By Keiko Morris on April 29, 2014.
Among the many terms bandied about in New York's commercial real-estate world, few carry as many different connotations as Silicon Alley.
Is it a geographic place as specific as the Flatiron District? A mere metaphor for New York City's broad technology sector? A fading bit of real-estate parlance?
To some, it is a tad insulting.
Source: Cushman & Wakefield
"The term was intended to be complimentary, but now it's not viewed as complimentary because it was created in the shadow" of California's Silicon Valley, said Alec Hartman, founder of TechDay NYC, an annual event for startup companies and investors.
Even so, the brand isn't entirely dead. A local newsletter, "This Week in Silicon Alley," tracks the sector, and earlier this week New York state Comptroller Thomas DiNapoli proclaimed in a news release that "Silicon Alley now stretches from Midtown South to lower Manhattan and into Brooklyn and Queens."
That sort of definition rings true with veterans of the city's real-estate scene.
"To me, [the phrase] Silicon Alley is symbolic, and it's always been symbolic," said Wes Rudes, a principal at Cresa, a real-estate advisory firm. In the 1990s, he marketed tech buildings in the Financial District as "Silicon Alley Plaza."
The moniker emerged to validate the budding community of startups, investors and engineers in Manhattan neighborhoods such as the Flatiron District, SoHo and TriBeCa.
The term "was clearly lifted as the East Coast outgrowth to Silicon Valley, which was still seen in the early '90s as the mother ship," said Carl Weisbrod, the city's planning commissioner and the former head of the Downtown Alliance, which put together programs two decades ago to foster the tech economy.
But for many, the "Alley" also stretched far south—to Broad Street—and far north, to Columbia University's Graduate School of Journalism. Some on the campus were exploring digital media in its early days, said Mark Stahlman, a consultant, and former investment banker and technology strategist.
Some credit Mr. Stahlman with coining "Silicon Alley" around 1995. Mr. Stahlman hosted a so-called cyber salon and was one of the founders of the New York New Media Association, an industry group in the mid-1990s. He said Silicon Alley encompassed anything within five blocks of Broadway.
"We were media," Mr. Stahlman said. "We were marketing. We were changing the world. Silicon Valley was chips, computers and hardware."
The technology industry benefited from broader efforts by government—largely in the form of tax breaks—to revitalize lower Manhattan. One such initiative led to the New York Information Technology Center at 55 Broad St., Mr. Weisbrod said. The Rudin family's real-estate company, which owns 55 Broad, worked with the city and the Downtown Alliance and invested $40 million to renovate and wire the building for high-speed data.
"The Alley was metaphorically what we were trying to brand," said Bill Rudin, co-vice chairman and chief executive of Rudin Management Co. "You had to have infrastructure and a building to symbolize to the world that you were serious." That initiative spawned Plug 'n' Go, another public-private venture with the city and the Downtown Alliance. Landlords with buildings on William Street, John Street, Broadway and Maiden Lane agreed to offer wired space with Internet-ready connections for technology companies, said Mr. Rudes.
He and his brother Jonathan Rudes, senior vice president at Cresa Long Island, leased and marketed the buildings, which had banners proclaiming Silicon Alley Plaza, Wes Rudes said.
The notion of Silicon Alley took a hit in the early 2000s when the nationwide tech bubble burst and many of the city's dot-com companies failed. Today, as the city's tech sector has matured, the name isn't used as widely.
Messrs. Rudin and Weisbrod view "Silicon Alley" as an outdated term that doesn't accurately reflect the city's current tech sector.
In recent years, technology behemoths like Google Inc., Twitter Inc. and Facebook Inc. have expanded their presence in Manhattan. "When Google moved in, people started moving further west," said Jamie Katcher, a senior director at Cushman & Wakefield.
Silicon Alley "has been replaced by reference to specific submarkets like Chelsea, Flatiron/Madison Square Park, SoHo that carry with them the kind of hip, cutting-edge image that these tenants are projecting," said Nicholas Bienstock, a managing partner at Savanna, a real-estate private-equity firm. The firm counts Twitter as a tenant in its building on West 17th Street in Chelsea.
With low vacancies in locations such as the Flatiron District, tech companies have spread out, said Greg Taubin, executive managing director of real-estate services firm Studley. "And downtown has been the beneficiary," he said.
"People want to think of New York as being a unique entity onto itself and not second place to Silicon Valley," said Michael Mandel, chief executive of CompStak, a real-estate technology firm.
Last week, TechDay NYC hosted more than 400 firms at Pier 92. It moved to the pier in 2013 after its inaugural year at the 69th Regiment Armory at 68 Lexington Ave.—in the heart of traditional Silicon Alley.
One person at the event, Patricia Giehl, a 21-year-old Fashion Institute of Technology student and intern for Chipp'd, a startup that makes keepsakes with scannable codes, said she wasn't sure about the meaning of Silicon Alley. "It's definitely foreign to me," she said.