(Photo: Brownstoner)

"This building would be great, but it just has too much...ceiling," is a thing that some startup office seekers are apparently uttering in the trendier neighborhoods of San Francisco. The Wall Street Journal reports that landlords are straight up wrecking buildings to make them look "edgier," "funky" and "fun."

That means lots of exposed ceiling pipes, open floor plans and a kitchen stocked with organic juices and plastered with signs about the upcoming company-wide 5k. Also: a room for people to cry in, when your investors just don't get it.

Writes the WSJ:

San Francisco landlords are finding a new way to attract desirable start-up tenants: tear up conventional-style office buildings to give them an edgier feel.

At 115 Sansome Street, once a headquarters of Standard Oil, new owner Harvest Properties removed the ceiling grid to reveal industrial orange pipes and sandblasted paint to expose the old copper finishes on windows. At 3180 18th Street, a former luggage factory, the building owner eliminated old ceilings, exposed original wood and created building signs that resemble the original ones.

"You don't want to feel like you're working for the man," one HotelTonight executive admitted, presumably before cranking up the volume on his Phish CD and launching into a diatribe about how Burning Man really changed his outlook on life.

Still, consciously "roughing up" an office space to make it appear loft-like and trendy is like buying something at Urban Outfitters and calling it "vintage." Truly cool kids like those at Kickstarter know it's all about throwing money at gutted pencil factories.

Wave goodbye, folks. (Photo: flickr.com/jphilipg)

With all the froth and flutter about New York City startups, it's easy to forget they're not special creatures, free from the tyrannical pressures of the real estate market. Today comes a reminder courtesy of The New York Times, which reports that many tech companies companies, rather than waste precious rocket fuel (i.e., capital), are electing to move north--to Midtown.

Oh, dear.

It's no secret the startup scene is infatuated with the notion of creatively converted industrial spaces, the kind of drafty, wide-open offices that just scream "young and hip." The problem is, that starving-artist aura doesn't come cheap, and this isn't dotcom 1.0:

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.

Tech companies: They're just like us! Harried by gentrification and ever-escalating rent.

Hence, Silicon Alley is creeping northward, into--God forbid--the mid-30s. It's not like they've gone so far as to camp out next to the Plaza, which would really be a Rubicon, but the new addresses give off a definite whiff of Penn Station. But don't you worry, it's still possible to find spaces that evoke manufacturing-age New York, so your CEO can continue babbling about shipping virtual products in an appropriate setting:

Yet the look of those original industrial spaces, with open layouts, tall windows and high ceilings, can also be found in Midtown, like at 1385 Broadway, a 23-story building on West 38th Street in the garment district where many wedding dress manufacturers were once based.

Of course, despite the lack of La Colombe Torrefaction outposts, it's not exactly like these companies are colonizing Mars: Twitter is at 360 Madison Avenue, near Grand Central; Facebook is nearby, at 335 Madison Avenue. Plus, there's always the Blue Bottle Coffee in Rockefeller Center.

(flickr.com/chadwho1ders)

Facebook is heightening its presence in New York and is looking to expand from its Madison Avenue digs into a bigger office better equipped for its influx of engineers. According to Crain's New York, sources say the execs at Facebook are considering an office space in the former New York Times building at 229 W. 43rd street.

Writes Crain's:

Times Square is not a favored haven for tech firms, but the owners of 12 upper floors of the 15-story former Times building have added some touches that are likely to earn points with tech crowd and could compensate for the midtown location. There is now a basketball court where the publisher's dining room used to be and the 12th floor terrace is now covered with astro turf to give it a more whimsical feel. Plus, tech firms tend to be drawn to more quirky, older spaces.

Crain's notes that Facebook could also choose to expand the space it already rents at its current office on Madison, or perhaps opt for an office closer to the burgeoning heart of NYC tech in the Flatiron.

