With an increasing number of young entrepreneurs scared off by Manhattan’s high rents, North Brooklyn has become a hub for growing firms. But as more and more tech firms move in, space is growing harder to find.
More than 120 high-tech, media and digital small companies are now based in Dumbo — a neighborhood of only seven and a half blocks.
The century-old steel-frame and brick facades of the old industrial buildings remain. But inside, most spaces have been completely converted into fancy lofts or design spaces.
Alex Bos is the manager at Commercial Department of Two Trees Management Company, the largest real estate management company in Dumbo, with 13 buildings comprising more than 3 million square feet of commercial and residential space.
The company’s three commercial buildings have 1.25 million square feet space in total, but “less than 1 percent is available now and we get an average of 10 to 15 inquires every day. It’s first come, first serve.”
Jeff Soto, 28, is the founder of TENDIGI, a company which focuses on developing mobile projects ranging from mobile games to internal enterprise apps. He just got his own office at 231 Front St. last month after a year of moving around in different shared spaces. It was the third time of relocation and probably the last time in a few years.
“It was very hard to find a space, because the spaces in Dumbo are so limited. We had to look around different places,” he said.
According to a survey titled “Economic Impact of the Tech and Creative Sectors” done in March 2012 by Urbanomics, there are about 523 innovation companies identified in the Brooklyn Tech Triangle.
This is a geographic combination of Dumbo, the Brooklyn Navy and Downtown Brooklyn, which are the three major communities filled with creative industries and great talents. This is where a large number of companies including HUGE, Etsy, Pontiflex, Loosecubes, MakerBot and Steiner Studios have sprouted and thrived.
Banding together, these companies are taking up 1.7 million square feet of office space. Among the 144 companies that are currently located in the Triangle, 83 percent are in Dumbo. And the numbers are growing– more than 100 new companies are expected to be created in this neighborhood by 2015, and 48 percent of Tech Triangle companies expect to at least double in size in the next three years, , according to Urbanomics’ survey.
Soto started out as a two person team startup at NYU-POLY Incubator, a co-working space founded by NYU-Poly and The New York City Economic Development, in February 2012. “We paid $400 for one workstation and shared the desk,” Soto said.
It was a perfect place to develop his business with a relatively low cost until he could shoulder a full rent. “Our business and team were growing very quickly, and a lot of works that we were doing were confidential, but the co-working space is a large open place. It’s the right time to have a dedicated space for our company,” he said.
Samir Ajmera, manager of NYU-POLY Incubator, said, “Once a company got more than five employees or stayed in the incubator for more than two years, it has to move to somewhere else, which means ‘graduating’ from here.” With six people in the team, TENDIGI became the first one to graduate to a larger office space in September 2012
“We rented a three-desk space which cost $700 every month in Green Desk,” Soto said. It is the largest co-working space company that owns two properties with about 500 workstations and offices in Dumbo. Despite a larger private space, three of them still had to work remotely.
This neighborhood has seen a tremendous growth in the number of companies since 2009. Meanwhile, several co-working spaces including NYU-Poly Incubator and Green Desk are trying to keep their spaces desirable but affordable.
April Wilson, operation manager at Green Desk, said single desk units range from $299 to $475 and offices for small companies range from $600 to $3200 a month.
“It’s about $10 a square foot, which hasn’t changed since 2008,” she said. However, with 95 percent of the spaces occupied, “we’ve been talking about possibly doing a slight rent increase.”
“The more occupied we are, the more likely we are going to charge at a more tightened rate rather than a more flexible rate, but overall we are trying to keep the price comfortable for our clients,” Wilson said.
For Soto’s company, there is also another concern.
“We work with many bigger firms. They need larger space desperately because they are trying to hire people. If they can’t grow their businesses, then we can’t help them and grow our business,” he said.
Ajmera said all of the 32 workstations in the incubator are occupied at the moment. “We don’t have any vacancy but I still get many people walking in to sign up for space every week.”
Angelo Rodriguez, president of CASA Group, another large local real estate management company, said, “In Dumbo, landlords take startups without asking for a three-year-security. They just check your credibility and charge a two or three month security, which is impossible in Manhattan.”
“So demand for office and retail spaces has been increasing rapidly since 2007. But there haven’t been so many options, at most five or six buildings,” he said. In 2008 to 2009, it was $30 a square foot for office space, now it goes up to $60 to $70. For co-working spaces, it was $20 to $30 a square foot and it is $35 now.
Rodriguez got his own office at 102 Front St. at the end of 2009, when the price for retail space was $40 a square foot, less than two-thirds of the price today.
“Last year at least 60 people came to me for help. Economy is getting better, so this year I’m getting more requests,” he said.
So far, he already has five new clients in his long list of people waiting for available spaces.
Though space is limited and money is scarce, 99.3 percent of the companies currently in the Tech Triangle would like to stay there, according to Urbanomics’ report. To meet the demand, Green Desk is going to open a new office space in Williamsburg in March this year. Some design and planning firms such as WXY Architecture + Urban Design have also started looking at possible expansion territories outside Dumbo in north Brooklyn, for instance, Flushing Avenue, Barclay’s Center and even Flatbush to house new tenants.