Are Commercial Real Estate Brokers Neglecting Startups?

What do startups look for in office space?  Considering the real estate industry’s current obsession with tech companies, this number is surprising: a third of New York’s tech startups have never been contacted by a commercial real estate broker.

Based on a research survey of fifty New York tech startups, commercial real estate brokerages have a ways to go in their courtship of these companies. Brokers who forge an early connection with these startups stand to profit handsomely if the firms take off. Several real estate firms are among the fastest-growing tech startups in New York, attracting millions in venture funding. 

The research survey also found that the vast majority of tech startups favor flexible, short-term leases. Nearly 80 percent of respondents said they favor a sublease over a lease. About 60 percent said their ideal lease term is between three and five years, while the remaining 40 percent preferred a lease term of between one and two years. None of the respondents were keen on five-year-plus lease. 

The RE:Tech Snap Shot study provides key insight into tech's impact on real estate. Highlights of our research findings include the following:

› Nearly 50% of tech startups surveyed were companies with 20 or more employees, equating to roughly ± 5,000 square feet per company.

 
 

 In the event that a commercial real estate broker reaches out to a tech startup, 100% of the companies surveyed responded that they would like to be made aware of available space and not market conditions or a commercial real estate brokers services.

 Nearly 33% of tech startups surveyed stated that they have never been contacted by a commercial real estate broker. 

 
 

 A major area of concern for tech startups is flexibility.

“We need flexibility. The future is very unclear and can bring tremendous growth, no growth, or going out of business.”