Property Guide To New York City

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1 Property Guide To New York City Why New York City? J ust seven hours away from London by plane, many UK startups choose to take their first steps in the US by setting up an office in New York City. New York City has flourished as a hotbed for tech startups and established international tech firms in recent years in fact, between 2007 and 2011, the tech ecosystem grew by 32 per cent (Cornell University). The city has built a reputation as a tech incubator with worldclass offerings. Incubators, accelerators and co-working spaces have been vital to the creation of New York s startup community. There are more than 100 such spaces in New York City and several more are currently in the market for space. The reasons to move to New York are compelling. Just like London, New York City s talent pool is strong, attracting top engineers and entrepreneurs from around the globe. In the aftermath of the recession, many of the younger high-calibre professionals are looking to the high-tech sector rather than Wall Street. This is providing the startup community with access to deep pools of talent not only in programming but also finance, management and law. A live-work-play environment, supported by a rich cultural and arts scene has also contributed to the city s allure. New York City office space is also a lot cheaper than London. Midtown rents average out at 40 per square foot per year, compared to 110 per square foot per year in London s West End. New York City is also a hotbed of investment. Of the seven leading tech regions in the US, New York City was the only one to see an increase in the number of venture capital (VC) deals between 2007 and Since the start of 2009, investors have poured more than $8bn into New York-based startups across 1,205 deals, shows data from CB Insights. For tech startups thinking of raising capital, New York City is perfect. Yet we know it can be daunting for a UK startup to move to New York City. We want to help you through the process here is our guide. Because ambition doesn t have ceilings THE guide to property 1

2 NEW YORK CITY Where should I move to? T his is the most common question asked when startups are considering expanding to New York. There is no single right answer, as it depends entirely on your needs, but generally, the bulk of tech startups can be found in Manhattan. New York City is the fastest growing tech community outside Silicon Valley COLUMBUS CIRCLE 7.1% TIMES SQUARE 8.1% 54.2% 18.8% PENN PLAZA/ GARMENT DISTRICT CHELSEA HUDSON SQUARE 24.6% TRIBECA CITY HALL 5.3% WORLD TRADE CENTER FINANCIAL DISTRICT PLAZA DISTRICT 3.8% 4.7% GRAND CENTRAL 34.7% GRAMERCY PARK 64.5% SOHO 26.4% 5.8% 10.9% ATER STREET CORRIDOR GREENWICH VILLAGE 39.1% % of square feet leased by tech tenants (2014-YTD) Midtown Midtown Midtown South Downtown 5.9% 15.5% 42.0% 7.9% % of tech leasing by submarket in manhattan MIDTOWN $ average rent per sq ft per year 200m sq ft office space Traditionally financial and legal Growth in tech companies in recent months MIDTOWN SOUTH $ average rent per sq ft per year Preferred location for tech and media Vibrant creative places in pre war buildings Strong live-work-play environment DOWNTOWN $ average rent per sq ft per year Traditionally financial - Wall Street Evolution and shift to a more diverse market Significant discount to Midtown / Midtown South Strong fibre network Green spaces, waterfront, shops, bar, restaurants AMAZON FACEBOOK YAHOO MICROSOFT Google Apple Twitter Mashable IBM MEDIA MASH EQUILEND COMPUTER GENERATED SOLUTIONS brooklyn: tech s new hub DUMBO DOWNTOWN BROOKLYN BROOKLYN NAVY YARD brooklyn tech triangle Downtown, DUMBO, Navy Yard DUMBO: $ average rent per sq ft per year Downtown Brooklyn: $ average rent per sq ft per year Shared workspace, creative office space, incubators 500 tech and creative companies so far etsy gilt pontiflex steiner studios THE guide to property 2

