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Big technology companies are doubling down on New York City (wsj.com)
46 points by mkane848 8 days ago | hide | past | web | favorite | 84 comments





The article misses the point that a big part of Amazon's HQ2 was building new offices in an industrial area of LIC and not using existing real estate Manhattan.

True, but one could argue that several east river neighborhoods are just extensions of the Manhattan density and culture, with the perk of having an actual view of Manhattan.

I get that some people want their own borough's identity, but LIC doesn't really represent that.


No borough identity is truly intact. Brooklyn of today bears little to no resemblance of what it used to. Similar gentrification is happening in queens and to a lesser extent the Bronx. Staten Island? yeah it's identity has the best chance of staying intact

New York City is comprised of the five boroughs, not just Manhattan.

And? All of the companies listed in the article are expanding in Manhattan, including Amazon.

"Many of these companies are willing to spend big dollars renting high-end Manhattan real estate, rather than the older office stock in Queens that Amazon was prepared to lease."


LIC is already gentrifying extremely rapidly. There are high-rise apartment blocks sprouting like weeds, it’s not going to be industrial much longer.

If anything it’s a poor place to put jobs, because unless you live in Queens itself the transport links are extremely poor.


Manhattan can build higher to meet office space demand.

“A company like Facebook and others are expanding because they are running out of talent in Silicon Valley and San Francisco,” said Paul Leonard, a managing consultant at CoStar.

Honest question... is that really true? It reads like hyperbole or certainly an over simplification.


Facebook already pays its median employee $240k (https://www.sfchronicle.com/business/networth/article/Yes-me...). You can assume that at those salaries, they've already hired a large percentage of the Bay Area software engineers who meet their bar and are willing to work at Facebook.

So if they want to hire another, say, 5k engineers, they either have to somehow convince 5k people to move to the Bay Area or expand in satellite offices. Word on the street from local recruiters is that you can still get new grads to move to the Bay Area (for a few years at least), but it has become nearly impossible to get senior talent to move in because of cost of living and quality of life issues. So depending on the type of engineer they're looking for, yes, they may be effectively forced to expand in other locations.


Strongly disagree. Have people here actually worked with former Facebookers or Googlers (or people who left for Facebook et)?

They are very likely to be very good and very unlikely to be bad. But they are not gods walking amongst us. There are hundreds if not thousands of professionals in the Bay Area who have the talent FB is looking for AND are working at nearby, lower-paying companies. Facebook pays higher than Amazon, Uber, and all kinds of "sexy startups". So I can't buy the scarcity of talent excuse.


I'm actually not sure how much talent Facebook could pick up locally by just opening the floodgates, which is what I believe you're advocating? I'm a former Facebook intern and Google employee, and don't plan on returning to either company even if it were the income-maximizing move for me (luckily, it isn't). Anecdotally, I've met many other local engineers who feel the same way.

What didn't you like about working for Google?

What do you consider to be more income-maximizing than Facebook and Google?

I can believe that, but NYC is just as bad, maybe even worse, isn't it? Seems like "out of the frying pan into the fire".

Software engineer salaries are fairly comparable between NYC and the Bay Area, although most quantitative sources I've seen have NYC coming in slightly lower. But NYC could have a large number of engineers who (1) are willing to work for Facebook (2) for $240k but (3) are unwilling to leave NYC.

Expanding their NYC office will allow Facebook to hire more of those engineers without lowering their hiring bar or further fragmenting campuses.


At a minimum, NYC is just very different from SF and the South Bay. Leaving aside costs and salaries, which are both probably a bit higher in the Bay Area, the environments overall are just a lot different.

Lots of people who love the access to nature, the climate, etc. in the Bay Area would never move to NYC. And lots of people who consider anyplace that's not Manhattan to be a provincial hick town would never move to the Bay Area.


> Lots of people who love the access to nature, the climate, etc. in the Bay Area would never move to NYC. And lots of people who consider anyplace that's not Manhattan to be a provincial hick town would never move to the Bay Area

I'm closer to the second camp (though I live in Brooklyn).

