The googlification of chelsea

Chelsea residents and entrepreneurs have seen massive changes to their neighborhood over the past decade, accelerated by the High Line’s creation in 2009 and Google’s purchase of the enormous former Port Authority building in 2010.

Chelsea is about to be shaken up once again.

Google last week finalized its deal to buy the 1.2 million square foot Chelsea Market building from Jamestown Properties for a reported $2.4 billion. (Jamestown will continue to manage the ground-floor food market.)

Many small business owners who have struggled for years to pay rising rent prices are concerned the purchase could ultimately leave them priced out of the neighborhood. Some, though, are optimistic they could benefit from the tech giant’s increased presence.

Douglas Wagner, director of brokerage services at BOND New York real estate, predicts that as Google becomes Chelsea’s major employer, the neighborhood will experience yet more upheaval, and evolve yet further from a predominantly residential and artsy neighborhood to one accommodating ever more business and entrepreneurship.

“Rather than just lifestyle support, we’ll see 24/7 business support,” Wagner said. “Some of those proprietary owned cafes and clubs, little mom-and-pop boutiques will move out. We’ll see more banks, shipping support and office supplies.”

Google, in 2007, initially leased 108,000 square feet of the 1.2 million-square-foot Chelsea Market building, and now leases one-third of the building, according to The Real Deal. Across the street, at 111 Eighth Ave., sits its 2.9 million square-foot headquarters, purchased in 2010.

The tech behemoth also reportedly intends to lease 250,000 square feet of the Pier 57 development and another 120,000 square feet in the area for office space, and cultural and educational activities, Crain’s New York reported.

The assumption is that more office space will mean more employees. Google and Chelsea Market did not respond to a request for comment.

New Google employees earn between $115,000 and $140,000, plus any bonuses, according to data on GlassDoor. And Wagner said many of those pay packages would likely double after a few years. Chelsea median income for people aged 25-44 is nearly $95,000, according to Point2Homes.

Wagner predicted Chelsea will become even more expensive, with rents continuing to climb, ultimately forcing out small businesses.

Eric Marcus, who has lived in Chelsea for 24 years, said he’s seen entrepreneurs move out over the years. National brands that can afford the rent have taken the place of mom-and-pop shops.

“That’s one of the heartbreaks, seeing independently owned stores bought out by chain stores,” he said. “It seems to be accelerating during this latest boom.”

Small business managers like Lorenzo Franchetti of Gelato Giusto on Ninth Avenue and Sam Moseleh of 8th Ave. Gourmet Deli said their rents increase about 3.5 percent with each new lease.

Moseleh, who has spent his whole life in Chelsea and helps his father manage the deli, has noticed the shift in the type of storefronts in the neighborhood.

“The building [across the street from 8th Ave. Gourmet Deli] used to be five stores over there,” Moseleh said. “Now it’s only one big Duane Reade.”

Gloria Rios, who works at Murphy Bed Express on Eighth Avenue, said she believes the presence of Google and big chain stores in Chelsea contributes to the store’s “extremely” high rent, which could require the store to abandon Chelsea in the next five years after a decade there.

Medium-sized retailers aren’t safe either. Jensen-Lewis, a furniture and interior design store that employs 25 people, has been priced out of its Seventh Avenue location. It is currently conducting a massive sale as it prepares to move.

Jim Ehrenthal, who holds an ownership interest in Jensen-Lewis, said the store plans to move a half-mile away due to an inability to renegotiate a less expensive lease.

“The high rent and commercial rent tax made the decision to find an alternative space necessary,” Ehrenthal said.

But while some smaller establishments are getting priced out of Chelsea, other small business owners said Google’s increased presence could be beneficial.

R. Marc, who owns Maison 140 on Ninth Avenue, said he believes Google’s 2010 move into Chelsea has benefitted his home goods store.

“The Google people make decent money,” said Marc, who asked that his first name not be used for personal reasons. “They’ll probably live in the neighborhood, spend their money in the neighborhood, go on lunch breaks in the neighborhood. The Google people will come to me because they want a gift. Or they’re going to come here because they just bought a $3, $5, $10 million apartment and they need stuff for it.”

Wagner suggested the neighborhood’s ongoing Googlification will hasten its transformation into a professional business environment. Marcus agrees.

“I would say that the future of Chelsea, if the trend continues, will become less diverse over time with a less interesting mix of retail,” Marcus predicted.