How Technology and Start-Ups are Changing Commercial Real Estate

startup

It’s impossible to ignore the surge of technology companies flocking to Atlanta in hopes of taking advantage of a receptive market, deep talent pool, and low cost of doing business. The technology industry is constantly changing, which means that these tech companies have constantly changing needs. Atlanta’s commercial real estate industry has had to become more flexible in order to accommodate these types of companies.

From a physical standpoint, most of these tech firms want open, collaborative offices so Landlords are having to authorize major renovations in order to effectively market space. Collaborative and shared space offers smaller firms a sense of stability. David Lightburn, who has converted more than 50% of the 100k SF Atlanta Tech Village building into shared space, said that when these start-ups are on their own and “silo’d” by themselves it’s much easier for them to succumb to the highs and lows of starting a new business.

These tech firms also require top-of-the-line connectivity, which means that Landlords are having to install dark fiber networks for increased speed and bandwidth just to become options for these companies when looking for space. A great example of this is the fiber network in place at the new Avalon development in Alpharetta. North American Properties’ John Kelley boasted about the fiber network of this development saying that they will “never have to upgrade what we have in Avalon.”

Because tech firms generally hire from the younger generation, having a plethora of available amenities within walking distance is also becoming a prerequisite for most of these companies, as it helps with things like recruitment and retention. This was a driving force behind Spanx’s decision to put their new HQ in the Buckhead Atlanta development; not only did this location allow them to open a flagship store in proximity to their HQ but it allows their hundreds upon hundreds of employees seemingly endless options for shopping, dining, etc.

From a contractual and standpoint, tech firms are more reluctant to sign multiple-year deals that lock them into a certain amount of space; most of the newer tech firms expand and contract based on the projects they’re working on and the amount of funding they are receiving and they want to work with Landlords and buildings that can accommodate that. A great example of a building that has embraced this concept is Atlanta Tech Village. Atlanta Tech Ventures turned the former Ivy Place building into a five-story incubator featuring removable walls that allow growth and shrinkage. One major trend we are seeing in Atlanta right now is a decrease in the demand for SF per employee but an increase in the amount of data center and network space per company.

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