Google: We Bought 111 8th Ave. for Office Space

111-8th-Avenue

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

Ever since Google purchased 111 8th Avenue, there's been speculation about how the company might handle its role as landlord of one of Manhattan's primary Internet connectivity hubs, and what it might mean to the telecom carriers and data center operators who are tenants in the building.

Today Google executives said the deal was driven by the growth of the company's workforce, rather than any ambitions to control a key piece of Internet real estate.

"Our primary reason for buying the building was the office space, not the Internet infrastructure," said Google co-founder Larry Page, who was just named to succeed Eric Schmidt as CEO. "The Internet tenants are great, but that's not why we bought the building."

Not A 'Carrier Hotel' Deal
Google is the largest tenant at 111 8th Avenue, occupying more than 500,000 square feet of office space in the 2.9 million square foot property, which spans an entire New York city block. The company says it will need lots of  additional office space to house employee growth.

"It's not about the 'carrier hotel' space," said Jonathan Rosenberg, Google Senior Vice President, Product Management. "We have 2,000 employees on site. It's a big sales center, but also a big engineering center. With the pace at which we're growing, it's very difficult to find space in New York. There are very few buildings in New York that can accommodate our needs. This gives us a lot of control over growing into the space."

Open Floor Plans A Fit for Google
A major advantage of 111 8th Avenue is its large floor plans, which fit Google's larger philosophy about open office space and collaborative environments. Most New York skyscrapers have tighter floor layouts that may not support a similar environment, Rosenberg said.

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 enormous building houses major data center operations for Digital Realty Trust, Equinix, Telx and many other providers and networks.

In December Google confirmed that it had closed a deal on the purchase of 111 8th Avenue, acquiring the building from the partnership of Taconic Investment Partners, Jamestown Properties and the New York State Common Retirement Fund. No price was mentioned, but reports in New York media place the sale price at $1.9 billion. Taconic Management Company to continue the leasing oversight services and management of the building.

Despite the retention of Taconic, Google's purchase has prompted speculation that the purchase of 111 8th Avenue might bring change for its Internet tenants. One theory has been that Google could use its control of the building as leverage in broader business negotiations with carriers (many of which require access to 111 8th Avenue), or interconnection providers in other geographic markets.