Bloomberg reported this week that Google is to buy Chelsea Market for about $2.4 billion. Chelsea Market is a 1.2 million square foot (or, 111,500 square meter) building that is being sold off by Jamestown LP, a real estate investment firm based out of Atlanta. The deal is expected to be closed by April this year, according to the New York real estate news site, The Real Deal. The news was leaked by two executives who asked not to be named as they were not authorized to talk about this transaction.
Chelsea Market is located between West 15th and 16th streets of Manhattan borough of New York City. It sits directly opposite Google’s headquarters and it is larger than the Empire State Building and covers the entire block between 15th and 16th streets. It is a shopping mall, urban foot court, office building and television production facility that has been developed by Jamestown LP.
Chelsea Market is renowned for its first-floor foot court, which, according to the market’s website, attracts more than 6 million visitors every year. The floors above are being used by various companies such as Food Network, the new channel New York 1 as well as the Major League Baseball Network.
Google in 2010 bought 111 Eighth Ave., a building that was previously a warehouse and took up an entire city block. The company paid a record $1.77 billion to acquire this space, which has become Google’s New York headquarters. Since then, Google has been trying to acquire all the property in that neighborhood.
Google already has about 400,000 square feet in the Chelsea Market building and is the largest tenant there, according to Reuters reported. The Real Deal reported that the company has been taking over space in that building quite aggressively. Every time a lease contract expires, Googles offers to rent out that space. This way, Google has now become the largest renter space in the building.
Despite this tactic, the company still has not been able to meet its space needs at 111 Eighth Ave. The company has also leased out about 240,000 square feet of space at 85 10th Avenue, which is owned by Vornado Realty Trust and Related Companies.
Google also signed a lease in December of 2015 for a 250,000 square foot office space at SuperPier Project belonging to RXR Realty and Young Woo & Associates. The company has also been negotiating to have a short term lease at RXR’s Starrett-Leigh Building, which would be about 200,000 square feet, while the building out work in the SuperPier Project is completed.
What the internet giant plans to do with this property is still not known. However, sources close to the matter say that initial plans are to keep the commercial component of the building. Currently, the building is almost full.
According to the news report in The Real Deal, this is going to be the first billion-dollar-plus purchase to take place in New York this year. The tech giant is paying more than $1,600 per square foot for this piece of property.
This deal will help boost New York City’s investment-sales market. Last year, the city saw only one building deal cross the $2 billion mark; this was the sale of 245 Park Avenue to HNA Group.
Chelsea Market was bought out in 2011 by Jamestown for $225 million. The investment firm bought out its partners Angel, Gordon & Co., Irwin Cohen as well as Belvedere Capital to acquire this place. The property was valued at about $800 million at the time of the sale, however, Jamestown invested in Chelsea Market.