[HN Gopher] Google to Buy New York City Office Building for $2.1B
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Google to Buy New York City Office Building for $2.1B
Author : jbredeche
Score : 111 points
Date : 2021-09-21 12:19 UTC (10 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| Someone1234 wrote:
| - Letting employees work from home: -$0 (savings on building
| ownership, HVAC, security, extra staffing, power, etc).
|
| - Opening a NYC office: $2.1B + upkeep.
|
| Even ignoring the environmental impacts directly and for
| commuting, at what point are we allowed to suggest that senior
| management at these large companies acts in an irrationally
| impulsive way? Why aren't the shareholders flagging this?
|
| It feels like Google are spending $2.1B here for an ego trip to
| contrast Apple's open plan "Apple Park." Microsoft almost looks
| modest by comparison for their boring looking Seattle offices
| (land value not withstanding). But why any tech company is
| opening new offices _now_ is mind-boggling.
| dan_quixote wrote:
| > Letting employees work from home: -$0
|
| Are we sure this is true? It's easy to put $0 on a balance
| sheet under the real estate column. But there are certainly
| other costs (including opportunity costs).
| dave5104 wrote:
| It's certainly not, since Google employees receive(d?) a home
| office budget to buy office furniture and supplies. It's
| still probably cheaper than running an office, but far from
| $0.
| bhahn wrote:
| > Letting employees work from home: -$0 (savings on building
| ownership, HVAC, security, extra staffing, power, etc).
|
| I don't believe the article said anything about not letting
| employees work from home or forcing people to go to this office
| building or others in NYC. Yes, some employees will inevitably
| have to go into the office some of the time, but extrapolating
| an entire policy from a building purchase is a big leap.
|
| > Even ignoring the environmental impacts directly and for
| commuting, at what point are we allowed to suggest that senior
| management at these large companies acts in an irrationally
| impulsive way? Why aren't the shareholders flagging this?
|
| As other commenters have said, this is a rounding error on
| Alphabet's business, and real estate is relatively
| inconsequential in priority to managing its core businesses.
| paulpauper wrote:
| $2 billion for google is a rounding error
|
| >Why aren't the shareholders flagging this?
|
| Look how well the stock has done since IPO. I think management
| knows what it is doing
| UncleMeat wrote:
| Google _is_ letting people work from home (in most orgs). But
| this isn 't the majority of the company and Google is still
| hiring like crazy.
| throwaways885 wrote:
| This is the thing. WFH at Google is an option now, but the
| uptake hasn't been as huge as people here might expect.
| ugjka wrote:
| They are not opening anything
|
| "Google is already leasing the 1.3 million-square-foot
| waterfront building, a former freight terminal dubbed St.
| John's Terminal, in the Hudson Square neighborhood. The company
| has an option to buy, which it said it plans to exercise in the
| first quarter of 2022."
| sailfast wrote:
| Even if most of your folks work from home you need a lot of
| square footage for gathering spaces, conference rooms, and
| phone booths when people do get together. (Which, they should
| when rates of infection get under control, because it's key to
| remote productivity).
|
| It's also an asset on their books at this point and probably
| cheaper to own than to rent in the long run.
| cronix wrote:
| > Why aren't the shareholders flagging this?
|
| They probably agree that it's better to own the building _you
| are currently leasing_ (as per the article) to reduce costs and
| get an additional gain from any appreciation. It 's not really
| any different than if you were to purchase the house that
| you've been living in and renting for the last 10 years, saving
| a couple hundred bucks a month in the form of a low interest
| rate mortgage coupled with no property management
| company/expenses, and then being able to sell it later,
| capturing any gain in the process. It's a solid business move.
| Essentially free money and adding a nice big chunk of
| additional revenue when/if they sell with essentially no change
| in business. Something they wouldn't be able to do if they
| continued leasing.
| guyzero wrote:
| Look at $GOOG's one-year performance versus its peers and I
| think you'll have the answer why shareholder aren't
| complaining.
| dangus wrote:
| Most of us can't fathom how many employees companies like
| Google and Apple have.
|
| Even if 70% (made up number) of Apple or Google or Microsoft
| employees work from home 100% of the time, they'd still all
| need _multiple_ $2.1 Billion office spaces.
|
| If you consider a typical Manhattan condo to cost $500,000 (in
| reality, probably higher), multiply that price by 2,000
| employees and you've got a $1 billion space. I know it's flawed
| napkin math, but if that's anywhere near the ballpark, 2,000 is
| not a lot of employees in a single office for a company like
| Google.
|
| Don't forget that real estate is also an investment vehicle.
| Even with upkeep and expenses (which are tax-advantaged for any
| business), large companies like Google have no problem becoming
| a landlord, and a company with a long-term strategy is going to
| consider NYC real estate to be a safe investment.
| throwaway1777 wrote:
| There are even some tech projects that require specialized
| hardware which are easier to do in the office/lab. Offices
| will never totally go away and you're right that this space
| may seem big but it's not that big in the scheme of google.
| neonate wrote:
| https://archive.is/4T3hv
| microtherion wrote:
| I guess in light of recent news, they decided they needed an East
| Coast Halloween Store to guarantee geographical redundancy if
| something should happen to the West Coast one.
| kyrra wrote:
| Googler, opinions are my own.
|
| Google just bought another building in Boulder Colorado 4 days
| ago as well: https://www.dailycamera.com/2021/09/16/google-buys-
| the-reve-...
