Landmark NYC Building (and Google HQ) for Sale: $2 Billion

The proposed mosque and Islamic community center a few blocks from Ground Zero isn't the only interesting real estate story in New York City these days.

Massive 111 Eighth Ave., which occupies an entire city block in Chelsea -- and is home to Google's (GOOG) New York headquarters -- is for sale, according to the New York Post. The huge structure -- it's the former Port Authority building and the city's third largest building at nearly 3 million square feet -- may fetch a whopping $2 billion, the paper reports.

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It's a very special building indeed, not only for its long history and remarkable size, but for it's current importance as one of the East Coast's key "telecom hotels" -- locations where communications and networking firms hook up their hardware. One way to think of telecom hotels is as important physical nodes of the nation's communications infrastructure, which is why you don't hear a lot about them, for obvious reasons.

The building is so big it has elevators that can fit full-size semi trucks. It also has powerful backup generators in case of emergency. In fact, there's some debate about precisely how big 111 Eighth really is: Some rank it as the second largest office building in the city, others as third or fourth: When you're measuring buildings in the neighborhood of three million square feet, there's a bit of a margin for error.

Here's how I described 111 Eighth Ave. for a Village Voice article on Google's arrival to New York in 2006.

111 Eighth Avenue, designed by Lusby Simpson and completed in 1932 to house the Port Authority of New York, is one of the largest buildings in the city, an architectural marvel, and a landmark. Looming like a 15-story locomotive over Chelsea, the mammoth red-brick structure occupies an entire city block between Eighth and Ninth avenues and 15th and 16th streets -- a footprint larger than two football fields.
The art deco landmark is fast becoming one of the most important high-tech facilities in the world. Google's blockbuster invasion of New York and its impending takeover of nearly two floors of the massive building aim to make New York City a key component of its little-publicized global expansion -- the details of which have become fodder for a mildly hysterical parlor game in the technology community and on Wall Street. The ultimate goal? Perhaps the planet's biggest ever computer network, bypassing all those pesky cable and telephone companies.

That's why what lies beneath 111 Eighth Avenue may be more important than the building itself. The old Port Authority headquarters sits atop one of the main fiber optic arteries in New York City -- the Hudson Street -- Ninth Avenue "fiber highway." The venerable behemoth is already one of the country's most important "carrier hotels" -- loosely speaking, the physical connection points of the world's telecommunications networks and the World Wide Web. As a result, Google will "have access to as much bandwidth as possible and as much variety of bandwidth as possible," says Dana Spiegel, a technology consultant and executive director of NYC Wireless.

A $2 billion sale of the building by its ownership group, which includes Taconic Partners, would be the city's largest real estate deal of the year, the Post says. Google is the largest tenant, leasing 500,000 square feet over three floors. The building was valued at $300 million in 1998, $800 million in 2004, and, apparently, as much as $2 billion today.

Yeah, that's pricey, but there's no doubt this is one of the most special buildings in New York City.