Soon to join the firm will be start-ups supported by THCG in its new incubation space. KickStart has just celebrated the opening of its new building specifically designed to provide alternatives to new tenants, hungry for tech-friendly space. One industry insider tells GlobeSt.com that while there is a desire out there for short-term space, it won't have a meaningful effect on the market.
THCG chief operating officer Evan Marks tells GlobeSt.com that, "it was necessary for us to move to enable us to exploit the synergies within our own organization." The goal, he explains, was to bring all of the operations, now functioning at two different locations--650 Madison Ave. and 105 Madison Ave.--under one roof. The move also allows the company to expand its role in its partnerships with start-ups.
Marks says they are on a "fast, critical path to build the space and have everyone completely operational" as soon as possible. He adds that in order to bring all of the new operations to this location, the 28,000 sf of space had to be rehabilitated.
KickStart @ 34th St. opened yesterday. Tenants here will have access to high-tech infrastructures while they grow, after which they will be farmed out to Newmark for permanent housing. A KickStart spokesperson told GlobeSt.com in an interview (in a story GlobeSt.com broke yesterday) that space like this is revolutionary.
A director for Cushman and Wakefield, Mark Mandall, tells GlobeSt.com, "There are a number of small start-ups out there looking for pure real estate plays like KickStart, as well as real estate for equity plays and developers like THCG, but these are not pure real estate cases in any of these situations.
"A real technology tenant not looking for a band aid will lease office space and put in their own infrastructure," Mandall continues. "Sure there's 1,000 start-ups not wanting to wire and put up a huge security deposit that will want a short-term space like these, but the office market isn't changing much as a result."
"The tight market has been pushing new tenants to fringe addresses for the past two years. When the Nasdaq took a dip in the summer, the frenzy for space did began to slow. The bloom is off the rose and companies aren't as quick to throw money at start-ups. New companies have to be reality-based and the frenzy started ending over the summer. There's a lag effect, though, and the market is too large to feel it. There's still a lot of pent-up demand out there and the properties are filling pretty quickly" he observes.
The trend then seems to be that companies that might have joined the frenzy are finding it impossible to make their way without the aid of incubator space in its many forms thanks to the Nasdaq's spring turn. While the start-ups may not impact the office market as Mandall predicts, the economy and the market itself seem to be impacting the ways start-ups view leasing space.
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