October 14, 2020 | technology | No Comments
Facebook has just leased enough new office space in Manhattan to nearly triple its current local work force, including at one of the city’s most iconic buildings, the 107-year-old former main post office complex near Pennsylvania Station.
Apple, which set up its first office in New York a decade ago, is expanding to another building in Manhattan. And Google and Amazon are stitching together corporate campuses in the city more quickly than anywhere else in the world. Amazon paid roughly $1 billion in March for the iconic Lord & Taylor building on Fifth Avenue.
Despite a pandemic that has ravaged New York, hollowed out many of its office buildings and raised fundamental questions about its future, the four companies collectively known as Big Tech are all significantly expanding their footprint in the city, giving it a badly needed vote of confidence.
With fears that the virus could spike again in the colder months, many companies are grappling with how, when and even if office workers will come back to buildings in Manhattan. And the tech giants have not brought their workers back yet, either.
Even so, the giants have not only moved forward with previous growth plans, but have also increased their pace of hiring and office acquisition during the pandemic.
The industry’s embrace of New York City comes despite the tumultuous reception that Amazon received last year when it proposed building a sprawling headquarters in Queens. Amazon abandoned the plans in the face of political and community opposition, but now has acquired more than 2 million square feet of office space for corporate workers, as well as warehouses from Staten Island to Queens to the Bronx.
After Amazon bought the Lord & Taylor building, it announced in August that 2,000 employees would eventually work there, increasing by half its current tech work force of 4,000.
Amazon now has eight office properties in New York, most of which are clustered in Midtown. The company recently expanded outside Manhattan, leasing space on the Brooklyn waterfront for its Amazon Music team.
“We know that talent attracts talent, and we believe that the creative energy of cities like New York will continue to attract diverse professionals from around the world,” said Ardine Williams, Amazon’s vice president of work force development.
Even with Big Tech’s expansion, the city continues to face a fundamental challenge: Most offices have been deserted since March, devastating the local economy and the ecosystem of transit, stores, restaurants and other business that depend on workers. Only about 12 percent of workers have returned to Manhattan offices managed by CBRE, a commercial real estate firm that manages 20 million square feet of office space in the city.
Many people do not want to go back to offices until there is a vaccine. Even after that, there are mounting questions about whether the pandemic has fundamentally tarnished the allure of the office towers of Midtown and Lower Manhattan.
What’s more, a recent uptick in new cases in parts of Brooklyn and Queens has raised fears that a second wave looms and that restrictions on daily life could be reimposed.
Collectively, Amazon, Google, Facebook and Apple have hired more than 2,600 employees in the city so far this year, bringing their total employment to over 22,000 people. Facebook alone has added 1,100 workers to bring its current work force up to 4,000.
Apple, Amazon and Facebook have gobbled up more than 1.6 million square feet of office space since the start of the year, most of which was leased or bought during the pandemic. Before the pandemic, Google added about 1.7 million square feet of office space as part of a corporate campus rising along the Hudson River in Manhattan.
The companies now have enough new office space to hire another 15,000 employees. When those workers will arrive at the new offices remains uncertain; all four companies have allowed their employees to work remotely and some, including Facebook, foresee a future in which up to half its employees work from home.
Executives at the companies said their investments even during one of the city’s darkest periods reflect their belief that the features that set New York apart — its diversity, culture, regional transportation network and numerous colleges and universities — will keep luring people after the pandemic.
To a large extent, the companies are also wagering that current and future employees will be eager to return to shared workplaces that promote spontaneity and collaboration.
“The big takeaway here is that New York will always be a tech hub,” said William Floyd, director of external affairs for Google’s New York offices, which has about 9,000 workers, more than half of whom are engineers.
Google is on target to employ 14,000 people in the city in the coming years, fulfilling a 2018 pledge to double its New York City work force. The company has pieced together a sizable corporate campus in and around the Chelsea neighborhood in Manhattan, including several properties that are under construction.
The tech sector first settled in New York more than two decades ago, a tiny player in the shadows of the city’s traditional powerhouse industries like finance, media, real estate and health care. Google opened its first outpost outside California, a sales office in Manhattan with a lone employee, in 2000.
But in recent years, New York has blossomed into a bona fide tech hub, an East Coast rival to Silicon Valley that has become a second home to tech behemoths but has also given rise to thousands of start-ups.
The larger companies have established a tech corridor on Manhattan’s West Side, stretching from West 34th Street in Midtown south to the World Trade Center area in Lower Manhattan.
The focus of the tech companies in New York has shifted from marketing and sales departments to teams that mirror those in Silicon Valley. They have recruited engineers and developers from local and regional universities and filled some roles with West Coast employees who want to decamp to New York City.
For every Big Tech company in the city, there are numerous smaller but still sizable firms, including Salesforce, LinkedIn, Spotify and ZocDoc. Microsoft, another tech giant, has a modest presence in offices near Times Square.
Before the pandemic, the city’s tech sector employed 150,100 people, and had added a total of 15,700 jobs in 2018 and 2019, according to the New York State comptroller’s office. Most of the new jobs were in fields like software, data processing and internet publishing.
The pace of hiring is expected to keep climbing.
In August, when Facebook grabbed all the office space at the James A. Farley Building near Pennsylvania Station, it cemented Manhattan’s West Side as its East Coast campus.
The company said it leased 730,000 square feet at the old post office in part because of its cavernous layout — a rarity among New York City buildings — which mimics the large open areas at its headquarters in Menlo Park, Calif. When a renovation is completed next year, the building will be filled with engineers.
“The floor plan will allow for multiple teams to be housed on those floors,” said Jamila Reeves, a company spokeswoman, “and we don’t necessarily have to break folks up.”
Around the corner from the Farley Building, Apple signed a lease for 220,000 square feet at 11 Penn Plaza, a 1923 Art Deco tower near Madison Square Garden.
Before the deal, Apple, which has said very little about its plans in the city, had not expanded beyond an office building on Fifth Avenue in the Flatiron neighborhood that it moved into in 2011.
Smaller tech companies have also kept adding to their payrolls right through the outbreak.
MongoDB, a cloud database platform whose headquarters are in Midtown Manhattan, has hired 97 employees since the beginning of the pandemic, bringing its total work force in the city to 551.
The company, whose products are used by Verizon, eBay and Adobe among other companies, has more than 2,100 employees worldwide and is creating a hybrid work model to have employees work remotely some days and in the office on others.
“While there are questions about what the future of work post-Covid will look like, we plan to maintain office spaces in New York,” said Dev Ittycheria, the company’s chief executive. “We believe that being physically present with colleagues in an office can offer important opportunities for in-person interaction, collaboration, and connection that are important for the success of our company.”
One of the company’s newest hires, Farah Wahab, started in August as a product marketing manager after working for five years at tech companies in San Francisco.
Though San Francisco has a far larger tech scene, she said the city felt more insular compared with New York.
“I love S.F. but it can feel a bit like a tech-centric bubble isolated from the real world,’’ Ms. Wahab, 32, said. “Being around different industries and types of people, as well as greater access to the market, was important to me both personally and professionally.”
Kia D. Floyd, Facebook’s head of public policy for the east and Midwest regions, pointed out that the company set up shop in New York shortly before the 2008 great recession, another challenging period of uncertainty in the city.
“People fled the city then and didn’t think it would come back,” Ms. Floyd said. “But the city has grit and resilience and diversity, and it was always going to be inspirational for businesses like ours.”