Renting an office in Manhattan vs San Francisco vs Portland
August 23, 2014
All things being equal, San Francisco is the top place to be if you’re in tech. New York is arguably not too far behind.
John and I started Customer.io in New York and grew the company in coworking spaces renting desks at $600 a month. At some point we decided we wanted our own space to build our company and culture. I never found space.
We gave up finding space in Manhattan late last year and decided to move the company away from New York instead.
Looking for an office in Manhattan sucks.
Have you ever tried to find office space in NYC? Rents are high, the listing brokers often stretch the square footage in the office. You might have a “1500” square ft office that is really only 900 square ft because you pay for common areas in the building. It is just as bad (if not worse) than looking for an apartment in new york.
When I was looking about 8 months ago, my ideal was a 1000 square ft office for $4000 a month. We came close once, but it ended up being elusive and I was never able to rent it.
Commercial rents in class B buildings New York were generally in the $38 - $70 per square ft per year range. Class A midtown buildings can be as high as $100.
The word on the street is that commercial rents in San Francisco next year will exceed Manhattan.
San Francisco office rents will climb to $69.71 a square foot by the end of next year, up almost 18% from $59.28 in the second quarter, Mr. Yasukochi said. Manhattan rents will grow at about a third of that rate, rising 6.5% to $69.68.
What if you look outside of Manhattan / San Francisco? How much further does your money go?
I’m looking for office space at the moment in Portland, Oregon. Commercial real estate is in the $16 - $24 per square ft per year range. Remember that elusive 1000 square ft / $4000 a month office in New York? You’ll pay ~ $1666 a month @ $20 per square ft per year. It feels like we’re getting a deal even paying the top of the market here.
If you can build your business (anywhere) outside of tech hub cities, your money is going to go a lot further, and your employees will live better too.