New York Startups are Moving to Brooklyn
Brooklyn’s office growth is bringing jobs across the river
The threat of a tech bust and the slowdown in VC funding has done little to deter the NYC office market. New York remains as popular a work destination as ever, with rents increasing faster than Manhattan can keep up with. TechCrunch reports that office space demand for tech companies increased by 177% from 2002-2012, comprising 25% of NYC leases in total. Furthermore, the city’s vacancy rate is a mere 9%, compared to the national average of 15%. While this demand is great for landlords, it’s putting a squeeze on startups who want to work in the city.
As a result, Brooklyn is quickly changing from a second choice to a legitimate tech hub of its own. It’s been decades since the borough first met the forces of gentrification, but it has generally seen more of an influx of residents than offices. Now, with Manhattan office rents pushing out companies the same way its apartment rents pushed out residents, Brooklyn dwellers will no longer have to cross the East River to commute to work.
This trend is affecting established companies almost as much as startups. Etsy, now over a decade old, was a pioneer in setting up shop in Brooklyn rather than Manhattan. Startup titans Kickstarter and Livestream also call the borough their home. Across the board, businesses are realizing that leaving Manhattan might not harm their talent pool as much as they thought. The allure of marginally more affordable rent is too much to resist.
If nothing else, the move to Brooklyn is good news for Brooklyn residents. Employment increased 45% in the Brooklyn Tech Triangle, a new name for the connected neighborhoods of DUMBO, Downtown Brooklyn, and the Brooklyn Navy Yard. The Tech Triangle is the de facto core of Brooklyn’s tech scene at the moment, and it’s been siphoning Manhattan jobs to local residents who don’t want to commute. Indeed, tenancy in the area grew 22% over the past three years.
The city itself is getting involved with the issue, too. There’s a relocation assistance program that offers up to $3000 in tax credit per employee for companies that move to designated areas in Brooklyn. Transit plans are also in the works: a light rail system will soon connect the Brooklyn and Queens waterfronts. The city is keen to develop Brooklyn, and wisely so; Manhattan can’t grow forever.
With shared offices on the rise, companies are finding more ways than ever to cut costs. Some manage to stay in Manhattan by subleasing their office space or by cutting back on employee perks.
Others elect to cut costs in the most obvious way: move somewhere cheaper.