It’s a proud moment when a startup is finally ready to grow up and move away from home. We wanted to find out where all the cool startups were hanging out, so we spoke to Michael Rouzenrouch, real estate broker and president of Miyad Realty, LLC whose firm has worked with new businesses. The company recently put Aviary (pictured above with artwork by graffiti artist ROA) in their new space at 243 W 30th St and also moved Tumblr to their new office on 419 Park Avenue South.
Rouzenrouch got his start in real estate shortly after 9/11, when various government agencies who had lost their offices in the World Trade Center were looking to relocate. One of Rouzenrouch’s first projects was finding a new space for the Secret Service. It was a “great learning experience,” he said.
Rouzenrouch entered the private sector when he worked with the broadband video network LX.TV, which was acquired by NBC Universal’s Local Media division in 2008. From there, the broker found that the startup community was good for referrals. “It’s such a small community and they all know each other,” he said.
Tech startups also have similar taste in real estate. Most of Rouzenrouch’s clients ask to see places in Midtown South from 23rd Street on down to Soho, Union Square, Tribeca and the Meatpacking District. “That’s where cool, creative companies are usually located,” he said. “It’s very accessible by all the trains and it [doesn’t have] that stuffy, corporate feel like Midtown.”
The challenge for most startups is convincing the stuffy, corporate landlords to give them a short-term lease. Most landlords are looking for a five to ten-year commitment to recover the money they’ll spend building out the space for the new tenant. “For tech startups we try to focus on built spaces” rather than “raw spaces,” Rouzenrouche said. Luckily, “everyone wants that bright, airy, lofty kind of feel.” An open floor plan saves money on drywall.
Another thing “that’s overlooked that we focus in on,” said Rouzenrouch, are “after-hours air conditioning and heating.” It’s important that companies have access to the thermostat even after rest of the building has gone home. “Tech-companies work late hours – they start late and they end late,” Roouzenrouch noted.
That’s not to say that they don’t have a good time. Many of Rouzenrouch’s clients ask for spaces that are bike-friendly and pet-friendly. Nina Eisenman, president of Eisenman Associates Graphic and Web Design asked for her dog to be included in the lease. She “was the only one who was allowed to bring a dog into the building,” Rouzenrouch recalled.
Even without special requests, tech startups have to prove to the landlord that they are a viable business, which isn’t easy for new companies that don’t have much of a financial track record, said Rouzenrouch. But a good presentation with work samples and press clippings can show what the financial records can’t.
When all else fails, said Rouzenrouch, there’s always the security deposit. “If it’s something the landlord doesn’t feel comfortable with, then the security depositâ€™s going to be sky high,” he warned.
But it can be done, and in general, said Rouzenrouch, “it’s a good time to be a tenant now.” While Midtown South is cheaper than the heart of Midtown, “it’s more expensive than the Financial District and all the way south by Wall Street,” said Rouzenrouch. “Tribeca is generally a little cheaper than Soho and Union Square.”
Despite the inherent challenges, “it’s a cool industry to be in,” said Rouzenrouch. He finds that startup companies move quickly when it comes to signing a lease. It took StumbleUpon CEO Garrett Camp only three days to find a new office in Manhattan. “He literally came in from San Francisco on a Wednesday…It was his space by Friday,” Rouzenrouch said. “That was one of the fastest deals we’ve ever done.”
Getting a new business moved in “requires a lot of pushing on our side to get the landlords to work with us and to make it as simple for the tenant as possible,” said Rouzenrouch, but New York City is worth the effort. “It’s a great place to be,” he said.