While the world focuses on the battle for Amazon HQ2, the other tech giants are consolidating their own urban fiefdoms.
Last week, it was revealed that Google will buy the Chelsea Market building in Manhattan, across the street from its main offices in the old Port Authority building, for as much as $2.5 billion. The mind-boggling sales price would make this the second-most expensive real estate deal in New York City history, and it demonstrates the lengths to which Google is willing to go to consolidate its burgeoning presence in Chelsea.
The move is also indicative of a far wider trend: While all eyes have been trained on Amazon’s salacious HQ2 search, Google and its peers have been quietly transforming many urban neighborhoods into de-facto tech campuses.
When the Chelsea Market deal goes through, Google will own or lease approximately 4.6 million square feet in Chelsea, with the option to build 300,000 more at Chelsea Market. (For context, corporate offices require around 200 square feet per worker, meaning the company’s New York offices could accommodate more than 20,000 Googlers.) While the company likely won’t touch the extremely popular ground-floor food hall, it may eventually muscle out the long-term office tenants in the building, including the Food Network and Major League Baseball, giving itself room to grow over the long term. Google already leases 400,000 square feet in the 1.2 million-square-foot building.
In fact, Google has major urban development plans in a number of global cities (not counting Sidewalk Labs’ ambitious plan to rebuild the Toronto waterfront “from the internet up”). In 2014, the company bought 12 acres in Los Angeles’ Playa Vista neighborhood, which entitles it to develop nearly a million square feet of office space, and has since leased an adjacent 300,000 square foot airplane hangar once owned by Howard Hughes. An 870,000 square-foot U.K. headquarters is currently under construction next to King’s Cross Station in London. And last year, the company began buying property in downtown San Jose, near the future high-speed rail station, that could yield as much as 8 million square feet of space.
While Google’s global urban development schemes have been far less conspicuous than Amazon’s HQ2 search, the former tech giant may have been inspired by the latter. Amazon helped pioneer the urban tech campus, occupying or building out 8.8 million square feet in Seattle’s mixed-use, high-density South Lake Union neighborhood over the past decade. Since then, some of the most prominent Web 2.0-era companies, including Twitter, Uber, and Snap, have established urban headquarters. These younger companies are fueling the trend of funneling of venture capital to just a few dense neighborhoods in a few major cities.
This concentration in cities is fairly recent. For decades, the tech industry was associated with what Joel Kotkin famously dubbed “Nerdistans”—low-slung suburban office parks surrounded by oceans of parking. The notorious tech buses that shuttled urban-dwelling workers to and from these facilities in the Bay Area were an early indication that techies were no longer content to live in the suburbs. Increasingly, it appears that they’d rather not work there either.
In downtown San Francisco, Salesforce has effectively sponsored a new neighborhood, where it leases or owns approximately 1.7 million square feet. The most conspicuous aspect of the company’s urban campus is Salesforce Tower, San Francisco’s tallest building, often described as a symbol of the city’s emergence as the global tech capital. The crown jewel of the campus, however, will likely be “Salesforce Park,” a 5.4 acre public park on the roof of the city’s under-construction transit center, for which Salesforce purchased the naming rights. A gondola will convey pedestrians from a street-level plaza next to the tower up to the transit center’s promenade. On the other side of the park, Facebook has leased 436,000 square feet in a skyline-defining new high-rise.
Facebook has also been carving out something of a campus in Manhattan, where it currently leases 355,000 square feet near Astor Place, and 190,000 square feet a few blocks north near Union Square. The landlord at the Astor Place location is reportedly trying to buy out the other tenants to give Facebook the opportunity to expand across the million-square-foot building.
Traditional tech campuses are known for their resort-style amenities, like video arcades, gourmet office commissaries, and various fitness facilities. But urban tech campuses already have all that—and much more—thanks to their proximity to bars, restaurants, high-end cycling studios, and all the other attractions of winner-take-all cities. Googlers of Manhattan can spend their lunch hours strolling Chelsea Market and the High Line; Salesforce and Facebook employees in downtown San Francisco will soon have access to Salesforce Park, which may become a High Line-esque destination.
Ultimately, access to these epic urban spaces might be the deciding factor in Amazon’s HQ2 decision, rather than whoever hands them the lowest tax bill.