Google Spends $2.1 Billion for New York Office Building Even as It Embraces Remote Work
Building renderings of Google’s new Manhattan offices at St. John’s Terminal.
COOKFOX Architects
Shares of Google parent Alphabet rose slightly Tuesday after the tech giant unveiled plans to purchase a $2.1 billion office building in Manhattan.
The move highlighted the tech giant’s appetite for commercial real estate, despite its enthusiastic adoption of remote working.
Google already leases the 1.3 million square-foot-building located on Manhattan’s bustling West Side, known as St. John’s Terminal. The company has the option to purchase the building, which it plans to exercise by the first quarter of 2022, said Ruth Porat, chief financial officer of Google and Alphabet (ticker: GOOGL).
St. John’s Terminal is slated to be the anchor of Google’s New York campus, the company’s largest offices outside of California. The $2.1 billion investment is in addition to the $250 million Google planned to spend to increase its New York presence.
The New York office is home to most of Google’s 12,000 New York-based employees. With the expanded campus, the company plans to grow its workforce in the city to more than 14,000 in the coming years. The new offices are slated to open mid-2023, Porat said.
The sale of the new building is the most expensive sale of a U.S. office building since the pandemic began, and one of the costliest in U.S. history, The Wall Street Journal reported.
Also read: 8 Stocks to Play a Return to the Office—When It Comes
In May, the company announced it would open its first-ever physical retail store at its Chelsea campus in a bid to boost gadget sales.
That same month, CEO Sundar Pichai rolled out details on Google’s new hybrid approach to work. Employees could choose to return to the office three days a week or apply to work fully remotely. The company also made it easier for workers to transfer to an office in another location, and gave employees four weeks per year to work from anywhere they’d like with manager approval.
At the time, Pichai expected that 20% of Google’s workforce would continue working remotely while another 20% would change offices. The remaining 60% would work from their current location on a hybrid basis. Workers who moved would be subject to a compensation adjustment, Pichai said.
Google also ramped up its cloud collaboration offerings for businesses, betting on the future of hybrid and remote work.
“We’ve seen a radical transformation, and a lot of that transformation is here to stay,” Google product management director Dave Citron said during a Sept. 8 briefing on new Workspace offerings.
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