Tech firms may be embracing remote work in a big way since the pandemic, but they’re still buying up office buildings too.
Google is still placing big bets in the office sector. The company just announced it's purchasing an office building in New York City for $2.1 billion, the priciest sale of a single U.S. office building since the start of the pandemic and one of the most expensive in U.S. history, according to Real Capital Analytics.
“Fears of the office building’s demise look overblown,” The Wall Street Journal reports. Even as the COVID-19 delta variant spreads, companies are showing renewed interest in returning to the office one day. They’re making plans for their return, too.
They're being drawn to lower office rents and higher vacancy rates. In Manhattan, office asking rents have dropped to 2017 levels. That’s prompted August leasing activity to more than double when compared to the previous month in Midtown, The Wall Street Journal reports.
The higher demand for office buildings comes at a time when many companies have embraced remote work. Google has allowed its employees to work from home since the spring of 2020. The company has recently delayed its return to the office until January 2022.
“But the Manhattan office purchase underscores how the company views office space as an important part of its long-term strategy,” The Wall Street Journal reports. Google’s $2.1 billion purchase is for a 1.3 million-square-foot property on the waterfront of Manhattan’s West Side.
Google, Facebook Inc., Apple Inc., Amazon, and other tech companies have become some of the largest renters and buyers of office space across the country. They’re taking advantage of lower office building prices.
"Even if they have 20% of their workforce working remotely, business is just growing so fast that the other 80% still needs a place to go," Brian Kingston, chief executive of Brookfield Property Partners, told The Wall Street Journal.