Frankly, we're all in favor of this potential Times Square move, as it will mean Facebook's new office will be located right around the corner from The Observer. Hope you guys like Shake Shack.

Google's Chelsea office (via Wikimedia Commons, user Beyond_My_Ken)

Tech companies are, once again, scouting for space. The New York Post reports that Facebook, IBM, and Amazon are all on the prowl in Flatiron, Chelsea and Meatpacking. Perhaps Facebook has decided that, access to advertisers notwithstanding, Midtown just isn’t hip enough?

But the most interesting tidbit lies tucked into the middle of the story. Brokers told the Post:

"West Coast-based tech companies, in particular, are more likely to be in parts of the city that are not in Google’s West Chelsea shadow."

Was it something Sergey said? Or maybe it's just that doozy of a property tax bill.

205 Hudson St. via Trinity

Trinity Real Estate, a division of Trinity Church located near the World Trade Center site, has had a pretty good run. In the past 14 months, Trinity saw occupancy rise from 84 percent to 92 percent and watched rents ratchet up 26 percent. According to Crain's, a big part of that growth is thanks to tech companies, or at least tech-driven startups like e-commerce site One Kings Lane, which is co-founded by Mark Pincus's wife Alison Pincus, and moved into 205 Hudson St. in May.

Trinity owns 18 former industrial buildings in the Hudson Square area and startup types, it seems, dig the "loftlike spaces, with large windows and big floor plates." But it's not just Trinity:

"Tech-driven firms such as One King's Lane, along with an army of media companies, were crucial drivers of commercial leasing last year. In all, they accounted for 28% of Manhattan leasing in 2011, up from 18% a year earlier, according to Cassidy Turley. That increase also came at a time when financial firms, which make up Manhattan's largest tenant group, shed staff."

Thanks to that growth, Hudson Square, which goes from Canal Street to West 14th Street and Sixth Avenue to the Hudson, claimed the largest drop in vacancy rates, along with the highest increase in rents for coveted buildings. Tech and media companies also helped Midtown south, from 32nd St. to Canal, claim "the lowest vacancy rate of any central business district in the country," says Crain's.

Students of the dot-com era will recall that Midtown south went through its own boom and eventual bust before, but Joseph Harbert, CEO of Cushman's New York Metro Region tells Crain's, “This time feels different, more real,” thanks to actual products and "very often" profits. Wait, landlords make a distinction between profits and VC funding, right?

This is a guest post by Michael Mandel, a commercial real estate advisor at Grubb & Ellis in New York City. He specializes in tech startups and data center transactions. His recent clients include eBay, Facebook, The Limited Stores, adap.tv, Verizon, Webair and Guardian Life.

So your startup has gotten too large for General Assembly, Dogpatch Labs, WeWork Labs, Betaworks, TechStars, or wherever you choose to incubate the next Facebook. You love the high tin ceilings, the wood floors, the exposed columns, and the proximity to the Ace Hotel, but it’s time to take off the training wheels and ride out on your own. This article is your definitive 900-words-or-less guide to making it in the big city.

Step 1: Determine what you need.

Most importantly, how much space do you need? Major considerations that impact square footage are employee count, number of private offices and conference rooms, and room for expansion. An architect can help you develop a “space program” that outlines the square footage you will need.

Other things to think about are:
What type of space? Traditional or creative/loft?
What neighborhood? Choices often focus on industry/image, employee commute and subway access.

A note on location: We brokers divide Manhattan into three major markets: Midtown, Midtown South and Downtown. Each market has many submarkets (neighborhoods), but on the whole, Midtown is the most expensive, followed by Midtown South and Downtown. Most startups end up in Midtown South, as it is a location of choice for peers, has lots of loft buildings, and exudes a hip vibe. The largest concentration of startups is in Gramercy/Flatiron, followed by SoHo/NoHo.

Step 2: Identify and explore your options.

A broker can create a survey of different spaces that meet your criteria. From this survey, you can pinpoint the spaces you’d like to tour. Touring each of these options gives you the opportunity to test your assumptions on neighborhood, type of space, square footage and other needs.

