly is going to add space within 111 Eighth as it becomesavailable, a move likely to further boost the sector’s re-emergencehere.

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At Thursday’s launch ceremony for the first phase of theAlexandria Center for Life Science, Mayor Michael Bloomberg alludedto the Google deal and noted that New York City has surpassedBoston in venture capital investment for Internet startups.Commenting on Bloomberg’s remarks, Fasulo says, “Google is going tohire all those smart young kids, and then a lot of them are goingto go off and start their own ventures.”

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A Google spokesman declines to comment on published reports.Spokesmen for CB Richard Ellis and law firm Fried, Frank, Harris,Shriver & Jacobson LLP, both of which negotiated for the buyer,tell GlobeSt.com their companies cannot discuss the deal.

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CBRE’s team included global chairman Stephen Siegel and vicechairmen Darcy Stacom and William Shanahan. Fried Frank’s RobertSorin handled the transaction on behalf of Google.

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The Wall Street Journal reported that Doug Harmon,senior managing director of Eastdil Secured, marketed the 15-storyproperty, which takes up an entire city block between Eighth andNinth avenues bordered by 15th and 16th streets. Eastdil reportedlywas hired by an ownership group that includes the New York StateCommon Retirement Fund, Jamestown and Taconic InvestmentPartners.

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The group acquired the 78-year-old 111 Eighth, originallydeveloped as the headquarters of the Port Authority of New York andNew Jersey, in 1998. The owners then repositioned it to appeal toits current tenant base, which includes Nike, Lifetime Networks andbarnesandnoble.com along with Google.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.