New York City Enjoyed a Healthy 2019, Thanks to Tech Tenants
CoStar Insight: Several of the World’s Biggest Companies Made Their Mark in The Big Apple
It’s no secret that tech has played a pivotal role in transforming the New York office over the past decade. Whether it was helping establish areas like Flatiron and Chelsea as office destinations, creating a less informal workplace culture, or fueling job growth for the better part of the cycle, tech’s impact cannot be downplayed.
In 2019, this impact has never been more evident. And it’s the largest companies in this sector, referred to as FAANG (Facebook, Apple, Amazon, Netflix, and Google), who were the driving forces in helping reshape the landscape in the years to come.
In the fourth quarter of 2019, the social networking firm announced plans that to occupy an additional 1.5 million square feet in Hudson Yards, the city’s $25 billion mega-development that opened in March. Much of that space is located at 50 Hudson Yards, where Facebook will serve as the anchor tenant when the building delivers in 2022.
Despite, already occupying 1 million square feet, with plans to move into more, Facebook’s growth plans have likely not ended there. The company is in talks to occupy more than 700,000 square feet at the nearby Farley Post Office and is competing with the next company on our list for it.
While not officially committing to any leases this past year, Apple certainly looked the part. The company has been in the market for at least half a million square feet, eyeing the best possible spaces available from the Farley Post Office to Tishman Speyer’s Morgan North Redevelopment. Whatever building the tech company ends up choosing, it is sure to be one of the larger deals of the new year.
Yes, the year started off as bad as one can imagine. Local politicians lambasted the incentives package created to lure Amazon’s HQ2 to Long Island City, with the e-commerce giant ultimately choosing to back out of the deal.
But time heals all wounds, and the city is the ultimate landing spot for tech talent in this tight labor market. Amazon chose to lease 335,000 square feet at 410 Tenth Ave., an office property undergoing a massive renovation and located just a stone's throw from Hudson Yards. It seems there’s a lot more attracting Amazon to New York then initially thought, as this new lease will be devoid of any tax incentives.
The streaming platform made a large commitment, in both space and dollars, to expand its presence in here in 2019. Netflix agreed to spend $100 million for its production hub in Brooklyn while increasing its office footprint by 100,000 square feet at 888 Broadway. This is all part of an agreement between Netflix and the State of New York, where the company will receive up to $4 million in tax credits if it adds more than 100 jobs by 2024.
And last, but certainly not least, is Google. The search engine giant made headlines in 2019, not only for leasing buildings, but for buying them as well. In May, Google purchased the Milk Building for $600 million as part of its efforts to further grow its footprint in the Chelsea submarket, where it already occupies millions of square feet.
In June, the lease to occupy 1.3 million square feet at 550 Washington St. was finalized. The move is the largest piece of Google’s $1 billion campus investment in the Hudson Square submarket, where the company will start moving employees over the next two years. But with the plans to occupy more than 200,000 square feet at Pier57 when the building delivers in 2020, it's safe to say Google’s expansion plans are not quite over.