While Silicon Valley is usually the first place people think of when it comes to startups and venture capital in general, the East Coast – and New York in particular – seems to have an edge up when it comes to the real estate sector.
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Proptech (short for “property tech”) companies especially like the city, as evidenced by a number of startups opting to move their headquarters there from other locales. This is in addition to the proptech companies who started operations in the area.
It appears that real estate-related companies aren’t the only ones choosing New York over the West Coast. Earlier this year, Bloomberg reported the results of a study that found “New York ranked first in an index measuring 30 global tech-heavy cities” as analyzed by real estate brokerage Savills Plc. (San Francisco came in second and London third.)
That index cited New York’s strengths as its “volume of venture capital cash, large pool of talent — both homegrown and people attracted to the city — and the opportunities that exist for them.”
Indeed, Julie Samuels, founder and executive director of TechNYC, a nonprofit representing New York City technology companies and innovation-friendly policies, said that New York used to be considered more expensive of a place to do business than the Bay Area, but not anymore.
“At this point, it’s not more expensive than the West Coast and in fact, it might even be a little cheaper these days,” she told Crunchbase News. “The culture of New York is about attracting people who want to build big things and meaningful products that impact existing industries and society.”
And proptech companies are a perfect example of that, Samuels said,
“If you’re a proptech company, you need technical expertise as well as expertise in the real estate sector,” she told Crunchbase News. “So you’re probably going to have better luck getting capital, expertise and potentially mentorship from the real estate sector in New York as all of those things are uniquely here.”
On top of that, access to potential customers abound in the city, which is another big draw. And let’s not forget that New York is one of the nation’s largest, if not the largest, metropolitan real estate markets.
Early-stage venture capital firm MetaProp NYC provided us with a short list of companies in the space that have moved in recent years:
- Commercial leasing management platform Hightower (which merged with leasing and asset management platform VTS) from Seattle
- SquareFoot, which describes itself as a “Zillow for office space” from Texas
- Kwant.ai (previously known as OnTarget), which aims to Increase productivity and safety on construction sites using IoT and AI, from the Bay Area
- Okapi, which uses machine learning and AI to provide personalized notifications for asset management, property management and engineering teams, from the Bay Area
The list does not include other proptech companies such as data platform Zumget Group and virtual open house startup GeoCV, which are based in the city. It also doesn’t include larger real estate-focused startups such as real estate brokerage Compass and marketplace Streeteasy.
“For a long time, technical talent was incredibly difficult to come by here and for many years, there was more of it on the West Coast than the East Coast,” Samuels said. “That’s increasingly not the case anymore. Once you take that advantage off the table for the West Coast, it seems inevitable that companies building tech for the real estate space would want to be in New York.”
The aforementioned SquareFoot, a platform that aims to help companies find workspaces, moved to New York from Houston in 2013.
Jonathan Wasserstrum, the company’s co-founder and CEO and Columbia Business School graduate, said while Houston was strong in the biotech and healthcare tech arenas, it was simply “not a big real estate city.”
New York City, he said, is “second to none” from a real estate perspective.
“Silicon Valley is not the end all be all,” he told Crunchbase news. “From an office point, New York is one of the most expensive commercial markets, if not the most, in the country with the largest number of square feet. Plus, a significant percentage of real estate decisions get made within 20 blocks of my office.”
Things appear to be going well for SquareFoot, which has raised about $13 million over time. Wasserstrum said the 56-person company has “more than doubled revenue” over the last 12 months.
“Moving to NYC was the best decision for the company,” he continued. “The quality of talent here on the tech side and the depth of real estate expertise in the city has been invaluable.”
Niran Shrestha, co-founder of Kwant.ai, relocated his company to New York from San Francisco in 2017. The company uses artificial intelligence and IoT to help contractors have a “more data-driven approach to making decisions,” and thus help improve construction productivity and safety.
After raising a seed round that MetaProp participated in, Shrestha said he realized New York City was just “a better fit” for the company’s headquarters.
“The accessibility to construction sites, and (thus) customers, is just one example of why,” he told Crunchbase News. “We can step out the door and have so many projects just around the corner for us.”
The U.S. construction market alone is estimated at $1 trillion, he said, “and New York is the biggest hub for that.”
While I’m sure there are other proptech or real estate-related companies that we’ve missed in this go-around, what we’re seeing confirms that NYC is definitely emerging as a hotbed for these types of startups. There’s just something to be said for the Big Apple.
Illustration: Li-Anne Dias