By Al Barbarino
Today’s brokers must be in-the-know with the ever-changing tech industry — or they risk becoming obsolete in the eyes of their digital clients.
“Understanding them and having a resume that you’ve worked with similar companies in the past — they dig that,” said Jason Schwartzenberg, a corporate managing director at real estate services firm Studley.
Getting on the right side of one of the fastest growing office space users in the country seems like a wise move in a market where traditional New York tenants, such the financial sector, are contracting.
According to Cassidy Turley, tech-driven firms accounted for 28% of Manhattan leasing in 2011, up from 18% last year and helped drive down vacancy rates in midtown south to the lowest in the country.
Schwartzenberg doesn’t just work with digital companies and startups — he worked for them. In 1999, he packed his belongings into his red 1992 Chevy Blazer and drove from Hasbrouk, N.J. to San Francisco, where he joined a tech startup called Digital Commerce.
In 2001, imbued with the booming California tech scene’s energetic spirit and on the heels of the dot-com bubble, Schwartzenberg moved back east and worked for a range of digital companies and startups as they moved in on New York City. There was Websplit, creator of a web browser; Interworld, a former ecommerce software provider; and, most recently, Torry Harris Business Solutions, a software solutions provider and the only survivor of the bunch.
The companies shared similar strategies, goals and ideals with those Schwartzenberg works hand-in-hand with today at Studley. For startups, which often operate out of incubators and co-op spaces before they are ready to move into their own spaces, choosing the right space in the right location can mean the difference between growing rapidly and sinking steadily.
“Having gone through that experience for a few different companies, I understand the predicament they are in,” Schwartzenberg said.
“Their businesses and head counts are changing on a day-to-day basis and they need flexibility to do various things.”
Technology, advertising, internet and media companies have basic things in common when they look for office space; they often seek flexible lease terms, expandable or pre-built designs and perhaps high, open ceilings, high-end finishes, glass front offices or game rooms. But the basics don’t cut it — and neither does an old-school approach.
“Clients need to be able to look at their advisors and not be able to tell the difference between them and their employee,” said Sean Black, a vice president at Jones Lang LaSalle. “They talk the same, they look the same, they understand the issues and at the end of the day they can ultimately execute.”
Black got his start in real estate in the early 2000’s, as digital startup companies zoned in on the area dubbed Silicon Alley — the Flatiron District, SoHo and beyond — and the “tech markets were going crazy.” The early exposure put him in tune with the issues startup companies face.
Today, digital clients make up about two-thirds of Black’s business and he has been involved in more than a quarter of a million square feet worth of tech deals within the last two to three months alone, he said.
He works with Wework Labs, a co-op space for entrepreneurs; Tremor Media, a digital video tech company; and he moved Foursquare, creator of the location-based social networking site, into their new 56,000 s/f office space at 568 Broadway in the heart of SoHo.
Tweeting regularly, knowing who Gilt Groupe and Foursquare are, and understanding crowdsourcing and flash mobs only scratch the surface when it comes to understanding the tech world and its companies, Black said.
Brokers working with digital companies have to stay ahead of the curve and take an active role in understanding the industry or they will ultimately lose deals and valuable clients.
“The thing about people in the technology sector is that they’re innovative and they’re always looking to the future,” said Black.
“Tech is all about the future. You’ve got to have a mentality that is energetic and appreciates the changes in technology while not being wedded to the traditional ways of doing things.”
Many clients look at their broker as a member of the team who can grow with them.
Schwartzenberg, who estimated about one-third of his business falls in the digital space, has worked with Intent Media, a company that helps e-commerce sites maximize web profits; Brightwire, a real-time provider of events throughout world; Clover, a mobile payments provider; and the Ladders, an employment website.
In 2009, Schwartzenberg first reached out to executives at Jibe — a maker of recruiting software that uses Facebook and LinkedIn to help users find jobs — to help them find office space. They were in their infancy stages and sharing space at a startup incubator.
It wasn’t until 2011 that the company was ready to move into their own space at 26 West 17th Street. Throughout the process of finding the right location, it was crucial knowing that Schwartzenberg knew the inner workings of the industry, said Joe Essenfield, 33, CEO at Jibe.
“It’s huge, because then you don’t feel like he’s just throwing listings at you,” Essenfield said. “He makes a much better use of my time.”
Time is crucial for CEO’s and other startup executives, as they scramble to secure new funding and talent. There is little time to tour new spaces, interview architects, furniture people and cleaners. More than ever these demands fall on brokers.
“If I can help people save time and focus on their core business, they appreciate that and in turn you feel good,” Schwartzenberg said. “In some crazy way you can feel that you were one of the reasons somebody was able to get their company up and going.”