Landlords More Skeptical About Dot-Coms
S A N F R A N C I S C O, July 21 -- The days of love at first sight are overfor Internet startups in their search for office space.
As recently as four months ago, practically anything related tothe Internet had tremendous appeal to commercial landlords, whoaccepted stock options as rent and sometimes didn’t even seekletters of credit.
The online industry still holds sex-symbol status in theeconomy, but mere looks aren’t everything anymore in California.Since the tech-heavy Nasdaq cooled, landlords have begun to worrythey could be left in the lurch if today’s hot dot-com companybottoms out.
Now commercial property owners are taking the time to carefullysize up a potential Internet business tenant, seeing if it has agood head on its shoulders and a profitable business plan.
Landlords Inspect Internet Companies
And in some cases, landlords are just saying no from the start.
“Landlords were happy to take dot-coms if they delivered stockoptions. Now landlords are getting more concerned. They’re askingfor more financial data. They’re also looking at financialprojections. They’re almost acting like Wall Street financialanalysts,” said David Oppenheimer, chief financial officer ofDigital Impact, a San Mateo, Calif.-based e-mail marketing companythat went public Nov. 22.
Oppenheimer, who is always shopping for more space for hisgrowing 2-year-old Internet company, said landlords or their agentsare demanding more than business plans. Some also want face-to-facemeetings with company principals.
“Space doesn’t lease overnight like it did before,” said MeadeBoutwell, a director in the San Francisco office of Cushman &Wakefield, an international property management firm. “Things havetaken a more reasoned, calm approach instead of the rampantgot-to-have-it-tomorrow approach.”
As a result, some Internet tenants are being forced to give upmust-have California addresses and shop for space in lessattractive areas.
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