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Google said to be close to buying its New York headquarters building for $2 billion

October 27, 2010 |  5:01 pm

Google appears to be on the verge of buying one of the largest buildings in Manhattan for about $2 billion in a megabucks deal that could set real estate records, according to reports.

The Internet giant already rents about 550,000 square feet for its 2,000 employees in the building, considered a trophy address for the top tech, entertainment, fashion and media companies in New York. It may be eyeing expansion in the so-called Googleplex East.

The 18-story building that is 99% leased in the Chelsea neighborhood has 2.9 million square feet of space and stretches across an entire city block.

According to the New York Post, as a former Port Authority of New York and New Jersey industrial property, 111 Eighth Ave. comes equipped for high-tech businesses with plenty of backup generators, electrical power and fiber optics for tenants.

The sale would make it one of the largest acquisitions of a single property in New York. Google was apparently one of many bidders, including real estate investment trusts, overseas entities and sovereign wealth funds from the Middle East and Asia. High-end buildings with strong anchor tenants like Google have kicked off bidding wars.

The deal would be a boost for the New York real estate market, where sales have ranged around $400 to $500 per square foot in recent years. The Google deal would be nearly $700 per square foot. In 1998, an investor group bought the building and three others for $387 million for 111 Eighth Ave.

Google can certainly afford a real estate shopping spree: It has $33.4 billion in cash.

-- Jessica Guynn