The Tech Whisperer: ABS Partners’ Ashkán Zandieh
Billy Gray Oct. 8, 2013, 11 a.m.
Before he got involved with a nascent industry on the upswing, Ashkán Zandieh gave a boost to a business in its death throes.
Mr. Zandieh, 30, worked for Universal Republic, at the time an imprint of the giant Universal Music Group label. His role in a band while an undergraduate at Hofstra sparked his interest in the music biz even as digital piracy upended it.
“I went to school full-time and worked at Universal full-time,” Mr. Zandieh said in an interview outside of a Williamsburg coffee shop. “I didn’t sleep a lot.”
Late nights paid off. The Web start-up that Mr. Zandieh ran was acquired 18 months after inception by a label looking to streamline the tour management process. (He said he was legally prohibited from mentioning the site’s name.) Before long, Mr. Zandieh applied the tech chops he honed in the music world and as an entrepreneur to real estate, an industry that had beckoned since his youth in Glen Cove. His father, Mohsen Zandieh, served as president of the Long Island Board of Realtors.
“When I worked for Universal Republic, I helped run its street team,” Mr. Zandieh said. “We did a lot of guerilla promotion. That mentality was always ingrained in us. And I applied it to my father’s 2007 campaign.”
That campaign roughly coincided with the elder Mr. Zandieh’s residential building purchases in Greenpoint and Queens and the son’s growing involvement in real estate. Ashkán employed social media to reach out to the family’s residents (“I never call them tenants”) and put a personal, if not quite human, face on their landlord. From there, he earned a MBA at Boston’s Suffolk University and a master’s degree in real estate from New York University, where he was nurtured by Matt Duthie of Jones Lang LaSalle.
“He really put things in perspective for me,” Mr. Zandieh said. “He told me that I should really find my voice in the industry, which usually takes six to 12 months.”
That vocalization quickly grounded itself in the technology real estate sector, which Mr. Zandieh read about in a growing cascade of articles about Microsoft, Google, Facebook and Midtown South, the broadly defined submarket toward which these tenants gravitated.
“A lot of the tenants were complaining that their brokers sucked,” Mr. Zandieh said. “So I took the residential side’s compassion for the tenant to start-ups pulling themselves up by their bootstraps.”
Mr. Zandieh’s route to ABS Partners Real Estate, which he joined in 2012 and where he now produces quarterly TechStarters market reports, was somewhat serendipitous. “Matt told me to check out ABS,” he said. “And that night, I went on the NYU job board, and the firm had a listing up.”
Timing played a part in Mr. Zandieh landing the job, but it turned out to be an ideal fit for an Internet success story wary of the constraints of a button-down corporate overlord.
“One thing that all entrepreneurs and start-up CEOs will tell you is that once you build you’re first start-up, you’re practically unhirable by another company,” Mr. Zandieh said. “It’s tough once you’ve squeezed the berries and tasted the juice of doing your own thing. My success at ABS is really thanks to one person, Jay Caseley, who brought me onboard and gave me free reign. Most companies take you, mold you and control you.”
While Mr. Zandieh enjoys the relative freedoms afforded to him by ABS Partners, his main career objective is to introduce a sense of structure to fledgling tech start-ups. And for all the buzz about the industry’s effect on real estate—skyrocketing rents in Midtown South, a taste for office design that knocks internal walls down, a surge in co-working spaces—the delicate nature (and shallow pockets) of many young Web start-ups leads to some unique challenges.
“Most brokers push people to take space,” Mr. Zandieh said. “I’ll actually advise these young companies to not take space. I’ll tell them they need to fundraise for a higher value and look for co-working spaces. Because the fact is landlords are risk-averse. My role is to advise start-ups. I preserve and enhance the tech scene.”
“WeWork is a start-up that was built like a start-up by people who came from start-ups,” he says of the prominent co-working incubator. “I tell [tech entrepreneurs] that they understand their model better than anybody. And it’s month to month!”
When it comes to traditional office space, Mr. Zandieh most often discusses Midtown South. The submarket expanded—at least in real estate parlance—beyond Silicon Alley, a term coined in the mid-90s to denote Broadway from the Flatiron District to Tribeca as New York’s answer to Silicon Valley, to encompass the western half of Manhattan from 34th Street to the Financial District. This summer, East Village blogs erupted in half-joking outrage over realtor descriptions of that neighborhood as the latest Midtown South offshoot, thanks in large part to the arrival of Edward Minskoff’s 51 Astor Place.
“It’s like looking at an energy grid,” Mr. Zandieh said. “You have hubs and offshoots. You need a hub. Silicon Valley is a hub, obviously. And that’s what Midtown South is. The only reason we’re talking about lower Manhattan and Midtown as alternatives is Midtown South and its expansion.”
Mr. Zandieh’s most recent TechStarter report described how the tech sector continued to “disrupt” the Midtown South submarket. The average asking rent for a 1,000- to 5,000-square-foot direct lease in the area was $49.73 per square foot in the second quarter, a slight dip from the first quarter’s $49.88-per-square-foot asking rent. Meanwhile, the sublease market for spaces between 1,000 and 5,000 square feet saw a 5.72 percent year-to-year asking-rent jump, to $42.53 from $40.23. Mr. Zandieh points out that to date 35 percent of new leases for start-ups have been subleases.
Could the plateau in direct lease rents auger an overall slowdown? “It’s a good thing,” Mr. Zandieh said. Speaking of the fertile sublease terrain, he pointed out that “start-ups don’t know where they’ll be in two years.”
As for where tech’s center of gravity might shift in two years, Mr. Zandieh is more bullish on NoMad (until recently lined with stores “selling cologne by the gallon”) than Midtown proper—or, more specifically, the area recently rechristened Times Square South—and lower Manhattan, which has seen an influx of technology and media firms.
“People talk about the progression north,” he said. “Some say it’s high vacancy and low rental rates. That’s an obvious factor. But it’s also low rent, like in lower Manhattan. It’s like Old Navy constantly having a bargain sale—50 percent off! But you only attract a certain customer that way. No disrespect to Old Navy.”
Mr. Zandieh, who lives in Greenpoint, is also a big booster of Brooklyn as an alternative to the Manhattan players. “Brooklyn’s considered to be sexy now,” he said, pointing to the crowd-funding sensation Kickstarter’s $7.5 million purchase of a former pencil factory at 58 Kent Street in his neighborhood for its headquarters. Just last month, he helped tenants bring San Francisco-based co-working “clubhouse” Makeshift Society to 5,000 square feet at 55 Hope Street in a slightly off-the-beaten-path corner of Williamsburg.
Young start-ups “feel like they fit in” in North Brooklyn, Mr. Zandieh said. It’s an area that shares the raffish scene’s “core cultural beliefs. Their peers are here. The nightlife’s here.” In all, it’s a prime submarket (whose real estate headlines have mostly concerned residential and retail booms) in which to achieve the “dynamic density” creative new businesses need.
When it comes to tech and real estate dynamism, Mr. Zandieh perks up while describing the real bottom line of the disruption he analyzes. And money is just a small part of it.
“It’s not about rent,” Mr. Zandieh said. “Rent’s a macroeconomic play. It will always work itself out. All real estate is a product of its environment. Something must occur for the industry to react. This is about the efficiency of space and the new age of work styles and, really, the once-in-a-generation shift in the workplace.”