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March302022

Shaping Up Your Space to Attract Tech Tenants

Jigar Shah, CPA and Jeffrey Kovacs, CPA, CGMA

3.30.22 | Industry Insights

The New York Metropolitan area is now being looked upon as a serious alternative to Silicon Valley. There has been significant growth in venture capital-backed companies with more than 200 venture firms now having a presence in the vicinity. And the pace is accelerating. In the first nine months of 2021 alone, $36 billion was raised for technology startups with over 150 investments of $100 million or more for New York City startups.

In short: They’re coming, and they need office space.

And why not? There are more than 320,000 tech sector jobs and one of the largest metropolitan workforces in the country in New York City. One of the most important elements of building a tech ecosystem in any geographic area is a collaborative partnership with the university systems. There are 120 universities in the New York Metropolitan area that are supporting the growth of technology and life science. Clearly, this is fertile ground.

So how can New York real estate professionals whet the appetites of these burgeoning tech companies to select their properties as the base of operations for future growth? To catch these fish, you need the proper bait. Here are some key considerations.

Technology

This is perhaps the first consideration of any potential tech-based tenant. Is your building on the cutting or blunt edge of technology?

Connection speed is a pivotal factor for tech companies. Fiber-optic cables do not suffer the same signal disruption experienced by copper lines and they are superior to cable internet speeds. This gives the tenant better access to data and applications stored in the cloud, which is crucial for apps, hosting, and more. Any modifications that would allow for various types of monitors and displays to be placed easily anywhere in the facility will be an attraction.

In effect, modifications that are in accord with what are now known as smart buildings or intelligent buildings should be considered. These buildings use integrated processes, smart engineering, or creative design to self-regulate the building’s environment and operations. A few examples of such smart building technologies are:

  • smart HVAC system that uses data to adjust to changing conditions throughout the day or week;
  • wireless scanners and sensors used in facial recognition; and
  • biometric authentication to grant access to the building in place of traditional key cards.

Scalability

When tech companies succeed, they grow very quickly which means hiring a lot of people in a short amount of time. Tech companies are typically looking for office space that can accommodate their current and future needs. Many of them ideally want shorter lease terms (3 years or less) to start, along with an option to grow in the building in the future or the ability to break the lease in the event there is no additional space to grow in the building. The building owners who are flexible enough to accommodate such needs tend to attract more Tech tenants.

Layout

Tech-based companies are typically attracted to clean and bright spaces with open floor plans. High ceilings with light wood floors are popular. Exposed brick, glass, and stained concrete might be incorporated into your design. Tenants should be able to swiftly and easily reconfigure their space to meet the demands of a fast-changing business sector. Some companies may be attracted to sound-proofed cubicles to accommodate Zoom and Teams virtual meetings that may require some degree of privacy.

While it is widely expressed that open space breeds teamwork and comradery, there is still a need for private conference and huddle/team rooms with, perhaps, glass walls to preserve the perception of openness.

Amenities

Tech companies tend to be youthful in both outlooks and in the talent they attract. Workdays can be long, erratic, and sometimes extend to weekends. Even during a period where hybrid workdays are common and becoming the norm, there will still be a need for break rooms: coffee/tea stations; exercise, spin class, and meditation spaces: fitness centers with shower facilities, and similar oases for relaxation. Consider offering coworking spaces with common areas, including rooftops and outdoor spaces that can be used for social events with clients or staff parties and company functions.

Location 

Young, hip, highly educated tech employees crave a superior quality of life that includes a life outside their work. Office space in neighborhoods near centers of culture, entertainment, and recreational and essential shopping will be a further attraction to employees. This will also factor into their own lifestyle choices as many will consider living close to their work to avoid the travails of a long commute.

Security

Tech professionals keep erratic and unusual schedules and will need building access at all times during the week. With this in mind, consider offering upgraded cameras and motion detection sensors and 24-hour security with live, on-site personnel.

Pitch

In working with prospective tech tenants, it is important to elicit from them the key factors that are most important to their particular business. As with any business, you cannot rely on a cookie cutter approach. You need to convey that you are sensitive to issues unique to tech sector business and open to working with them to offer a facility that will be conducive to their ongoing growth and development.

If you have questions, contact Jigar Shah at 212.331.7499 | jishah@berdonllp.com and Jeffrey Kovacs at 646-954-9910 | jkovacs@berdonllp.com or your Berdon advisor.

Berdon LLP New York Accountants

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