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Silicon Central: How New York Tech Grew Up And Moved Uptown

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© 2017 Bloomberg Finance LP

By Meghan Cross Breeden, partner at Amplifyher Ventures

In 2009, if you walked into Foursquare’s overflowing Astor Place loft office, it was impossible not to become infatuated by the New York startup scene. The engineering community was a thriving group of 20-somethings whose lifestyles catered to easy commutes and after-work dodgeball leagues.

In 2013 tech edged above 14th street, branding Flatiron as its own. Affordable rent and community within a commercial district offered Yext, Flatiron Health and others a level of maturity blended with relevance.

Today, however, the poachable engineer is at a very different stage of life. This cohort of seasoned tech talent has sparked a new tech HQ: Silicon Central, the blocks circumventing Bryant Park and Grand Central Terminal.

Quite simply, tech - like finance and legal sectors before it - is just growing up.  The average software developer is now 31 years-old, and the average employee at an internet-related company is 35. With most of them starting families by 31 years-old, that developer who grew up with the Mayor Bloomberg-era New York tech boom is likely now of an age where family is either the reality or on the horizon. Suddenly, that 5th floor walk-up off the L train doesn’t seem quite as charming.

This aging of the average tech employee is creating a demand for more space in an already inflated housing market. New Yorkers pay 30% more for housing than the average American. While more than one-third of New Yorkers cite the high cost of living as a reason to leave, the majority includes those who seek the family-friendly neighborhoods and fresh air that can be found along the Metro North line.

Take Chantel Waterbury, a serial entrepreneur who helped pioneer the 2011 New York startup boom. While she based her previous business Chloe + Isabel downtown, she opted to relocate to midtown for her latest venture, INSPR, in order to accommodate her team. “We wanted an easy commute from Westchester, where both myself and my co-founder live, as well as downtown and Brooklyn,” says Waterbury. “We knew we were aiming for south of Grand Central and East of 5th Ave."

For Scott Simonelli, CEO and cofounder of audio analytics platform Veritonic, Grand Central neighborhood was the obvious choice. All but two of his 11 team members live in Connecticut, New Jersey or Westchester, but as they are actively hiring, location gives them a competitive advantage for attracting a wider set of candidates. “If you’re 21 or 22 years old and it’s your first job, there’s a lot of energy here;” and for the commuters, “You can sell a train ride. You can tell that story to a prospective employee about how productive that time of day is.”

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Now with the emergence of other tech hubs in midtown, Veritonic is just one of many tech companies migrating to midtown to entice top talent. Company, the new $1.1 Million square-foot tech campus purposefully situated itself adjacent to Grand Central Terminal. “As the battle for talent gets ever more intense, we always thought that the convenience of our neighborhood was ultimately more important than the sex appeal of some other neighborhoods,” says Matt Harrigan, CEO of Company, “We enable our companies to recruit from all 5 boroughs, Westchester, CT, and NJ.”

With the unemployment rate in tech at a low of 1.9%, Harrigan echoes the driving force behind tech’s midtown migration: Recruitment. 58% of NYC developers report being open to new job opportunities, and those are just the openly poachable ones. In a concentrated market of opportunities, the increasingly heated competition for tech talent begs the question, what’s the secret to attracting and retaining the seasoned engineer?

“The more tenured engineers that have kids and could care less about ping pong tables,” says Alex Dancho, Director of Engineering Operations at Newsela, which also recently moved its offices to midtown. As a new father and Connecticut resident, Dancho adds, “I wouldn’t take a job that’s any more of a commute than what I have right now.”

The 200-person e-learning business plans to increase its engineering team by 50% this year, based on an understanding culture of commuters and Manhattanites alike. Through Dancho’s nearly five years with the company, he’s consistently received LinkedIn messages from recruiters boasting perks that are misaligned with the priorities of his sub-generation of developers. “The older engineers who have families aren’t as interested in the fluff.”

Tech’s midtown migration is still in the early innings though. According to commercial real estate company The SquareFoot, the Grand Central neighborhood offers more than 70 million square feet of office space inventory, with an additional 2.6 million square feet in construction. Grand Central’s 11% vacancy is still above the city’s 8% average.

And we aren’t going to see tumbleweeds in Flatiron any time soon. The SquareFoot reports a 3% vacancy rate in Flatiron and maintains its HQ there. “We like it around here,” says Jonathan Wasserstrum, CEO and founder of The SquareFoot. “For us, half of the appeal is the startups around us, and the other half is that it's pretty centrally located with transit accessibility throughout the city as our brokers run around town all day.”

Meanwhile, what midtown boasts in convenience still doesn’t compare to the innovative appeal found elsewhere. Dumbo, for instance, has been home to Etsy and creative agencies Red Antler and Huge for more than a decade. Innovation consulting firm What If!? recently swapped their long-time East Village digs for Sunset Park’s Industry City.

All that said, with the growing maturity of top tech industry talent, the Grand Central neighborhood provides a viable option for startups looking to offer their top talent the bonus of convenience.

Meghan Cross Breeden is a partner at Amplifyher Ventures. She was previously a founding managing partner at Red Bear Angels.