Google’s Moves at 111 8th Focus on Office Space

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The exterior of 111 8th Avenue, one of the premier carrier hotels in Manhattan.

Manhattan real estate watchers are scrutinizing Google’s actions as the search giant settles in as the new landlord of 111 8th Avenue, one of the city’s major telecom and data center hubs. Early indications are that the company’s strategy is all about the office space.

That aligns with statements by Google executives, who said the deal was driven by the growth of the company’s workforce, rather than any ambitions to control a key piece of Internet real estate. Nonetheless, there has been speculation about how the company might handle its role as landlord of one of Manhattan’s primary Internet connectivity hubs, and what it might mean to the telecom carriers and data center operators who are tenants in the building.

Several weeks ago all available space at 111 8th was taken off the market, suggesting Google wants that space for its own operations. That view is reinforced by an update Tuesday from Michael Mandel of Grubb & Ellis at the Data Center Practice blog.

“We have heard rumors that current tenants without renewal options have received letters from Google indicating that they should not expect to renew in place, and real estate industry sources claim that Google tried unsuccessfully to buy Nike out of its sixth floor lease,”Mandel writes. “We have also heard from a data center tenant in the building, that the company received an ultimatum to the effect of – we will let you renew your POP space if you agree to terminate your office space early. The jury is out for the future of data center tenants, but it certainly appears that new data center users and expanding tenants will not have any options in the building.”

What about existing telecom and data center tenants? It’s too early to say. and it remains to be seen whether these early reports  reflect a broad strategy or a new landlord dealing selectively with tenants. It’s safe to say that future lease expirations for large tenants will be closely watched.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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