Executive Summary:
The ability to socialize and collaborate is one of the founding blocks of creating a tech community. Midtown South’s dominance in attracting all types of startups can be attributed to its ability to create and sustain a culture that helps start-ups to network across multiple platforms.The benefits of easy collaboration among tech based companies paired with high demand for creative space in New York’s Midtown South has led to an explosive rise in tech’s real estate and economic footprint.
The rise of New York’s tech scene has helped the city’s overall real estate market, outperforming many other US cities and making Midtown South the tightest submarket in the country.
The initial success of Midtown South’s tech scene had other surrounding neighborhoods replicating the loft creative office space layout that startups are know for in the form of pre-builds. Amenities such as access to public transportation and competitive rents might have helped the initial tech push, however, the success of Midtown South’s tech scene can be attributed to tech’s collectivism, interactionism, and other sociological theories rather than price.
P.3
The Sociology of Tech:
Collectivism of Tech:
The sociology of tech has more to do with culture than the particulars of tech. Culture engages a group of verbal and nonverbal codes in order to communicate. In the case of tech culture, the recent surge in real estate activity in New York and San Francisco is the product of sociological factors which has lead to the creation of community. The cultivation of culture has made both markets the top two tech markets in the country.Collectivism is one of the basic elements that exists in the creation of a community. The synergistic mentality orients the importance of cohesion within a community. Cohesion is one of the elements that can be attributed to the creation and sustainability of the New York, San Francisco, and Boston tech community. The same can be said about the creation of new tech communities that are taking root in Boston, Las Vegas and Austin.
Interactionism
Community as Social Realty Networking
Ease & Anonymity in Interactions Identity
Collectivism
Cohesion Social Group Culture & Politics
Typology
COMMUNITY
& CULTURE
P.4
The Creation of Culture & Community:
It has been demonstrated that an individual’s ideas and acceptance of community and culture are formed in part, through interactions. People act in their communities according to the meanings they derive based on the culture within their community, coupled with their cultural environment. As it pertains to real estate, collectivism assists with the absorption of real estate. As the tech community continues to strengthen, a larger population density will organically form which will have a positive effect on the absorption of real estate and decrease the vacancy rate. The startup community, like all communities, naturally and subconsciously adhere to a collectivist methodology. This approach is evident in not only the creative loft office space layout, but also the macro geographic location of tech companies and startups.
Collectivism is one of the basic elements that exists in the creation of a community. The synergistic mentality orients the importance of cohesion within a community. Cohesion is one of the elements that can be attributed to the creation and sustainability of the New York, San Francisco, and Boston tech community. The same can be said about the creation of new tech communities that are taking root in Las Vegas and Austin.
The Sociology of Tech | The Creation of Culture & Community
It has been demonstrated that an individual’s ideas and acceptance of community and culture are formed in part, through interactions. People act in their communities according to the meanings they derive based on the culture within their community, coupled with their cultural environment.
As it pertains to real estate, collectivism assists with the absorption of real estate. As the tech community continues to strengthen, a larger population density will organically form which will have a positive effect on the absorption of real estate and decrease the vacancy rate. This theory holds true in areas such as Midtown South, where in 2012 vacancy rates fell below 5%.
The startup community, like all communities, naturally and subconsciously adhere to a collectivist methodology. This approach is evident in not only the creative loft of ce space layout, but also the macro geographic location of tech companies and startups.
Collectivism of Tech
Annual Rent Growth by Tech Submarket Q1 2012 vs Q1 2013
New York-Midtown South Silicon Valley-Mountain View San Francisco-SOMA Average Of ce Rent Vacant Available Of ce Class B
Average Net Absorption Rate
Of ce Class B
P.5
Interactionsim of Tech | Location Matters:
With ability to communicate and share ideas, close proximity to other entrepreneurs and startups helps stimulate innovation. The ability to work across platforms, network and share ideas are important features for fledgling startups. For new tech cities like New York, elements of the sociological theory, symbolic interactionism, can help explain the surge in tech activity in Midtown South. Verbal and nonverbal interactions has helped fortify the synergistic-like environment which has helped create culture and cultural values.
Creativity Breeds Creativity
According to a study of 35,000 academic papers by Issac Kohane of Harvard Medical School, the best, most widely-cited research came from co-authors sitting less than 10 meters apart. “How closely they worked mattered as much, if not more, than their affiliates,” according to Kohane.
Creative entrepreneurs want to be close to other creative entrepreneurs. Startups that are outside of the San Francisco and/or Midtown South are usually looking to create their own culture outside of the ones already created, don’t utilize the creative synergy in the area, or don’t find value in the features of the tech hub.
The Cultivation and Preservation of Culture through Co-Working:
Co-workspaces are a microscopic view of the overall startup community. Besides providing a creative place to work, co-workspaces are a place where ideas can openly be shared and people can work in a culture that embraces innovation. These types of spaces have been a common place for young startups to grow to become mature tech companies. The collectivist mentality of like-minded entrepreneurs, coupled with the culture within a co-workspace, has made coworking the heart of innovation and thought leadership.
Co-workspaces are like cities, a micro view of the overall macro tech scene and culture. Over the past few years, coworking has become the “it” thing in San Francisco and New York. Though traditionally these spaces catered to freelancers, the population and demographic of a cowork resident has shifted to entrepreneurs and startups. From a corporate point of view, companies like Google, Zappos, and AT&T proved that coworking can simultaneously be cool and rewarding from a business development, research, and technological perspective. According to Deskmag, nearly 1 in 10 co-workers are employed by a large or medium-sized business. As more big businesses are looking at coworking and adopting the startup methodology to help open the channels of communication, coworking will become the future of working.
In the United States, there are nearly 45,000 co-workspaces. According to Deskmag, the number of dedicated nspaces have nearly doubled year-over-year since 2005 to more than 1,800 locations. As companies like Nextspace tap into more cities and open nearly 25 locations nationwide, Jeremy Neuner, CEO of NextSpace, believes that it’s “early enough in the market that everyone can have a piece of the “cowork” market.” How a coworkspace cultivates and utilizes the smart, cool people already ingrained in the culture is ultimately the “secret sauce” for each workspace, according to Neuner. One co-workspace space is not better than the other, “it’s a difference of culture and each culture is uniquely benefi cial to a specifi c neighborhood.”
No two coworking spaces are the same. Based on the simple visual such as decoration and furniture, to the physical such as the location and layout of the space, the look and feel of coworking varies from space to space. However, the creative attitude and culture also vary. Each coworking space organically taps into a particular tech culture simply based on location. The success of co-workspace operators like WeWork have been able organically tapped into the “cultural interactivism” of a location in order to help preserve and enhance the startup scene in both San Francisco and New York. With locations in SoHo, Meatpacking, and Chelsea, all in New York’s Midtown South, each location caters to a certain type of tech and entrepreneur that fundamentally
getretech.com
!
!
Let’s Connect
!
For a deeper discussion on these results or other reports, please contact:
!
Ashkan Zandieh
347.770.7471
[email protected]
!
!
About RE:Tech
RE:Tech is a coalition of real estate tech startups and thought leaders. RE:Tech’s
advisory & research division studies the impact of real estate technology on the
real estate industry with the purpose of creating thought leadership via fact &
experience based analysis & perspective.
!
!
RE:Tech has taken responsible steps to ensure that the information contained in the RE:Tech Report has been obtained from reliable sources. However, neither of the parties can warrant the ultimate validity of the data obtained in this manner. Results are updated periodically. Therefore, all data is subject to change at any time. Before making any decision or taking any action, you should consult a competent professional advisor. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