|
| The price for it isn't listed yet, but my guess is in the $60m to
| $100m range.
|
| Google bought the building I sit in now for $131m 4 years ago:
| https://www.denverpost.com/2017/09/21/google-buys-land-build...
| UncleOxidant wrote:
| Google not jumping on the WFH bandwagon.
| diebeforei485 wrote:
| I suspect this means they will be downsizing in SF. NYC has a
| far, far more reasonable tax regime.
| Wonnk13 wrote:
| I think this is Ruth shifting cost structures moreso than any
| indication about in office work culture. I believe they were
| already renting, so someone probably did the math and realized
| they'd come out ahead in the medium to long term. Google isn't
| leaving NYC anytime soon.
| tamade wrote:
| Not hard to understand. Real estate in a tier 1 city is the
| ultimate NFT.
| francisofascii wrote:
| Here is a cynical take...
|
| Big Tech: "We will continue promoting remote work." Real estate
| prices plunge. Big Tech buys real estate on the cheap. Big Tech:
| "In-person work is important." Real estate prices surge. Big Tech
| profits.
| KptMarchewa wrote:
| >Real estate prices plunge.
|
| You failed at step 2.
| francisofascii wrote:
| Commercial office real estate.
| quartz wrote:
| To the folks who think this is some kind of rejection of remote
| work: even in a remote work era, having physical offices in
| cities makes a ton of sense so long as large numbers of people
| want to live there.
|
| In a city like New York, living day to day life across many
| physical spaces is a core part the experience. In fact it's one
| of the major draws. The park is your front lawn, the cafe your
| breakfast nook, the theater your living room, and the office
| is... your office.
|
| Remote work is great and all if that's not the lifestyle you
| want, and I think the pandemic has perhaps shown that many were
| living this lifestyle who didn't want it (especially if you were
| living the quasi-bedroom-city life of SFBay where you slept in SF
| but commuted out of the city daily for work), but Google
| embracing the deeply social and physically connected lifestyle of
| a functional city like New York isn't really a rejection of
| remote work being viable-- it's just accepting that to many, this
| type of city life is preferable and having a physical space to do
| your work provided by your employer is part of what makes that
| so.
| sjg007 wrote:
| Remote workers could also fly into NYC for meetings and such.
| hkarthik wrote:
| I think this misses the mark on the fact that we now have an
| aging population in the USA, and an aging population has
| different needs when it comes to raising families that the
| urban lifestyle simply hasn't evolved fast enough to support.
| Urban areas in the USA like NYC are still the playground of the
| young and unattached. I think European and Asian cities have
| done a much better job at this.
|
| With two kids aged 10 and 12, I need access to a sports park
| for practices and games. I need space to park a car and roads
| wide enough to support them because I have a lot of things to
| haul. I need good public schools that don't break the bank to
| provide my kids the support and community they need.
|
| Everything smooth and convenient about living as a single
| person in an urban area quickly turns into living life on Hard
| Mode for families. As our working adult population ages, cities
| need to evolve to meet these needs, or expect people to move
| out as they outgrow the lifestyle.
|
| I'm sure there are folks who live in places like SF with
| families and ride around in heavy urban traffic with 2 kids on
| an electric cargo bike, but that's just not for many of us.
| We're happier and way more stress free in the suburbs or even
| in the rural areas working remotely.
| baron816 wrote:
| So what about the population aging--there will always be
| people in their 20s and 30s and older single people too.
| Cities will still appeal to them. The point of the op is now
| people have a choice of which city to live in. Lots of folks
| will choose NYC and commuting because that's the lifestyle
| they want. Lots of others will choose to live in the suburbs
| and have kids. The thing now is that your lifestyle doesn't
| have to correspond directly to your job.
| talentedcoin wrote:
| The number of people over 65 living in the USA is expected
| to double over the next 40 years:
|
| https://www.urban.org/policy-centers/cross-center-
| initiative...
|
| I have to assume at least a few of those folks will be New
| Yorkers!
|
| For what it's worth, though ... I'm not sure Google buying
| a building it already leases means anything other than
| perhaps they are bullish NYC real estate?
| bobthepanda wrote:
| There's also quite a lot of old New Yorkers still
| resident there, though.
|
| Pluses of living in New York include not needing to
| drive, most things being close by, and generally more
| widespread things like elevators. Old people can become
| less able to drive cars over time, or climb the stairs in
| a suburban home, or carry an SUV's worth of groceries.
| iknowstuff wrote:
| "Why We Won't Raise Our Kids in Suburbia (and moved to the
| Netherlands instead)"
| https://www.youtube.com/watch?v=ul_xzyCDT98
|
| "Who else benefits from the Dutch cycling infrastructure"
| https://www.youtube.com/watch?v=xSGx3HSjKDo
|
| "Why Great Cities Let You (Easily!) Cycle to IKEA"
| https://www.youtube.com/watch?v=CgvYgxo6UY8
|
| "8 to 80, people of all ages cycling in the Netherlands"
| https://www.youtube.com/watch?v=swqaAIkGtpA
|
| As you can see, you don't need "wide roads". Quite the
| opposite, in fact. When safe cycling infrastructure is
| present, traffic shifts to cycling, because it's faster,
| cheaper and more pleasant. This makes roads less congested
| for your car trips. Widening roads does not have this effect,
| as additional lanes simply fill up with more traffic if there
| is no faster, safe alternative. Also, wide lanes encourage
| high speeds, and you don't want that around your kids.
