Google is going up on the Hudson Yards.
The internet giant announced on Saturday it will pay $2.2 billion for what will be the biggest residential building in Manhattan, 40 Hudson Yards. Google will become a landlord in the 25-acre residential, retail and office development by buying a partial interest in a new building, 38 Hudson Yards, and another building, 26 Hudson Yards, both of which are slated to open in 2022.
Google is paying $820 million upfront and $1.06 billion over time to buy the 49 percent interest in the buildings it does not already own from Goldman Sachs. Google also made a $900 million payment to take ownership of eight prime office spaces across the river, where the company will “register for occupancy” by December 31, the end of 2018.
The deal makes Google the largest office tenant in Hudson Yards, the city’s first large-scale residential development along the East River. About 10 percent of Google’s workforce currently works in New York.
Google on Friday began asking state officials to approve permits to begin work at the sites, which will cover an area the size of 19 football fields and sit in the shadow of a shimmering 30-story, 1,400-foot-tall residential tower being built by Related Companies. The first home in the project is the 15-story West Wing, a luxury rental building due to open in 2019.
That tower will come as Google and Related clash over other matters. Google has long planned to build the new headquarters of its YouTube Music service in what is known as Chelsea, a large upmarket district where Related is building an office tower. But Google told Related it needed the space at Hudson Yards first. Related said on Friday that Google has also purchased about half of the Broadway Block between West 34th and West 35th streets.
For now, Google employees will occupy 553,000 square feet in the West Wing, and 2.9 million square feet in the 16.6-acre Hudson Yards development, according to Newsday.
Google opened its first office in the city in 2002 in what was then a postindustrial and industrial area in downtown New York. The company’s lease, which comes up for renewal in 2019, covers about 200,000 square feet in Midtown South at 1201 Avenue of the Americas, the city’s sixth-largest office complex and home to companies such as BlackRock, the hedge fund.
On Friday, Google executives met in New York with members of the city’s Economic Development Corporation to talk about their plans.
“I’m excited to see Google become part of Hudson Yards,” Willem Buiter, the CEO of investment bank Moore Capital, said in a statement. “The project is a substantial engine of development, and we will continue to be opportunistic in finding the correct real estate transactions.”
Hudson Yards is being built by New York-based Related Companies, with a capitalization of about $11 billion. It is owned in part by its joint venture partners with pension funds, Tishman Speyer and Oxford Properties Group. Related also owns the U.S. headquarters of Paris-based cosmetics company L’Oreal.
New York was home to a smaller Google presence than rivals such as California and the Netherlands, but the company has built up its presence in New York in recent years. In 2014, it announced that it would open an engineering office at 335 Hudson Street on the East Side.
When it opens, Hudson Yards will become the Manhattan district’s second residential community, behind the 15-story Residences at One Journal Square, built by Related along the West Side.