Why Tech Should Care About Real Estate
You don’t know how important real estate is to a company until it almost bankrupts you. Cvent founder Reggie Aggarwal shared that revelation to over 500 commercial real estate leaders yesterday at Bisnow’s Northern Virginia State of the Market event. The event management platform company rose quickly during the dot com heyday. But after the bust, the team was reduced to 26, with 35k SF of space and a yearly rent of $900k. Revenue was only $1.5M. Reggie worked out a deal with a (forgiving?) landlord, who forced him to sign his own name to a new lease for less space.
Now the publicly-traded company is 2,000 employees strong in 270k SF around the world (130k SF in Tysons). The company moved into SAIC’s old HQ 18 months ago. After calculating that head count would grow 35-40% annually, Reggie required the space be open, with high ceilings, natural light and lots of glass. The executive offices are on the interior with cubicles closest to the windows. The location was also chosen because of its proximity to Metro, although Reggie says only one-third of employees, who are primarily Millennials, are taking Metro to work. Now his concern is the 30-40% rise in wages over the last year, especially for software engineers. Silicon Valley firms like Google and Facebook are coming to the DC area offering six-figure salaries, even for recent college grads.
The good news for the region, especially Northern Virginia, is that jobs will continue to grow in 2016, says Transwestern analyst Elizabeth Norton, who also spoke at Bisnow’s event. She says the region will add 48,000 new jobs per year for the next five years, with 21,000 of those in NoVa. The fastest growing sector is professional business services, with 30% of those jobs being in tech. Cybersecurity and cloud will dominate, outpacing NYC and San Fran. But the federal government, which dominated NoVa’s industry for decades, won’t ever be what it once was, says Elizabeth. The private sector will have to pick up the slack.