Something a lot of people don't seem to realize is that there are a lot of very smart people working on trading apps for big banks on Wall Street that absolutely hate it. High Frequency Trading apps require a ton of programming talent, but a lot of the engineers who work on this stuff really dislike the bank atmosphere. When I worked at Jet.com, I had several coworkers who were substantially smarter than me, who actually took a paycut to work for Jet, simply because they hated the bank environment so much.

I think some of the tech companies know this fact, and feel that they can probably poach some of this talent by offering competitive salaries while having a more interesting atmosphere.

EDIT: DISCLAIMER

I work for one of these "primarily California companies expanding stuff to NYC".


I actually like visiting Manhattan but I don't think I could ever tolerate living there. I spent a summer interning in Midtown for a small consulting firm while in business school. We're admittedly talking pre-Giuliani New York in the summer with very little money but it still wore on me to the point where I pretty much decided I wasn't interested in working there.

I do, on the other hand, understand the attraction of the Bay Area given enough money although, in this case, the negative side of the balance sheet has gotten much longer and redder.

I agree with your basic point. Another reason I never seriously went after an investment banking job was that the sort of thing I was interested in was pretty much viewed as grunt stuff that techies did, i.e. not really respected.

(ADDED: I was using Manhattan as a term for the [nice uber-urbanized] parts generally although I know that's not accurate. I don't think I ever set foot in Brooklyn until relatively recently.)


The nice thing about New York is that the transport infrastructure, while unreliable, exists so that you could live anywhere in the five (well, four) subway connected boroughs that pleases you. Want to live in a leafy suburb with a modest front and back yard? Head to Queens!

The Bay Area’s transit system is a joke in comparison; if companies have to resort to a private shuttle system to get anything done, it’s reflective of a failure in planning.


I think big tech companies are so large that they've realized that if they keep pumping $200k-$500k/yr employees into the bay area (that weren't there before):

1. Housing prices will continue to increase since the supply is not changing yet demand (and ability to pay at current prices) is increasing

2.1 Gentrification happens and existing bay area natives get more adversarial to tech companies

2.2 Existing employees experience a decrease in QOL if comp packages remain the same

3. Tech companies keep having to increase TC packages to keep their employees' abilities to purchase homes

Also by expanding into other large markets tech companies can hire people who have lots of ties to an area and don't want to move. This has an added benefit of perhaps not having to offer as much TC since these markets might be less competitive.


NYC TC is fairly close to SF TC.

However: 1) Software (&c.) is not the dominant industry, so rising salaries in software does not have an outsized effect on the real estate market.

2) The NYC housing market, unhealthy as it is, is healthier than the SF Bay Area's. NYC is somewhat less geographically constrained and, importantly, has excellent public transit infrastructure for long-distance commutes from lower-cost outer suburbs.


So it's even better, not considering the bad career effects of not being at HQ?

The NYC housing market is larger and healthier so an increase in X employees there will have less of an impact than an increase of X employees in SV

They can certainly find more talent in the bay area, if they were willing to pay even more.

In SV and SF, half the paycheck goes to the GOv and the other half goes to real estate.

If you want to cut labor costs, Simply find a city with a lower cost of labor. There's plenty to choose from: Austin, Dallas, Houston, Chicago, etc. All of these places sport roughly 100K salaries for senior devs. They could hire all the engineers they wanted.

And of course, there's always the final (least palatable) option: Improve your highering process. It's pretty ridiculous when half the employees of your own company wouldn't hire the other half.


California's tax code contributes to housing illiquidity in the SF Bay Area.

A dev who bought a home eight years ago has a substantially different net income after housing and taxes from a similar dev who would be moving to the area.

So there's some merit to the idea that SV/SF have a fixed number of developers for whom salaries in the $150k-250k range are excellent, and another pool of "new arrivals" for whom that salary is decent/good, but results in a substantially lower quality of life. Further raising salaries distorts the real estate market even more.