3 NEW YORK CITY Give yourself room to breathe by planning a move to New York City at least six to nine months in advance.this will help ensure that you find the perfect space for your needs Average rent cost (in USD, per sq ft per year) Midtown: $70.29 Midtown South: $58.83 Downtown: $53.12 NYC property checklist: 1 Plan six to nine months in advance It will take time to find a new space, negotiate reasonable terms, fit the space out, buy insurance and move in. Give yourself room to breathe by planning a move to New York City at least six to nine months in advance. This will help ensure that you find the perfect space for your needs. When it comes to property in New York City, the last thing you want is to rush and make hasty business decisions. 2 Use a broker or consultant A local property consultant will be best placed to advise you on finding the best property for your needs. In the US, your property adviser s fees are paid by the landlord. So for no additional costs to your business, you can have an experienced consultant assist you in finding a space and to negotiate lease terms on your behalf. 3 Move to the right neighbourhood Manhattan is the most popular area for startups in New York City, but talk to your adviser to work out where exactly you want to move, and what the pros and cons are. New York City offers tax benefits for certain eligible areas, such as lower Manhattan, so don t forget to factor this into your decision. 4 Take a tour Once you have a short-list of spaces, make sure you physically go to New York City to visit them. While you re there, pay attention to the neighbourhood, access to transport, food options, places to socialise and so on. Think about the kind of culture your company embodies and be sure the neighbourhood is the best fit. Your local property adviser will know the area inside out. 5 Find a lawyer Your adviser will help you negotiate the cost of your lease, and work with a lawyer to make sure the lease is fair and does not include any onerous terms that you weren t expecting. 6 Calculate any extra fees While the base rent will be the biggest part of your lease, don t forget the extra fees that are often included in leasing an office space. These often include fees for cleaning, water, electricity, taxes and maintenance. Your adviser will tell you exactly what the rent payment includes and what additional monthly or annual charges will be added on. THE guide to property 3

4 UNITED STATES OF AMERICA N 1 ew York City and Silicon Valley, where average asking rents are $64.57 and $40.44 per square foot respectively, are not the only destinations for British startups to expand to. We can help you move anywhere in the United States. There are dozens of fast-growing tech clusters across the US. Here are ten of the up and coming cities to consider. Seattle, Washington (Silicon Canal) $31.17 Seattle is a desired location for tech companies for several reasons, including access to quality real estate in close proximity to where tech workers want to live, a flourishing startup scene which is bringing significant venture capital to the region, an emerging position as Cloud City and proximity to major blue chip firms such as Amazon and Microsoft. But the most significant reason has to be the abundance of young, highly-educated workers Seattle was recently ranked as the second-best place for millennials to live. The South Lake Union District area is seeing the most interest by startups of late. 2 Austin, Texas (Silicon Hills) Average RENT (per sq ft): $30.44 Dubbed Silicon Hills for its booming tech scene, Austin is home to more than 4,700 tech companies. The city offers an abundance of educated talent for a fraction of the cost of other tech markets. The average wage for Austin tech workers is half that of San Francisco and NYC, and the absence of corporate and personal income taxes creates a pro-business environment. Access to accelerators, incubators and VC firms is good, and the city is home to the worldfamous SXSW festival. San Francisco, California 3 (SILICON GATE) $60.09 The tech industry has reshaped the face of the office market in San Francisco. Of the 7.5 million square feet of office demand today, more than one third comes from high-tech companies. San Francisco has been effective in attracting a wide range of high-tech companies Seattle $31.17 portland $21.87 San Francisco $60.09 silicon valley $45.96 denver $23.93 Tech property hotspots in the US chicago $33.30 new york CITY $61.81 philadelphia $25.08 boston $32.58 dallas $23.00 AUSTIN $30.44 THE guide to property 4

