Excerpts from the Innovation Economy blog.
Just how expensive has Kendall Square office space become?
So expensive that some start-ups are finding it easier and cheaper to rent a luxury apartment in the neighborhood than compete for commercial space alongside Amazon, Staples, Google, and a zillion small biotechs.
I went to visit Yesware last month at Archstone Kendall Square to see what it looks like when an eight-person company moves into a two-bedroom apartment. Yesware helps sales people manage e-mail communications with prospective customers; the company raised $1 million last year from Google Ventures and Foundry Group.
The lobby and halls of the building were empty. Chief executive Matthew Bellows greeted me at the door of the fourth-floor apartment.
“No one else is around during the day,’’ he explained, “and we blow out of here at 6 or 7 p.m., when all of the other people come home from work.’’
Bellows said the company is up to eight employees, but two or three contractors or interns sometimes show up to work, too. Thanks to walls of windows facing east, the apartment gets better natural light than most offices.
All of the furniture, Bellows explained, had come from IKEA. “We rented a U-Haul, drove down there, and then we hired a Task Rabbit guy to put it together,’’ he said.
Everything else came from Amazon, including computers, monitors, an LCD projector, and some nifty adhesive material that turned the wall of one bedroom into a whiteboard, creating a conference room. The other was still a bedroom; cofounder Cashman Andrus lives in Brazil, but he sleeps there when he’s in town.
The rent is $3,500, Bellows said, which beat the company’s other options, once it outgrew free space at the nearby Dogpatch Labs facility. “Everything else we looked at in Kendall and East Cambridge was at least $5,000 a month, and it required a three- to five-year lease,’’ Bellows said.
At least three other start-ups have rented space at Archstone, but all of them have plans to move to various Boston neighborhoods soon. Yesware and Objective Logistics will remain neighbors; they found space in the same Leather District building. Bellows said Yesware will move out in June. “Our rent will increase a bit, to $20 a square foot, but we’ll have 5,000 square feet, which gives us room to grow,’’ he said.
As for renting in Kendall or East Cambridge, Bellows said, “Start-ups are going to flee. For any start-up, paying $40 or $50 a square foot is a waste of money.’’
Another tech entrepreneur renting an apartment in Central Square for his company (who asked me not to mention his name or the name of his company, as his landlord wasn’t aware of the situation) said he was paying $20 per square foot for a 2,000-square-foot unit. Everything else he looked at in Central and Kendall was more expensive, and in many cases, too much space for his company.
“We looked at some co-working options,’’ he wrote via e-mail, “but at about $500 per table, it worked out to be almost the same price for one quarter the space. Also, we felt a co-working space would not let us develop our own culture.’’
Brian Murphy, an assistant city manager in Cambridge, said, “It’s difficult to regulate what’s going on in a private residence’’ but “zoning enforcement is largely complaint-driven. Unless the activity is bothering neighbors, the Inspectional Services department would not be involved’’ in trying to crack down on start-ups using apartments or houses.
Murphy, who oversees community planning for the city of Cambridge, said it’s clear that Kendall Square needs more office space to help bring rents down - and avoid having companies moving into apartment buildings.
“We love to have these companies here,’’ he said, noting that major companies like Hewlett-Packard got started in garages. “We want to make sure we do everything we can to make sure the innovation economy flourishes in Kendall as best it can.’’
Visit www.boston.com/innovation for the full Innovation Economy blog, updated daily.