Some of the newer startups in Silicon Valley have migrated to the more urban, denser, and cosmopolitan areas of San Francisco and Palo Alto. Pinterest, Zynga and Yelp, for instance, have eschewed wide-open spaces for busy downtown living. What is the reason for this sudden change of pace? Even if Silicon Valley is 40 miles of large green utopia, that is still 40 miles of sprawl, and a significant distance from the amenities of the city. Sometimes for business to flourish, one needs to rub shoulders with the hustle and bustle of other industries, such as finance, advertising, publishing and law. Given the grass is greener in the big city mentality, it’s not surprising that tech would eventually set its sites on the greatest concrete jungle of them all – Manhattan.
In New York City, there is a huge tech boom going on right now. Tech giants once relegated to Silicon Valley and the West Coast are now luring talent into a the urban sophistication of the Big Apple, where architecture, culture, and international restaurants have replaced miles of bike lanes and sunshine. Dubbed ‘Silicon Alley’, it has started to affect the growth of its West coast counterpart.
Mayor Bloomberg was a big proponent of diversifying industry in New York City. Take for example, the land that the city has donated to Cornell to build their future tech campus on Roosevelt Island. The Applied Sciences NYC initiative has been working since 2005 to capture the growth in science and technology research fields in New York.
A part of the reason for the diversification push is that Wall Street has shown itself to be vulnerable. This revives interest in technology, and opens another door for opportunity. Before the dot-com bust in 2000, New York was actually booming in the technology sector. After the bust, it was hit much harder than Silicon Valley in terms of investment dollars coming in.
Today, twelve years after the bust, New York has begun to attract deals and investment dollars once again – now accounting for 10 percent of the investment and 11 percent of the deals. More than 500 new startups, including Tumblr and Kickstarter call Manhattan their home.
Recently, two Silicon Valley heavyweights have made the move to Manhattan. On November 2011, eBay acquired Hunch, a NYC-based recommendations engine, for about $80 million. This will expand eBay’s offices to New York City, where it is expected to grow to more than 200 employees.
Meanwhile, social mega-site Facebook will open its first New York engineering office in 2012. COO Cheryl Sandburg of Facebook has been quoted as saying it will “hire as much talent as it can. [The New York office] isn’t a satellite office, it will be a core piece to its engineering stack.”
Will Manhattan see the same spike in real estate prices experienced by Silicon Valley in the 90s? One could only hope. For New York real estate owners, this could be the boom of a lifetime, although such landlords have been treated pretty good by the market over the last 20 years.
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Image Source: Applied Sciences NYC