From the front lines of a NYC office hunt — Our new home at 580 Broadway

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580 Broadway – After build out

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580 Broadway – Before build out

I’m proud to say that Founder Collective has a new home in NYC. We’ve just moved to 580 Broadway in Soho. We’re thrilled. But getting here wasn’t easy. Here’s what I learned while out on the hunt for new space.

Set your parameters clearly at the outset, and conduct the search with several brokers at once.

When we started our search we anticipated looking primarily in the Flatiron and Union Square and we expected low $40s per sqft. The market proved to be much more expensive (and tight) than we expected – especially for small footprints of 1-2,000 sqft in downtown Manhattan. Within 48 hours of listing, a desirable spot had several offers. We fell in love with a slick, top-floor space on 23rd St that, amazingly, was on budget. We put the offer in as soon as we returned from the showing, and it was too late. Because we asked for a three-year term instead of the five the landlord was asking, we lost out to another bidder.

After losing 23rd St, we decided to expand the southern border of our search to Tribeca despite that it would add to the team’s collective commute. Broadening the search helped, and we got more firm on budget and specs. We tracked everything on a Google Doc, checked 42floors.com religiously and worked with several brokers concurrently. The best brokers were hustlers who called us the minute they saw a space available that they thought we’d like.  We also found that the best brokers knew the landlords well, and they often had the inside scoop on a given building.

Startups (and others) should consider sharing or subleasing.

Subleases and office shares are ideal for the start-up. Its often best for the start-up to be the roommate. Security deposits required by some buildings can be 6 months or more depending on the credit history of the company (often on the larger side for early stage companies). For a fast growing company, or a super early stage company, this can be prohibitively expensive and a major drain on cash. More established companies (Series B/C+), or venture funds in our case, have better financials and thus can negotiate lower security deposits. Additionally, companies that are taking larger footprints (>5000 sqft) also typically have more room to negotiate rents, security deposits and build out costs. In one instance, we have 2 portfolio companies moving in together to distribute costs and end up with better space at a better deal (often the larger the footprint, the better the deal).

Don’t fall in love and don’t over-optimize

Searching for an office is pretty similar to searching for a home or apartment. It’s a grueling process that mixes the emotional with the rational. The emotional side (the “feel” of a space, how it impacts one’s commute etc) is hard to separate from the rational (budget, size, price per sqft etc). Just like searching for a home, however, one must temper the temptation to over-optimize. Real estate, particularly in NYC, is filled with trade-offs. Find the best place, move in and get back to business.

 

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