GOOG Alphabet Inc

By Douglas MacMillan, Eliot Brown and Peter Grant 

Google is gearing up for an expansion of its New York City real estate that could add space for more than 12,000 new workers, an amount nearly double the search giant's current staffing in the city, according to people familiar with the matter.

The plan, which hasn't been previously disclosed, would give Google room for nearly 20,000 staff in the city, including those it has now -- rivaling the approximately 25,000 jobs Amazon.com Inc. is projected to add if it completes plans for a major new office in New York.

The Alphabet Inc. unit is nearing a deal to buy or lease a planned 1.3 million-square-foot office building at St. John's Terminal in the city's West Village neighborhood, said people familiar with the discussions. The building, planned to be completed by 2022, would give Google space for more than 8,500 staff, based on the industry standard of 150 square feet per employee.

In addition, Google plans to expand its existing property at Chelsea Market by about 300,000 square feet, according to people briefed on those plans. Taken with announced plans for 250,000 square feet of office space at Pier 57, that is enough space for more than 3,500 workers.

A Google spokeswoman declined to comment on any talks about the St. John's Terminal property. She said Google plans to expand Pier 57 to include a community space, winter garden and water taxi landing open to the public. The company announced in March it bought the Manhattan Chelsea Market for $2.4 billion but agreed to keep leasing space in the building to food and retail tenants.

The owner of the St. John's Terminal, Oxford Properties Group, a subsidiary of the Ontario Municipal Employees Retirement System, didn't respond to requests for comment.

The expansion is the latest sign of big tech's rapid encroachment into cities beyond the industry's traditional centers on the West Coast. Amazon, Google, Apple Inc. and others are racing to build offices outside of Seattle and Silicon Valley, in places where real estate and talent are cheaper and where city officials are sometimes willing to strike deals to land a prominent employer with big growth potential.

Amazon's yearlong quest for a second headquarters pitted hundreds of North American cities against each other in a high-profile battle for a deal that promised to bring 50,000 employees and more than $5 billion in investments to the new location over nearly 20 years. On Monday, The Wall Street Journal reported Amazon plans to split its second headquarters evenly between two locations rather than picking one city, halving the potential number of jobs in each city.

New York is one of a few finalists being considered by Amazon, along with Dallas and Crystal City in northern Virginia. Amazon is negotiating to place one location in Long Island City, Queens, according to people familiar with the matter, although it hasn't been decided.

Google, by contrast, has steadily expanded its East Coast outpost with relatively little fanfare. The company, which opened its first New York office in 2000, moved into the mammoth building at 111 Eighth Ave. in 2006. That property, which Google bought for $1.9 billion in 2010, has remained its primary office in the city while it has scooped up neighboring office buildings across the street at Chelsea Market, on 10th Avenue, and at Pier 57 -- a straight line west from Eighth Avenue to the Hudson River.

The company currently employs a little more than 7,000 workers in New York, or about 8% of its global staff.

New York could become the next battleground in a budding rivalry between Amazon and Google, which are increasingly vying to be the first place consumers turn for searches related to product purchases.

The potential flood of new tech jobs to New York is a boon to the efforts of local officials to turn the city into a hub of the booming tech economy. Former Mayor Michael Bloomberg championed the development of a local tech industry, including the $2 billion Cornell Tech campus on Roosevelt Island, which opened last year.

Other politicians have dangled tax breaks and subsidies to encourage tech business in New York. Gov. Andrew Cuomo earlier this week said he had put together a strong incentive package to lure Amazon, while Newark and New Jersey proposed $7 billion in incentives to land the e-commerce giant's second headquarters.

Google said it has not applied for subsidies or tax incentives for any of its properties in New York.

Google's website lists more than 240 job openings for New York, including roles in advertising, sales, design and engineering. Amazon lists more than 600 jobs in the area, from warehouse staff at its nearby New Jersey fulfillment centers to research scientists and recruiters in New York City.

Google has plenty of room to grow within its 4.7 million square feet of existing space in its New York City buildings, which are occupied in part by other companies on long-term leases. As those leases expire, Google has been moving into the vacant spaces. While it's unclear exactly how much space is leased by others, it is enough square footage for many thousands more employees, people familiar with the matter said.

--Katie Honan and Craig Karmin contributed to this article.

Write to Douglas MacMillan at douglas.macmillan@wsj.com, Eliot Brown at eliot.brown@wsj.com and Peter Grant at peter.grant@wsj.com

(END) Dow Jones Newswires

November 07, 2018 22:01 ET (03:01 GMT)

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