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Commercial real estate prices rising in cities popular with tech startups

As major cities become hubs for tech startups, commercial real estate prices are rising, promting SMBs to look for ways to cut costs.

As major cities become hubs for tech startups, commercial real estate prices are rising, promting SMBs to look for ways to cut costs.

As startups in major hub cities like New York and San Francisco try to get off the ground, there are a number of obstacles in their paths. One hurdle in particular appears to be getting bigger by the day.

According to a recent article for business and technology blog Inc., the explosion of new tech startups in these metropolitan areas is driving commercial real estate prices skyward. Transwestern, a national commercial real estate services firm, estimates that office space rent has ballooned 8 percent in the last year in New York's "Silicon Alley" area – a hotbed for early stage tech companies. Similar trends have been noticed in Chicago and even more so in San Francisco.

These are exactly the type of businesses that must keep a close eye on every penny they have, including what is paid for rent, according to Richard Brenner, president and CEO of financial advisory company The Brenner Group.

"These guys are very cash-strapped and they watch every penny more carefully," Brenner told Inc. "They're concerned about it. Fifty cents a month means something to them."

The more small and midsize businesses (SMBs) have to spend on renting office space, the less they can afford to spend on personnel. But, critical functions must be performed, regardless of financial and staffing woes, and there are solutions.

For example, seeking fixed fee IT support in NYC can help to lower costs and counteract the rising commercial real estate prices for startups in Silicon Alley. Overworking employees and making them handle a full IT workload in addition to the other hats they wear in the company is how things get missed. Strategic partnerships help SMBs avoid these pitfalls while making sure all needs are being met.