Friday, August 10, 2012

Tech Building Boom Reaches Queens

New York's technology boom has a new beachhead, and it's in Queens. The challenge of meeting steep rents in Manhattan's tech-oriented Chelsea, SoHo and Flatiron neighborhoods has already pushed the start-up scene into parts of Brooklyn. Now, efforts under way in Long Island City aim to turn the waterfront area into a mini-silicon alley.

Long Island City may one day see spillover from its proximity to Cornell University's sprawling applied-sciences campus, to be built on Roosevelt Island starting in 2014. "As start-ups spin out and naturally settle across the river in Long Island City, it will transform western Queens by bringing in new talent and resources," Mayor Michael Bloomberg predicted last year.

However, the early adopters aren't waiting for any future boom to find its way to Queens.

The area is still largely industrial and many streets are desolate, but the Hunters Point section is visibly changing. Construction crews working on high-rise rental buildings roam the area as joggers make their way through a newly opened portion of the waterfront.

Plaxall Inc., a manufacturing company, said it has applied for state funding to convert a building in Long Island City's Hunters Point section into an incubator, the shared office spaces used as low-cost launching pads by young businesses.

The Long Island City area offers the advantage of short commutes to Midtown along with cheap rents for large industrial spaces that suit growing companies—especially those in manufacturing.

Shapeways, a 3-D printing company, opened a distribution center in the Hunters Point area earlier this year and has plans to build a factory nearby. The start-up, which also has offices in Manhattan, expects to have 25 employees in Queens by the end of next year.

Significant hurdles remain before Long Island City arrives as a technology hub in its own right. A city-made map meant to promote New York's emerging digital landscape currently lists only seven companies in the area.

There is a drive to build a tech-savvy brand for Long Island City, but so far, the neighborhood hasn't perfected the swagger seen on the other side of the river. Monthly tech meet-ups hosted by the nonprofit Coalition for Queens have drawn 150 to 200 attendees with a meek pitch: The venue is just a five-minute ride from Grand Central.

Still, the proselytizing managed to convince Ben Guttmann, chief executive of the education start-up Digital Natives Group. He signed a lease at a building owned by Plaxall last month after talking to another local entrepreneur at one of the meet-up sessions.

"We realized Queens is very affordable," Mr. Guttmann said.

Plaxall pegs the average annual office rents in Hunters Point at about $15 to $25 per square foot. Manhattan's tech centers, where established companies like technology giant Google Inc. and blogger network Tumblr Inc. have large footprints, see offices rent around $56 per square foot in Flatiron and over $40 per square foot in Chelsea, according to research by brokerage firm CBRE Group Inc.

While it lacks the amenities of Union Square, waterfront development has made Long Island City more appealing to some technology entrepreneurs. "Being able to go out for lunch with the best view in the city was a big selling point," Mr. Guttmann said.

"When we moved here, there wasn't a local supermarket or a drugstore," said Elias Roman, co-founder and chief executive of Songza, a digital music business based in Long Island City since 2007. Employees at the company usually eat lunch at Food Cellar & Co., an organic grocery store, and have meetings on the boardwalk by the water.

"It's been an incredible process to see the neighborhood fill in and now to see start-ups want to be a part of that," Mr. Roman said.

Nevertheless, the western-most neighborhood in Queens is still a long way from duplicating the tech successes of Manhattan or Brooklyn. "It's as if we've been a little bit behind the curve, but now we're really taking off," said Gayle Baron, president of the Long Island City Partnership, an economic-advocacy group.

"I think that tech companies have been moving outside of Manhattan at least since 2000. Why it will stick now is because of the fact that more support services are being explored."