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Google is buying Chelsea Market building for over $2B

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Re: Google is buying Chelsea Market building for over $2B

#81

Post by Itaxpica »

JumpCrisscross wrote: post #54

I first heard about this deal around Thanksgiving. I am curious how everyone kept the real estate brokers' mouths shut for this long. For New York City, this might be a record.

It's the second-biggest in the city's history after the GM building in 2008, which went for 2.8 billion (https://nypost.com/2018/02/06/the-history-behind-googles-mas...). The current record for a single transaction is the Stuy Town purchase in 2015 for 5.4 billion (https://www.nytimes.com/2015/12/19/nyregion/dollar5-45-billi...), but that was more than one building.

Re: Google is buying Chelsea Market building for over $2B

#82

Post by aresant »

This is such a fascinating cycle.

Large pensions & sovereign wealth funds are so desperate for yield vs. low treasuries that they have pushed income producing commercial real estate values to all time highs.

As a result these fund managers are then forced to take on larger risks to cover their liabilities by making larger portfolio allocations into public techs like Google, and privates like AirBNB & Uber.

And this dry powder has helped the technology companies get so insanely big and sophisticated that they are hiring away the best fund guys to manage their own treasury desks and drive commercial real estate transactions like this one!

Funds would have KILLED to get a deal with Google locked into a long term lease.

But because Google is taking themselves off the market as a tenant, the funds again have to go and chase riskier yield, like larger allocations in tech . . . the entire macroeconomy is just turning into a bizarre Möbius strip . . .

Re: Google is buying Chelsea Market building for over $2B

#84

Post by sumeno »

toomuchtodo wrote: post #61
sumeno wrote: post #55

Earlier quoted context omitted.

So NYC aside, what is your answer for cities? How does a city improve itself without bringing in new jobs and tax revenue? Should a city just let buildings sit there and rot instead of selling them to a company that wants to create hundreds or thousands of jobs?

No tax credits for businesses (See: Amazon). You pay a tax per head of employee you intend to employee onsite that covers infrastructure and subsidizing affordable housing. If you're a going concern, affordability should not be an issue. Otherwise, you're straining infrastructure and housing with marginal benefits to the host city. Hire remote instead.

So you would discourage businesses from coming to your city. I suspect your reelection campaign is going to be a difficult one.

Re: Google is buying Chelsea Market building for over $2B

#85

Post by NDT »

ChuckMcM wrote: post #68
cletus wrote: post #47

NYC Xoogler here. Speaking from experience, the main office (111 8th/76 9th) is amazing. I think Google's decision to buy that years ago has totally been vindicated. I'm surprised more high cash surplus companies don't do this, just to control their destiny in a way you simply can't as a tenant (eg if you're a large tenant, each floor you rent in the same building is going to get more expensive, being a tenant limits…

I totally agree. Fun historical note, IBM generated cash in its early days as Google and Apple do today, it bought a lot of real estate all around the world. In the 90's when it seemed liked it was doomed, it "saved itself" by selling off big chunks of that real estate. That gave the company operating capital without having to go to the equity markets or debt markets. Given the ups and downs of tech, it seems like a…

The interesting thing is that there are at least 10 buildings/floors leased by IBM just in Manhattan. The prominent ones are the "IBM Building" in midtown (that used to be owned by IBM) and still has its name on the building and the somewhat iconic 51 Astor Place which is the Watson HQ.

Re: Google is buying Chelsea Market building for over $2B

#87

Post by bfuller »

ryanwaggoner wrote: post #25
toomuchtodo wrote: post #21

Earlier quoted context omitted.

SFBA, Seattle, Major Colorado Metros, Austin, Nashville, Cambridge/Boston, Raleigh-Durham. That's not fear. That's pattern recognition. > Fast-growing technology sector is fueling a housing boom in cities across America https://www.washingtonpost.com/realestate/fast-growing-techn...

Places that have gotten expensive because they've become desirable places to live and convinced lots of people to move there? The horror! The only real problem here is shitty local governance and NIMBYism that refuses to acknowledge reality and build more housing . In the end, it doesn't stop people from moving there, it just drives up costs and drives out natives and people lower on the socioeconomic ladder. If you…

Austin has been a great place to live forever. People from all over have been moving there for quite some time. And there is plenty of housing, the problem is the poor communities are being priced out of the city center and a place that was once known for its culture has become pretty bland. That only happened once it started becoming a "tech hub"

Re: Google is buying Chelsea Market building for over $2B

#88

Post by CydeWeys »

eric_h wrote: post #70
jagger27 wrote: post #64

Earlier quoted context omitted.

So they're buying the entire block? $2 billion seems cheap all of a sudden. That hodgepodge mess of buildings really appeals to my inner Lego-building child.

The building they purchased in 2010 (111 8th Ave) is a full city block that they picked up for $1.9 billion - seems to be the going rate for a block in Chelsea.

Chelsea Market is 1.2 million sqft. 111 8th Ave is 2.9 million sqft, and the fourth largest building by floor area in all of NYC. Not only is Chelsea Market much shorter on average than 111 8th Ave, its land area is smaller as well. The buildings themselves are also older and less modern, thus worth less. 111 8th Ave is an absolute tank of a building.

We got an excellent post-recession deal on 111 8th Ave. Chelsea Market looks to be at booming economy rates, hence paying about the same amount of money for much less.

Re: Google is buying Chelsea Market building for over $2B

#89

Post by DogOnTheWeb »

jagger27 wrote: post #64
CydeWeys wrote: post #38

Earlier quoted context omitted.

New York Googler here. Chelsea Market is actually 19 different buildings on the same block that have merged together over time. The floor layout is truly crazy. Some floors are staggered by a full half height at the interface between buildings, there are exterior courtyards on the inside of the block that are roofed over, and buildings are of differing height. You can see it all on Google Maps; contrast with 111 8th…

So they're buying the entire block? $2 billion seems cheap all of a sudden. That hodgepodge mess of buildings really appeals to my inner Lego-building child.

The layout is like none other. You'll walk down a spiral stairway, through some cubes, turn the corner to a ramp, more cubes, more narrow hallways and ramps.

Re: Google is buying Chelsea Market building for over $2B

#90

Post by toomuchtodo »

sumeno wrote: post #84
toomuchtodo wrote: post #61

Earlier quoted context omitted.

No tax credits for businesses (See: Amazon). You pay a tax per head of employee you intend to employee onsite that covers infrastructure and subsidizing affordable housing. If you're a going concern, affordability should not be an issue. Otherwise, you're straining infrastructure and housing with marginal benefits to the host city. Hire remote instead.

So you would discourage businesses from coming to your city. I suspect your reelection campaign is going to be a difficult one.

General population voters > Tech voters making $100k/year+. Easy win when people who can't make tech salaries are barely scraping by, unable to afford food or meds sometimes because they have to make rent.
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