Google said it’s going to splash out $2.1 billion on a New York City office building even as it moves towards a permanent, “hybrid work” approach that will see many of its employees work remotely much of the time.
Google’s purchase of the St. John’s Terminal building in Hudson Square, Manhattan, is the largest price anyone has paid for an office building in the U.S. since the COVID-19 pandemic began last year, according to data from Real Capital Analytics.
The company already leases the building and will exercise an option it has to purchase it, with the deal expected to close by the first quarter of next year. The decision to purchase the building was announced in a blog post penned by Google Chief Financial Officer Ruth Porat, who said the St. John’s Terminal building will serve as the “anchor” of a new campus the company is building in the area.
For New York City, the deal is a boost to the area’s commercial real estate market at a time when the economic recovery has wobbled a little due to many employers, including Google, postponing their plans to return to the office due to the resurgence of the delta variant of COVID-19. Google has delayed its office reopening until January 2022 and expects that around 20% of its employees will continue to work remotely even after that date.
Like many technology firms, Google has thrived during the pandemic. Its revenues have grown substantially, allowing it to invest in real estate and various other initiatives as it plans for the post-COVID era. Google has benefited due to the growing reliance on Internet services to enable remote work, study and entertainment.
The search engine and cloud computing services provider will open its new campus centered on St. John’s Terminal at 550 Washington Street by mid-2023, Porat said. The completed campus will encompass 1.7 million square feet of office space that will house Google’s sales and partnerships teams.
St. John’s Terminal began life as a freight facility and is being completely renovated, with Google in the process of transforming it into a “highly sustainable, adaptable and connected building,” Porat said. It will feature a biophilic design that helps to connect the people working there more closely to nature, with numerous open outdoor spaces planned.
Google will also connect the campus to the waterfront, and there are plans to offset 100% of its carbon, in line with Google’s ambitious environmental sustainability goals.
Separately, Google said it would invest $250 million into New York City real estate as part of its broader, $7 billion U.S. expansion plans announced earlier this year. It ultimately plans to expand its workforce in the city from 12,000 employees to 14,000 over the next five years.