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Palo Alto real estate prices have exceeded New York mid-town prices, according to Jones Lang Lasalle. Real estate is one of the biggest expenses for startups and often represents the single largest liability. According to this data, prices in Silicon Valley hubs are going to increase. But finding the right place is critical.

Sightglass Coffee in SOMA

First, there are tremendous cross-pollination and networking effects. It’s the reason I live and spend quite a bit of time in SOMA. I run into old friends starting new companies, portfolio companies and meet others through spontaneous introductions. The density of the city makes last minute meetings easy to coordinate too.

Second, hubs facilitate hiring. Hubs like Palo Alto, Mountain View, SOMA, Union Square in NYC, and even the Market Street corridor concentrate talent. Plus, all of these areas are close to public transportation which is essential for minimizing commute.

Taralucci e Vino in Union Square, New York

Walking through San Francisco, it’s difficult to avoid cranes and buildings undergoing refurbishment to serve as office space. In the next five years, the cities’ largest companies will be tech companies and will occupy spaces formerly leased by banks, medical device firms and advertising agencies.

Startups are driving demand for real estate in these hubs and as this generation of urban startups blossom, they will create a gravity that will continue to draw new startups, reinvigorating San Francisco, New York, Boston, Mountain View and Palo Alto.

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2 thoughts on “Startup Hubs

  1. It does seem weird to me that the clusters in San Francisco are so specific. SOMA is always cited as a hub for startup activity, but just a mile away in the “Tendernob” it seems like every other building has vacant commercial space. SOMA has some pretty gritty areas itself, so it must be that startups are allergic to tourists?

    • Haha. I don’t think it’s allergy to tourists but proximity to Caltrain and the Bart/Muni. Startups travel often to the valley and TenderNob adds 30 minutes to the commute.

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