Brokerage firms reaching out to biz incubators

Real Estate Weekly, August 16, 2000 by Natalie Keith

In the race to capture the high-tech office market, some brokerage firms are reaching out to business incubators, where start-up companies conduct business in the early stages of development.

By consulting with fledging companies while they are still operating from space within the incubator, brokerage firms are hoping to establish a relationship. By gaining their trust, brokers hope to later gain their business.

"It's a good way to get a foot in the door," said Julien J. Studley managing director Robert Eisenberg.

Brokerage firms meet with start-up companies to establish short- and ling-term space needs, so companies are well informed before making the move out of the incubator. Making prudent decisions regarding space is important for small, growing companies because making a poor decision can cost them dearly. If a company signs a long-term lease and finds the space is too small or too big to make its needs, a lot of venture capital could be spent needlessly, officials said.

Studley has established formal incubator initiatives. in its Atlanta and Chicago offices, which doesn't obligate companies to work with Studley but establishes the type of relationships brokers relish. Atlanta-based NAI/Brannen Goddard Co. is providing similar services to clients of e4Speed.com -- a subsidiary of Renaissance Worldwide, Inc.

In New York Studley is seeking to imitate methods that have proven successful in Atlanta and Chicago, but do not have a formal program, Eisenberg said.

"A lot of companies are trying to do this. Incubators probably get lots of calls," he said.

Incubators house very-early stage companies and provide on-site management and a full array of business planning, management and financial services. Among incubators in located in the New York City are Iron Street Labs, the Business Incubation Group, and the Audubon Business and Technology Center at Columbia University.

According to the National Business Incubator Association's 1998 State of the Business Incubation Industry shows that since their inception North America's nearly 600 incubators have added some 19,000 companies and more than 245,000 jobs to the economy.

Dinah Adkins, Executive Director of the association, concurs that real estate decisions are an important component of starting a new business.

"They're funding may not be in place and they may have to sign a long-term lease," Adkins said. "It may not be the right amount of space, it may be too big or too small."

Mitch Gipson, Executive Director of the Audubon Business and Technology Center, said the biotechnology companies looking to move out of the incubator normally contact brokers on their own. Some bypass using brokerage services altogether because the supply of space that's appropriate for biotechnology companies is small and easy to identify.

Because of the manner in which the center is funded, a greater concern is ensuring that companies relocate within the New York City area. Public organizations fund the incubator as a way of supporting economic development efforts and, therefore, want companies to stay in the area.

"We wouldn't be adverse to working with a broker. Our "move-outs" are going to contact a broker and we want them to know which ones are familiar with the type of space they need," Gipson said.