Since SV/SF/California seems uninterested in the political moves necessary to improve the housing supply (sensibly, as these market changes would negatively impact the voters who have bought into the current system) the natural result is to move to other geographic markets for talent.


Not if the engineers don't want to live there...

There's plenty of engineers that already live in those cities though?

Which, in all likelihood, is the primary reason why Silicon Valley does not want to move out of Silicon Valley.

I've seen more than a few posts at here where candidate for jobs in Silicon Valley is given an offer but turns it down because they don't want to move to Silicon Valley/San Francisco for various reasons.

Various reasons usually boiling down to an obscene cost of living. For most of the other major cities in the US (excluding maybe NYC, Boston, Seattle, DC) a salary doubling wouldn't make you whole for a move to the Bay Area.

DC here. Any time I’m distressed about the cost of living, I just look at the Bay Area. As far as I can tell, housing is at least 3-4x more expensive. Even on a senior engineer’s pay, your choices come down to something tiny or something that requires a very painful commute.

I wouldn't go that far... or maybe it depends on what you define as "tiny".

For a place to rent you can find 2500 sqft higher end apartments relatively close to work for 3000-3500 a month. The total income of a senior engineer when you factor in the stock compensation (and not just the base salary) should more than cover for that. On top of it, many other things cost the same across the country (ex. gadgets) while your salary is much higher than other places.

Now if by "cost of living" you mean that you must _own_ a single family home, then things definitely start looking a lot more grim. But I think it's unfair to make that as some sort of basic requirement for moving somewhere, it's a very American attitude to begin with.


It’s a basic requirement for me to move somewhere. I don’t much care if that’s fair or not.

Where can one find 2500 sqft apartments for 3000-3500? Very curious.

You can't in SF. Anything new would be under 1000'.

I know of some in the 1500' range, which is huge, on the peninsula, but I'm not telling anybody.


I suspect the availability of better public transport allowing a commute from 50/60 miles on the train which in turn allows you to buy a nicer bigger property.

I suspect that most of the young tech and finance workers in NYC live in Manhattan, Brooklyn, Queens (LIC in particular), Jersey City, and Hoboken -- all of which are expensive and right in the center of the metropolitan region. I am sure some recent college graduates are commuting from the suburbs but for the most part suburban life attracts people who are more established in their careers (and who are not planning to stay out late enough that the late night LIRR/MNR/NJT schedules are a consideration).

I was thinking couples in there late 20's who might want to start a family - I suspect that FANG employees median age is creeping up

They are not running out of talent but they are running out of starry-eyed tech dreamers and people that can be exploited of their passion. The SF Bay area tech scene is fizzling out and the excitement is long gone. Also, this is a chance for top tech execs and their friends to capitalize on the real estate speculation game as they reinforce the new talent pipeline to NYC.

The time to buy and speculate in NYC was 20-30 years ago. You can speculate now, but the metro area is so large that even a large company building a regional office there would be a drop in the labor market.

Disney owns a city in Florida (Reedy Creek Improvement District), Scientology owns a city in Florida (Clearwater)...

I would assume that the best real estate speculation would be to buy land with higher margins.


I guess they looked at a map and picked the most expensive US city they could find then?

Talent is a myth.

https://www.newyorker.com/magazine/2002/07/22/the-talent-myt...

Labor costs are high and growing in the SF Bay Area but there are many other areas that would work just fine for a tech company HQ.


While the article you reference is quite good, if I do say so, as it points out many aspects of how people 'exude' superiority more than they actually are 'superior', or 'more talented' than others, straight up saying that "Talent is a myth" is none-sense. Your view should be more nuanced.

Further underscores how much of an immense scam the HQ2 sweepstakes / city talent show was. It should always be brought up the next time a company, sports franchise, or other organization tries to get sweetheart deals to build somewhere. Amazon should be forced to wear this millstone around its neck every time it tries to extort a community for land.

