That's right, I said billion. Google has actually been the largest tenant at the the old Port Authority building on 111 Eighth Avenue on the city's West Side for some time now (they began leasing space in 2006), but closed a deal Wednesday to purchase the 3 million square foot building. While the $1.9 billion purchase price is hardly a steal, Google is most likely more interested in the fiber sitting under the building as it is in the real estate.
As Wired described it,
111 Eighth Avenue is no ordinary humongous building. As it happens, the structure sits almost directly on top of where the Hudson Street/Ninth Avenue fiber highway makes a dog-leg to the right before heading north-east toward the Upper West Side.
In New York City, fiber-optic cables travel in large bundles underneath the asphalt.
Thus, 111 Eighth Avenue has become known as one of the most important so-called telecom carrier hotels on the Eastern seaboard, if not the entire United States.
Handy for Google to own that, don't you think?
For its part, Google took a bit different approach in describing the property acquisition in a blog post Wednesday:
We believe that this is a great real estate investment in a thriving neighborhood and a fantastic city.
Like the city, our New York office is a melting pot of cultures and ideas—it’s home to Googlers from more than 35 countries who speak more than 40 languages. They live in the five boroughs and spread across the tri-state area. We’re excited to continue to build our presence there.
If making one of the largest real estate deals in New York history counts as "building their presence", then they certainly have reason to be excited. While Google intends to allow the existing management company to continue handling the daily operations and dealings with the other current lessees, one has to wonder what the next few years will hold as those leases expire.
With such prime access to New York's extraordinary data pipes and a cash purchase through which the city of New York made $46 million in transaction taxes alone, there is definitely more to this deal than the need for office space. 111 Eighth Avenue, after all, has half again the square footage of the Empire State Building and Google now owns it.
Merry Christmas, Google.