BY WINNIE McCROY | Internet giant Google announced on Tues., March 20, its purchase of Chelsea Market from Jamestown for $2.4 billion.
The two companies have agreed to work together to ensure a smooth change of ownership, with Jamestown retaining its role as a manager of the building’s retail and food hall presence.
Google was already the largest tenant in the 1.2 million-square-foot former Nabisco factory complex, having leased about 400,000 square feet of space. In 2010, Jamestown sold Google its headquarters at 111 Eighth Ave. (directly across from Chelsea Market) for $1.77 billion. Google’s New York offices have grown to include about 7,000 employees, from more than 70 countries, with large teams focusing on projects.
“It’s been eight years since we purchased [111 Eighth Ave.], but not before taking on additional space as a tenant in Chelsea Market and 85 10th Ave.,” David Radcliffe, Google vice president of real estate and workplace services, said on the Google blog. “Today, we’re excited to announce we’ve closed a deal with Jamestown Properties to purchase the Manhattan Chelsea Market building for $2.4 billion.”
Back then, as Google was increasing its footprint in the area, local preservationists and other concerned community members said it was only a matter of time before Google took even more space in the Chelsea Market building. Those fears were intensified when Jamestown convinced the city to change zoning and approve a 300,000-square-foot addition to the Chelsea Market building.
Critics feel that deal ultimately would negatively impact the High Line, which could be cast into shadow would Google choose to create a vertical addition.
Speaking last month, Save Chelsea’s David Holowka — who is also a member of Community Board 4’s Waterfront, Parks & Environment Committee —said that, if Google is to build higher, it should site the vertical addition “where it will have less impact on the [High Line] park.”
Holowka also said that “Jamestown’s ‘multiple-block technology corridor’ seems like part of a vision that’s been around for five-plus years. Their promise to do that may have had a bearing on securing rights to the space directly above Chelsea Market and the High Line [back in 2012].”
For Jamestown, a German investment and management company focused on income-producing real estate in the U.S., this long game is all part of business. Now, Jamestown stands to make a huge profit from its original investment of $225 million in 2011.
“For Jamestown, this is the highest-profile example to date of our unique approach to creating value, but it’s consistent with transformative projects we’ve successfully undertaken across the country,” said Michael Phillips, Jamestown’s president. “It’s a combination of identifying underutilized locations, creative and visionary repositioning, value-creating management, rigorous financial analysis and patience.”
It took about 15 years of patience. In 2003, Jamestown purchased a 75 percent interest in the Chelsea Market building, transforming the site by adding a food hall and focusing on attracting tech, media and other creative tenants to the upper floors. Now, Chelsea Market is visited by more than 500,000 locals and tourists every month. The food hall has made the property extremely attractive; so much so that Google has said it won’t alter the retail aspect at all.
It is unclear how the sale will affect upstairs tenants, including the Spectrum news channel NY1, the Food Network and Major League Baseball — which has a lease there until 2022.
“Chelsea Market is a cornerstone of the Chelsea-Meatpacking district, and has been serving the local community for over 20 years,” Radcliffe said. “The iconic ground-floor market attracts visitors from all around the world and provides a great experience for foodies and shoppers alike. With our purchase of the building, we’ve agreed to work together with Jamestown to ensure a smooth transition with little or no impact to the community and tenants of the building. As part of this effort, Jamestown will continue to manage the retail and food hall.”
Despite community concerns, many locals attest that both Jamestown and Google have been good neighbors, by creating the Hudson Guild Tech Up Lab and coordinating efforts to preserve the Julien Binford mural that was removed when the former bank building, at the northwest corner of 14th St. and Sixth Ave., that housed it was slated for partial demolition.
“This purchase further solidifies our commitment to New York, and we believe the Manhattan Chelsea Market will continue to be a great home for us and a vital part of the neighborhood and community,” Radcliffe said in the statement. “We’re proud to be part of a city that’s a cross section of so many industries and cultures. And as we look ahead to the next 18 years and beyond, we’ll continue to invest in our growth and commitment to the city.”