Google Buys Giant New York Building for $1.9 Billion

Google is down with New York City.

So down, in fact, that the web search titan just dropped $1.9 billion to acquire one of the largest and most historic buildings in all of the Big Apple. At nearly 3 million square feet, 111 Eighth Avenue, the former Port Authority building, sits like a beached, red-brick cruise ship overlooking New York’s Chelsea neighborhood. The building is so big, in fact, that it has elevators large enough to accommodate 18-wheel semi-trucks.

And yes, that’s a helicopter landing pad on the roof.

It’s tough to describe how massive 111 Eighth Avenue is — you really have to stand in front of it. But suffice it to say that it takes about 20 minutes to walk once around the building, which encompasses one of those very long city blocks found on the West Side. The size is all the more striking because in a densely-packed city like New York, which is full of very tall buildings, it’s rare to find one that is so horizontally gigantic.

Then again, if you think about the commerce and trade that built New York into the most important city in the world, you can understand why the Port Authority needed such a massive structure.

111 Eighth Avenue was designed by Lusby Simpson and completed in 1932, just one year after the Empire State Building and the Chrysler Building. In fact, one way to think about 111 Eighth Avenue is like the Empire State Building on its side. It’s worth noting that the Empire State Building has just over 2 million square feet of office space — about 1 million less than 111 Eighth Avenue.

Needless to say, it’s quite an upgrade from Google’s first New York City office — a Starbucks on 86th Street.

But 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.

The building’s previous owners, a consortium led by Taconic Investment Partners, knew that proximity to the fiber-line would be attractive to companies, so they tricked out the building with something called a network-neutral “Meet-Me” room, which is literally a room filled with networking equipment that allows the tenants to connect with each other — and the fiber-line.

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.

But of course, Google already knew that, which is why it moved into the building in the first place in 2006. It’s also the reason that companies like Verizon, Sprint, Level 3, WebMD, Nike, BarnesandNoble.com and ad agency Deutsch are tenants.

In a blog post Wednesday, Google announced that it has closed the deal and said it has re-upped with Taconic Management Company to continue running the leasing and management operations of the building

Google said that it now has 2000 employees in New York City, and — no surprise — it’s hiring like crazy, which will just heighten an already red-hot tech labor market in the city.

“We believe that this is a great real estate investment in a thriving neighborhood and a fantastic city,” wrote David Radcliffe, a Google VP for Real Estate and Workplace Services.

Google did not confirm the purchase price, but it has been widely reported, including by the New York Post, which has been all over this story. The city of New York netted $46 million in transaction taxes on the deal.

It’s by far the largest U.S. real estate transaction of 2010. And it’s Google’s biggest purchase of the year.

“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,” Radcliffe wrote.

Google is identified closely with Silicon Valley, where it was founded by two Ph.D students in a Stanford dorm room. But judging by today’s purchase, Google clearly loves New York, as well.

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