“Silicon Slopes” — a loosely defined hotbed for technology companies straddling the Utah and Salt Lake county line — is keeping developers busy adjusting to those companies’ needs and desires.
Lehi and Draper are ground zero for the changes, which feature startup companies wanting small space but room to grow, buildings constructed with a younger workforce in mind and a coveted spot between two major universities cranking out the young talent that tech companies crave.
“You can’t just build a Class A building that’s generic and everybody goes into it,” John Bankhead, vice president of development at Gardner Development Co., said during a discussion of tech and development at a recent meeting of NAIOP Utah. Technology companies simply have a different set of needs than medical or law firms, he added.
Those needs are symbolized by StorageCraft, a maker of backup, disaster recovery, system migration and data protection products. It has moved into better digs, designed with a younger demographic in mind — “the people we want to get,” according to Scott Barnes, chief technology officer.
The changes include more open space and more collaboration space, a large workout room and indoor bike lockers for employees. The number of conference rooms has grown from 10 to 40, and cubicles have shrunk from 8-by-8 or 9-by-9 feet to 6-by-8 feet. Offices are on the interior, with conference rooms on the edge “with the best views of the mountains,” Barnes said. Those conference spaces have no projectors but instead large-screen TVs that don’t require window shades.
“We have completely opened it up so that everybody has a view,” Barnes said. “Whether they have the cubicle on the window or the office in the interior, they can look out, they can see mountains, they can see if it’s raining or snowing.”
Jeff Rossi, executive director of tenant representation at Cushman & Wakefield Commerce, said companies desire buildings with connections between indoors and outdoors, in some cases wanting floor-to-ceiling glass or large atriums.
“It’s all about democratizing the view,” he said, adding that companies also want collaboration spaces that can feature couches as gathering spots, amenities both inside and outside the building, and access to transportation options.
“A 50-year-old, yes, he wants to jump into his car, he wants to drive to your office, and he wants to park his car all day and then go back to it and drive home,” Rossi said. “But a 20-year-old has a much different scenario in his head,” preferring to commute by bike — perhaps placing it on FrontRunner trains — and take a biking break at lunch.
“You see this experience around a building. It’s not just coming to work and packing into a small space. It’s having an experience around your day that has you connecting with lots of people, that has you having lots of amenities, that has you having different kinds of food available to you, that has connectivity to the outside and has you going home at some hour that’s not necessarily a 9-to-5 anymore. It’s 7 o’clock in the morning to 7 o’clock at night and you’re connecting all through your day,” he said.
“We spend so much of our life in our work environment. Our work environment has changed to be more of a home environment.”
Barnes said some of its older workers “had a panic attack” when they saw plans for StorageCraft’s new offices, but the company wanted to have a building attractive to talent coming out of universities.
“It’s important to getting that younger group, because a lot of these guys are coming from brand-new buildings at school at BYU and the U of U – state of the art – and we had to match that,” he said.
Bankhead said the “employee experience” must be considered before buildings are designed, with developers needing to keep a keen eye on the desires of potential tenants, from the C-level executive to the janitor. Often, they prefer “open” floors and rectangular buildings that allow them to configure the cores of the building in a way that provides flexibility.
Jonathan Gardner, founding partner of GBR Capital, said it can be difficult for developers to provide what clients want while still fitting it into an affordable financial model.
Rossi said communities throughout the FrontRunner line are hot spots for tech development, but Lehi and Draper dominated the discussion of the hottest, in part because they are halfway points between BYU and the University of Utah.
“They recognize that this is one of the greatest breeding grounds in the country, whether it’s high-tech or high education levels,” Gardner said. “Why would a high-tech venture fund want to come and locate here? Because they see big talent.”
FrontRunner allows someone who prefers an urban lifestyle to live in downtown Salt Lake City and drive or take the train to Lehi or Draper. But others might want a less-urban setting, opting to live in Draper or Lehi and raise their families in a nice, new home and still be close to work, Rossi said.
“I think that’s why people are targeting Lehi and Draper, not just because there’s a large number of technology companies there, but there’s a great opportunity to leverage that in the next 10 to 20 years,” he said.
Software maker Xactware has moved its base from Orem to Lehi and shuttles employees to and from a FrontRunner stop, Gardner said. The company needed access to Salt Lake Valley talent “and they were losing talent because they couldn’t get them to drive to Orem,” he said.
StorageCraft didn’t have to move far. When considering its move, the company plotted its workers’ home addresses and discovered “we were dead-center of all of our employees,” Barnes said.
“We knew we couldn’t move more than a few miles and we ended up just going about a mile south … because that area is so dead-center to the draw from all areas, not to mention that we’re 20 minutes from the airport, which was important for us,” he said.
Rossi noted that having offices in Draper and Lehi actually is inconvenient for many C-level executives who live in Park City. But those execs realize that offices in Draper and Lehi give employees “a different lifestyle and a different amenity base.”
Panelists said Utah continues to see less-established companies opting for smaller space but with room to grow because they want to be sure “they can make a go of it in Utah,” according to Beth Colosimo, senior business development manager at the Economic Development Corporation of Utah.
“We are seeing a lot of companies that are wanting to look at short-term space, knowing that their long-term needs are going to be something that they don’t even know how to predict,” she said. “But they want to be in this market and they want to test the waters, so they’re coming in asking for subleases, short-term leases, in order that they might really figure out where to be established.”
Utah is seeing many California-based tech firms expanding operations into Utah, which is competing primarily with Arizona on those projects. Utah has lost out when a few financial services companies have chosen Arizona, she said.
“They’re hedging their bet that if they go to a larger market, even though they like the talent and the workforce here, if they’re looking to hire 400, 500, 600 people, they’re just hedging on going to a larger market because they feel like the [labor] pool is bigger,” Colosimo said. “I don’t think it’s the [low] unemployment [rate] as much as it’s ‘Can we scale to 400 and 500 people over the next four or five years?’”