Dan Berger stands in what was meant to be the receptionist area for his new office — a large, built-in desk that occupies much of the foyer. He looks around, shaking his head.
“Another prime example of antiquated space, completely inefficient for a company like ours,” he says. “What are we going to do with this? I don’t know, maybe we’ll turn it into a collaborative area.”
He says the same as he walks through the kitchen, which is too narrow for workers to comfortably stop and chat. Moving into the old server room, he shakes his head again: “We just don’t need this.”
Such is life for a small technology start-up trying to plant its roots in a city that was not built for them.
Berger’s company, Social Tables, is the first to outgrow 1776, a start-up breeding center and coworking space in downtown Washington. In the past year, the company, which provides event planning and management services, has expanded its roster of clients from 50 to more than 1,400 hotels, caterers, awards shows and other event planners, including most recently, nationwide contracts with Hyatt and House of Blues. In the process, the firm grew from seven employees to 25.
So, this past summer, Berger started searching for a new, larger space to call home, and at the time, real estate brokers told him the market was bursting at the seams with commercial office space. Under those conditions, for many firms, the search would have been relatively quick and painless.
It wasn’t for Berger’s team, because it needed the type of space — an open, collaborative environment — that remains rare in a town full of buildings designed for law firms, associations and nonprofit groups.
“I looked at dozens of places, most of them with built-in cubes, old computer monitors still in place, and no space for meetings and collaboration,” Berger said. “We couldn’t find anything, it was bad, but then we came across this at the last minute.”
“This” is a small fourth-floor suite in the heart of Chinatown, where Berger and his team have turned what looks like a wide hallway into the firm’s bustling headquarters. What were once corner offices now house the company’s engineering department, the customer services department and the marketing department, each room home to at least four or five employees.
Along the corridor, three more rooms have been turned into cozy meeting spaces, complete with couches and white boards; rooms that Berger calls the “lungs” of the office, where he hopes spontaneous, “water-cooler” moments between coworkers will breed innovative ideas for the company.
And right smack in the middle of it all is Berger’s desk — not office, desk, facing a wall and within arm’s reach of someone else on either side. No door, no view.
It is that mix of open and closed spaces that he says works best for budding technology companies, but of which there is still little available in the District.
“If we embrace these companies, it would do wonders for the commercial real estate market here, because the law firms aren’t growing, the associations aren’t growing, and the government contractors certainly aren’t growing,” said Andy O’Brien, a broker with Jones Lang LaSalle that conducted the search for Social Tables. “So you have embrace the industry that is growing, and right now, that’s technology.”
O’Brien has started advising building owners to “build more open spaces, offer the exposed ceilings, and don’t build all those walls. If you build a conference room and a huddle room and leave the rest of the space open, you will lease it immediately because that type of space isn’t out there, and there’s demand for it.”
But the physical design isn’t the only area in which property owners must change their thinking. Right now, the market still caters to five- and 10-year leases, which doesn’t suit firms like Berger’s, which plans to add another 11 employees in the next few months and more later this year.
“By the end of the year, they could be at 40 people, they could be at 80,” O’Brien says. “We don’t want to put these these firms in a situation where they are locked into a long lease, they outgrow the space, and then they have to sublet it on the backend for a loss.”
In fact, that’s precisely how Berger found his new office. He is subleasing the suite from another technology firm, Concept Solutions, that recently outgrew the space and moved to Reston. Evidence of the surplus of supply on the market, he is paying exactly half the market rate for the space.
Meanwhile, because it was a sublet arrangement, the company was able to secure a short 16-month lease, rare in the area, O’Brien says. It expires next April, at which point Berger expects his company to be searching for a new home yet again.
By that time, he hopes the city will have more space tailored to firms like Social Tables.
“It could be a conducive environment for the growing number of start-ups in D.C.,” Berger said of the excess inventory of office space. “The problem is, these spaces are a bad fit. Hopefully, that will change.”