The tech office market in Metro Atlanta is changing the office market landscape fast, ushering in new ways to think about office layouts, lease agreements and funding.
Most of you tech outsiders probably think you have a handle on what tech office space is: space that more resembles your child’s dream playroom with bean-bags, slides going from one floor to the next, indoor swings, and video-game rooms. While those are all true things that exists in tech offices, the market has become much more complex than that. This market is changing the way some landlords structure lease agreements, the way they remodel spaces for their clients and in some cases, who the landlord/investor is.
A recent article in the Atlanta Business Chronicle told the story of tech entrepreneur Greg Benoit, who decided to invest $25 million in redeveloping an office building into a tech office building at the corner of Lenox and Piedmont roads in Buckhead. The building is 100,000 square feet, will be called TechRise, and will market to businesses who have grown out of incubation, but are not big enough to commit to a five-year lease. From what I’ve heard, most landlords wouldn’t consider letting a tenant have space for anything less than a five-year lease. Which is why this kind of scenario may have required a landlord like the 32-year old Mr. Benoit, who it appears has not been a commercial landlord before.
With technology being what it is, it isn’t hard for an entrepreneur to start an app or something and have it instantly available to customers across the globe. It is much easier today for a company to gain instant global success than it was in the past. For that reason, more entrepreneurs are taking more chances and finding easier funding to do so. Intown Atlanta, especially around Georgia Tech, has seen huge investments in incubation space over the last 10 years. Benoit’s new project will be right next to Atlanta Tech Village, a building with flexible office space marketed to tech start-ups.
Atlanta Tech Village offers month-to-month leasing options where start-ups can lease by the number of desks they’ll occupy and have access to shared conference rooms, break-rooms, game-rooms and printing stations. Spaces like Atlanta Tech Village also market the fact that it’s tenants will be in close proximity to other similar start-ups, resulting in collaboration between employees and owners of different companies all trying to help each other succeed. Atlanta Tech Village was created by David Cummings, who used proceeds from the $95 million sale of his tech company Pardot.
Incubator spaces like Atlanta Tech Village market to companies with 1-10 employees, while TechRise will be more for companies with 10-100 employees and cannot project far enough into the future to commit to 5- and 10-year leases.
Patrick Braswell is the CEO of Transcend CRE, a commercial real estate firm specializing in the tech market. Braswell helped Benoit with his purchase of the Buckhead office building and looks forward to transforming the old building into tech space.
“The easy answer is to make the space open with exposed ceilings, a huddle room, game room and bright colors, and many people are doing just that,” he told me. “But really it’s much more than that. You need to understand the functions of the company you are leasing to and what they will be doing in that space. The design has to be very strategic and (customized) to the how the tenants’ work.”
He compared the new way to designing office space to how we used to buy music.
“When I was growing up, if I wanted a song, I had to go to the store and buy a CD,” he said. “Today I immediately go onto Spotify and search for it, and it’s there.”
And that’s the mentality of many of these new entrepreneurs who don’t just want an office space. They want their office space.