Notorious bandit Willie Sutton when asked why he robbed banks famously said, “Because that’s where the money is.” Ask a start-up (or even established) tech company why they rent expensive urban office space and the answer will be, “Because that’s where the workers are.”
Jim Dougherty, a longtime Boston entrepreneur who recently cofounded a health care startup, Madaket Inc., in Cambridge, Mass., told the Boston Globe, “We wouldn’t even remotely consider moving to the suburbs, even if we could get rent that is a fraction of the price of Kendall Square [in Cambridge]. I lower my rent costs but I don’t get top people. And if you can’t get top people, you might as well not start a company.”
Massachusetts worked long and hard to create a technology corridor around Boston in the suburbs. Space was cheaper as was housing (relatively speaking) and all of life’s amenities (i.e. recreation, shopping, medical care, etc.) were available in abundance.
But that’s no longer the case. According to the Globe article, “Once the center of gravity for the state’s technology community, the suburbs are now more on the outer rings. In 2013, for example, Burlington, Lexington, and Waltham collectively accounted for just 13 percent of open positions for software engineers, while Cambridge and Boston jobs combined for a whopping 63 percent, according to an analysis by the recruitment giant WinterWyman.”
A significant part of the problem is the recent college grads, who attended top institutions like the Massachusetts Institute of Technology or Northeastern University, want to stay in Boston or Cambridge after completing their education. The suburbs are too long of a daily trek, especially if you don’t own a car – or even a driver’s license. “It’s pretty common that I meet someone under 30 who lives in the city who doesn’t have a car,” Ben Hicks, a WinterWyman assistant general manager for its software search team told the Globe.
And it’s not just a New England trend. The Globe article says, “The same urban tech migration is playing out in San Francisco, Los Angeles, Seattle, and New York City as some of the hottest tech companies in those areas establish themselves in downtown offices. For example, Twitter Inc. is headquartered in the gritty Mid-Market neighborhood in San Francisco, and the crowdfunding site Kickstarter Inc. opened its headquarters in the Greenpoint section of Brooklyn, N.Y.”
Kickstarter made the move to Greenpoint because it is fast becoming the high tech center of New York City. Unlike the case in Boston and Cambridge, tech companies are willing to take a chance on Brooklyn for its lower rents because, thanks to good public transportation and more affordable rents, tech workers are willing to live/and or work in Brooklyn.
Even tech Mecca Silicon Valley is feeling pressure. According to a New York Times article about companies like Twitter staying put in San Francisco, “The emphasis on San Francisco signifies how Silicon Valley, an area extending south from just below San Francisco to San Jose, Calif., no longer has a grip on technology companies. About 18 months ago [in February 2012], tech companies started moving or expanding here to be closer to their employees.”
The Globe article does highlight one trend in tech job recruiting that suburban companies are using: going to the city in low-tech ways to initiate the hiring process. Duncan Lennox, CEO at Qstream Inc., a Burlington, Massachusetts, mobile software company that is hiring, said it is difficult for the suburban companies to get the attention of job seekers. The article said, “To get noticed, Qstream is posting flyers in Cambridge coffee shops in hopes of luring urban tech workers. ‘There are cool technology startups in a place where parking is plentiful,’ the flyers read. ‘This place that promises unexpected opportunities lies just beyond the city gates and is called, ‘The Suburbs.’ ”