| bobthepanda wrote:
| > When safe cycling infrastructure is present
|
| This is debatable. Tokyo lacks widespread European-style
| cycling facilities and still has quite high bike mode
| share.
|
| Low stress roads can fill much of the same gap, as long as
| they are well connected.
| gowld wrote:
| Guess how many children live in NYC.
|
| You don't need all that sports gear, it's an arbitrary
| choice. The most popular sport in the world is played with
| just a small ball.
| xyzelement wrote:
| Technically, you don't need _anything._ People evolved
| living naked outdoors, subsisting on berries.
|
| Drawing the line of what conveniences of modern at "city
| apartment" but not "suburbs" is extremely arbitrary (I am
| also guessing you are saying that as a single city-living
| male, so your view is theoretical and not borne of
| experience - just a thought.)
| walshemj wrote:
| Well I believe you can play cricket in central park
| hrid88ry4g wrote:
| Some might contend it is popular not because of the quality
| of the game but rather its accessibility.
| thethethethe wrote:
| > I need space to park a car and roads wide enough to support
| them because I have a lot of things to haul.
|
| > I'm sure there are folks who live in places like SF with
| families and ride around in heavy urban traffic with 2 kids
| on an electric cargo bike, but that's just not for many of
| us.
|
| Maybe riding a cargo bike with your kids on the back is
| unpleasant because the suburban lifestyle you are talking
| about has bled into American urban planning. If American
| cities were designed around people instead of cars many of
| the problems with urban life you are talking about would be
| moot.
|
| I point this out because you thesis seems to be that getting
| older and having kids is orthogonal to urban life. However,
| historically, and in many cities outside of north America,
| this is not the case. If you look at the Netherlands for
| example, where a deliberate effort to plan cities around
| people has been ongoing for 50 years, many people don't own
| cars, their kids bike to school and use public spaces for
| recreation, and they can pickup furniture from Ikea on their
| cargo bikes while never touching a road built for cars.
| capitainenemo wrote:
| Another thing to keep in mind is that europe in general and
| the netherlands in particular has a far more mild climate
| than the east coast of the united states.
|
| As Douglas Adams said about NYC.
|
| "In the summer it's too darn hot. It's one thing to be the
| sort of life form that thrives on heat and finds, as the
| Frastrans do, that the temperature range between 40,000 and
| 40,004 is very equable, but it's quite another to be the
| sort of animal that has to wrap itself up in lots of other
| animals at one point in your planet's orbit, and then find,
| half an orbit later, that your skin's bubbling."
| my_usernam3 wrote:
| > However, historically, and in many cities outside of
| north America, this is not the case
|
| Uhhhhh I think this is also what hkarthik was saying with
| his first paragraph.
|
| > I think European and Asian cities have done a much better
| job at this.
|
| .... Either way it sounds like we all agree, urban family
| life in US is subpar to our economic counterparts.
| thethethethe wrote:
| Yeah I saw that, though I found it confusing considering
| the complaints op had with American cities later in the
| post, which I was responding to.
|
| Asian and European cities did not make themselves more
| hospitable to families by adding wider roads and
| providing parking spaces for cars like op was talking
| about, they did it by doing the opposite, which is what I
| was commenting on.
| oceanplexian wrote:
| Cities are also a nightmare if you want to get into a lot of
| hobbies. For example I like building and modifying cars, and
| you can forget about renting a private garage at a reasonable
| price in most large cities. The same goes for woodworking,
| machining, most motorsports, boating, RC airplanes and
| drones, etc.
| Lammy wrote:
| In some places it's even illegal to work on your car in a
| private garage: https://code-
| enforcement.saccounty.net/Programs/Pages/AutoRe...
|
| "Minor repair and maintenance of vehicles and similar
| equipment shall include brake part replacement, minor tune-
| up, change of oil and filter, repair of flat tire,
| lubrication and other similar operations."
|
| "It shall be unlawful for any person to engage in, or
| permit others to engage in, minor vehicle repair or
| maintenance under any of the following circumstances: -
| Using tools not normally found in a residence;"
| walshemj wrote:
| Sounds like an ordinance a "karren" would draft.
|
| At least one of the reasons give is "not readily
| believable"
| bobthepanda wrote:
| Ban lists of activities like this are also not exactly
| hard to find in suburban HOAs, though, so YMMV.
| hellbannedguy wrote:
| Google, Facebook, and the other monopolies are itching to get
| their workers back. (Little Zuck is buying buildings in San
| Francisco like I buy beer.)
|
| These companies hate not having their workers under their
| thumb, but won't come out and say it.
|
| They know they will never have a hard time attracting workers.
| The 1 out of a thousand Rockstar might be another conversation,
| but the run of the mill worker--no problem.
|
| They know they will be able to do whatever they want for years.
| I imagine Zuck, and the Google Boys, thanking their god, the
| dollar, they don't live in China.
|
| (Xi is cracking down on certain big businesses. He, and his
| mates, don't like the extreme wealth disparity rearing it's
| head. He doesn't like companies that seem to exploit people. He
| doesn't like the fact that houses are rising in price so
| quickly, only the wealthy, and companies that buy up
| realestate, can afford them.
|
| Xi is worried about the amount of credit certain businesses are
| taking on. I heard business debt is almost 3x ours. Business
| leverage that is, not governmental debt. This couldn't be
| right?
