NYC Tech Sector Growing Faster Than City Can Keep Up

BioTitan writes "New York City's plans to build its tech sector have turned out like a party gone wrong — someone inviting 100 people expecting 10 to show up, but finding that not only did everyone come, but they also brought their friends. New York City Mayor Michael Bloomberg wants to build NYC into the second Silicon Valley. Dedicated spaces complete with 3-D printers, workshops, and computers with design software are being built — with the Brooklyn Navy Yard leading the way — yet there is far from enough space to meet demand. Tucker Reed, president of the Downtown Brooklyn Partnership, said, 'Despite the presence of a considerable number of commercial buildings in downtown Brooklyn, longer term leases have tied up much of the current space over the next five years.'"

Comments

What's the appeal?

[moeinvt]

Unless your tech company is providing services which require a physical presence, what's the appeal of NYC? Real estate prices alone are a very compelling reason to locate elsewhere.

Re:What's the appeal?

[dkf]

Unless your tech company is providing services which require a physical presence, what's the appeal of NYC?

Network effects from being close to all those other tech companies. (Seriously. This is why cities are generally more economically effective, and why large cities tend to be more effective than small cities; the effect is super-linear.)

Re:What's the appeal?

[SirGarlon]

If real estate prices were the primary consideration, tech companies would be starting up in rural Oklahoma, not Silicon Valley. Companies need to access to a concentration of talent, and professionals like to live in places where they have multiple career opportunities. A good place to locate your tech company is near other tech companies.

Personally, I think for tech companies to be located near universities is also an advantage, because it gives them access to interns and makes recruiting easier.

Re:What's the appeal?

[Rakishi]

Your tech company won't get far without employees and there's plenty of those in NYC. Also, investors won't enjoy having to go to Bumfuck, Iowa to talk to you and see the operation.

Re:What's the appeal?

[AthanasiusKircher]

I saw some fascinating coverage [...] suggesting that places such as New York and San Francisco in fact can offer higher real wages for high-income people

Perhaps in some cases. But some costs make this comparison difficult. For example, in a smaller city around a university in a different part of the U.S. (i.e., a place with an available talent pool), you are very likely to pay 1/10th of the cost to buy an equivalent apartment or house in the central hub of the small city, compared to the middle of Manhattan. When your housing price is $2 million instead of $200,000, it can take a long time to make up that difference, even if you're earning double the salary.

Most people just live with the fact that you don't get a lot of living space if you want to be a big city. For others, they may have different priorities.

If you happen to be one of the few lucky people who work their way up the ladder in jobs to get some managerial position that just doesn't tend to happen in a smaller city, you might earn enough money to justify the property expense. But that's not most people -- or even most tech workers.

But beyond just being paid well, such people also like to have enjoyable life experiences.

For young people just out of college, I completely agree. I've lived in everything from a small town to a mid-size city to a large city, and I definitely agree about the opportunities for entertainment, culture, etc. in large cities.

But some people also like to have other "enjoyable life experiences," perhaps the most important of which is called "having a family." Obviously lots of people raise kids in the middle of NYC and do great. But all of your costs for doing so are magnified greatly -- child care is expensive (which is huge if you actually want time to take advantage of all of those mostly adult-centered culture and entertainment activities that you're living in a city for), and unless you're living in the right place, you're looking at huge expenses for private schools, in addition to the housing costs I already mentioned.

Meanwhile, move to a small but respectable city like I mentioned above and you cut all of these costs by a huge factor, plus you can even afford a large house in the middle of town with only a 5-minute commute, along with a big yard for your kid to play in, and decent public schools (or even affordable private ones).

For people who are more than a few years out of school and actually have (or want to have) a family -- and yes, this does happen even for a lot of tech people -- there are significant advantages to get out of big cities, which is why you always hear about people with kids moving to the suburbs or whatever.

Except in a small city, you don't even need to move to the suburbs -- you could get all of that in town with a 5-10 minute commute, rather than taking an hour (or even two) each way to get out of NYC (and still often pay high prices).

And as for culture and entertainment opportunities, your appreciation changes with kids (unless you let someone else raise them, but that somewhat defeats the purpose of a "having a family"). Anyhow, you get some of these things in a small city (particularly a university town). And if you want something more, many of these cities are easily within an hour drive or a little more of a major city with all of those things... which you can take advantage of when you decide to take a night out with your spouse or a weekend with the family, all the while paying your child care provider a fraction of what you would elsewhere.

in summary... because that's where the cool kids want to hang out. and you want to hire the cool kids.

