Some landlords are hesitant to lease to burgeoning tech tenants, and oftentimes the rent is too high. Read more below and on The Real Deal here.
Some of the most valuable office leases inked in Manhattan’s Midtown South in the last year were with the new darlings of the real estate world, technology firms. Among the attention-getting deals were Twitter signing at 245-249 West 17th Street, IBM’s Watson Group at 51 Astor Place and Facebook at 770 Broadway.
Yet there is a quiet grumbling against their smaller and less credit-worthy brethren, brokers and owners said.
The wariness regarding the generally younger tech firms is stoked by those that have failed and left landlords with the expensive proposition of releasing the space. Some landlords also dislike the short-term leases such firms often require.
The perception that untested technology firms are risky is leading some owners to shy away from them and look for companies in more traditional industries like architecture, finance or advertising.
“If a company goes under, [the landlord] loses money,” Stephen Powers, director of leasing at brokerage Denham Wolf Real Estate Services, said. That antipathy to new tech tenants gave him leverage representing an architect in Midtown South.