Here’s Why Major Tech Companies Are Investing Big in New York Real Estate
After Amazon’s caustic breakup with New York City came to pass on Valentine’s Day 2019, even the most optimistic tech enthusiasts had to doubt that the e-retail giant would ever return to New York City in force.
Why would it, when its much-negotiated plans in the city had fallen through? Amazon’s dreams of having a four-million square foot campus on the East River had crashed and burned, and any return it did attempt would lack the nearly $3 billion in public funds it had negotiated for during H2Q negotiations.
Given the acrimony of the split and the volume of perks lost, a reasonable person might think that Amazon would storm out of New York and seek the support it wanted elsewhere. But now, shockingly, Amazon is back in town — and it won’t be leaving anytime soon.
In early March, Amazon paid $1.15 billion to acquire the iconic Lord & Taylor building on Fifth Avenue, which it intends to staff by 2023. Company press releases further indicate that the e-retailer plans to recruit a whopping 2,000 employees from New York City.
But how does this about-face make sense? Wasn’t the whole point of Amazon’s split with NYC that the city couldn’t offer what the company needed? Well, yes — and no.
Amazon might not be getting $3 billion in public support anymore, but New York is still one of America’s foremost business hubs. Over the last decade, New York has become the East Coast equivalent of Silicon Valley, offering a welcoming home to established tech giants and nascent startups alike.
“We know that talent attracts talent, and we believe that the creative energy of cities like New York will continue to attract diverse professionals from around the world,” Ardina Williams, Amazon’s vice president of workforce development, shared in a release on Amazon’s office acquisition.
Other major companies seem to share this sentiment. Before the pandemic took off in March, Google added over 1.7 million square feet of commercial real estate towards its developing campus in Manhattan. Apple, Amazon, and Facebook have purchased more than 1.6 million square feet of office space since the start of 2020.
But New York doesn’t just offer an exceptional business location — it also provides top-tier talent. NYC currently encompasses over 120 universities and is ranked first globally for the number of STEM-field graduates produced annually. A full tenth of the nation’s developers live in New York City, and, according to a recent HR&A report, tech firms in the city have the fastest average hiring time for engineers across all US tech hubs. Major player statistics underpin New York’s talent advantage; collectively, Google, Facebook, Amazon, and Apple have hired over 2,600 employees in New York since the start of 2020.
Worth noting, too, is that Startup Genome ranked NYC first globally in terms of funding availability and quality. The metro region alone received an incredible $13 billion in funding in 2018. New York’s wealth of available talent, preexisting tech presence, and deep funding pools cement NYC as a go-to place for tech interests.
Moreover, tech sector optimism continues to run high despite the uncertainties of COVID-19. As one writer for the New York Times recently reported: “Executives at the companies said their investments even during one of the city’s darkest periods reflect their belief that the features that set New York apart — its diversity, culture, regional transportation network and numerous colleges and universities — will keep luring people after the pandemic.”
Of course Amazon has returned to the city; its acrimonious exit was a $3 billion bluff. It would be a mistake to view the city as being any less than it is: one of America’s foremost tech hubs.
Originally published on NovelPropertyVentures.com
