New York’s Financial District is becoming an appealing option for many homegrown and international startups. You don’t have to look far to see why.
In the famous words of Petula Clark, “When you’re alone and life is making you lonely, you can always go, downtown.” The simple message of this golden oldie has provided all of us with expert advice on how to kill time for decades. But now these classic lyrics hold a particular relevance for many budding startup companies trying to break into the rapidly developing technology scene. The past year has seen scores of lone startups from home and abroad migrate to Lower Manhattan. While Flatiron and Chelsea have traditionally been the popular hotspots for these hipster-run tech-based companies, many are now flocking further south. But what exactly is causing this movement?
Incentives and Subsidies
In recent years the IT sector has risen to great prominence in New York; today it provides over 260,000 local jobs. As the city’s second largest industry, outgoing Mayor Michael Bloomberg spent much of his incumbency investing in initiatives to strengthen this promising sector. A direct result of this enthusiastic support are the many grants being practically thrown at the tech industry.
New York is clearly determined to refashion itself as the tech Mecca of the East Coast, and Lower Manhattan is well poised to become the hub of this growth. One particular program trying to make this happen is the Take the H.E.L.M. competition. This is a fund providing promising startups with up to $250,000 for relocating downtown. Administered by NYCEDC and funded by the Lower Manhattan Development Corporation, this competition has been carefully designed to lure local and overseas startups to the floundering Financial District.
Arguably the biggest drawing card for these fresh young startups moving south is the cheap rent. Following 9/11 and the post-GFC cutting and running by many big banks from the area, Lower Manhattan has faded into a shadow of its former self. Not only is there an abundance of cheap, vacant office space, but residential real estate is also weak. However, it appears the boom in New York’s IT sector may provide the perfect solution to this conundrum. With tens of thousands of startups already established in New York and many more to come, there will be no shortage of small businesses keen to snap up these empty downtown offices.
One of the inaugural winners of the H.E.L.M. competition, StellaService, says they were already eyeing office space in Lower Manhattan prior to winning the grant earlier this year. Content Director Ty McMahan said his company’s desire to leave its previous location in Flatiron and move further south was due to the cheaper rents, larger office spaces, and all-round better quality of the buildings. “It’s a much better fit for us,” says McMahan of his spacious new digs. Moving to the Financial District has enabled StellaService, which measures the customer service performance of online stores, to grow from fifteen employees to forty employees this year alone.
As we’ve seen in other cities, startups like to be near other startups. Contrary to big business where competitors steer well clear of one another, small tech companies tend to gravitate toward one another and are more inclined to socialize with other startups through meet-up groups and organized events. It’s for this reason that we often see communities of startups popping up in pockets. Neighborhoods like Dumbo and Flatiron are prime examples of this; and now Lower Manhattan is exhibiting the same trend.
They’re also much more open to sharing resources and office space, and this often by choice as opposed to cost-cutting reasons. During their relocation earlier this year, StellaService sublet some of their new office space to a few other small companies. This provided them with the perfect opportunity to network and build friendships with like-minded people outside their company.
The Future of Lower Manhattan
Though it’s only the early days, the flow-on effects of this tech explosion will be huge. New York is on track to undergo a sweeping identity change. Traditionally synonomous with banking and finance, NYC is well on its way to becoming an epicenter of digital creativity. And if startups continue migrating downtown, we can also expect to see an exciting revitalization of Lower Manhattan. With most startup employees between 20 and 40 years of age, there’s bound to be an accompanying surge in new bars, restaurants, and shops in the area. Watch this space.