|
| Xi is worried his unchecked Capitalistic experiment might come
| crashing down.)
|
| Ok, back to employers salivating for the day they can demand
| everyone show up.
|
| I've thought about it, and don't see an out. They will drag
| everyone back in. It doesn't matter if the tech works.
|
| Maybe if we started using Global Warming as an excuse to not
| came back? All those extra cars on the roads couldn't be good.
|
| (Sorry about bringing China in to the mix. I'm a tiny bit
| jealous just how quick they can move there. I liked city life
| when they were diverse, and then only for awhile. In all
| honesty, the only thing about city life I liked was the ratio
| of single women to men. I said it.)
| alonsonic wrote:
| How are cities like NYC not diverse?
| hellbannedguy wrote:
| In all honesty, the only thing I liked about city life was
| the ratio of single women to men. And I know that sounds
| shallow. I wrote diversity out of habit? Conditioning? I
| tried to update my post, but the system wouldn't let me.
|
| I knew a lot of people like city life. I didn't. They say
| you are suspose to habituate to noise. I never did.
| tootie wrote:
| Not really. I live in NYC and my company has an office in NYC
| and still never go in and don't care if I ever do. We're likely
| going to retain a space once our lease is up, but it's going to
| be modeled very differently. Our business has some physical co-
| location requirements for certain aspects, but no one doing
| tech work needs to do anything beyond meetings. And we are all
| 100% comfortable doing them over video. If we want a rallying
| spot for once or twice a year jamborees, we could do it at a
| hotel or a much smaller permanent space. There's no reason
| Google would need to pay $2B unless they were rejecting remote
| work.
| morelikeborelax wrote:
| Ah yes your anecdotal experience clearly means one of the
| largest companies in the world is rejecting remote work by
| buying an office they already lease.
| bobthepanda wrote:
| Google has quite a bit of headcount in NY (12,000 now, up
| from 7,000 in 2018 according to the article) and at that
| current pace of expansion they could probably still use the
| space even if only a percentage of employees still work in
| office.
|
| More importantly, this seems like it's mostly to hedge given
| that office building prices in NY are reaching new lows and
| they've already leased space in this building for a while.
| devrand wrote:
| I'm not sure that last part is true. The building hasn't
| been delivered yet. Google did announce the lease a couple
| years ago, but I doubt that lease has commenced as the
| building is still under construction.
|
| That being said, Google does seem to snag big properties in
| a down market. They bought 111 Eighth Avenue back in 2010
| around the financial crisis.
| pbuzbee wrote:
| As a Googler who wants to work remote, in my personal opinion I
| think this makes a ton of sense. Focus on providing offices in
| major urban areas for people who want an urban lifestyle, and
| then offer remote work for people who don't.
|
| NYC isn't for me personally, but I absolutely see the appeal
| for others, and I can see why Google would want to expand
| proportionally there.
| gordon_freeman wrote:
| > In a city like New York, living day to day life across many
| physical spaces is a core part the experience. In fact it's one
| of the major draws. The park is your front lawn, the cafe your
| breakfast nook, the theater your living room, and the office
| is... your office.
|
| why would someone rather not live in a countryside with
| expansive views and much lower stress and work remotely?
| (especially when tech like Starlink are going to remove the
| comms friction)
| smoe wrote:
| Because I get bored. It lacks the cultural diversity and and
| offerings the big cities have, which is the reason I live in
| one in the first place, not because of the job. Also most of
| my friends are here.
|
| I love the countryside for weekend or longer trips when I'm
| not working and just want to relax all day or go for hikes.
| RobRivera wrote:
| why would someone assume that is the superior mode of
| operation for every human neuro-type?
| [deleted]
| cj wrote:
| I've lived in NYC, SF, Boston, and now the country side.
|
| Each have their pros and cons, just like anything in life.
|
| For one, in NYC I liked being able to walk everywhere and not
| owning a car.
| conk wrote:
| What's the dating scene like out in the countryside?
| gowld wrote:
| You have a car, so you set a larger search radius and get
| the same number of rejections.
| pkulak wrote:
| Because I want to be able to do things without sitting in a
| car for half an hour first.
| judge2020 wrote:
| I agree that many people end up wanting that, but certainly
| some see the lure of a big city and would (at first, at
| least) love to interact with people on a daily basis.
| jumelles wrote:
| Rural areas tend to be more conservative and less diverse. I
| don't want to drive 15+ minutes just to get to the grocery
| store. I like having specialty shops around. I value access
| to museums, cultural events, and art festivals. I don't want
| to be an hour from the nearest hospital.
|
| Seriously, you couldn't pay me to live in the countryside.
| knodi123 wrote:
| Why would someone prefer something that you wouldn't? There
| as many answers to that question as there are people. I for
| one love big cities, and prefer to live in one even though
| I'm a remote worker.
|
| You do you, I'll do me, and if we're lucky in life then we'll
| each find someone whose preferences are similar to our own to
| share a life with.
| jdorfman wrote:
| Why? I seriously don't understand this investment. Can someone
| here explain?
| vmception wrote:
| A lot of tech companies are real estate companies.
| cronix wrote:
| And fast food. McDonald's holds over $30B in real estate.
|
| https://www.business.com/articles/mcdonalds-business-model/
| edwnj wrote:
| Google is sitting on bags of cash and those bags are being
| devalued like we live in Venezuela (40% of all dollars printed
| in the last 2 years!).
