Google has recently agreed to buy a property in Lower Manhattan, Chelsea Market, to the tune of $2.4 billion, a spectacular amount of dollars even for such a large conglomerate as Google. However, there are reasons behind this outlay, corporate prestige is surely in the mix with Amazon seeking its second HQ with the possibility of a further 50,000 high-paying positions on offer – Google has marked its territory in the very must-be-located area of Manhattan.
However, despite Google’s many billions of dollars, there is of course a purpose to this move to Manhattan and enlarging its footprint, as Google is not alone in seeing this area as the place to be as companies such a JP Morgan being another. The banking giant is also relocating to Manhattan and building a 70-storey tower on no other than park Avenue, an area sure to impress its corporate clients.
Jamie Johnson of FJP Investment has said that companies such as Google and JP Morgan are investing heavily in high end real estate as they are competing for the most talented employees who consider the working environment and area a major player when moving from one company to another.
Outdated and older properties are not deemed to be ideal workplaces for the kind of workforce that these companies are trying to lure, so spending $2 billion plus can certainly have a positive impact on the extremely talented workforce they wish to attract. A company such as Google for instance, whose net worth is almost a trillion dollars and rising, the sum of $2 billion is surely a drop in the ocean and indeed it certainly adds to the image of the company – which of course is extremely important if they wish to attract the right workforce to take the company forward in the future, and a big footprint in a key international centre such as Manhattan is certainly the way to go.
Within the haloed New York district, the value of property investments has attracted companies such as Wells Fargo, Times Warner, KRR just to name a few, all residing in 2.3 million square feet in Hudson Yards, again, showing the need to be seen “on trend”. The long running “bull” market has of course allowed these corporate giants, it would seem, never ending liquidity, allowing the companies to place their capital into real estate especially in such areas as New York.
Let’s look at another player in this field, Facebook, reportedly looking to build a 1.7 million square foot office space for itself in California, going one step further and building 1,500 apartments for its employees. This of course makes financial as well as commercial sense; it will not only give the employees a reason to move over to Facebook but the tax advantages of corporate ownership of the properties along with depreciation and maintenance costs will be offset against its tax liabilities, along with the fact they know their costs from the onset so there will be no surprises in years to come such as having to relocate.
Basically, it makes sense to own your building as it is an investment in many ways and shows commitment to your workforce and the outside world that you are in the game for the long term.