Bay Area Startups Fight Their Way Through a Tightening Office Market

March 2012
T3 Advisors


Commercial real estate markets in the innovation hubs of the country are booming. Silicon Valley, SOMA, Boston and New York are on the top of this list.  The leverage pendulum has swung deep into the corner of the landlord, and pre-revenue, early-stage startups have challenging times leasing office space with flexible terms while minimizing capital expanses (e.g. build-out, buying furniture, etc.).  Enter, the Coworking world.

Early stage technology companies battle changing real estate conditions in San Francisco and Silicon Valley.

The lingo, for example, can sometimes be a little confusing.  Incubator, Accelerator, Coworking, Sharing or “we-space” are terms thrown around and basically describe the idea of shared resources.  Each descriptor has iterations that make it unique, often around support, investment and networking, but the common thread among almost all is the idea of sharing office space.

We shouldn’t be surprised by this movement. Lisa Gansky spells it out pretty clearly in her book, The Mesh.  The same way that Netflix has allowed us to share movies, ZipCar share cars and Airbnb share, well, air beds, the same is happening in the real estate world.  Pooling like-minded people and companies together to take advantage of economies of scale that create infrastructure benefits in kitchens, server rooms, larger conference rooms, and copy/printing capabilities is obvious.  But, in addition, there are “water cooler chats” and “casual collisions” that occur when multiple companies are working together in a way that we’ve never seen before.  Different companies employ people with different skill sets.  The opportunity to access these multiple skill sets, while not carrying them all as FTEs is the secret sauce.  Not only are startups benefiting from great space that allows for collaboration and fosters productivity in its own employees, but it also provides the opportunity to leverage other company’s expertise and skill sets to solve problems quicker and cheaper by someone you know and can trust.  It’s a classic win-win for startups.

A unique, new tool to assist emerging companies with their search for the perfect office space!

For companies with less than 10 people, the co-working option allows for ultimate flexibility, very limited investment in infrastructure and an ecosystem that could provide significant time and cost savings.

Now, the questions are:

  • How do you find these coworking solutions?
  • Where do they exist?
  • Who can apply?
  • How much do they cost?

Small companies are underserved by the traditional real estate market.  These small, co-working deals yield little, if any, compensation for the real estate broker.  At T3, however, our corporate real estate company was built to serve all segments of the innovation economy, including smaller, start-up companies. We’ve started developing an online search tool that will help technology startups, VCs and business owners identify and dissect the Coworking, Accelerator and Incubator opportunities in the Bay Area, for starters.

Over the next several weeks, we’ll be updating you on the progress of the tool and encourage you to subscribe to our blog via email or RSS feed to stay tuned.  In the meantime, feel free to download some helpful hints below for start-up technology companies searching for real estate in the Bay Area and Silicon Valley.