Business World

Friday 17 January 2020

Google's piecemeal bites into the Big Apple show Amazon how to be a good neighbour

Google recently added to its New York HQ by acquiring the Chelsea Market shopping mall. Photo: Bloomberg
Google recently added to its New York HQ by acquiring the Chelsea Market shopping mall. Photo: Bloomberg

Gerrit De Vynck and Natalie Wong

If Amazon's botched expansion in New York City offers a cautionary tale, Google is showing there is another way.

The Alphabet Inc unit has added thousands of jobs since it set up shop in the Chelsea neighbourhood in 2006, and plans to add thousands more on Manhattan's west side. The company did not take public subsidies, and has mushroomed in New York without provoking much ire. "Google did it very wisely," said Mitchell Moss, an urban planning professor at New York University (NYU).

Google's New York HQ. Photo: Bloomberg
Google's New York HQ. Photo: Bloomberg

Google, a tech pioneer when it first arrived in New York 20 years ago, has established itself gradually, buying and leasing mostly older buildings, and leaving the exteriors alone.

Amazon, meanwhile, flirted with cities around the US in its flashy public bid to establish a second headquarters. It ultimately negotiated government subsidies to bring 25,000 jobs to the Long Island City section of Queens. The e-commerce giant abandoned the plans a year ago after the public money became a lightning rod for criticism, partly over concerns about what a huge new campus filled with high-earning staff would do to a gentrifying neighbourhood.

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Google has more than 8,000 employees in New York across several buildings and could surpass 14,000 by 2028. In the past two years, it bought Chelsea Market and a building across 15th Street for a total of about $3bn (€2.7bn).

It also announced plans to spend more than $1bn creating a new campus about a mile south of its New York headquarters at 111 Eighth Ave. When Google bought that building in 2010, it marked a turning point in New York's bid to be a major technology hub, said Doug Harmon, chairman of capital markets for Cushman & Wakefield.

Long a media and finance stronghold, New York has been tipping toward tech as companies that have outgrown California tap the city's highly skilled workforce. The city had more than 264,000 tech workers in 2018, a 20pc jump from 2013, according to real estate company CBRE Group.

Facebook has expanded its presence in recent months, with a lease at Hudson Yards, while Amazon also recently took space in the neighbourhood to house more than 1,500 workers.

While Amazon said in February it was disappointed that it could not build the relationships with state and local officials required to move forward with its project in Queens, the company plans to expand in its 18 tech hubs across the US, including New York.

There are some parallels between Chelsea when Google arrived and Long Island City when Amazon announced its move. The Queens neighbourhood is going through its own wave of gentrification as glass apartment towers spring up for young professionals.

Amazon wanted to build a huge new campus in Queens near a public housing project. And while the company said it would generate $186bn in economic activity over 25 years, opponents saw it as contributing to congestion and higher rents.

In Chelsea, though, Google has mostly managed to avoid controversy. "Gentrification was under way long before Google showed its face here," said Pamela Wolff, a member of community advocacy group Save Chelsea.

When Wolff moved to Chelsea from Tennessee to chase a career in dance more than six decades ago, the area was largely Spanish-speaking, with single-room apartments for dock workers.

After Chelsea Piers ceased being a shipping hub in the late 1960s, the area started to draw residents priced out of Greenwich Village, making it a global capital of gay culture. Eventually, art galleries moved in and housing prices rose.

Google has fuelled development in Chelsea and the nearby Meatpacking District. It showed up three years before the opening of the former High Line elevated railway as an attraction and almost a decade before the Whitney Museum relocated to the neighbourhood from the Upper East Side.

Now, the area is a tourist magnet, full of high-end boutiques and fashionable brunch spots.

"Google has been the hub for this renaissance," said NYU's Moss. "Once it becomes acceptable for educated workers, then it becomes acceptable for everyone else."

Google faces some of the same criticism tech companies always do: that they force prices up in neighbourhoods but do not spend much of their high salaries supporting local businesses, some of which have closed in recent years due to high rent. Google employees stay inside offices with free cafeterias, then go home at night, Wolff said.

"It's so attractive that it creates a cocoon around those employees," she said.

Google has tried to stay active in community groups, helping it stay ahead of complaints and showing local leaders that it is at least listening to their concerns. The company has provided public internet in a Chelsea park, and helped rescue an 80-year-old mural when the bank it was located in was slated for demolition.

Bloomberg

Bloomberg

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