Google, which already owns a gigantic building in Manhattan, is buying Chelsea Market for $2.4 billion. The NYT article about this gives some insight into the very strong growth of the tech sector in NYC.
Chelsea Market sits directly across Ninth Avenue from the company’s headquarters at 111 Eighth Avenue, which is larger than the Empire State Building and covers the entire block between 15th and 16th Streets.
But it is only the latest example of an internet behemoth, and even smaller tech companies, expanding rapidly in New York City.
Amazon, Facebook, Salesforce, a cloud computing company, and Spotify, a music streaming service, are all enlarging their footprints here by hundreds of thousands of square feet. Employment at technology firms has grown three times faster in New York City than in the rest of the private sector, adding more than 50,000 jobs since the end of the recession in 2010, according to a report by the state comptroller.
At the end of 2017, tech firms accounted for 29.3 million, or 8 percent, of the 398 million square feet of office space in New York City, according to CBRE, a real estate company. In a snapshot of recent tech-sector activity, those companies have leased or renewed leases for 21 million square feet of office space in the last 10 years alone. If telecom companies are included, that number jumps to 26.8 million. Nine years ago, tech firms had only 17.6 million square feet of office space, or 5 percent of the office market.
I took a few related things away from this. First, New York tech sector is large and growing, and is at a fundamentally different scale than most of the cities hoping to be big tech hubs. I believe Google already employs 6,000 in New York. Facebook employs 5,000. Amazon announced they were hiring 2,000 more just as the HQ2 bidding got underway. So in effect, NYC is already getting a piece of that action. Per the article, the city of New York has 291,000 tech jobs vs. 347,000 in Silicon Valley. That’s a decent comparison on a total jobs basis, though obviously the lion’s share of the value is getting captured in the Valley.
It also illustrates that New York’s tech environment is heavily driven by major, established players, many of them Silicon Valley based, that see NYC as a place they can recruit gobs of high end talent. What I don’t see in New York is a lot of huge, indigenous startups growing to be platform players. There are a lot of new media companies in New York. And there are some companies based here like Etsy and Kickstarter. But the impression I get is that the explosion in employment is coming out of major established firms more so than startups. New York is an obvious place for marketing, finance and other business functions. But it’s also very easy to get engineering talent to want to live here.
During the dotcom collapse, New York’s Silicon Alley 1.0 got mostly wiped out. It will be interesting to see what happens to this much larger, corporate driven ecosystem the next time there’s a downturn in tech.