Startup Incubator Takes Full Manhattan Building For New Hybrid Concept
One of the most successful tech incubators in New York City is growing its ambitions into the world of coworking and beyond.
Grand Central Tech, which has grown from 15K SF to 130K SF at 335 Madison Ave. in the past five years, has been transformed into Company by co-founder Matthew Harrigan, Forbes reports. The new concept will take over the full building, which stretches between 43rd and 44th streets and between Madison and Vanderbilt avenues across the street from Grand Central Terminal in Midtown Manhattan.
The 1.1M SF building, now called The Company Building, is owned by Milstein Properties, which values the property at over $1B, according to Forbes. Partnering with Company, the Milstein family will lease 700K SF to large enterprise tenants like Facebook, which has signed on for a one-floor lease starting at the end of the year. Those tenants will sit atop 250K SF of coworking space with membership that, unlike with WeWork, Company will curate like an incubator space.
Part of what set Grand Central Tech, and now Company, apart from most standard incubators is that it does not take a portion of equity in an entrepreneur's startup in exchange for membership. Instead, it will charge rents well below market price — about $65/SF, according to Forbes — for entrepreneurs and subsidize the cost by charging the enterprise tenants above-market rents (starting at $100/SF, with rent in the surrounding area averaging $95/SF). Harrigan's bet is that idea-hungry tech companies will pay the premium to mingle their employees with the startup culture downstairs.
Enterprise tenants will have "traditional leasing arrangements," according to Company's website, while month-to-month coworking memberships will be offered to teams of up to 20. Companies between 15 and 120 workers can sign one- to three-year leases for "startup suites."
Common space will be a key feature of Milstein's $150M renovation of the building, which will include ground-floor retail like a bar, multiple restaurants and space for pop-up shops. That component will make up part of the 150K SF devoted to amenities, which also includes a 150-seat theater for speaker events, an outdoor terrace overlooking Grand Central Terminal, and a completely open second floor that includes long, cafeteria-style benches and tables.
Company itself will also be raising capital for a $50M venture fund, although it has not decided how to invest in some of its tenants and not others without giving the appearance of favoritism, as Harrigan told Forbes.
Coworking is rapidly growing its presence within the office market, but as it does, WeWork has entrenched itself further as the industry's dominant force. Competitors like Knotel, which is unapologetically gunning for WeWork's crown, and Convene, which has expanded its business from event hosting to coworking, have focused on larger businesses to scale quickly, rather than the startups that sparked the coworking revolution.