The past few years have witnessed the ascent of technology-based firms in the twin trends of job growth and space use. Some of the most recent high-profile leases have involved relatively young tech firms, and capital is finding its way into start-ups from angel funding to high-profile acquisitions.
To some real estate professionals this current exuberance is irrational, and the leasing activity in tech is a bubble. These naysayers believe we are going through a repeat performance of the late ’90s dot-com boom-and-bust. They sit by the shoreline waiting for the Good Ship Banking and Financial Services to roll back in.
They are mistaken. I have been in and around real estate long enough to know the difference. Unlike the late ’90s — a bubble by any definition — today’s tech growth is market-driven and is as prudent as a high-risk entrepreneurial activity can be. It will continue to drive space use in a wide range of markets, and the advancements in technology will continue to fundamentally change the way we work.
To define current market conditions as “disruptive” or “transformative” may be an exaggeration, but only slightly so. The majority of American adults own and use smartphones, and the use of these devices to find directions, shop, read and the like is ubiquitous. My daily commute used to be competing for space to read my newspaper on the subway; it is now a sea of electronic devices. Worldwide adoption is as robust. The market for technology is truly a global village.
Thus in less than 20 years since the heady dot-com days, the use of technology in every aspect of our lives has created a stable and mature market for creative firms to serve. And these firms require space that appeals to their Gen Y workforce: open, collaborative space with plenty of amenities and a shared sense of purpose.
The ’90s lacked the appropriate due diligence designed to manage risk. It was, in fact, a bit of a tech casino where the most absurd business models received funding — and plenty of it. The pencils have been sharpened and revenue expectations made clear. Today’s funding is smart and ambitious — the appropriate response to a world of endless possibilities.
So don’t fear the future. Live it. Embrace change, and you will benefit.