Back in 2000, Google’s New York outpost consisted of one salesperson working out of a Starbucks on 86th Street. Today, the company announced that it closed the deal to buy an eighteen-story office building at 111 Eighth Avenue, otherwise known as Googleplex East, for $1.9 billion, paid in cash. Taxes on the sale will net $7 million for the state and $46,462,500 for New York City, as well as over a billion dollars in profit for the sellers, Jamestown, New York State Common Retirement Fund and Taconic Partners. Bonus backlash, the real estate edition? The 2,000 Google employees (Facebook prefers to think of them as future hires) working in the 550,000-square-foot space the company currently occupies work in both sales and engineering. What justifies this kind of deal in a down economy? Google has plenty of cash to burn, but the appeal probably lies in the fiber-optic cables transmitting high-speed data that lie under the former Port Authority building, primarily the “fiber highway” along Eighth Avenue/Hudson Street and Ninth Avenue that’s considered one of the most vital connection points to the world’s telecommunications networks. It’s the same reason that high-tech companies like Verizon, Sprint, and Level 3 Communications, the company that streams Netflix to your laptop, also have offices in the building — and can probably expect a rent hike from their new landlord.
Google’s Christmas Gift to NYC Real Estate: $1.9 Billion in Cash [Curbed]
Investing In New York [Official Google Blog]