Google Follows in Apple's Footsteps With New $1 Billion Campus
Following Apple's (NASDAQ: AAPL) declaration last week that it was building a new $1 billion campus in Austin to grow its existing presence in the live music capital of the world, Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is announcing its own $1 billion campus. The search giant will be expanding its presence in New York City with a new campus, Google Hudson Square, that will be over 1.7 million square feet.
The search giant already has over 7,000 employees in the Big Apple, working across various products including Search, Ads, Maps, and YouTube, among others.
Image source: Google.
Expanding in New York
In a blog post detailing the news, CFO Ruth Porat said the company hopes to start moving employees into two of the new buildings by 2020, followed by another building in 2022 after construction is complete. The new campus will be the new main location for the company's global business organization, according to Porat. Google has been in New York City for nearly 20 years, and the city had Google's first office outside of California.
With the extra real estate, Google says it will have the capacity to double the number of workers it has in the area over the next decade. In comparison, Apple's Austin campus accommodates around 6,200 employees, and the Mac maker said it would add 15,000 employees over time at its new facility.
Google didn't want incentives
Of course, Amazon.com (NASDAQ: AMZN) made a big controversial splash earlier this year when it said its second headquarters, HQ2, would be split between New York City and Northern Virginia. The e-commerce titan has already faced considerable backlash from local New Yorkers in Queens, who fear the move will exacerbate housing costs and accelerate gentrification. Hudson Square is more centralized in Manhattan, but Google's move could likewise contribute to rising housing costs.
Amazon was also criticized for aggressively pursuing incentives from state and local governments throughout the bidding process, inevitably creating a public spectacle. Apple CEO Tim Cook called the process a "beauty contest," and said Apple wouldn't go that route. (Apple did however end up scoring various incentives from Austin.)
Apple CEO Tim Cook on Amazon's contest for its second headquarters location: "We're not doing the beauty contest. That's not Apple." #RevolutionCHI pic.twitter.com/TAKZDx3wmO
— Recode (@Recode) March 28, 2018
Google specifically did not pursue any incentives, according to The Wall Street Journal.
Hey, big spender
In terms of capital expenditures, Google has been on a massive spending spree all year long, including a separate $2.4 billion purchase of Chelsea Market, also in New York City. In addition to facilities investments, the company is dramatically ramping up investments in technology infrastructure, including data centers and undersea cables, Porat elaborated in April. Year-to-date capital expenditures through the first three quarters of 2018 totaled a whopping $18 billion, more than doubling over the comparable period in 2017.
"Facilities [spending] does tend to be lumpier over time. We are continuing with the ground-up development projects," Porat had said. "As a reminder, we do favor owning rather than leasing real estate when we see good opportunities and that has served us well over the years."
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Amazon and Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, and Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.