|
| So if you're a cashcow like Google, you want your bags in
| anything and everything except dollars.
|
| And buying commercial real estate in New York in the midst of
| lockdowns and remote work while the city is going through a
| commercial real estate market crash.. is good.
| dudus wrote:
| Google purchased the port authority building in NY for 1.8B on
| 2010 [1]. They also made a ton of real estate investments in CA
| and UK.
|
| I imagined that with the pandemic and prospects of less
| employees in the office things would slow down.
|
| But someone at Google is betting on a rebound after covid of
| office space demand, company growth or just real estate
| appreciation.
|
| 1: https://www.nytimes.com/2010/12/03/nyregion/03building.html
| dleslie wrote:
| Is it a pure bet, or part of a strategy? With their control
| of the YouTube algorithm, search result suggestions, Google
| News curation, and dominance of ads, Google doesn't lack for
| ability to manipulate public opinion.
|
| Edit: if I were Google, and I existed in the present absence
| of serious regulation, I would wield the ability to
| manipulate opinion in the favour of my business strategy. I'm
| not sure if that's an offensive notion, and that's why this
| comment is controversial?
| encryptluks2 wrote:
| I agree. Sounds like a terrible investment. For that price they
| could literally give over 2000 employees a million dollars or
| hire 5000 new employees in other remote locations.
| rmah wrote:
| A real estate purchase is not a normal expense (on the income
| statement) the way paying employees is. Assuming it's a cash
| purchase, it's a balance sheet transfer from cash asset to a
| real-estate asset. If debt financing is used to pay for it,
| while the interest expenses would appear on the income
| statement, the loan itself would also show up on the balance
| sheet as a debt. In short, a building purchase has minimal to
| no impact on profits (i.e. the net income on the income
| statement) and if purchased with debt, minimal impact to the
| cash flow statement.
| t0mbstone wrote:
| These companies just can't seem to grasp the idea that remote
| work is viable
| lexapro wrote:
| They are probably measuring output and concluded that office
| workers are more productive.
| w0m wrote:
| If I was still in my 20s and single; I'd likely strongly
| consider working in a Manhattan Google office building.
| That just sounds awesome. X years past that phase - I'd
| rather not. That it doesn't fit me (anymore) doesn't mean
| it's not enticing to others though.
| w0m wrote:
| Some people can't grasp the idea that remote-work isn't the
| answer for everyone in all positions.
| lbotos wrote:
| There are many types of remote work:
|
| - Remote Only
|
| - Remote First
|
| - Remote Optional, Office First
|
| - No Remote, Office Only
|
| Companies (especially large ones) are not gonna just go from
| No Remote or Remote Optional to Remote Only. Change takes
| time even in the face of a shock to the system like COVID-19.
| coliveira wrote:
| Companies like Google, MS, Apple, etc., make huge amounts of
| money, and they need to put some of that money in tax
| advantaged investments. Real estate for offices is one of the
| easiest ways to do this. They can also use this to say that
| they're investing billions in the US, when in fact the
| investment is just on existing buildings.
| manquer wrote:
| That isn't as bad as you make it sound .
|
| Even if google is not directly building new , the cash they
| are paying will directly or indirectly fuel additional real
| estate investment in new buildings by the seller or reduce
| their debt load enabling them to invest in new development in
| the future etc .
| davey48016 wrote:
| This is space they already lease, so it's not just a
| speculative real estate play.
|
| If they plan on continuing to use the space long term, then the
| total cost of renting it might be higher than owning it.
|
| To the extent that investors use EBITDA to evaluate stocks,
| getting rent off the books is probably good, too.
| lbotos wrote:
| Strong Assumptions include:
|
| 1. They think that in-person work still has value.
|
| 2. They want a physical presence in a world-class city.
|
| 3. They think the property will appreciate in value to sell
| later
|
| 4. They intend to rent it out and generate income that way.
| nerdponx wrote:
| If they are buying real estate now, I suppose it means they
| are not expecting rents to fall soon.
|
| Right now, the city government seems very happy with the
| fucked up real estate market and the continued gutting of
| city centers, so maybe they are correct.
|
| Reversing this trend is one of the most important things New
| Yorkers can do to ensure the long-term health of their city.
| It's already been bled out pretty badly by the real estate
| investment vampires.
| rmah wrote:
| For a variety of real-estate industry/finance specific
| reasons, commercial rents in NYC are very "sticky". Many
| building owners would rather space sit empty for _years_
| rather than rent the space at lower rents (for various
| degrees of lower). In short, both the near-term and long-
| term future outlook would have to be quite bleak before we
| see a broad and substantial lowering of commercial rental
| rates in NYC.
| tw04 wrote:
| Just look to Kmart? Somehow the entire company sold for less
| than their real estate was worth and the entire deal was paid
| for by the acquiring company taking out loans against their
| real estate.
|
| Another example would be Sun, I think Oracle sold off their
| Boulder campus for nearly what they paid for the entire
| company.
| ibn-python wrote:
| Respectfully, what is there not to understand? They're
| expanding their footprint in NYC due to increased demand. I've
| heard here and there that headcount at Google NYC has always
| been tight, so this should alleviate some of that. Facebook and
| Amazon have also committed to massive leases in NYC within the
| past few years as well.