Does it? Amazon chose NYC because it wanted to be in NYC.

The whole point was to show what the movers and shakers actually think of Middle America and every culturally irrelevant place on this continent. It succeeded.

Were any of those places whoring for yield ever in the running?

No.


The things Amazon wants and needs -- particularly, desirability by young, affluent techies -- don't really exist in "middle America".

For example, public transit. Only a handful of US cities have decent public transit at all, probably the only cheap city in that group is Philly. You're not gonna find good transit in Cleveland or Phoenix or Nashville, because they've chosen not to seriously invest in it. Is that Amazon's fault somehow?


Chicago alone is a glaring exception.

- It's not constrained for space, rent is relatively cheap

- Good public transit and airports

- Great food scene

- Cultural mecca

- Young people love it

- Several great universities are either in it or nearby

- Pedestrian/biker friendly

- Each of the many neighborhoods is like a different town with its own character

Google and Facebook recently made minor expansions into Chicago, but why the trickle? I get that in the short-run the elite want to be "where it's at" i.e. SF and NYC, but Chicago has so much to offer. Tech companies would get a lot for their money if they start a virtuous cycle of investment and employment here. Many STEM students from UChicago, Northwestern, and UIUC would rather stay home but the opportunity in California is too great to pass up.


- They will tax the crap out of anything that moves because of impossibly high, undischargeable pension obligations, and techies will be an attractive target.

I agree but Chicago has a bit of a commute issue still. I'm assuming most execs and more senior employees would want to live in the north shore area like new trier and new trier->loop is a bit more of a commute than los altos->mountain view.

Also I think people unfamiliar with Chicago don't understand the nature of its crime issues (namely that it's just as safe as other big cities as long as you avoid the worst areas).

One other potential issue is that a lot of the good software engineers in Chicago are working for reasonably high incomes at trading companies which maybe big tech doesn't want to compete with or has culture concerns

And municipal corruption. But other than all those it's great


The weather is worse, there is less of a gravity effect. Tech workers attract more tech workers because of the liquidity of the employment market.

Chicago has decent public transportation and plenty of young, affluent techies. It's not SV or NYC but it fits the bill for a midwest city.

Chicago, and IL, have plenty of issues to work through though so I get why they didn't want to setup a HQ there.


Chicago has a doomsday clock that keeps ticking down with its pensions and the state's pensions. Those governments might start raising the taxes more and more and fall into a tighter death spiral as it pushes people away, leading to less revenue.

The pension explanation doesn't make sense. Chicago would gladly offer tax breaks to any company opening a major HQ here, as it has in the past. It's had a streak of being business friendly.

I also don't get the "violence" explanation. Violence is terrible and everyone in Chicago wants to end it, but the average person is far removed from any shootings.


Can't exactly guarantee offer tax breaks if they are short on tax revenue, and while every government federal/local is always short Chicago/Illinois is deathly short. The tax increases have already begun and there have been weird talks coming out of the Chicago mayor's office essentially asking for a tax on the rest of the state to help out Chicago proper.

If tax breaks attract a large company, Chicago still gets tax revenue from all their employees. Property tax revenue, income tax revenue, and consumption taxes all go up. This is especially true if that catalyzes further development across the local economy.

All of that was true of Amazon's move to NYC, but the locals still balked at the "massive tax breaks" given to the company.

Yet the Bay area has a mediocre public transit system that does not provide convenient service to major employers like Facebook, Google, or Apple. Transit service in the Bay Area is so bad that the major tech companies run private commuter buses to make up the gap. Somehow that has not stopped tech companies from building new offices around the Bay.

That's the high-level version, but here's the detailed version.

If you look at a VTA (local bus) map, it's oriented around the Lockheed campus (plus Yahoo, Marvell and Juniper.) That's because Lockheed told the VTA to do that.

25 years later, when Google approached the VTA, the VTA said no. Hence the private buses with wifi.