5 from around the world, primarily due to the highly-educated workforce and dense knowledge economy. With several top-tier universities nearby and only one hour drive from Silicon Valley, the access to human capital is much greater than most other office markets across the US. Despite rental rates now exceeding $60 per sq ft, there are still affordable options in fringe submarkets as well as several incubator and accelerator spaces for startups looking to grow. Boston, Massachusetts 4 (Silicon East) $32.58 The Greater Boston area is prime for tech companies. Elite universities, such as Harvard and MIT, continue to fuel innovation and produce top talent. Tech companies traditionally cluster in East Cambridge, the Route 128 Corridor and the Seaport District. Inside Boston, the Financial District and Downtown Crossing are increasingly welcoming tech companies too. Incubators and shared workspaces are vital to Boston s tech ecosystem, providing flexible options for startups and early-stage companies. Portland, Oregon 5 (Silicon Forest) $21.87 The tech market in Portland is dominated by two major forces: quickly expanding SME tech firms who are clustering in the central city, and electronics manufacturing firms, generally located in the Sunset Corridor, led by Intel, the region s largest employer. Driven, by the area s growing tech talent pool, competitive tech wages, reasonable cost of living and low cost of doing business, Portland is increasingly seen as a destination for tech startups. Chicago, Illinois 6 (Silicon Loop) $33.30 With Chicago s world-class universities, in addition to its draw of graduates from throughout the Midwest, the city has a highly-educated, diverse workforce with a deep population of younger workers willing to take the risk of pursuing their own startup or going to work for one. As a result, Chicago has seen recent organic growth in tech startups. NEW YORK CITY $64.57 SAN FRANCISCO $60.09 SAN FRANCISCO PENINSULA $45.96 SILICON VALLEY $40.44 CHICAGO $33.30 BOSTON $32.58 SEATTLE-BELLEVUE $31.17 AUSTIN $30.44 PHILADELPHIA $25.08 DENVER $23.93 DALLAS $23.00 PORTLAND $21.87 Average direct asking rent (per sq ft) Dallas, Texas 7 (Silicon Prairie) $23.00 Dallas has a long history for technology firms, starting with the 1951-founding of Texas Instruments. Today the hightech infrastructure in Dallas clusters around computing and electronics, with numerous hardware, software and solutions companies - such as Hewlett Packard, McAfee, Cisco, Oracle among others - having operations in the city. Tech companies tend to locate themselves in the suburbs, close to their skilled workforce. Key submarkets include Far North Dallas, the former Telecom Corridor in Plano-Richardson and Las Colinas. With its low cost of living and doing business, aggressive company recruiting efforts and high quality of life, Dallas s tech ecosystem is expected to keep growing. San Francisco peninsula, 8 California $45.96 Located between San Francisco and Silicon Valley, the San Francisco Peninsula is home to a highly-educated talent pool and several prominent high-tech companies including Google, Facebook and Oracle among others. The region boasts one of the highest concentrations of high-tech employment, second to Silicon Valley. Over the last year, the region s high-tech sector has seen significant growth, especially from rapidly expanding software companies. Philadelphia, Pennsylvania 9 $25.08 The high-tech industry will soon be changing Philadelphia s skyline and economic future, as media conglomerate Comcast Corporation builds its Innovation and Technology Centre. Comcast will take over a fourth of the building, with the rest rented out to tech startup companies. Led by schools such as the University of Pennsylvania s School of Engineering and Applied Science and Drexel s College of Engineering, tech companies are attracted to Philadelphia s young talent and venture capital that want to remain in the city. Denver, Colorado 10 (Silicon Mountain) Average rent (per sq ft): $23.93 The tech industry in Denver is growing as companies expand, and many startups are budding around the city. Traditionally, high-tech firms have gravitated to the Northwest and Southeast Suburban parts of the city, as well as nearby Boulder, where Google has a large presence. Creative and incubator office spaces are being built and are providing opportunity for small tech startups to put down roots and gain traction in the market. Also consider Phoenix, Salt Lake City, Orlando and Orange County. JLL can provide information on all 34 tech markets in the US. THE guide to property 5

6 REST OF WORLD W herever you want to take your business we can help, no matter where you want to expand. Growing your business overseas is exciting, but we also know how daunting it can be to make the right decision. This is why you need someone with global connections. We have offices in every continent, with consultants on hand to provide you with the local knowledge you need to make the right choice. We operate in all of the markets that you might be considering and we can help you to compare locations based on sound economic and demographic analysis. We have a great track record of working with companies of all sizes from small one-man startups to established companies with tens of thousands of employees tailoring our advice to meet your needs, wherever you decide to grow. So, whatever stage you re at in your journey, we are here to help your property meet the demands of your business. Because ambition doesn t have ceilings For more information on how we can help with your property requirements, in London, the US and further afield, contact: James Nicholson +44 (0) james.nicholson@eu.jll.com uk.linkedin.com/in/jnicholsonjll Charlie Wade +1 (650) Charlie.Wade@am.jll.com linkedin.com/in/charliewade10 THE guide to property 6