More than a decade before Google put together a deal to buy the Chelsea Market building for $2.4 billion, the head of the tech titan’s in-house real estate team in New York was working on another marquee project.
In the early 2000s, Paul Darrah was leading the real estate team at Bloomberg LP, overseeing construction of the company’s new, 750,000-square-foot headquarters at Vornado Realty Trust’s 731 Lexington Avenue. Darrah and his team had to convince Vornado to alter their plans for a primarily residential and hotel tower, and worked to design the building to their own specifications.
It was that Bloomberg project, sources said, that put him on the radar of the city’s biggest real estate players.
“That really made everyone stand up and take notice,” said Mark Weiss, of Cushman & Wakefield. “To deliver a major corporate headquarters like that, on-time and on-budget, is a major accomplishment.”
Since May, Darrah has headed up Google’s real estate and work services department, a position that gives him a voice in some of the biggest real estate deals in the country: According to Real Capital Analytics, the global real estate assets of Google’s parent company Alphabet have an estimated value of $14.5 billion – roughly 30 percent of which is concentrated in two New York City buildings.
He was a key figure, industry experts said, in Google’s decision to acquire the Chelsea Market building from Jamestown, in what is slated to be the second priciest single-building deal in New York City history.
Darrah is also working on company projects such as the build-out of its 370,000-square-foot offices at Pier 57 on the Hudson River, and its short-term lease for more than 200,000 square feet at the Starrett Lehigh Building. Both properties are co-owned by RXR Realty.
“Google has been on a long-term expansion plan in New York for space close by to 111 [Eighth Avenue] and they have the cash to buy,” said Colliers International’s Joseph Harbert, whose company represented Google in its first lease at 111 Eighth Avenue in 2005. “I believe it has been more difficult than anticipated to empty out 111 and the need for growth-space hasn’t abated, so this is very logical for them.”
Google, LLC
After Bloomberg, Darrah went to work in corporate real estate for Lehman Brothers, where he led the partnership with Tishman Speyer on the developer’s $1 billion bid to develop Hudson Yards in 2008. The year before, Lehman had teamed up with Tishman to buy the national apartment REIT Archstone Smith for $22.2 billion – a deal that ultimately helped sink the investment bank – and part of their Hudson Yards pitch included a new headquarters for Lehman on the Far West Side.
Tishman ultimately lost out to the Related Companies and Oxford Properties Group and Lehman soon after went under. Darrah moved on to Bridgewater Associates, where he oversaw the world’s largest hedge fund’s 6 million-square-foot real estate portfolio.
At Google’s New York City office, Darrah oversees everything from identifying real estate needs, handling transactions and designing those “Googley” workspaces the company considers central to its identity.
But when it comes to opening the coffers for a multibillion-dollar real estate deal, sources familiar with Google’s inner workings said the negotiations go all the way up the corporate ladder to the Googleplex in Mountain View, California.
That would mean Ruth Porat, CFO of Alphabet and also head of the corporate umbrella’s real estate and work services department.
Porat, who was previously CFO and executive vice president of Morgan Stanley, joined Alphabet in 2015. Her take is that all the perks Google offers in its workplaces – such as stocked kitchens, food trucks and cafeterias – are “a core part of the work experience.”
“We’ve looked at it, and we think it’s a really smart way to run the business,” she told Fortune last year. “Our view is if we have people staying on site, hanging out together, the return on that is terrific.”
And while it wasn’t exactly clear which Google executives worked on the Chelsea Market deal and in what capacity, sources said the company’s California-based real estate head David Radcliffe likely played an integral role.
Radcliffe is a Google veteran who had worked on the company’s acquisition of 111 Eighth Avenue for $1.8 billion in 2010. And his fingerprints are all over Google’s other major real estate transactions, such as its $1.16 billion lease of NASA’s massive Moffett Field airfield in Santa Clara County, its $30 million plan to build 9,850 housing units for company employees in North Bayshore and Google’s 2 million-square-foot complex in Hyderabad, India – the company’s largest campus outside the United States.
But the company’s faced competition for prime real estate from tech rivals such as LinkedIn, which spent years battling with Google over expansion plans in Silicon Valley. And in New York, companies like Facebook and Spotify are aggressively growing their footprints at tech-friendly buildings in prime neighborhoods.
After the Chelsea market transaction, RXR’s CEO Scott Rechler told the New York Times that the modern tech industry is going through a significant shift.
“It’s now about the implementation and application of technology,” Rechler said. “And that’s presented an opportunity for New York, the business capital of the world. The talent pool is here.”