Google searching for more office space in New York City amid hot office market conditions
Google is currently on the hunt for space to accommodate about 3,000 additional employees in New York City.
Real estate sources told The Wall Street Journal that the company is running short of space for its burgeoning workforce in the Chelsea neighborhood of Manhattan, where it occupies about 750,000 square feet.
Google is reportedly looking for 600,000 square feet of space in the area. Sources familiar with the office hunt told the Journal that there was no suitable space available in Chelsea. Google has already set eyes on some options like the former New York Daily News building at 450 West 33rd St. and the St. John's Terminal Building at 550 Washington St.
Google purchased its current New York City office at 111 Eighth Ave. in 2010 for $1.9 billion. The building has other tenants like Nike and Deutsche Inc. Just weeks ago, the tech giant signed a lease for an extra 75,000 square feet in the building, reports Crain's New York.
Google's office at 111 Eighth Ave is much smaller than its Mountain View, Calif., headquarters but isn't any less on the fun quotient. They have ladders and scooters that help workers commute between and around floors.
However, the company's workforce is outgrowing the building.
The Journal reports that it's not just the bigwigs like Facebook, Google and Twitter that are bringing the tech boom to the Big Apple. Small startups are also leasing more space in the city.
The influx of techies into the city has heated up the office rental market in Manhattan. According to The Real Deal, availability of Class A office spaces - those larger than 100,000 square feet - has been declining at an accelerating pace and rents increasing at a similar rate.
Class A office rents in Manhattan averaged $73.77 in the first quarter of 2014, compared to the $69.81 recorded a year earlier. Vacancy rates fell to 10.4 percent from 11.8 percent in the same period, according to the publication.
Experts believe that rents will further escalate if the pace of increase remains the same.
"Building owners are negotiating with multiple tenants for the same space. While this has been true in Midtown South for several quarters, it has now become more widespread. If this pattern continues, we can expect to see rents rise further in certain parts of Midtown," Peter Riguardi, president of Jones Lang LaSalle's New York operations, told World Property Channel.