Step 3: Prepare a short list/financial analysis.

Each space will be sized differently and have varying rent and deal terms. A comparative analysis allows you to put all properties on a level playing field.

Step 4: Submit offers and negotiate deal terms.

Your offer outlines the terms at which you are willing to make a deal. If possible, you should submit offers for multiple spaces at the same time. This creates competition among owners and helps achieve the best deal possible. Some deal terms to think about:

• Rental rate (per square foot per year)
• Rent abatement
• Lease term
• Electricity
• Heating and air conditioning
• Operating expenses
• Taxes
• Landlord’s work or funds for space build-out
• Sublease and assignment rights
• Signage
• Renewal/termination options
• Security deposit/guarantee

While all of these items are negotiable, there are market standards for each of them. Your broker will help you establish what terms are fair.

Step 5: Negotiate your lease.

Hire a lawyer! New York City landlords are sophisticated. Their lawyers draw up leases that benefit them. Your lawyer will work with your broker to advocate on your behalf and ensure the landlord doesn’t take advantage of you. When negotiating a lease, watch for:

• Correct business terms
• Sublease provisions
• Compensation for failure to deliver the space on time
• Relocation clauses
• Subordination, non-disturbance and attornment
• Insurance (check with your insurance agent)
• Accurate description of landlord’s work or drawdown of tenant improvement allowance.

There are a million other items like these, so make sure you have a broker and a lawyer!

Step 6: Build out the space and move-in.

If your lease stipulates that the landlord construct your space, be sure you know the completion date and the finishes/quality of installation. Plan to integrate your IT/telephone wiring at the same time. If you’re overseeing space construction, monitor layout, costs and deadlines! When move-in time arrives, make sure the internet and phone services are functional and you understand the building protocol for move-ins.

A few words on ways to accommodate growth:

Find a sublease. Sublease space typically rents for 20 to 30 percent less than space available directly from landlords. Most also require a shorter time commitment in years than an owner will offer, because you are assuming another company’s remaining term. However, with a sublease you won’t have a direct relationship with the landlord, the landlord can possibly throw you out if the sublandlord defaults, and you’ll likely have to pay for a new build-out out of pocket.

Right of first offer. Depending on the size of your requirement, the landlord may give you the right of first offer on any space that becomes available next to yours, on your floor, or in the building.

Right to terminate. Landlords will often allow you to terminate your lease early provided that you give advance notice and pay a penalty equal to the landlord’s unamortized transaction costs.

Renewal/expansion clause. You may insert an option into your lease to renew or expand at either a pre-determined price or fair market value.

Expansion within portfolio. If you’ve outgrown your space, most landlords will accommodate relocation to a larger space within your building or another in their portfolio and rip up your existing lease. Still, it’s helpful to get this in writing.

These are just a few of the many considerations you’ll need to keep in mind when looking for space and negotiating a lease, so find someone you trust to help understand them. Your broker’s job is to educate you on the market, landlord character, and market-appropriate deal terms, and to walk you through the process.

You can see right through this one

Apple's plans to bring the world's largest iStore to Grand Central always seemed to defy all laws of taste, landmarks preservation and possibly even physics.

Apparently, Apple has reached the same conclusion, because a source close to the M.T.A. has confirmed that the company has backed out of plans to bring computers to commuters in an 16,000-square-foot store on the balconies of Grand Central's main terminal.

Newmark Knight Frank top broker Jeffrey Roseman dangled the news in a recent tweet: "Lets see if Apple NOT coming to Grand Central gets as much press as it got, when the rumor started," he dared. So bite we did.

The negotiations were always preliminary, as The Observer reported earlier, and appear to just have fallen through. We've called the M.T.A., Apple and Landmarks Preservation for comment, but we suspect they're all enjoying gelato in the park by now.

lkusisto@observer.com