Google is said to be close to signing a $2.4bn deal to establish an East Coast base in New York City, the latest in a series of moves by tech firms who believe Silicon Valley‘s best days may be “over”.
Reports said the multinational tech giant, valued at $133bn, is ready to finalise a deal for a building in the meatpacking district, close to offices it already rents there. The building, a former Nabisco factory, occupies an entire city block and the Associated Press said it would be among the most expensive real estate deals in the city’s history.
If it goes ahead, Google would be among a number of tech companies that are looking to expand their New York footprint. Concerns about the soaring cost of living in San Francisco, and worried that innovation may be accelerating faster in other parts fo the country, a number of firms are looking to New York and other cities.
New York recently welcomed an enlarged presence from Facebook and Spotify. Meanwhile, even as New York waits to hear if it is the lucky one among 20 finalists that have applied to be the base for Amazon’s second headquarters, Jeff Bezos’ company recently signed a deal to bring 2,000 employees to a property on the city’s west side.
Representatives for Google did not respond to requests for comment about the company’s New York expansion plans, which was first reported by the real estate publication The Real Deal.
The AP said New York had been pitching itself as an alternative to Silicon Valley for years. While tech may never rival financial services and Wall Street as the most important private-sector employer and economic driver, it has already established a legitimate footprint that goes beyond a handful of giant companies.
A report by state Comptroller Thomas DiNapoli found the city had 7,600 tech firms in 2016, an increase of 23 per cent since 2010. The report said the average salary for tech employees in the city was $147,300.
Julie Samuels, executive director of Tech:NYC, a trade association of New York tech companies, said the presence of large companies like Google and Amazon has created “a robust ecosystem” where young engineers and others move to New York to work for the large companies and then leave after a few years to found startups.
The news comes as a number of other tech giants are looking to find alternative locations for investment opportunities and expansion. The New York Timessaid Robin Li, an investor with the San Francisco venture capital firm GGV Capital, recently led a three-day bus tour through the Midwest, stopping in Youngstown and Akron in Ohio, Detroit and Flint in Michigan and South Bend in Indiana.
The trip was pitched as an opportunity for Silicon Valley investors to meet local officials and look for promising start-ups in overlooked areas of the country.
“I’m a little over San Francisco,” Patrick McKenna, the founder of High Ridge Venture Partners, told the newspaper. “It’s so expensive, it’s so congested, and frankly, you also see opportunities in other places.”
Last December, AOL founder Steve Case, pledged to invest mostly in start-ups outside of San Francisco, “we’ve probably hit peak Silicon Valley.”
He announced he was establishing a $150m fund, Rise of the Rest, to offer seed money to start-ups in areas not traditionally associated with technology. The fund is being co-managed by investor JD Vance, the author of the recently published Hillbilly Elegy.
It already has the support of a group of three-dozen of the US’s best-known business leaders including Jeff Bezos, Sara Blakely, and Howard Schultz.