Google Inc. has played a major role in New York's evolution into a technology center and now wants to expand further in the city, launching a search for enough space to hold more than 3,000 employees, according to several real-estate executives familiar with the hunt.
The Internet firm has been in discussions with several landlords about leasing at much as 600,000 square feet in Manhattan—about half the size of the Chrysler Building. A space that large would represent a roughly 80% expansion for the company, which first established a small outpost in New York in 2000.
Today, Google is based in the Chelsea neighborhood. The company occupies a total of about 750,000 square feet in two properties—at 111 Eighth Ave., a mammoth building that it bought in 2010 for $1.9 billion, and in Chelsea Market across Ninth Avenue. Google has run out of available space at those locations, the executives familiar with its search said.
The expansion options include 450 West 33rd St., a bulky 16-story building on 10th Avenue that used to house the New York Daily News, and the St. John's Terminal Building, a former freight rail terminal at 550 Washington St. by the West Side Highway in the West Village, people said. The company doesn't appear to be close to making a decision, and it is unlikely all of it would be occupied at once. Many tech companies have started leasing more space than they need in anticipation of growth.
Still, Google's search is the latest sign of how important the tech sector has become to the city's economy and real-estate industry. Tech, advertising and media jobs have grown from 265,700 in 2006 to 327,100 this year, according to brokerage Newmark Grubb Knight Frank.
At the same time, the financial-services industry is losing standing as New York's traditional growth engine. The number of positions dropped to 434,500 from 449,100 in 2006, Newmark said.
Much of the tech growth in Manhattan is from Bay Area tech firms, such as Google, Facebook Inc., Yahoo Inc. and Twitter Inc., which want to recruit software engineers and other who want to live in New York.
But behind the more mature tech companies are a "whole wave of startups from five, four, three years ago hitting the second generation doubling and tripling their spaces," said John Wheeler, managing director at real-estate services firm Jones Lang LaSalle Inc.
If Google ultimately leases multiple hundreds of thousands of additional square feet, it would be one of the largest corporate expansions in New York in years. A company typically puts about 500 employees in every 100,000 square feet it leases.
Google's headquarters in Mountain View, Calif., are much bigger than its Chelsea operation. The company reported owning or leasing 7.3 million square feet in the California city as of the end of 2012, the last year it reported specifics.
But New York is the second largest outpost in the country for the company, and company executives have said the demand by its employees to live in the city was far greater than it expected.
Google's building on Eighth Avenue has 2.9 million square feet, but most of the space is occupied by other companies that have long-term leases that were signed with the previous landlord. The company has coaxed some to move; with the others, Google will simply have to wait until their leases expire—in some cases, years.
New York landlords have learned the hard way that the tech sector, like others, has ups and downs. It expanded rapidly during the dot-com boom of the late 1990s, propelling rents and lowering vacancy. When the bottom fell out, vacancy jumped and rents plummeted.
But for now, the growth is boosting many landlords, particularly those with large floors in old buildings that many tech firms prefer because—like trading floors—they promote open communication and collaboration.
The floors at 450 West 33rd St., for instance, are at least 100,000 square feet in size. The building, owned by Brookfield Office Properties Inc., is getting a $200 million face-lift; one change is the replacement of small turret-like windows with large blue glass panels.
Across 10th Avenue, developer Related Cos. is building two giant office towers set near the station of the No. 7 subway line extension that is set to open later this year.
The St. John's Terminal has floors that are larger, more than 200,000 square feet—perhaps the largest floors in Manhattan.