The second technology boom is redefining New York
Over the past few months, Tech City News has produced a documentary exploring New York’s tech scene and the challenges of expansion. In August, the team spent a week interviewing members of the Big Apple’s tech community about why it has become a strong contender as a base for US expansion.
As part of the project, Tech City News will be publishing a series of articles exploring New York’s tech ecosystem and what it takes to expand there. Watch the documentary now.
On a professional level my nearly 17 years in New York City have been defined by four periods of time: the ‘dot com’ boom, 9/11, Lehman Weekend and lately the second technology boom.
Yet this latest surge in the tech industry is different than before – it is a generational change in every sense.
I liken it to the arrival of rock n’ roll. Never again would music be the same and every popular music artist since has in some way been influenced by the transformational days of the music scene in the late 1950’s and 1960’s.
In exactly the same way the technology industry is today having a profound impact on the real estate market in NYC. Never before has an industry single-handedly shaped the way we work together and how we configure space more than the high-tech industry.
The young ones
When I arrived in January 1998 the Midtown South area of Manhattan was populated with warehouse users, print companies and garment tenants.
Space easily traded at a 50% discount to the swanky glass skyscrapers on Park Avenue. Restaurants were the lower end ‘convenient’ sort and hotels catered to the foreign backpacker on a limited budget.
Fast forward to today and it’s incredible to see the level of change that has been driven by the tech industry.
An often-repeated line you will hear in presentations when advising landlords and tenants is that the workforce of today requires something different – it’s “not your father’s office space”.
Many high-tech companies are largely staffed by millennials, and their workplace preferences are driving the trend toward denser work environments.
As millennials make up a larger portion of the total workforce (50 percent by 2020) their workplace preferences will continue to drive the trend toward higher density.
Employment in New York City’s technology sector increased by 4.7 percent year-over-year in September, bringing the total number of people employed in this sector to 65,100.
Further fuelling the growth engine in NYC is the confluence of bright young people and Wall Street. Hedge funds and private equity firms have joined venture capital firms, adding to the significant amount of capital available for high-tech companies.
And while the ‘dot com’ boom was fuelled by a rush to IPO, this time around it’s the larger tech companies looking to maintain their innovative edge by purchasing new technologies that is spurring much of the growth.
The infusion of young talent and acquisition of startups’ technologies help these companies maintain their leading position.
The modern office space user, whether they be a true high-tech company or part of the old guard trying to keep up with the Jones’, now wants high exposed ceilings, polished concrete floors, lots of natural light, cool amenities and an efficient side-core layout where they can achieve higher densities and greater collaboration.
The best boutique hotels, restaurants, bars and night clubs are centred in and around Midtown South. The new nucleus of business in NYC continues to march towards the West Side of Manhattan where developers such as The Related Companies and Brookfield Properties are pouring billions into new development to provide the type of urban environment and space experience these young workers demand but within the fabric of new development.
I’ve always subscribed to the saying that “change is progress no matter what the change”. NYC continues to evolve, excite and stay relevant in this new era of mobile devices, big data and unprecedented innovation.
Head of JLL’s International Desk, expat Brit Giles Wrench moved to have a taste of working life in New York City and it was so good that after 17 years he is still there! During his time in the Big Apple, he has had first-hand experience of the city’s changing Tech real estate scene working with every type of business from startups to IPOs.