With job growth in the tech sector four times faster than the rest of New York City’s economy, recruiting and talent retention has become the top priority for companies with ambitious expansion plans, and that goes for buildings, too. For many tech and media companies, there’s an appeal in Creative Class A Buildings (a term we’ll coin right now) which helps them grow their business and bring in the talent they need.
What are we defining as Creative Class A?
It is a building that offers a continuation of the extensive list of amenities offered by recruiters. These older properties, repositioned to accommodate future generations, are typically surrounded by restaurants, bars and shopping, and tenants prefer them for those reasons. Just look around at the hunger for the urban that has arrived in New York City. Young creatives commute from Brooklyn, bike to work, share money on the mobile app Venmo. Graduates with STEM (Science, Technology, Engineering and Mathematics) degrees spend much of their job interviews asking companies about what they can offer them as opposed to the other way around. Tech firms and their highly sought after engineers are the new class. Tomorrow’s top talent demands buildings and offices that are unlike anything the real estate and tech industries have encountered before. Environments that are flexible, creative, friendly, open, sustainable and offer the unexpected. That’s the Creative Class A Building.
“The bottom line is that tenants realize older buildings—retrofitted to accommodate tomorrow’s workforce—provide them with a better ability to recruit,” said my colleague, SGA Founding Partner Jeff Tompkins. “In the ultra-competitive race for talent, our clients in tech and media will spend more on Creative Class A buildings than they will on any other property type.”
The recruiting industry is changing. Companies such as Airbnb and LinkedIn recruit teenagers because they know more about social and mobile technologies than most adults. When a number of engineers working at New York City startups were surveyed about where they would like to work, their answers overwhelmingly favored the epicenters of Creative Class A buildings, with Soho the top choice in 33 percent of responses. The next most popular was Chelsea/Flatiron .
“When evaluating available properties in today’s market, I’m not only reviewing the building’s offerings, but also how my company’s culture can blend into the spaces I see. I almost prefer to see the space before it goes slab to slab, so I can determine if we can reuse any of the existing infrastructure,” said Marcie Kowalski, tech industry insider and former U.S. facilities manager for SoundCloud. “When sourcing real estate, I also search for buildings that boast a solid amount of elevators and are staffed 24 hours a day. Tech doesn’t work 9 to 5, so having a building open all hours is very important.” In June, SoundCloud leased 44,000 square feet at 50 West 23rd Street, a 340,000-square-foot building built in 1906 that was purchase by Two Trees in 2010 and given major infrastructure upgrades.
From the developer’s perspective, beyond the high price points Creative Class A Buildings command, benefits also include a construction process that can be quicker and more affordable than new construction. Floors with shared amenities can be configured to accommodate the darling startups of the tech world in need of short-term commitments. High ceilings are perfect for new mechanical systems such as exposed ducting, mechanical equipment and piping. For TAMI tenants, the cubic foot is just as important as the square foot.
Increasingly, millennials want to know if a company is committed to sustainablity. The construction process is a great selling point to the employees of tech companies.
“Retrofitting yesterday’s building stock is one of the best examples of sustainability that architects and developers can articulate or promote with a tenant,” said my father and SGA Founding Partner Al Spagnolo, “because it demonstrates a commitment to sustainability. We’re not sending the building off as waste into a landfill, and it has great benefits when it comes to the reduction of energy.”
“Tenants start the selection process by first selecting a neighborhood, then they want the best building in that neighborhood,” Mr. Tompkins said. “If you’re going to reposition a building, my suggestion is to make sure your building is the best one in the area.”
Adam Spagnolo is the director of marketing + business development for SGA, an architecture, interior design and VDC firm.