|
| Besides that, these companies wield so much cash it seems like
| a safe bet to park a couple billion in. NYC real estate is
| arguably one of the safest bets in the modern era
| IG_Semmelweiss wrote:
| >>> NYC real estate is arguably one of the safest bets in the
| modern era.
|
| Respectfully disagree. All it will take is 1 dirty bomb going
| off in manhattan to make parts of the city unhabitable or
| unsafe.
|
| If and when that happens, it will be pandemic-level exodus.
| NIMBY and all that
| hmillison wrote:
| Considering NYC recovered economically from 9/11, which
| made parts of the city uninhabitable. I don't see this
| being as big of a concern, though it would be tragic if
| something like this happened.
| oblio wrote:
| Random cataclysms are not something you factor in to normal
| decision making. So, yes, Google's decision is a safe bet.
|
| There are leaps of logic and then there are Olympic
| somersaults.
| im3w1l wrote:
| A dirty bomb is not the same as a nuclear bomb. It takes
| a nation state to build a proper nuke, but some random
| terrorists could cobble together a dirty bomb.
| oblio wrote:
| Regardless, nobody plans around for it. It doesn't make
| any sense.
| rrdharan wrote:
| > headcount at Google NYC has always been tight,
|
| I think you mean desk space at NYC has always been tight?
| Assuming so, yes can confirm.
| traceroute66 wrote:
| > NYC real estate is arguably one of the safest bets in the
| modern era
|
| Uh huh. That's what they all said about commercial property
| in Western city-centres _before_ the pandemic ... "a sure
| bet" they said .... "rents only going up" they said....
|
| Now you walk through all these CBDs and they are shadow of
| what they were before because people discovered working from
| home either full-time or near enough (3-4 days a week) and
| the need for large chunks of commercial property is now being
| brought into question.
| ibn-python wrote:
| I generally agree that this is probably the fate for many
| American cities, but NYC seems to be in a league of its own
| compared to the other cities in North America. I feel like
| a better comparison is something like London, Rome, Mumbai,
| Beijing. These are cultural epicenters that are more
| resilient (but not immune) to economic downturns. Yes
| things might get tough for a bit but they're the place you
| want a multi bullion dollar investment to live when the
| goings get tough.
| rmah wrote:
| What's not to understand? Presumably, Google's bean counters
| think the cost of capital necessary to purchase the building
| plus any real estate value appreciation will be lower than the
| cost to lease the building. That part seems pretty strait-
| forward.
|
| Or are you not understanding why they don't "just" have
| everyone work remotely? If that's the case, then try to
| understand that despite what you may see online, it may be that
| many people don't want to work remote all the time. Moreover,
| working remotely will have deleterious effects on managerial
| promotion as that is heavily influenced by interpersonal
| relationships. And higher level managers are the ones that make
| such decisions. Even if remote work is better for the bottom
| line, remember that people make decisions to benefit themselves
| (across a variety of dimensions and timeframes), not their
| organization.
| endisneigh wrote:
| Makes sense. If you insist on living in NYC for any reason, then
| going into the office is probably more comfortable than living
| (and working) in a cramped NYC apartment.
|
| Though it's pretty ironic that virtually all of the software
| Google uses and creates facilitates virtual work, yet they insist
| on an in-person setting.
| tootie wrote:
| In my experience, I know a load of people who live and work in
| NYC and they almost universally prefer working from home. One
| guy lives in a dump due to his own misfortune and he spends a
| lot of time in the office but everyone else is perfectly
| content at their personal desk. I used to have a ten minute
| walk to work and still wouldn't do it unless I absolutely had
| to.
| pyrophane wrote:
| > If you insist on living in NYC for any reason
|
| Believe it or not, there are people out there who find NYC to
| be a desirable place to live. Not everyone wants to live in a
| suburb.
| endisneigh wrote:
| Sure, never said otherwise
| ysavir wrote:
| Not technically, no, but this language:
|
| > If you insist on living in NYC for any reason
|
| Strongly suggests that living in NYC is only something
| people do if they have reason to _insist_ on it, and not
| because it's just a place where people want to live.
|
| Someone could just as well say that "If you insist on
| living in a suburb for any reason, then working from home
| is probably more comfortable..."
| cmelbye wrote:
| New York is culturally known as a city that never sleeps,
| an expensive city, a crowded city, a city with muggy
| summers and bone-chilling winters, etc. There have been
| countless songs, books, and tweets written about how it
| takes a certain level of resolve to thrive there. That
| doesn't mean that people don't enjoy living there.
| ysavir wrote:
| Not sure if this was meant towards me or the parent
| comment, but I'll mention that I am a satisfied NYC
| resident.
| endisneigh wrote:
| You're reading too much into it. And yes, someone could
| insist on living in a suburb. Urban and suburban living
| each have their own advantages.
|
| Therefore one could insist on living in each for any
| reason, hence my comment.
| ysavir wrote:
| I don't think I'm reading too much into it. There is a
| big difference between these two sentiments:
|
| > If you live in NYC
|
| > If you insist on living in NYC for any reason
| endisneigh wrote:
| Lol I'm the author of the comment and am telling you my
| intent.
| heavyset_go wrote:
| I know very few people in NYC who actually want to go back to
| their offices to work.
| evanmoran wrote:
| It's the pandemic likely causing the timing, but not as a
| statement of remote vs not remote work: it's just cheaper now
| with the pandemic to buy rather then rent in the medium-long
| term. So if they decided they need the space for 20+ years then
| they certainly have the cash to buy if they want to.
