For all of the peace, quiet, seclusion, and cheap office space that suburban America offers, corporations and companies have always clung to the need to have offices within major cities. Of course, they don’t get any more major than Manhattan. The trouble is that real estate costs in areas such as Midtown or the swanky neighborhoods of Chelsea and Soho routinely top out at close to $90 per square foot, and even at those costs, vacancies are virtually unheard of. Yet this saturation of coveted commercial space has led to an ever-increasing trend of more and more companies looking to set up shop in Lower Manhattan. While this may seem to be among the least surprising of real estate trends, the sector that’s driving it is generally farther west of Manhattan.
Tech companies have long been associated with sprawling campuses spread out over acres of rural suburban landscape in areas like Silicon Valley in California. The appeal of these areas to techies has always been evident: low real estate costs, a much more laid-back atmosphere, and the space to include eclectic workplace features. But in recent years, with Bay Area real estate costs in the stratosphere, New York has seen over 600 tech firms establish offices in Lower Manhattan, particularly in Midtown South.
So, what’s calling the techies east to the Big Apple? NYC real estate industry insiders are citing many of the same reasons that originally drove them out to the suburbs of San Francisco, namely inexpensive leasing costs compared to the surrounding areas. Many have also brought that same quirky atmosphere back with them. Midtown South office buildings once dominated by more traditional mahogany desks and cubicles are now being overtaken by foosball tables and pinball machines, giving the area a much more easygoing attitude.
Perhaps even more appealing to tech firms than the cheap office space is the opportunity to work in the same community as some of the biggest names in the industry; networking is just as important in NYC as in Silicon Valley. Since 2010, the following tech giants have either established or increased their space in Lower Manhattan:
- Adobe Systems
All of this activity has inevitably served to drive up the leasing costs in the area. At the beginning of 2015, Midtown South reported its 17th straight quarter of commercial growth, with costs-per-square-foot prices reaching an average of $62.02.
With the unprecedented expansion of tech industry office space seen in the last four years, and the fact that Midtown South still maintains the lowest vacancy rate of any business district in the U.S., one can only assume that this area will continue to draw more and more data engineers and programmers away from the suburbs and into the Big City in the coming years. With the virtual world expanding like it has been lately, it should come as little surprise that those who support it are choosing to migrate as well.