BY LAUREN VESPOLI | Palo Alto, San Francisco…Union Square? At the rate tech companies have been gobbling up 14th St. real estate, Lower Manhattan is on track to become the next Silicon Valley.
According to Scott Hobbs, deputy director of the Union Square Partnership business improvement district, the area’s tech real estate boom took off around 2011. First, Apple iAD, Apple’s advertising business, signed a lease at 100-104 Fifth Ave., at 15th St. Yelp signing its first 10,000-square-foot lease in the same building later that year. Then came Knewton, an education technology company, leasing another 10,000 square feet in the building.
Fast-forward three years later, and the Yelp office has grown seven times over, to 70,000 square feet. Union Square, conceived in the 19th century as a physical link between Broadway and the Bowery, has become Manhattan’s Digital District, and the tech industry’s appetite for real estate in the district is practically insatiable.
In December, MasterCard signed a 10-year lease for a 58,000-square-foot space at 114 Fifth Ave., at 15th St., to house a tech lab focused on research and development, as well as software design. Days later, digital media company Mashable signed a 10-year deal for 38,580 square feet of space for its new headquarters in that same building. Urban Compass, a tech-focused real estate brokerage startup, recently expanded into a second office, a 9,000-square-foot space at 19 Union Square West.
“Tech companies are excited by the creative energy in the 14th St. area,” said Hobbs. Companies are drawn to the fact that the Union Square area is a mixed-use neighborhood with an intersection of residential, commercial and retail spaces.
“Many of these companies — they’re not working nine-to-five,” he noted. “They need nightlife and activities for their employees to take part in when they’re getting out of work late at night or in the morning.”
According to Hobbs, leasing this year has been “incredible,” in Midtown South, the real estate term for the area including Union Square. The district’s commercial vacancy rate has hit a recent low of 7.7 percent.
Part of what contributes to the area’s vibrancy is Union Square’s role as a transit hub for commuters and pedestrians. According to the Metropolitan Transportation Authority, the Union Square subway station is the fourth busiest subway stop on weekdays and the second busiest on weekends. In 2013, 34.6 million riders passed through the 14th St. Union Square station.
The area also has a remarkable pedestrian headcount. In 2012, the last year for which such data is available, an estimated 350,000 pedestrians passed through the square on a summer Greenmarket Friday.
Despite the district’s existing advantages, such as commuter convenience, the BID continues to focus on making the area an appealing environment for tech offices.
“If you don’t want to sit in your office and work, you can bring your laptop down to the park and work on our complimentary WiFi,” Hobbs said. “I don’t know that there are many districts where you have the ability to have so many spaces to come and work.”