| burkaman wrote:
| They are already leasing it, so this is not really as interesting
| as it sounds. Big buildings are expensive.
| msoad wrote:
| I thought they bought this building in 2012 for $1B. I guess
| that sale didn't go through.
| wan23 wrote:
| That was a different building. Since then they've bought two
| more!
| paganel wrote:
| Now I'm just curious what the total value of their real
| estate holdings really is. A history of how that value
| fluctuated recently would also be interesting. I guess this
| information is hidden somewhere in Alphabet's quarterly
| earnings reports but I'm afraid I wouldn't know where
| exactly to look (or what to look for).
| lotsofpulp wrote:
| The article says $60B to $70B between land and buildings.
| [deleted]
| tick_tock_tick wrote:
| It's interesting in that it implies Google is still committed
| to large in person offices.
| gowld wrote:
| If I understand HN properly, it just means that someone in
| the Facilities department wanted to get a promotion.
| dannykwells wrote:
| LOL'd at this thanks.
| brink wrote:
| You do understand HN properly. Here, have some downvotes.
| 01100011 wrote:
| And it's probably a good investment since cash is cheap right
| now and cities like NYC are depressed thanks to COVID-19.
|
| I hate cities but have to think that they're good investments.
| Global warming will likely change the economics of suburbs and
| people are having a lot less kids, making cities less
| unattractive.
| im3w1l wrote:
| Makes me wonder: why now?
| throwaway1777 wrote:
| This is a huge point. They aren't increasing space or
| headcount, mainly changing the cost structure
| gowld wrote:
| And long-term outlook.
| ignoramous wrote:
| Mr. Gorbachev, tear down this wall: https://archive.is/4T3hv
| WarOnPrivacy wrote:
| All my questions are about tech infrastructure. Does the location
| of this property have anything to do with proximity to NYC's
| internet exchange points? Will this building need that kind of
| access? If so, why? Is there infrastructure is already in place
| to build out high-volume connections? Are there maps and diagrams
| of that infrastructure; can we see them?
| s17n wrote:
| Pretty sure it has nothing to do with any of that stuff - this
| is just a building with a very large footprint that was vacant,
| pretty much a unique opportunity in Manhattan.
| dopamean wrote:
| Is it considered vacant if Google was already leasing the
| space but hadn't yet moved in?
| epc wrote:
| No. The Port Authority building they bought in 2008 or 2009 had
| (still has?) a huge telco exchange space, which was why Double
| lick had been there. 60 Hudson St is the other bug exchange
| point, it's maybe a half mile from St John's Terminal.
| iszomer wrote:
| Bought the dip?
| IG_Semmelweiss wrote:
| Some history on the site:
|
| Only some 7 years ago, this very area was targeted to be the
| heart of a new stadium development for the Major League Soccer.
| It was going to be the West Village home....for NYC FC soccer
| franchise
|
| It made sense: Pier40 city park, across the street from 550
| washington St, was basically a decreipt property stuck in time as
| was the rest of the neighborhood. Then hurricane Sandy hit. The
| damage closed the Pier40 building for almost half a year. Some
| support did arrive from Sandy hurricane aid, which ironically did
| more to help the building than any other city park initiative.
|
| Post-Sandy, Pier 40 park seemed destined to stumble along.
|
| Then came the MSL. They were convinced they could sell the idea
| to the site: redevelop moribund Pier40 and 550 Washington St next
| to it. Everyone seemed excited.
|
| However, they did not count on a surprise rival: parents of the
| little league baseball kids that regularly play at Pier40 turf
| fields (as does DUSC soccer kids). They protested. Loudly. Some
| of them likely well connected.
|
| The project then died and moved elsewhere.
|
| Now, some of those parents live in the area. They are now looking
| to benefit enormously from this Google development.
|
| Kudos for them. They earned it
| oblio wrote:
| So it's good because they're going to make money?
| IG_Semmelweiss wrote:
| Its good because of the positive externalities it brings
|
| The parent's protesting, while self interested (for their
| kids) benefited many groups, particularly teenagers and
| immigrants that often play pickup sports at Pier 40 like
| touch football, ultimate, or soccer, without park permits
| (because they can't afford field permits).
|
| So, this is good because Google will bring more security and
| investment into a forgotten NYC area.
|
| Coincidentally, Pier 40 is also the on-ramp spot where the
| terrorist truck driver started his post-Halloween drive that
| killed 8 tourists in the pedestrian walkway. [1]
|
| [1] https://abcnews.go.com/US/witness-describes-chaotic-
| scene-dr...
| b9a2cab5 wrote:
| Why do we need field permits and park permits to _play a
| game of sports_ in the first place? It 's a park. This is
| the kind of bureaucratic bullshit that wastes taxpayer
| dollars and makes people hate the city government.
| bobthepanda wrote:
| The reason, ostensibly, is the lack of park capacity
| generally available in Manhattan. Permits are pretty much
| the only way to reasonably schedule slots for all the
| schools serving the 1.6M+ people of Manhattan and their
| teams, since schools usually do not have sufficient play
| fields of their own.
|
| During less busy times this isn't an issue. The permits
| more or less act as guaranteed reservations.
|
| https://www.nycgovparks.org/permits/field-and-
| court/request/...