Since Google is buying all of Mountain View's office space, they would really need to reroute the entire VTA now.


In some ways, Bay Area transit and traffic woes may be a root cause for the invention of ridesharing.

Santa Barbara’s was

In Ancient Rome, where your namesake hails from, wouldn't a superwealthy individual(corporation) be considered obligated to use that accumulated wealth in part to provide for the public infrastructure?

> For example, public transit. Only a handful of US cities have decent public transit at all

That’s a weird criterion given that the Bay Area has awful transit.


Cleveland is largely the state of Ohio’s fault, and Phoenix is investing in light rail.

It acted as a kind of ruse to get these places to signal how far they would go to be “connected” to the tech world that they, rightly or wrongly, feel is leaving them behind.

I tend to agree that what Amazon did was pretty cheap and low class, though.


yeah it was a cheap shot and hilarious, all of us "coastal elites" were scratching our heads during the whole charade looking at each city in the running wondering how the likes of Little Rock Arkansas, Nashville Tennessee, Pittsburg, Columbus etc would ever be desirable places, let alone if any of us would run the risk of being sent to one of those doldrums if we worked for Amazon, all for the conclusion to revert to the norm of coastal elite decision makers at Amazon echoing our preexisting sentiment because they are one of us after all

trolling level: phenomenal


As far as Amazon’s DC metro area location I don’t see why amazon wouldn’t have considered locating in the DC or MD parts of the region if the incentives and pitch were right. Making the three jurisdictions bid against each other seems like a reasonable strategy even if there was a secret plan to end up somewhere in the region in the end.

But they ended up in the place that offered the least incentives.

The incentives that MD or DC offered probably weren’t enough to make up for the deficiencies of the areas.

I’m not sure about DC but it seems like businesses are frequently choosing to locate in NoVA rather than MD. https://www.bisnow.com/washington-dc/news/neighborhood/camer...


Because thats where they wanted to be. Its not that confusing.

Amazon was playing Tag the Sponsor to reveal all the municipal whores for fun.


But amazon DID go around announcing plans for HQ2 and making a big deal about it, to get tax breaks etc.

“Many of these companies are willing to spend big dollars renting high-end Manhattan real estate, rather than the older office stock in Queens that Amazon was prepared to lease.”

In other words, development in Queens/LIC isn’t attractive and needed government subsidies to make Amazon consider going there.

In general it seems like tech companies are willing to pay top dollar for locations in the most expensive areas like SF and manhattan rather than try to find cheaper areas.


The most expensive areas tend to be more "central"/have better access by public transit.

LIC is served by 5 subway lines, a commuter rail line with two stations in the area (and a third in progress to serve a new commuter rail connection to Manhattan), a ferry, and multiple bus lines, with various connections between them all. It is one of the best served neighborhoods as far as transit goes, even compared to Manhattan.

And if you want to get there from neighbouring Brooklyn, by itself containing 2.6 million people, you will probably have to go through Manhattan anyway.

Actually the 'G' train, which only serves Brooklyn and Queens, terminates in LIC at one of the major transfer stations (where one can connect to the 'E', 'M', or '7' trains).

Having the G in your commute is almost as stressful as taking the L.

True, though it was (slightly) better when I was a teenager -- back then it went all the way to Forest Hills and the trains had six cars (R46 equipment for the subway nerds).

Hence "probably". The G is a single line for two very large boroughs.

Meanwhile, almost every line in the system passes through Manhattan.


The G is not the only train connecting Brooklyn and Queens directly, though it is the only such line to go to LIC. The J goes directly from Queens to Brooklyn before Manhattan, as do the A and the M. There is also the Atlantic branch of the LIRR, which connects Brooklyn, Queens, and Nassau county (though the fares are higher).

Which is why Google has offices in Kings cross London very central for rail terminuses

are there other instances in history were local governments have successfully driven out or not fallen for giant corporates?

The State of WV for most of the early 20th century was run by coal barons.



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