Google Clicks On $1.8B for East Coast HQ

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

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

Dan Fasulo, managing director of Real Capital Analytics, calls the deal “a bullish sign for the market overall.” However, he tells GlobeSt.com that there are aspects of the transaction that make it a special case, including the property’s location in “a very hot submarket, the Meatpacking District,” its high-tech infrastructure and the buyer’s deep pockets.

What Fasulo finds especially exciting about the deal is its long-term implications for the city’s tech sector. Google reportedly is going to add space within 111 Eighth as it becomes available, a move likely to further boost the sector’s re-emergence here.

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

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.

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

The Wall Street Journal reported that Doug Harmon, senior managing director of Eastdil Secured, marketed the 15-story property, which takes up an entire city block between Eighth and Ninth avenues bordered by 15th and 16th streets. Eastdil reportedly was hired by an ownership group that includes the New York State Common Retirement Fund, Jamestown and Taconic Investment Partners.

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