20:47:19 | 2012-08-21
Silicon Alley in New York City has experienced a boom even as economic worries persist. Reuters Social Media Editor, Anthony De Rosa, heads into the heart of Silicon Alley to unearth the secrets to success of three of the hottest young tech companies.
(New York, NY) — The economy is booming—in New York, that is. New York City stands strong as the biggest regional economy in the United States, and it is the second-largest city economy in the world after Tokyo.
As home to one of the world’s two largest financial centers, the New York Stock Exchange and NASDAQ, New York City is also a pillar among industries such as law, banking, accountancy, entertainment and technology.
In recent years, the city has even come to boast its own Silicon Valley, bearing its own moniker of Silicon Alley.
In fact, the name was first brought to light in 1995—the same year that set off the “dot-com” boom. Silicon Alley, an area roughly between 30th and Canal streets, describes the mass of Internet and new media companies that are established and emerging in New York City. Obviously derived from Silicon Valley in California, Silicon Alley originally referred to the companies occupying the Flatiron District down to SoHo and TriBeCa along Broadway. As the locations of these companies expanded, Silicon Alley came to describe the dot-com industry for all of New York City.
After the dot-com bubble burst, Silicon Alley began its comeback around 2003, and today New York City thrives as the startup leader in advertising, new media, financial technologies, telecom and web 2.0 companies.
Startup companies continue to sprout, continually experimenting with new and innovative ways to foster young-company growth in the “city that never sleeps.” New York City Mayor Michael Bloomberg is one of many who believe that Silicon Alley is superior to the original Silicon Valley, starting with the mayor’s roadmap to make NYC the nation’s “premier digital city.” In May 2012, Bloomberg embarked on this goal through the rollout of the Made in NY Digital Map, an easy, interactive way for users, such as entrepreneurs, investors, developers and designers, to learn more about and gain access to the city’s technology startups and hundreds of career opportunities.
According to the Made in NY Map website, “The Made in NY Digital Map is a visual testament to the vibrant state of New York’s digital industry—showing a powerful constellation of over 500 homegrown startups, investors and co-working spaces across the five boroughs.”
The interactive map is another concentrated effort for the city to continue propelling itself as the one of the world’s leading technology hubs.
“New Tech City”
New York City experienced a 32 percent increase in venture capital deals for the technology industry from 2007 to 2011, according to “New Tech City,” a report conducted by the New York City advocacy group Center for an Urban Future and sponsored in part by AT&T. Additionally, since 2008, 12 tech startup accelerator programs have been established in the city, particularly in areas of entertainment and digital media, healthcare, and human capital management.
Although New York City has not been considered as “hardcore tech” as Silicon Valley, it is evident that the East Coast tech scene is flourishing thanks to the city’s ongoing access to a plethora of talented designers, marketers and savvy business developers. In contrast to Silicon Valley, where companies are starkly technology based, NYC houses countless industries such as finance, fashion, media, real estate and telecom.
Silicon Alley is geographically known as Midtown South, and of late, it has replaced Midtown as the most desirable location for companies, dominating in the technology and media space, to lease space. Why? Although rent doesn’t come cheap, the ability and speed at which companies are able to develop and sell products within the city represents a clear tradeoff. For years, NYC actually was the city largely known as the one companies left when they needed to expand but could not afford the higher rent—or salaries.
According to Cushman & Wakefield, as noted in a July 2012 Bloomberg report, Silicon Alley has the lowest vacancy rate of all central business districts in the nation, standing at 6.1 percent. “Historically, Midtown was the location that companies flocked to for affordable rent following a recession, but that’s not the case this time,” reports Ken McCarthy, senior economist at Cushman & Wakefield.
Asking rents in Silicon Valley rose to $49.43 a square foot in the second quarter from $48.45 in the previous three months.
So how did the dynamics change? New York City, even in a slow economy, has demonstrated a booming ecosystem supported by private investors, such as NEA and Accel Partners, incubator labs, and other shared work spaces in a sea of industries. The city is also home to a growing consortium of engineers and veteran entrepreneurs, who are on hand for encouragement and advice to budding businesses.
And unlike Silicon Valley, Silicon Alley is significantly closer to Europe, where many New York City companies conduct business.
In 2012 and well beyond, Silicon Alley will continue to grow. With technology giants such as IBM, Facebook and Amazon seeking space in the city’s Flatiron, Chelsea and Meatpacking districts, the tech boom in New York City is only increasing.