With all the negative press about Wall Street and financial institutions, compensation not being what is once was and bonuses being dismal, we are seeing a powerful and influential industry emerge in New York City.
Despite 9% of New Yorkers being unemployed, the tech industry (both in Manhattan and in the outer boroughs) can’t find enough qualified workers. As these new tech companies gain traction on the economic front, so too are they making their presence known on the residential real estate front by quickly becoming some of New York’s new major players. According to RealDirect CEO Doug Perlson, “The New York tech scene is having a real impact on the real estate market. What we are seeing is that business after business is now technology, and more and more companies are hiring tech workers. These people need a place to live.”
Employment in the tech center has grown more than 30 percent, and there’s been a 73 percent increase in bioscience jobs. Even Google, who many consider the king of tech, are making their presence felt in the real estate market with the Wall Street Journal reporting a deal to buy their NYC office building (that they currently lease) for close to $1.9 billion. Other companies, such as Yelp, Spotify, Zynga, Mashable and Twitter have all recently established offices New York City. Facebook is also in the process of opening an engineering center in Midtown sometime this year. In the not-so-distant past, the financial industry drove much of the real estate development in New York City, but the information technology and media industries are becoming more active players. Publishing giant Conde Nast, the anchor tenant for 1 World Trade Center occupying 1.05 million sq ft of space in the tower will reportedly sign on for an additional 133, 000 sq ft according to a New York Post story. Mario Kranjac notes that, while New York City is still more recognized for financial dealmakers than for technology and Internet trailblazers, both talent and timing are driving a remarkable tech boom here.
Considering all this, New York City is poised to live up to its nickname “Silicon Alley.” Many are coming to know it as a high-tech corridor developing in the Flatiron District and neighboring Chelsea. One of the appealing characteristics of the Flatiron is that the landlords seem 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. And while start-ups look to the 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 began leasing 111 Eighth Avenue in 2006. This shift from finance to tech is not only happening next to the financial sector, but often overlaps with it. There is a wave of New York entrepreneurs who have come to high-tech from high finance. Many feel the negative press directed at Wall Street (both past and present, note ” Why I Am Leaving Goldman Sachs” by Greg Smith http://nyti.ms/zVmlWt) has opened up career paths, pushing talented young people toward companies like Yipit, where half of the employees used to work for banking institutions.
Whether Wall Street ultimately makes a convincing comeback is anyone’s guess. But what is clear is that tech is taking on New York City.