By Sarah Trefethen
When the financial advice software company Smart Asset graduated from the prestigious Y Combinator incubator program in San Francisco last summer, the founders made what New York’s economic development community hopes will become a popular choice among young tech firms — to abandon the West Coast in favor of the Big Apple.
“We decided that, based on where our employees had most of their ties, where our investors are, and the companies we work with, it made sense to be based in New York,” founder and CEO Michael Carvin told Real Estate Weekly.
The company first moved into New York City’s shared office space on Canal and Broadway and then started looking for a permanent home.
They looked in Union Square, where they found rents at $60 psf, and considered Chinatown and Tribeca, Carvin said.
“The last place we looked was Wall Street,” he said. “We found we were able to get a really good deal on good space.”
With the help of Cassidy Turley’s Theodora Livadiotis, the company moved into 3,000 s/f at 44 Wall Street, with rent just north of $30 psf.
But there was an extra incentive for Smart Asset to move Downtown. The company was one of 25 finalists in the New York City Economic Development Corporation’s “Hire and Expand in Lower Manhattan” competition, also known as “Take the H.E.L.M.”.
All of the finalists were given a $10,000 incentive to invest in offices downtown, and the five winners landed $250,000 each.
“There was a lot of buzz around bringing companies downtown, and I think they were really trying to create a community in Lower Manhattan for young companies that are doing new things,” said Ty McMahan, director of content at Stella Service, one of the five grand-prize winners.
Stella, which employs about 30 people in New York, had already signed their lease for 6,000 s/f on the 23rd floor of 75 Broad St. They relocated from about 2,000 s/f on 20th Street in the Flatiron District.
Other finalists included SHoP Architects, an existing lower Manhattan firm, and WeWork, the shared workspace provider that recently signed a 16-year lease for 120,537 s/f at 222 Broadway.
The online retail startup OrderGroove, another $10,000-winning finalists, recently signed a 10,000 s/f lease to join Stella Service at 75 Broad Street. Barry Lewen from Coldwell Banker Commercial Alliance represented OrderGroove. The owner of the building, JEMB Realty, was represented by Frank Cento of Cushman Wakefield. The asking rent was $38 psf.
Like Stella Service, fellow grand-prize winner Booker Software was also already committed to their Lower Manhattan expansion before they got involved in the competition, according to Abbey Simmermacher, a senior marketing manager with the company.
Booker initially relocated to 22 Cortlandt St. in February 2011, Simmermacher said, moving from space in Gramercy.
“Our CEO was looking for big, open space, and something that was a little cheaper than prime real estate,” Simmermacher said.
In November, they signed a new lease to expand from their 16,500 s/f space on the 18th floor to include the 19th floor, for a total of 32,000 s/f.
The EDC is aready taking applications for a second round for the H.E.L.M. competition, with winners to be announced in November of this year. The second year of the competition will award four $250,000 cash grants and four $50,000 cash grants to companies seeking to open an office or expand in Lower Manhattan. Finalists will again receive $10,000.
Booker, which creates booking software for health and beauty service providers, plans to use its $250,000 winnings to give all the spas and salons in Lower Manhattan three months of free access to the company’s products.
And Stella will use at least some of the money in the buildout of their new space at 75 Broad, according to McMahan.
“We may have a proper coffee machine now,” he said.