Chester Higgins Jr./The New York Times
Ideeli, an online fashion retailer, moved into offices at 1385 Broadway, a 23-story building in the garment district.Â
A decade ago, in the dot-com boom, technology companies flocked to the neighborhoods along Broadway in , with most ending up south of an unofficial cutoff of 23rd Street.
Today, though, that Rubicon is being regularly crossed by a new generation of digital businesses that seem willing to trade Lower Manhattan and its perceived hipness for the more button-down precincts of Midtown.
More than 100 Internet-based marketing firms, retailers and social networking companies are based in the area between the Flatiron Building and Central Park, out of about 1,400 similar businesses across the city, according to data compiled by NYC Digital, an initiative started last year by Mayor Michael R. Bloomberg to promote the city's technology industry.
“The boundaries of Silicon Alley are definitely pressing outward,†said Jonathan Serko, a broker with Cushman and Wakefield who has worked to bring tech companies to Midtown. He added, “some of the companies are moving out of necessity.â€
In pockets of downtown Manhattan, commercial rents have spiked in recent years as increasingly fashionable neighborhoods like Chelsea, Greenwich Village and the financial district have welcomed a surge of new businesses. Residential conversions have also gobbled up the types of industrial buildings that tech companies once favored.
At the same time, fledgling tech companies have become more cost-conscious than their predecessors, many of whom burned through their seed money in a short time, brokers say. Significant savings are possible in Midtown, where rents can be $40 a square foot compared with up to $70 a square foot in trendier areas, according to Cushman data.
GSI Commerce, which provides online services for retailers like Toys “R†Us, was subletting a 10,000-square-foot loft on Broadway in SoHo in 2011 when the company was acquired by eBay, prompting the need to expand.
“There are many spaces out there that are beautiful, don't misunderstand me,†said Jan Dobris, a senior vice president of GSI Commerce. “They just weren't good ways to expend dollars.â€
The spaces that Ms. Dobris saw in SoHo, the financial district and Hudson Yards were around $60 a square foot, which was too pricey, she said. Eventually, she settled on 1350 Broadway, a prewar high-rise on West 36th Street.
In March, GSI leased the 25,000-square-foot third floor for about $45 a square foot, according to Malkin Holdings, the building's landlord.
There are other perks about Midtown, like the proximity of Penn Station, Ms. Dobris said. Several of her company's 100 employees travel frequently to GSI's headquarters in King of Prussia, Pa., and she said they liked having trains close by.
Attracting digitally focused companies like GSI is a priority for Anthony Malkin, the president of Malkin Holdings, which has renovated most of its Manhattan portfolio to lure new kinds of tenants.
At 1350 Broadway, he refurbished the marble-walled lobby and elevator cabs, adding small monitors that display weather and news, and upgraded the building's windows, lights and bathrooms. U Marketing, an ad agency with a big focus on digital platforms, moved to the eighth floor in 2009 and recently expanded into a next-door space.
Similarly, at the , which Mr. Malkin supervises, a continuing $550 million renovation has removed the walls on many floors to make offices more open.
The efforts may be paying off. This spring, LinkedIn, a social networking Web site, signed a lease for a 10,400-square-foot space on the 24th floor, Mr. Malkin said, to augment its 32,000-square-foot space on the 25th. Asking rents in the landmark 102-story skyscraper start at $50 a square foot, he added.
In opting for workplaces that are more conventional than the former warehouses where they began as start-ups, tech companies “are moving away from environments that are about creativity into those that are more ‘Let's get to work,' †Mr. Malkin said.
