Google announced Monday it will spend more than $1billion to build a new office complex in New York City that will allow the internet search giant to double the number of people it employs there.
It is the tech industry’s latest major expansion beyond the Seattle-San Francisco Bay corridor. It follows recent steps by Amazon and Apple to set up operations well outside their home areas.
However, Google said it has not applied for subsidies or tax incentives for any of its properties in New York, unlike Amazon, which has been offered $2.8billion in tax breaks for the company which surpassed a $1trillion valuation in September.
Tech companies are ‘coming to the realization that the Bay Area, which has traditionally been the major center of tech activity in the US, is getting expensive and crowded,’ said Andrew Bartels, principal analyst at Forrester Research.
‘A lot of vendors are coming to the realization that ‘We can probably find top talent elsewhere at a more affordable costs, and perhaps a better style of life for employees who may be struggling to make ends meet.’
The Northeast is proving to be a good match, with its large concentration of highly educated young people.
Google will be opening a large new campus in Manhattan and doubling its New York City workforce to 14,000 over the next decade
Google said it would lease a large office building at 550 Washington St (pictured, artist rendering) in the West Village neighborhood and make it the centerpiece of the Hudson Square Campus
The building has already been chosen by Google as part of its expansion plans and is located along the Hudson River. The offices will be located at 345 Hudson Street
New York in particular boasts key qualities, including proximity to the financial industry, a large base of existing tech workers, and the second-largest concentration of tech startups behind the Bay Area, Bartels said.
Google, based in Mountain View, California, will fashion a complex exceeding 1.7 million square feet along the Hudson River in the city’s West Village neighborhood, Ruth Porat, senior vice president and chief financial officer, said in a blog post.
Google opened its first office in New York nearly 20 years ago and now employs 7,000 people in the city.
Its footprint has expanded continuously. Google said this year that it would buy the Manhattan Chelsea Market building for $2.4billion and planned to lease more space at Pier 57, both along the Hudson about a mile north of the newly announced complex.
A month ago, Seattle-based Amazon said it would set up new headquarters in New York’s Long Island City neighborhood and in Arlington, Virginia, creating upwards of 25,000 jobs in each location.
But it’s not just the East Coast that is benefiting from the expansion.
Apple, based in Cupertino, California, said last week that it plans to build a $1billion campus in Austin, Texas, that will create at least 5,000 jobs.
And Google is expanding elsewhere, too. It plans to develop a 50-acre area into offices, homes, shops, restaurants and parks in San Jose, California, the heart of Silicon Valley.
Google will fashion a complex exceeding 1.7 million square feet along the Hudson River in the city’s West Village neighborhood, Ruth Porat (left), senior vice president and chief financial officer, said. Google’s CEO Sundar Pichai is also seen above
The offices will also be located at 315 Hudson Street (pictured)
And this year Google opened new offices and data centers in cities including Detroit; Boulder, Colorado; and Los Angeles, as well as in such states as Tennessee and Alabama.
The bidding for programmers is driving salaries higher, which in turn is catapulting the average prices of homes in many parts of the San Francisco Bay Area above $1million.
Many high-tech workers are choosing to live elsewhere, forcing major tech employers to look in new places for the employees they need.
Facebook, based in Menlo Park, California, has more than 2,000 employees in New York.
Google hopes to move into the new campus by 2020.
Porat said that the company’s most recent investments give it the ability to more than double the number of Google employees in New York over the next 10 years.
Tech companies see New York as a way to gain a new perspective, one that is different from that of Silicon Valley, which can be seen as an ‘out-of-touch echo chamber,’ Bartels said.
‘New Yorkers consider themselves to be more in tune with the reality of life in US urban centers and believe this helps them innovate products and services that are more closely aligned with the needs of the average American,’ he said.
But there are concerns over tech companies moving into the Big Apple, including infrastructure and the already looming housing crisis.
According to Vox, it doesn’t actually make sense for the companies like Amazon to add major campuses to New York because the companies’ presence will tend to exacerbate the city’s crises of housing affordability and overburdened transportation infrastructure.
Those concerns were brought up just last week by council members who met with Amazon executives.
There are concerns over tech companies moving into the Big Apple, including infrastructure and the already looming housing crisis. Those concerns were brought up just last week by council members who met Amazon executives with protest (pictured)
‘We have a crumbling subway system, record homelessness, public housing that is in crisis, overcrowded schools, sick people without health insurance and an escalating affordable crisis,’ City Council Speaker Corey Johnson, said. Protesters are seen during the meeting
‘We have a crumbling subway system, record homelessness, public housing that is in crisis, overcrowded schools, sick people without health insurance and an escalating affordable crisis,’ City Council Speaker Corey Johnson, said during the meeting.
‘Is anyone asking if we should be giving nearly $3billion in public money to the world’s richest company?’
However Amazon claims that the move will majorly help residents by injecting ‘over $186 billion in positive economic impact’ during the course of a quarter of a century.
It’s something Governor Andrew Cuomo and Mayor Bill de Blasio agree with as it’s that said by splitting HQ2 between Arlington, Virginia and the Big Apple, 25,000 jobs will be created in the latter location over a decade.
But the Council questioned why they weren’t consulted about a project of this size and many believe that despite promises made by Amazon, they may not benefit the city which is set to rise in population by 131,000.
And not all tech companies are investing in areas outside of their original headquarters, however.
Microsoft is overhauling its headquarters in Redmond, Washington, with an 18-building construction project that will make room for an additional 8,000 workers.
It currently employs about 47,000 in the area.