Exactly. Once you're no longer a "cool kid" and have your own kid, your perspective may change. "Cool adults" may have different priorities.

(Again, I'm not saying it's impossible or difficult to have a family in the city -- but I think it can potentially negate a lot of these positives in many cases.)

Re:What's the appeal? (Bingo!)

[FooAtWFU]

While some of these points are not without merits: (0) what exactly are you proposing to carry that public transit would interfere with? big fat server racks? (1) "constrained by the hours the metro runs" it runs ALL NIGHT - thank you - they're quite proud of it, though it makes maintenance obnoxious - and moreover for historical reasons there are like 3 ALMOST COMPLETELY INDEPENDENT subway SYSTEMS (not just lines, systems, IRT BMT IND) so if one is down there's probably a backup(2) office outing: just tell everyone to hop on the subway, 80%+ of them will have an unlimited pass anyway, and the rest you can let expense it if you really want (3) I'm not sure that the hiring pool dynamics work exactly like you imagine; the big tech hubs support businesses of the sort where you say "I am in a high-margin business and I can make a lot of money per employee; I can afford to pay them lots and I am constrained by my ability to find and attract large numbers of skilled people and to grow the business much bigger". If your business isn't like that it's another matter and sure, go for cheap programmers, have fun, I won't be working there :D

Transportation is not a limiting factor here!

[Phoenix666]

But with public transportation, you're really limited in what you can carry. Any kind of office outing requires renting an expensive bus to shuttle everyone to or from the event, too. And if the subway has a problem, you may as well shut the place down until they get things fixed. Additionally, your employees who might otherwise be happy to work late or odd hours to finish some project are constrained by the hours the bus or metro runs. So you lose some potential productivity there too.

Or you could have to drive, only to find that some idiot cut off some other idiot and caused a massive accident that has the expressway backed up for miles, and you have to wait around for hours until they clear the accident. Constrained by the hours the bus or metro runs? Do you have any idea how many public transportation options there are in NYC? There are 24 subway lines that run all night. There's the Metro North, Long Island Railroad, New Jersey PATH trains, New Jersey Light Rail, and Amtrak if you don't like the subway. There are scores and scores of bus lines, dozens of express buses from Staten Island and the like, and those are just the MTA buses; and they run all night. There's Greyhound, Trailways, and about 30 other lines that go into Port Authority on 42nd. There are ferries and water taxis. There are yellow cabs, car services, gypsy cabs, and peddle-cabs. There's a freaking gondola if you live on Roosevelt Island. Or you could rent a bike with CitiBike or ride your own around the extensive network of protected bike lanes.

In short, transportation without owning a car is not even remotely a problem in this town. It's also why you want to locate your startup here instead of somewhere else where the options are limited.

Re:Transportation is not a limiting factor here!

[Grishnakh]

I live in NJ, across the river from Manhattan. Public transit inside Manhattan is not bad: it's very fast, as the subway trains run very frequently. It's not cheap though: it seems to have skyrocketed in price over the last 10 years. I think the current price is $2.25 per ride; back in 2000 it was $17 for a weeklong unlimited ride pass, which doesn't seem to exist any more.

However, public transit outside of Manhattan sucks. Yes, there's a light rail that goes to NJ (there's a stop just a couple miles from my house here), but it's horribly slow, and only runs once per hour, and costs $8 per trip. It's actually faster and easier to just take a bus, though that isn't exactly quick, but the train is so slow and infrequent (and parking is a giant problem and expense unless you happen to live within walking distance of the train station) that the bus becomes better by default.

From what I've seen of the Long Island Railroad, it's much the same. Too-slow trains running much too infrequently.

Public transit in this area could be much better; they just need to quadruple the frequency of train trips, and provide better and cheaper parking solutions at the train stations (i.e., free parking garages) for all the people who live only a few miles away: close enough to use the train, but too far to walk.

So yes, transportation inside Manhattan is perfectly adequate, if you only want to employ 20-something workers who live in the city in tiny shared apartments. If you want any older workers (i.e., people with more than a few years of experience, people who might have families), it really isn't that great.

NYC Energy

[Phoenix666]

Another poster pointed out that access to a robust talent pool is a key reason why you'd want to locate a startup in NYC. There is another reason, too. It's not just the tech talent pool that factors into the success of your venture, it's the talent pool in other, closely related industries like design. In New York there's a lot of cross-over that leads to surprising and creative solutions. In every discipline you have the best professionals in the world pushing the envelope, and that both drives and inspires you beyond what you'd be capable of in a sparser, thinner environment. New York has an energy that I have never felt in any other world city, not in Paris, not in Tokyo, not in Shanghai.