SIL­I­CON VAL­LEY EAST: GOOGLE PLANS $1B EX­PAN­SION IN NEW YORK

Apple Magazine - - Summary -

Sil­i­con Val­ley is be­com­ing Sil­i­con Na­tion.

Google an­nounced Mon­day it will spend more than $1 bil­lion to build a new of­fice com­plex in New York City that will al­low the in­ter­net search gi­ant to dou­ble the num­ber of peo­ple it em­ploys there.

It is the tech in­dus­try’s lat­est ma­jor ex­pan­sion be­yond the Seat­tle-San Fran­cisco Bay cor­ri­dor. It fol­lows re­cent steps by Ama­zon and Ap­ple to set up large op­er­a­tions well out­side their home turf.

Tech com­pa­nies are “com­ing to the re­al­iza­tion that the Bay Area, which has tra­di­tion­ally been the ma­jor cen­ter of tech ac­tiv­ity in the U.S., is get­ting ex­pen­sive and crowded,” said An­drew Bar­tels, prin­ci­pal an­a­lyst at For­rester Re­search.

“A lot of ven­dors are com­ing to the re­al­iza­tion that ‘We can prob­a­bly find top tal­ent else­where at a more af­ford­able costs, and per­haps a bet­ter style of life for em­ploy­ees who may be strug­gling to make ends meet.’”

The North­east is at­trac­tive be­cause of its large con­cen­tra­tion of highly ed­u­cated young peo­ple. New York in par­tic­u­lar also of­fers prox­im­ity to Wall Street and al­ready has the sec­ond-big­gest con­cen­tra­tion of tech star­tups be­hind the Bay Area and a large base of tech em­ploy­ees, Bar­tels said. Face­book, based in Menlo Park, Cal­i­for­nia, has over 2,000 em­ploy­ees in New York.

Google, based in Moun­tain View, Cal­i­for­nia, will fash­ion a com­plex of more than 1.7 mil­lion square feet along the Hud­son River in the city’s West Vil­lage neigh­bor­hood, Ruth Po­rat, se­nior vice pres­i­dent and chief fi­nan­cial of­fi­cer, said in a blog post.

Google opened its first of­fice in New York nearly 20 years ago and now em­ploys 7,000 peo­ple in the city. Its foot­print is ex­pand­ing rapidly. Google said ear­lier this year that it would buy the Chelsea Mar­ket build­ing for $2.4 bil­lion and planned to lease more space at Pier 57, both along the Hud­son about a mile north of the newly an­nounced com­plex.

Po­rat tele­graphed Google’s plans to dou­ble down in New York a month ago dur­ing a tech­nol­ogy con­fer­ence.

“Not ev­ery­body — big sur­prise — wants to live in Sil­i­con Val­ley, so we want to make sure we have the op­por­tu­nity to build vi­brant cen­ters across the coun­try,” she said.

The news fol­lows Seat­tle-based Ama­zon’s an­nounce­ment a month ago that it would set up new head­quar­ters in New York’s Long Is­land City neigh­bor­hood and in Ar­ling­ton, Vir­ginia, cre­at­ing up­wards of 25,000 jobs in each lo­ca­tion.

But it’s not just the East Coast that is ben­e­fit­ing from the ex­pan­sion. Ap­ple, based in Cu­per­tino, Cal­i­for­nia, said last week that it plans to build a $1 bil­lion cam­pus in Austin, Texas, that will cre­ate at least 5,000 jobs.

Even as it looks else­where, Google is still buy­ing of­fices and draw­ing up plans to con­struct new cam­puses near its head­quar­ters, as it tries to build upon its suc­cess in in­ter­net search, email, web browsers, dig­i­tal map­ping, on­line video and smart­phone soft­ware to make money in other mar­kets such as health care and in­ter­net­con­nected homes.

The com­pany re­cently agreed to pay more than $100 mil­lion for a swath of land in down­town San Jose, Cal­i­for­nia, for a big new cam­pus that will in­clude em­ployee hous­ing.

Mi­crosoft like­wise is over­haul­ing its head­quar­ters in Red­mond, Wash­ing­ton, with an 18-build­ing con­struc­tion project that will make room for an ad­di­tional 8,000 work­ers. It cur­rently em­ploys about 47,000 in the area.

But the com­pe­ti­tion for pro­gram­mers is driv­ing salaries higher, which in turn is cat­a­pult­ing the av­er­age prices of homes in many parts of the San Fran­cisco Bay Area above $1 mil­lion. Many high-tech work­ers are choos­ing to live else­where, forc­ing ma­jor tech com­pa­nies to look in new places for the em­ploy­ees they need.

Google hopes to move into the new cam­pus by 2020. Po­rat said that the com­pany’s most re­cent in­vest­ments give it the abil­ity to more than dou­ble the num­ber of Google em­ploy­ees in New York over the next 10 years.

Tech com­pa­nies see New York as a way to gain a new per­spec­tive, one that is dif­fer­ent from that of Sil­i­con Val­ley, which can be seen as an “out-oftouch echo cham­ber,” Bar­tels said.

“New York­ers con­sider them­selves to be more in tune with the re­al­ity of life in U.S. ur­ban cen­ters and be­lieve this helps them in­no­vate prod­ucts and ser­vices that are more closely aligned with the needs of the av­er­age Amer­i­can,” he said.

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