Google buying new office building for $2.1 billion, employees 'need to collaborate'

In brief: Google has announced a significant investment in its New York City office expansion plans, with the company planning to acquire an office building in Manhattan for $2.1 billion. The new campus on St. John's Terminal in Manhattan, which the search giant currently leases, is due to open in mid-2023. It will become part of the firm's new 1.7 million-square-foot Hudson Square campus.

A former freight facility, the purchase of St. John's Terminal represents the most expensive sale of a US office building since the pandemic began nearly two years ago, according to The Wall Street Journal. The building will be Google's largest office outside its main California headquarters.

With Google exercising an option to buy the building in the first quarter of 2022, it will add to the massive $55.9 billion worth of land and buildings parent company Alphabet already owns. The aforementioned figure includes the $2.4 billion acquisition for its Chelsea Market building in 2018.

The space will offer a "highly sustainable, adaptable and connected building" thanks to its biophilic design, allowing employees to connect more closely to nature. The popular design concept will incorporate various outdoor open spaces, as well as reconnecting the Hudson Square neighborhood to the adjacent waterfront.

"We know that our employees, in order to really be happy and productive, need to collaborate. Because of that need to collaborate, we've been investing more and more in office space," said William Floyd, Google's director of public policy and government affairs.

Hybrid work models have evidently become more common due to the pandemic; companies are reevaluating the need for office space, leading to many vacating real estate in favor of remote working.

Google itself is delaying its complete return to offices until January. Beyond that, CEO Sundar Pichai previously revealed that most employees will spend around three days in the office and the remaining two remotely. Working culture for Google post-pandemic will also see 20% of its workforce working from home permanently, which may result in pay cuts for some.

While remote working may negatively impact productivity and innovation, it's clear that, moving forward, companies will increasingly adopt a hybrid work solution; Microsoft, for example, will allow most employees to work from home for less than 50 percent of the week.