WSJ: Google is Buying 111 8th Avenue

111-8th-Avenue

The exterior of 111 8th Avenue, one of the premier carrier hotels in Manhattan.

Google has signed a contract to buy 111 8th Avenue in Manhattan, one of the world's choicest pieces of Internet real estate, the Wall Street Journal reports. The search company will pay for approximately $1.9 billion, the Journal says, citing sources familiar with the deal.

111 8th Avenue is one of the premier "carrier hotels" in New York. The enormous building houses major data center operations for Digital Realty Trust, Equinix, Telx and many other providers and networks, as well as 500,000 square feet of office space for Google.

The 2.9 million square foot building, which occupies the entire city block between 15th & 16th Streets from Eighth to Ninth Avenues, was placed for sale in September by an ownership group including Taconic Investment Partners, the New York State Common Retirement Fund and the German investment group Jamestown.

111 Eighth Avenue is among the world’s most wired buildings. It was originally built as the Port Authority Commerce Building in 1932, and was redeveloped for telecom use by Taconic in the late 90s.  The offering is being closely watched as a barometer of the Manhattan real estate market.

Google's purchase of the building provides access to additional office space for its growing New York sales and engineering operation at 111 8th Avenue. As the building owner, Google has the ability to easily expand into vacant space if needed. About a quarter of the building is dedicated to data center and telecom space, but the tenant list also includes Deutsche Bank, Barnes & Noble,  Armani, Nike and Lifetime Networks. Google is also now the landlord for many networks and service providers, which could create interesting possibilities.

While Google could build out its own data center space at 111 8th Avenue, the cost of power in New York probably precludes a massive server farm in the building. Most of Google's large-scale data centers are located in suburban or rural areas with cheaper power.