As New York seemingly emptied over the course of last year, one industry dug even more deeply into the nation’s most populous city: technology companies.
Office leasing in 2020 marked an all-time low with approximately 13 million square feet, according to recent data, but activity by technology, advertising, media and information (TAMI) firms proved a bright spot. TAMI leasing activity accounted for one-third of all leased space and half of this activity was driven by leasing commitments from Apple, Amazon, TikTok and Facebook.
Although the city has long been associated with the finance sector, technology could soon become an anchor industry. Despite public statements from some tech firms such as Twitter about committing to long-term work-from-home policies, these firms are simultaneously showing a commitment to leasing office space, even in the midst of the pandemic. This bodes well for the city’s long-term desirability and should help it prosper. New York’s tech sector now employs more than 330,000 people and, in 2020 alone, 22,000 people were hired by Amazon, Apple, Facebook and Google.
This raises the question of why now and why New York, when tech has long been associated with Silicon Valley. Part of this is a larger wave of corporate relocations out of California to more business-friendly environments. The other part of this is likely talent acquisition and retention. New York offers tech companies the ability to be near other tech companies without being in an industry monoculture, because of the diversified nature of business in New York. Tech companies have a larger and more diverse pool of talent to draw from and greater proximity to culture and commerce. There are 73 Fortune 500 companies here and 410,000-women-owned businesses, for example.
The trend is growing, as New York is now the world’s second largest tech ecosystem with more than 9,000 startups and more than 100 accelerators, incubators and co-working spaces, according to a 2020 report by research organization Startup Genome and nonprofit Tech: NYC. The City will continue to thrive as an ecosystem thanks to its “depth of talent, experience, and capital in the ecosystem, which might retract but will remain there post-crisis,” researchers wrote.
Tech companies currently account for 29.3 million square feet of New York City office space, compared to 17.6 million square feet in 2011, per Tech: NYC.
A Magnet for Tech
Technology firms have historically congregated together within the same or neighboring areas, and these ecosystems form the soil from which they’ve grown and built success.
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The city’s appeal as a leading tech ecosystem is only growing, bolstered by its diversity, education and cosmopolitan nature. It is larger and more culturally interesting than any other city in America, and this diversity is essential to the technology tenets of collaboration and innovation. About 2.3 million of its 8.5 million residents hold a bachelor’s degree, with more than 1 million of those degrees in STEM. In addition to an educated talented base, the city has no shortage of venture capital investors and business service providers like attorneys and bankers.
Advisory firm Accenture recently surveyed C-Suite executives from 400 companies that earn more than $1 billion in revenue, with upbeat findings. About 85% of New York City companies plan to increase their hiring for technology roles—and 87% said they were confident they could find tech talent locally.
In fact, this vibrance is exactly why top technology firms like Facebook, Amazon and Google are doubling and tripling their office footprints in New York City. In press statements to New York media outlets through the years, spokespeople for these firms have repeatedly pointed to the city’s resilience, diversity and talent base.
Government support of New York City’s accelerating status as a tech hub remains crucial to growing its reputation as friendly toward technology firms, especially after the massive loss of Amazon’s HQ2 expansion into the outer boroughs. Recent activity from the e-commerce giant itself suggests tech companies haven’t been deterred.
Amazon purchased the former Lord & Taylor building for close to $1 billion in March 2020 and started leasing 335,408 square feet of space in December 2019 at 410 10th Avenue. (The building sold for more than $800 million a year later in December 2020.) Additionally, Amazon pre-leased the entirety of Thor Equities’ under-construction industrial facility at 280 Richards Street in Red Hook, comprising 312,100 square feet. Even in Long Island City, the scene of Amazon’s quashed HQ2 project, the e-commerce giant is, as of last week, planning to open a 20,000-square-foot delivery station at 38-50 21st Street.
The city itself, through the New York City Economic Development Corporation, the city’s nonprofit investing arm, is in progress on the Union Square Tech Training Center, a 21-story, 240,000-square-foot building that will serve as a tech incubator and educational center. The organization has pledged tens of millions of dollars over the past years to initiatives fostering tech talent.
New York City’s ascendance as a global technology hub over the past decade and healthy pace of expansion in an arduous year give promise to the city’s return after the pandemic. Its technology sector will be one of the brightest moments in its comeback story.