Insignia's new media group tackles Silicon Alley issues

Real Estate Weekly, August 16, 2000

What does an e-commerce company do when it needs double the amount of space it had leased only four months before? How does an Internet company eager to lease space overcome the continuing hurdle of being edged out by other tenants in the space race? Where does a web-based company turn to evaluate its current and future real estate needs or unburden itself from an unviable existing lease?

Silicon Alley companies are increasingly turning to Insignia/ESG's New Media Group, formed last year to provide comprehensive services and consultation to deal with the specific challenges they face.

The make-up of Manhattan's office market has changed significantly over the past 18 months. Silicon Alley companies had become a major force. In 1999, these companies accounted for 30% and 11% of leases Midtown South and Downtown, respectively. Insignia/ESG's Office Market report for the first half of 2000 shows that demand from Silicon Alley companies has increased significantly and has crossed all boundaries in Manhattan accounting for 26% of Midtown's leases so far this year, 66% of Midtown South's and 26.1% of downtown transactions.

This burgeoning market sector is the bailiwick of Insignia/ESG's New Media Group. The mission of the group's team of experts is to go beyond showing space, to serve as strategic consultants, to focus on the client's business plan, analyze its current and future needs, ensure real estate flexibility, preserve capital and avoid costly, long-term real estate errors.

Headed by Richard Karson, this team of 12 brokers experienced in dealing with e-business and telecom/infrastructure companies works integrally with its clients, virtually sitting on their side of the table.

"We are well aware of the unique needs of Silicon Alley companies and know how to help them get the space they want. We recognize their needs and with the support of Insignia and Insignia/ ESG's vast resources are able to provide solutions to their short- and long-term real estate needs," Karson said. "It is not unusual for these rapidly growing companies to outgrow their space by the time they move in," he adds.

The services provided by Insignia/ ESG's New Media Group include the identification of space and deal-structuring for a company's initial lease; restructuring an existing lease; consulting and transactional brokerage; the selection of vendors for office furniture, supplies and computer equipment; moving services; the management of tenant construction companies and the development of dynamic growth plans.

"Having worked with numerous Internet-related and other high-tech companies over the past few years, we understand their need to attract and retain a talented work force, their desire to find space that offers a creative work environment, their requirements for state-of-the-art communications capabilities, redundant power systems, high ceiling heights and 24 hour/7 day accessibility," Karson said.

Insignia/ESG has negotiated more than 3 million sf of leases for numerous new media companies in the past 18 months including About.com, Aduaction.com, BuyandHold.com concrete media, Idealab? , iVillage, MTV Network Online, Women.com Cybersettle.com, Oven Digital, Primary Knowledge, Inc., Reciprocal.com Solicnet, Virtual Growth, Inc. and WorthMedia.com.

Karson advises his clients on how to present their financial information to owners, the need for quick decisions and how to retain flexibility in their transactions.

When to acquire space or more space is as an important an issue as finding appropriate space. Often, whether young and unproven or rapidly growing, these tenants are in a stronger position at a later phase of financing and can negotiate a better deal. Whether young and unproven or rapidly growing, these tenants are generally difficult for landlords to understand. Accustomed to dealing with the balance sheets and credit histories of traditional companies, owners often have difficulty assessing the creditworthiness of new high-tech companies.