Tech boom in Pittsburgh gives rise to co-work spaces
November 9, 2013 7:57 PM
Jeff Honnold, owner of Clearmind Consulting, a website development company, works at Revv Oakland, a co-working space for startups.
By Deborah M. Todd / Pittsburgh Post-Gazette
When Revv Oakland founder Mark Mussolino approached Nathan Schwartz of Oakland Real Estate five years ago with a plan to make their community the city's next startup hub, he happened to water a seed planted years earlier during visits to the West Coast.
During Mr. Schwartz's time in Palo Alto, Calif., during the early 2000s, he was impressed by the buzzing small business district found on University Avenue, a boulevard running through Stanford University's campus. Hiding among the businesses -- mostly tech-driven startups run by Stanford students -- was one tiny office with a small blue and white sign advertising a company called "The Facebook."
Between the university brain trust in Pittsburgh's Oakland neighborhood and the booming demand from the region's tech startups for innovative work spaces, Mr. Mussolino said it was easy for Mr. Schwartz to see the potential of discovering the next Facebook atop a Forbes Avenue storefront.
After the Schwartz family decided to use the Meyran Avenue space that formerly housed new-age smoke shop Tela Ropa in 2011, Revv Oakland -- a 5,000-square-foot co-working community perched above a beauty supply store and Peace, Love & Little Donuts -- was born.
When the first crop of Revv Oakland spaces were leased within 18 months, Mr. Mussolino didn't have to utter a word before the idea emerged to expand the concept to a 20,000-square-foot campus of six spaces and to team up with local stakeholders.
Rebranding the project as Startup Oakland -- a collaboration between the Oakland Business Improvement District, Revv Oakland and the Oakland Real Estate company -- the goal is to use tech-centered co-working spaces to draw more than 100 additional businesses to the neighborhood.
In an area with as many educational and technological resources as Oakland, building a neighborhood ecosystem could have happened years ago, said Mr. Mussolino. However, the moves are occurring today because real estate developers, neighborhood associations and other private sector stakeholders have begun to see co-working spaces as investments with the potential to enrich the region, if not themselves.
"Oakland is definitely an expensive neighborhood and Revv Oakland doesn't exist if not for Oakland Real Estate subsidizing the effort," said Mr. Mussolino.
In a time when Pittsburgh has the No. 1 office market for technology companies based on office rental prices and the five-year rent outlook, according to Los Angeles-based real estate and investment firm CBRE Group, real estate developers are increasingly turning to open space clusters. The idea is designed to bring workers from all sides of the creative class together. And they are offering a range of lease agreements and prices that few developers would have agreed to in the past.
Henry Schwartz, co-managing partner of Oakland Real Estate, declined to say how much of a discount tenants receive through Revv Oakland lease rates that begin at $100 a month for desks and $500 per month for private offices.
Jason Stewart of the Pittsburgh office of commercial real estate company Jones Lang LaSalle said average office rental prices in Oakland range anywhere from $25 to $35 per square foot, compared with an average of $20 to $29 throughout the city.
However, Mr. Schwartz said providing affordable spaces for companies with unlimited growth potential will provide returns for the city and for his bottom line in the long run.
So far, the company has provided bigger spaces for ShoeFitr and NoWait, both tech upstarts from South Side-based incubator Alpha Lab.
"We're trying to fill a niche," he said. "People go to Alpha Lab, graduate and then they're on their own. There's a big gap in the tech industry in Pittsburgh and we're just trying to fill that gap."
David Little, owner of Bloomfield's Drake Building, is of a similar belief that technology hubs can grow not only fledgling startups, but also entire neighborhoods.
Mr. Little opened the newly renovated 42,000-square-foot building last year to house tech incubator C-Leveled as one of its main first-floor tenants. That partnership has led to the renovation of more than 20,000 square feet on the building's top floor that is dedicated for C-Leveled startup companies, a co-working space run by an independent company and office and entertainment spaces meant to draw a variety of businesses.
With renovations set to be complete sometime before spring, Mr. Little hasn't yet decided how he will price his three-year leases. But more than potential profits, he is interested in seeing what sorts of partnerships can come out of the arrangement.
"We're looking more for, instead of business types, companies interested in a collaborative space who like being in an open environment, who are open to types of synergy that can happen on any given day in that environment," he said.
Dale McNutt is the man behind Startuptown, one of Pittsburgh's earliest co-working spaces. He welcomes the move to increase regional co-working, which he considers long overdue.
After forming Startuptown casually over a period of six years in its Fifth Avenue location in Uptown, Mr. McNutt and Paramount Film Exchange owner Alexander Denmarsh have formed a private-public partnership with the Urban Redevelopment Authority and other stakeholders to dedicate $1.2 million to add 6,000 square feet to Startuptown's footprint.
The funds will go toward creating space for four to eight companies expected to bring in more than 50 jobs. The project is expected to be complete in January.
Mr. McNutt is glad to see co-working grow beyond his footprint. After years of operating Startuptown as a semi-incubator that has provided promising companies space free of charge, he's encouraged by signs that stakeholders finally recognize the need to come down to a startup's level to lift up the region.
"We're in it for community redevelopment as much as anything," he said.
Deborah M. Todd: firstname.lastname@example.org or 412-263-1652.
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