Tech Firms in Manhattan Trade Trendy Lofts for Midtown Bargains

The following is an excerpt from an article in 

The New York Times
Wednesday, August 29, 2012

Tech Firms in Manhattan Trade Trendy Lofts for Midtown Bargains

By C. J. HUGHES

A decade ago, in the dot-com boom, technology companies flocked to the neighborhoods along Broadway in Manhattan, with most ending up south of an unofficial cutoff of 23rd Street.

Today, though, that Rubicon is being regularly crossed by a new generation of digital businesses that seem willing to trade Lower Manhattan and its perceived hipness for the more button-down precincts of Midtown.

More than 100 Internet-based marketing firms, retailers and social networking companies are based in the area between the Flatiron Building and Central Park, out of about 1,400 similar businesses across the city, according to data compiled by NYC Digital, an initiative started last year by Mayor Michael R. Bloomberg to promote the city’s technology industry.

“The boundaries of Silicon Alley are definitely pressing outward,” said Jonathan Serko, a broker with Cushman and Wakefield who has worked to bring tech companies to Midtown. He added, “some of the companies are moving out of necessity.”

In pockets of downtown Manhattan, commercial rents have spiked in recent years as increasingly fashionable neighborhoods like Chelsea, Greenwich Village and the financial district have welcomed a surge of new businesses. Residential conversions have also gobbled up the types of industrial buildings that tech companies once favored.

At the same time, fledgling tech companies have become more cost-conscious than their predecessors, many of whom burned through their seed money in a short time, brokers say. Significant savings are possible in Midtown, where rents can be $40 a square foot compared with up to $70 a square foot in trendier areas, according to Cushman data.

GSI Commerce, which provides online services for retailers like Toys “R” Us, was subletting a 10,000-square-foot loft on Broadway in SoHo in 2011 when the company was acquired by eBay, prompting the need to expand.

“There are many spaces out there that are beautiful, don’t misunderstand me,” said Jan Dobris, a senior vice president of GSI Commerce. “They just weren’t good ways to expend dollars.”

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