DC's Tech Scene Is Already A Powerhouse. What About Its Offices?
The DC tech scene is not up-and-coming, it's already here and making a big impact.
"We're not on the cusp of anything," Social Tables founder Dan Berger says. As a region, DC is No. 6 in the volume of startups, according to AngelList. "We're so there."
That's Dan with the mic, preaching the gospel to the almost 300 folks who turned out to Bisnow's Creative Office event in Crystal City, in one of Vornado's buildings. That's Mitchell Schear moderating the panel and Dominique Taylor of EverFi and Jonathon Perelli of LifeFuels on Dan's left.
The crowd was almost entirely real estate pros, eager to hear the entrepreneurs on stage talk about their experiences searching for space in the DC economy. Dan's company just opened a 30k SF HQ at 1325 G St near Metro Center, Dominique's has 22k SF in Georgetown and Jonathon's has 7k SF in Reston.
The three entrepreneurs represent the kind of companies landlords would love to have, but don't quite know how to attract. Jonathon has an idea.
"When you hear crazy things for their office like furry walls? Smile," he says. LifeFuels does, in fact, have a furry wall in its office, à la Get Him To The Greek. "In real estate, you need financials. We don’t always have those to the degree you’d like to see or can get from a government contractor. My hope is you embrace folks that have these wild and crazy visions. Be flexible and be open."
"The most important thing for us was free rent up front," Eastern Foundry co-founder Andrew Chang said. "We had to have time to build our membership." Now, Eastern Foundry has grown and is looking to expand, one day, internationally.
That's Andrew on the right; 1776 managing director Brittany Heyd, next to him, found the space to incubate and accelerate startups in Vornado properties in Crystal City. Andrew said when he toured the landlords in DC explaining Eastern Foundry's business model, no one got it. Until he met Mitchell.
Brittany agreed with Andrew's critical issue. "For entrepreneurs, short-term cash is always going to be a problem."
That's why when Dan moved into his space, he got the landlord, TIER REIT, to agree to $2.5M in tenant improvement costs, and agreed to pay more in rent to offset it. Dan encouraged the other entrepreneurs in the room to take heed.
Developers and brokers like to talk about the high-end finishes and column spacing their buildings offer, but as the tenant panel said, cost and culture are the key for the end user.
MRP Realty's Zach Wade broke it down. "I think we’re over-improving. I don’t think tenants give a crap about some of the stuff we’re doing."
The tenant panel followed our developer/architect/builder panel, featuring DPR Construction's Chris Gorthy, Zach, WiredScore's Michael Burke, Hickock Cole's Mark Ramirez and The Meridian Group's Tom Boylan, moderated by The Ezra Co's Ezra Weinblatt.
Zach, eminently quotable, said "downtown DC, our inventory is a disaster for creative office." While other cities have had success repurposing older buildings to get the exposed brick character, DC's building stock from those eras was burned down in the MLK assassination riots. Buildings constructed in the '80s are much harder to reposition.
But exposed brick isn't what defines creative office, as hard as that is to believe.
"When people talk about creative office, it’s anything from plywood on cinder blocks to really high-end custom furniture design," Chris said. "In reality, it comes down to the culture of the occupant."
Instead of the finishes in the bathroom—Zach thinks those are getting over-improved, too—landlords should focus on the community and feel of the space.
"We look at it more of a full-service operation," Tom said. "Hospitality themes are seeping more and more into office. The office is a home away from home, and it has to have that amenitized, full-service feel."
That also means landlords can't just rely on tenants to build out their own technology system. Michael's company rates every building's connectivity, and he's found out most landlords don't even know what systems are in place. For attracting tech companies, finding out if the WiFi is too slow is a great first step.
All of this adds up to one big question: What does creative office mean? Mark's company is tooling around with putting a bowling alley in a building. That's creative. Does it mean that the tenants are startups filled with Millennial workers?
Yes and no. Tom says TMG is focused on "just designing something that we think is going to work in the future," taking cues from WeWork and MakeOffices. And a creatively designed office can work for anyone.
"What, you don’t think lawyers are people too?" Zach asked. "Everyone wants to be cool."