NY BACK? GOOGLE IT!
Tech giant’s ‘buy’ boosts office hopes
Jubilation swept the New York realestate world on Tuesday over Google’s announcement that it plans to purchase the huge St. John’s Terminal building at West Houston Street and the Hudson River for $2.1 billion early next year.
It was hailed as the city’s priciest single-building purchase since before the pandemic — but it’s even better news for the slowly rising office-occupancy rate, according to the broker who handled the property’s sale to its current owners.
Cushman & Wakefield investment-sale powerhouse Douglas Harmon pointed out that the purchase option was built into Google’s lease agreement three years ago with the owners of St. John’s, an industrial-era landmark that’s being converted into an advanced digital workplace. The Post first reported such an option in December 2018.
Google wasn’t obligated to exercise its purchase right despite expectations that it would. In choosing to do so, it clearly signaled its commitment to long-term, expanded office use even while many employees continue to work from home.
The buy enlarges Google’s burgeoning stronghold in Manhattan, where it already owns two smaller Hudson Square-area buildings as well as the mammoth Chelsea Market and 111 Eighth Ave. in Chelsea.
Three years ago, Harmon also brokered the sale of St. John’s to current owners Oxford Properties and the Canada Pension Plan. That’s when the “real impact” of Google coming to the area came, he said. “Everybody said, ‘Wow, look at Google,’ ” when it promptly leased the whole building.
Oxford and its partner paid $750 million for what was then a vacant shell. It has since spent a fortune to redesign and modernize it.
In some ways, the purchase announced Tuesday is now anticlimactic, Harmon said. Google always had the option to purchase — and it was always likely it would.
Still, it’s a good signal for the back-tothe-office movement, he said.
“What’s much clearer now is it’s a matter of time for everybody back in their offices. It’s about when, not if,” he said. “There were questions about this six or nine months ago, but not anymore.”
In fact, Manhattan physical office occupancy finally budged upward last week, from 19.5 percent to 28.1 percent, according to Kastle Systems’ widely followed Back to Work Barometer, which tracks key-card swipes to enter office buildings.
There’s still a long way to go before office towers are anywhere near to being filled with people again. But the 8.7-point advance was the largest such increase since the pandemic mostly emptied Manhattan’s half-billion square feet of offices. Last week’s New York jump was the largest in the top 10 markets followed by Kastle.
Like Facebook and Amazon, Google has said it would likely adopt a “hybrid” system to allow employees to work partly in offices and partly from home.
But Google clearly doesn’t intend to let its total 3.1 million square feet of Manhattan space — including St. John’s, when it’s ready in 2023 — to be used for just espresso bars. The company said this week it will add 2,000 more employees in the city on top of 12,000 who already work there.