|
| > When to Apply
|
| > If you are a member of an organized league, you must
| request a field or court for any formal use. Otherwise,
| our fields and courts are available to the public for
| informal use (pickup games). If you would like to reserve
| a field or court in advance at a specific time, you
| should make a request to ensure your uninterrupted use of
| the field.
| lordlic wrote:
| Yeah I mean that seems like a weird narrative. Some people
| get wealthy because they bought land and then did _nothing_
| and held on tenaciously to it even as the rest of society
| increasingly needed it for something else? How is that a
| victory for the good guys? That 's just rentier capitalism.
| pessimizer wrote:
| > even as the rest of society increasingly needed it for
| something else?
|
| You added this part.
| Ericson2314 wrote:
| Now, I happen to think Stadiums are too inefficient a use of
| space to be in Manhattan, but we should never celebrate
| NIMBYism like this.
| jrockway wrote:
| Is commercial real estate necessarily a better use of space
| than a place for kids to play team sports?
| bobthepanda wrote:
| Would kids be able to play at an MLS Stadium?
|
| In a similar vein, the Olympics 2012 bid for NYC would've
| been where Hudson Yards is now, but was rejected over
| concerns about bursty event traffic (the area already hosts
| the convention center.) This location is even less able to
| handle bursty traffic, it's not near any express subway
| lines or commuter rail terminals.
| jrockway wrote:
| > However, they did not count on a surprise rival:
| parents of the little league baseball kids that regularly
| play at Pier40 turf fields
|
| The MLS soccer field was long canceled at that point
| because of Hurricane Sandy, it seems. (Dunno, I don't
| follow Chelsea real estate. I live in Brooklyn.)
| Ericson2314 wrote:
| I am saying I fully reject the _means_ of NIMBYism,
| nevermind the _ends_.
|
| But yes, I would be against reducing park space.
|
| In this case I thought GP was celebrating the move for
| preserving park space, perhaps because this building isn't
| on the pier but just land? But I am not sure.
| tobyjsullivan wrote:
| For anyone unfamiliar, Google also bought another building in
| Manhattan for $2.4B five years ago.[0] Seems to have worked out
| for them so far. I would caution against reading too much into
| this move.
|
| [0] https://blog.google/inside-google/company-
| announcements/furt...
|
| Edit: updated to clarify this was _some_ building in Manhattan.
| My original post was confused with another purchase (probably
| their purchase of the Port Authority building).
|
| Edit 2: Better link
| epc wrote:
| They bought Chelsea Market, which is a one avenue by one block
| building opposite Ninth Avenue from 111 Eight (former Port
| Authority Inland Terminal building).
|
| Edit: forgot they also have bought the Milk building opposite
| Chelsea Market across 15th St, it's the building the air bridge
| connects to.
| maxpert wrote:
| They will first do these investments and then insist on coming
| back. I see modern IBM unable to give up their cult culture.
| traceroute66 wrote:
| > I see modern IBM unable to give up their cult culture.
|
| Indeed. Google of all companies should have embraced the future
| that was exposed by the pandemic, i.e. remote working.
|
| This is even more the case given 100% of their products are
| based around the internet and so inherently facilitating remote
| work: - Android - Chrome - Docs
| - Forms - Google Search - Gmail - Google
| Meet/Chat - etc.
|
| I mean they pretty much don't have to license any third-party
| software, all they need to do is eat their own dogfood.
| calcifer wrote:
| I don't see anything on that list that can effectively
| compete with the speed, efficiency and fluency of a quick
| huddle around a whiteboard.
| cmrdporcupine wrote:
| What nonsense, they were one of the first companies to send
| people home to work remote. First week of March if I recall.
| And we will be one of the last to go back... they're not
| asking for us to come back until January at the _earliest_ ,
| and even then we will have the option to work fully remotely,
| and even coming in it's only 3/5 days a week.
|
| Honestly, I've been going in voluntarily 3 days a week
| recently _because I like it_ -- it 's a distraction free
| environment where I can focus, have better Internet, get free
| food, not have to do dishes, listen to my kids argue, etc;
|
| HN has recently become an echo chamber of remote work
| advocates. Not everyone wants to work remote. Not every job
| is amenable to it. And as a software engineer I'm far more
| productive in the office than at home.
|
| I'm glad Google is still investing in our offices.
| atlasunshrugged wrote:
| I don't see that at all. A hybrid culture sure, but all
| remote work? I think it's way too early to tell if companies
| like this will end up with a few marquee offices in places
| like NYC, SF, Berlin that employees who want to can go to
| while everyone else can work remote. I'm more ambivalent now
| but in my early 20's I definitely wanted to be in an office
| in a big city where I was with lots of colleagues in an
| energizing environment.
| BikiniPrince wrote:
| I think for those who are seasoned it a viable option.
| However, I've seen the new hires really struggle to come up
| to speed.
| cmrdporcupine wrote:
| Hell, even a pain moving within companies.. I just
| switched teams/projects at Google in the winter, and it
| was a months long slog to come up to speed... I've been
| at the company for almost 10 years, but never had this
| slow of a ramp up before.
|
| Until recently, where a couple days in the office with
| the TL and a whiteboard and I feel way more connected and
| competent.
| dleslie wrote:
| Indeed, it's orthogonal to their information collection
| strategy to encourage non-digital communication.
| inkeddeveloper wrote:
| I mean, not really. Imagine how much more information they
| can collect by literally observing employees all day in the
| office. There is no limit to the amount of information they
| can gain from surveillance.
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