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What ever happened to the idea that a company should avoid purchasing and managing real estate and instead focus on its core competency?
by rickmode 16y ago
What ever happened to the idea that a company should avoid purchasing and managing real estate and instead focus on its core competency?
- phlux 16y ago>"As part of the deal, we’ve retained Taconic Management Company to continue the leasing oversight services and management of the building on our behalf" The building cost ~1.9 BILLION -- may be one of the most expensive real-estate deals yet.
- kqr2 16y agoGoogle is estimated to have about $33 billion in cash (maybe $31 billion now). Google manages its money like a private hedge fund. Considering currency fluctuations, real estate is often considered a good hedge against inflation so it may seem like a smart move in the future. http://www.silobreaker.com/google-net-cash-reserves-up-70-pct-in-past-five-years-estimated-at-33-billion-5_2263906143229181979 http://www.silobreaker.com/google-net-cash-reserves-up-70-pc... http://www.fool.com/investing/general/2010/06/07/google-the-hedge-fund.aspx http://www.fool.com/investing/general/2010/06/07/google-the-...
- jonprins 16y agoNot really. Tishman Speyer Properties and Black Rock Realty jointly bought Stuyvesent Town and Peter Cooper Village (two very large, sprawling apartment complexes in Manhattan) for over $5bn, back in '06. Of course, they had to give it up in January because things didn't work out quite like they expected (rent controlled apartments don't give up the ghost easily; they'd wanted to turn them into high-class ibanker condos). Source: http://www.theatlanticwire.com/opinions/view/opinion/Americas-Most-Expensive-Real-Estate-Deal-Goes-Bust-2293 http://www.theatlanticwire.com/opinions/view/opinion/America...
- gatsby 16y agoI don't think Tishman's Stuyvesent and PCV purchases were similar to Google's purchase at all. Tishman purchased these properties to generate cash flow from single tenants and as potential development opportunities. Very different from Google's RE strategy. Regardless of short-term fluctuations, Google's NY building will likely be a wise investment because it's a long-term play and they're not dependent on the cash flow that Tishman required to cover their monthly costs. Google will save millions on annual leases, the property will probably continue to appreciate in value over time, and they can write off massive amounts for building depreciation over the next couple decades.
- joezydeco 16y agoThe building is a massive colocation site the size of a city block. It seems right up Google's alley.
- brown9-2 16y agoIt's more than that, it's also a giant office building. Here is the previous (large) HN discussion on this topic, there is nothing new in the blog post linked to here: http://news.ycombinator.com/item?id=1965686 http://news.ycombinator.com/item?id=1965686
- uxp 16y agoI know of a large holding company of luxury jewelry goods that has space in the building. For them, its not just cubicles. It would be a very poor publicity stunt to kick everyone out of the building in order to install racks and servers in every room. Other companies have enough leverage in non-internet related fields to cause a big shitstorm if it was to happen. If this is a long term approach I could see them not renew or assign new leases when current tenants vacate, but you will not see press releases. I also have no association with this story, so I can only speculate as well.
- enneff 16y agoIt already has entire floors of co-location space. That's what people are referring to. Google might have some interest in co-locating some gear there, but they would never turn it into a DC proper (it's nowhere near large enough).
- oiuytriuytr 16y agoJust think of it as a really big rack enclosure
- jkent 16y agoI would think that Google probably don't need or want to colo in Manhattan. Jersey is only milliseconds away. That being said, a growing NY engineering staff probably don't want to be in Garden City.
- cma 16y agoIt is actually less than a millisecond away, even within fiber, which is a bit slower than vacuum.
- oiuytriuytr 16y agoAnd there's enough existing spare capacity to run the amount of data a facility like this is going to handle?
- deleted 16y ago[deleted]
- mikeryan 16y agoGoogle is flush with cash, the real estate market is soft and it beats renting. Honestly I think more tech companies should look to own their real estate. Its a solid asset in the balance sheet. Most companies already have an in house facilities team who's job it is to maintain their property and you can always hire a property management firm to handle the rest. My step dad owns a few faucet stores, granted totally different field, in the Bay Area, he owns the buildings of all his stores and the value of his real estate holdings are the equivalent of the value of his business.
- kqr2 16y agoThe counterargument is that real estate is potentially an opportunity cost. Instead of purchasing real estate, that money could be used to grow your "core competency", e.g. opening more stores, expanding into other cities, etc.
- jbri 16y agoThis all sounds similar to the argument that Google should stick with search instead of moving into email. Or stick with Search + Email instead of moving into mobile devices.
- marcog1 16y agoGoogle's mission: "organize the world's information" - what information is being organized? "and make it universally accessible" - are they going to make the building universally accessible? "and useful" - I'm sure the building is useful without Google owning it :)
- ugh 16y agoGoogle's mission: "organize the world's information" - what information is being organized? "and make it universally accessible" - are they going to make the paperclips universally accessible? "and useful" - I'm sure paperclips are useful without Google owning them :) Google really shouldn’t ever buy paperclips and the ones they bought in the past were clearly wrongheaded investments.
- kvs 16y agoThey can always sell it when the price is higher and lease it back.
- patrickgzill 16y agoIt is a massive datacenter in addition to having office space. Plus, so many VOIP and Web companies are already there, it is a perfect place for Google to interconnect fee-free (or nearly so) with them.
- samratjp 16y agoOr buy them - it's chunk change anyways :-)
- dspeyer 16y agoGoogle isn't managing it. The existing management company is keeping the job. Google is just owning it.