Is the World Trade Center the new tech hub of the east coast?
In 2014, One World Trade Center opened its doors to its first tenants. The Durst Organization’s Jordan Barowitz oversees communications at One WTC and was initially surprised by some of the companies who were leasing office space there. “We thought that the building, with its prestigious address and the level of its architecture and design, would be like this prestige icon where global Fortune 500 companies would want to have their New York or their US offices,” Barowitz said in a Fortune 500 interview. Instead, he explained that most of the people he saw walking through the building’s lobby were casually dressed, and that “beards and sneakers were abundant”. This can be attributed to the many smaller companies who are now tenants of the building, particularly companies in the tech sector. Most of these companies are neither start-up nor fortune 500, but rather reside somewhere in the middle.
Silverstein Properties, the developer of much of the WTC site, recently signed a lease with Hudson River Trading for 136,000 square feet of office space at 3 World Trade Center. This 15-year deal will relocate the young fintech firm to the 74th-77th floors of the 80-story tower, and give them additional access to 5,000 square feet of outdoor space of the 76th floor.
Hudson River Trading is not the first fintech firm to headquarter its operations in Lower Manhattan. Other fintech firms in the neighborhood include Digital Asset, Morningstar and Fastfin. Executive Vice President of Silverstein Properties Jeremy Moss said recently: “Lower Manhattan is becoming the fintech center of America”.
But it’s not just fintech. All kinds of tech companies are moving their operations to lower Manhattan. In the same week that Hudson River Trading announced its move, fast growing global online sleep company Casper signed a 70,000 square foot lease on the 39th and 40th floor of 3 WTC. In 2017, Spotify leased almost 500,000 square feet of office space next door at 4 World Trade Center. Other notable tenants include High 5, a gaming company and Juno, a ride-hailing app (both residing at One WTC).
Lobby of 4 WTC
Tech companies have claimed more than 33% of the space in the new World Trade Center, compared to only about 3% of the space in the old towers. Although the new WTC is on track to becoming a “Silicon Valley in the sky” of sorts, the trend of increased tech companies operating in New York goes beyond the scope of lower Manhattan. Beyond the blocks surrounding 23rd street (Silicon Alley) and the WTC, where most Fintech and AdTech reside, Queens is now home to many new FoodTech and BioTech companies, while Brooklyn is becoming a new hub for UrbanTech and CreativeTech companies.
Being in lower Manhattan offers certain advantages for young Tech companies, allowing all firms in the area to feed off of each other’s experience. “New York City’s start-up scene is quickly gathering steam and is a big part of Lower Manhattan’s resurgence,” explained COO of IEX John Schwall to Rebellion Research. “Being at 3 WTC, with New York City being the epicenter that it is, gives us access to an incredibly diverse pool of rock-star talent, drawing not just from finance and tech but also from health, retail, entertainment and media. The ability to access your customers, and recruit and fundraise in a dynamic centralized hub is somewhat unprecedented.”
IEX's COO John Schwall
A total of over $38B has been invested in New York based tech companies in the past five years, leading them to employ 120,000 people, 60% more than in the late 2000s. In 2014, New York based digital lending firm On Deck Capital went public with a valuation exceeding $1B. The very next year, New York based e-commerce firm Etsy followed suit, going public with an over $1B valuation.
Although there were no New York based Tech IPOs in 2016, there was over $9.5B invested in 421 new tech companies says Josh Kleyman, Trade Commissioner & Coordinator at Canadian Technology Accelerator. “These numbers show a lot though. The New York tech scene is starting to resemble the traditional New York economy,” writes Kleyman. Rather than investors making numerous bets on risky companies in hopes of striking gold with only a few, New York has seen a fundamental shift towards many stable tech companies who are consistently profitable.
We can’t talk about tech in New York City without mentioning Amazon opening its second largest headquarters office in Long Island City, Queens. Not only is this sure to spur an even greater increase in New York’s tech community, but this move is reinventing Long Island City. New York has agreed to give Amazon $1.7B in subsidies in return for Amazon building a school, engaging in park and infrastructure improvement, and bringing upwards of 25,000 new jobs to Long Island City. Amazon’s decision also highlights why New York appeals to tech companies: the city’s proximity to airports, many mass transit lines, restaurants, retail and cultural institutions, all paired with large numbers of college-educated talent. Other tech companies – large, small, or currently non-existent – are likely to follow Amazon’s lead and make New York their home.
Currently, the four largest tech companies in New York are Infor (Software company), Fresh Direct (grocery delivery service), WeWork (office real estate service), and Oscar (insurance company) in that order. Although these names may not be as exciting as Google, Apple and Snapchat, they anchor New York as the second largest tech hub in the US.
With the new World Trade Center proving increasingly attractive for young tech firms, New York has expanded its economic future beyond the financial services industry. Given the symbiotic relationship between tech firms and financial institutions, tech firms in New York may actually have a certain advantage over those in Silicon Valley, as they are in close proximity to their investors.
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Written by Jeremy Kattan & Edited by Alexander Fleiss