February 23, 2024

Square Feet: Manhattan’s Tech Start-Ups Settle in the Flatiron District and Chelsea

“When people talk about Silicon Alley, it’s always been just a concept,” said Michael Kirven, the principal of Bluewolf Inc., a technical consulting company that has moved three times within the Flatiron district in the last decade. “Within five years, you’re going to have a true Silicon Alley. Every company that’s a tech start-up will be here.”

The older, small office buildings in the Flatiron district have attracted start-ups, while large companies like Google and IAC/InterActiveCorp have found homes in Chelsea.

It is no accident, for example, that General Assembly, a new educational institute, meeting place and co-working environment devoted to technology entrepreneurs, was established at 902 Broadway, at East 20th Street, in the middle of the Flatiron district.

“There were a lot of young companies, a lot of designers and artists, and a lot of venture capitalists working in that neighborhood,” said Adam Pritzker, a co-founder of General Assembly. “There were a lot of these pieces that we wanted to put together.”

Craig Nevill-Manning, the engineering director at Google who is largely responsible for the company’s New York presence, said, “New York has not traditionally been known as a center of technological innovation, but it is true now.” He added, “There’s a pretty exciting start-up scene now that there wasn’t in 2003, when I arrived.”

Much of what attracts those start-ups is the loftlike space that the Flatiron district offers, in relatively small footprints. Adams Company, a property management and leasing company that has almost two million square feet in the Flatiron district under management, oversees spaces as small as 1,500 square feet.

“You have a lot of buildings with high ceilings and natural light, overlooking Madison Square Park,” said James Buslik, principal of Adams Company, who leased space recently to several tech companies, including Mashable, Demand Media, Tremor Media and Bluewolf. “Creative people find creative space.”

After an exhaustive search through much of Manhattan, David Mojica, the facilities director of Demand Media, said he was drawn to the exposed ventilation system and ceilings at 121 East 24th Street.

“It definitely has that upbeat technology vibe when you walk in,” Mr. Mojica said. “As soon as we saw it, we fell in love with it.”

Bluewolf has been in the neighborhood a bit longer, nearly a decade. The company recently signed a 12-year lease for 12,000 square feet at 11 East 26th Street, the same building that houses Yelp, the online city guide based in San Francisco. Bluewolf chose the building for its central location, the character of the space and its proximity to many of the company’s customers, Mr. Kirven of Bluewolf said. The private roof deck did not hurt, either.

“You get the amenities of a Midtown building but the flexibility of a loft in Brooklyn,” Mr. Kirven said. “Obviously without the Midtown rents, either.”

Prices are substantially lower than in Midtown and other prime office neighborhoods. Along Fifth, Madison and Park Avenues, rents can range from $50 to $75 per square foot, said Grant Greenspan, a principal of the Kaufman Organization. On the side streets, prices can fall to $26 or $27.

The Kaufman Organization has been getting more involved with the Flatiron district. In December the company bought 100-104 Fifth Avenue, a building with 275,000 square feet of space. Apple snapped up a short-term lease of 10,000 square feet on the sixth floor for its mobile advertising network, iAd.

The Kaufman Organization has also helped Paperless Post, Break Media and Zemoga find space in the neighborhood.

“You’ve got everyone from someone who’s selling a phone app to online retail,” Mr. Greenspan said. “Anything in terms of taking advantage of the Internet.”

Another appealing characteristic of the Flatiron district is that the landlords seem to be flexible about the lengths of leases. A short lease is a major advantage for start-ups, because they often grow at an exponential rate, or disappear, in the blink of an eye.

Bonobos, an online men’s apparel store, is only three and a half years old and has already outgrown two offices (three if the apartment of the founder and chief executive, Andy Dunn, is included). After looking at 70 possibilities throughout downtown Manhattan, the company signed a three-year lease at 45 West 25th Street, about 10,000 square feet of space.

“A lot of landlords are looking at 10-year leases,” Mr. Dunn said. “As a start-up, there’s no way to do that. Even a three-year lease was a scary thought.”

One more perk of the Flatiron district is its proximity to venture capital, which provides the rocket fuel for start-ups. A number of venture capital businesses, including Union Square Ventures, First Round Capital and IA Ventures, have offices nearby.

If start-ups look to Flatiron for its small spaces, larger tech companies are choosing Chelsea for its sprawling floors. IAC, for example, opened its Frank Gehry-designed world headquarters at 555 West 18th Street in 2007. And Google moved to the hulking 111 Eighth Avenue in 2006 partly so all employees could be on the same floor, which was 200,000 square feet — or about five acres. In December, the company bought the entire building, 2.9 million square feet.

“There’s a psychological barrier to going to a different floor to talk to somebody,” Mr. Nevill-Manning said. “Having 800 people on a single floor means we’re much more productive and much more creative as a result.”

Google also has leased space in nearby Chelsea Market, which spans 9th and 10th Avenues between 15th and 16th Streets. Of that building’s 1.2 million square feet of commercial space, 780,000 square feet is leased to technology and media companies like Scripps Networks (which owns the Food Network) and Yext, an Internet marketing company, said Michael Phillips, a managing director of Jamestown Properties, which owns the building.

“I don’t think Midtown has inventory that’s interesting the way this is interesting,” Mr. Phillips said. “And I think the public amenities are almost incomparable,” he added, referring to Hudson River Park, the High Line, Chelsea Piers and the concourse of Chelsea Market.

Many companies have chosen Silicon Alley to be close to similar companies, which might be their clients, their suppliers, their competitors or a source of new hires. Mr. Dunn of Bonobos, for example, hired his vice president of merchandising from J. Crew, which is at 770 Broadway at East Ninth Street, and his vice president of marketing from the Gilt Groupe, at 2 Park Avenue, between 32nd and 33rd Streets, both nearby.

For Google, on the other hand, the proximity has not been that important.

“From a recruiting point of view, a lot of those connections get made virtually,” Mr. Nevill-Manning said. “They know where to find us online.”

Article source: http://feeds.nytimes.com/click.phdo?i=127e8011ccdc6a3f0f11203c5cb922d9

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