The Real Deal New York

Google is buying Chelsea Market building for over $2 billion

Jamestown in contract to sell the 1.2M sf office-and-retail property at 75 Ninth Avenue
By Mark Maurer | Twitter_logo_blue copy February 06, 2018 10:00AM

Google’s Sundar Pichai, Jamestown’s Michael Phillips and Chelsea Market at 75 Ninth Avenue

Google did not have to search far and wide for results.

The tech giant is close to acquiring the Chelsea Market building from Jamestown for north of $2 billion, The Real Deal has learned.

The 1.2 million-square-foot office-and-retail property at 75 Ninth Avenue is home to the popular food hall as well as Major League Baseball and the Food Network. Google is already the largest tenant at the building, leasing about 400,000 square feet of space. The company’s New York headquarters, at 111 Eighth Avenue, is right across the street.

The deal, which looks to be the first billion-dollar-plus trade to go under contract this year in New York, is slated to close in two months, according to sources familiar with the transaction. They said that Google is paying over $2 billion, or north of $1,600 a square foot. The transaction would give an early boost to the city’s investment-sales market, which saw only one single-building deal exceed $2 billion in 2017 – HNA Group’s purchase of 245 Park Avenue.

WATCH: TRD breaks down Google’s $2B+ bid for Chelsea Market

Atlanta-based Jamestown bought out its partners Angelo, Gordon & Co., Belvedere Capital and Irwin Cohen in the building for $225 million in 2011, valuing the property at nearly $800 million at the time. Cohen had developed Chelsea Market in 1997 after spending only $10 million on the foreclosed mortgage debt.

It was not immediately clear what Google is planning for Chelsea Market, though sources said the company is expected to keep the status quo at the property’s retail component. The property, located between West 15th and 16th streets, is almost fully occupied. For example, MLB, which is based at 1271 Sixth Avenue, has a lease there until 2022.

Google was expected to try and muscle out other tenants at the building, where it has been rapidly swallowing up space, expanding with each lease expiration at the property.

CBRE is representing the buyer and Cushman & Wakefield is representing the seller, sources said.

Representatives for Google, a subsidiary of Alphabet Inc., could not be immediately reached, nor could representatives for Jamestown. The company, which is associated with German-owned syndicator Jamestown US-Immobilien GmbH, is represented in U.S. real estate deals by Michael Phillips.

Google is already one of the most significant tenants in Chelsea. It paid a then-record $1.77 billion in 2010 to buy its New York headquarters at 111 Eighth Avenue, though it’s been unable to get existing tenants at the 2.9 million-square-foot property out fast enough to meet its space needs. It also has about 240,000 square feet at Vornado Realty Trust and Related Companies’ 85 10th Avenue.

In December 2015, Google signed a 250,000-square-foot lease at RXR Realty and YoungWoo & Associates’ SuperPier project. While that space is being built out, the company has been negotiating to take about 200,000 square feet at RXR’s Starrett-Lehigh Building on a short-term basis.