techdwellers1GeoRiot founder Jesse Lakes was excited to secure his company’s first office space earlier this year, picking the TechDwellers incubator in Seattle’s quirky Georgetown neighborhood because of its low-cost; short-term lease and central location for the company’s four staffers.

But just four months after moving in, GeoRiot has moved out, along with the seven other startup tenants on the fifth floor of the Pacific Market Center building.

TechDwellers is abandoning the startup incubator model after two-and-a-half years, leasing the fifth floor office to a larger and higher-profile tenant: kitchen supplies retailer Sur La Table.

“It’s pretty painful because we had only been in there four months,” said Lakes, who had invested time and energy in decorating the office space. In fact, just three months ago GeoRiot and TechDwellers issued a press release touting the relationship, with Lakes saying that it was “by far the biggest step” in expanding the business and he was thrilled to join the community.

Especially tough was the month-to-month lease that GeoRiot and other startups had signed, allowing Benaroya Capital — the operator of TechDwellers — to give 30 days notice for companies to vacate by Sept. 30.

Matt Zaharias, founder of Tiger Custom Computers, said that stung a bit and left him scrambling to find office space for his 4-person IT consulting shop. But Zaharias said it was well within Benaroya’s rights and give just 30 days to move out, adding that they were accommodating during the transition. “The space was really nice and relatively inexpensive,” said Zaharias, who has since landed new office space in the Interbay Work Lofts, a longer commute for a couple of his employees. “It is kind of a bummer.”

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Neil Crist

The company hit hardest by the closure of TechDwellers was Venuelabs, a fast-growing startup that moved its 36 employees into 5,400 square-feet of space earlier this year. CEO Neil Crist signed a multi-year lease with TechDwellers, thinking at the time that they could make the location its long-term home.

In fact, the bootstrapped software company had been in the midst of designing a $250,000 build out of an adjacent space in the building when it got word that their 4-year lease was being terminated.

“It has put a bit of stress on us because we have a lot of people to move in a short amount of time,” said Crist. He doesn’t fault Benaroya for breaking the lease, and he understands the economics of landing a large tenant in the building. He also said that Benaroya worked hard to find them another space, though those options didn’t work out.

However, the amount of time the Venuelabs team sunk into planning the original move, not to mention the brainpower they put into the office redesign is time they won’t be getting back.

“I have better things to do than move the company every six months,” said Crist. “We don’t have cycles to waste on things that aren’t going to net anything.”

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Lisa Goodman, John Carleton and Larry Benaroya of Benaroya Capital at the TechDwellers space in Georgetown in 2011.

At this point, Venuelabs plans to move out of the building by the end of this week, heading to a smaller temporary office space at Union Station in Seattle’s International District. “We are in boxes right now,” said Crist, adding that they plan to take over the 3,000 square foot space on the third floor of Union Station next week.

That’s less than ideal for the company, which now has to make some of its sales staff work virtually because of the cramped quarters. Crist said it took about three months to find the TechDwellers space, and he plans to start looking for a more permanent home for the company next year. “We need a long-term place to hang our hat,” he said.

With Benaroya inking a deal with Sur La Table, TechDwellers will fade into the sunset.

“Sadly, TechDwellers will not continue,” said Lisa Goodman, chief marketing officer at Benaroya. “Unfortunately, after three years and only 15,000 of the 40,000 square feet occupied, we didn’t have enough traction.  This surprised us as we believed TechDwellers was a good concept, a very good location and great value.”

Seattle also has seen the rise of a number of startup incubators and co-working spaces in recent years, from SURF Incubator to ThinkSpace. Some have wondered if there are simply too many in Seattle.

techdwellarsAs part of the lease with Sur La Table, Goodman said they needed to make a number of improvements to the fifth floor, noting that there are penalties for late delivery. “We need to begin our work as quickly as possible in order to finish on time,” said Goodman, explaining why they could not give more notice to the startups at TechDwellers.

Some of the startups in the building have learned their lessons about leases. Ironically, GeoRiot’s Lakes said that the month-to-month lease was one of the selling points when they moved in earlier this year, since startups don’t always know where they’ll be in six or 12 months. He just didn’t think it would be Benaroya executing on that part of the agreement.

At the company’s new offices above the Macrina Bakery on 1st Avenue South, Lakes signed a one-year lease. “We learned from our mistakes,” he said.

Zaharias also is adjusting at his company’s new space in Interbay, with some employees considering moves to be closer to the offices. “It was a shock at first and bit disappointing, but after being here a few days I think it is going to be a good fit for us,” he said.

Comments

  • http://drewfrey.com/ Drew Frey

    Hate seeing companies have to go through this. Is there anything that can be done?

  • Nathan Vorwerk

    BallardLabs will give any of these folks a free month of co-working space! BallardLabs.com

    • Jesse Lakes

      Thanks, Nathan, that’s an awesome offer.

  • http://thinkspace.com Peter Chee

    Sorry to hear that this has happened to TechDwellers and the companies that were using their space. There’s a lot to be learned about something like this as I’ve seen it happen a number of times over the last five years where the space provider closes up shop and the tenants are left without any space and forced to move without a plan. Kind of like what Neil Crist says in this article, there’s a lot of time and energy that goes into moving a company into a space and the disruption that it causes to move a company is significant in terms of lost productivity. I will say that at thinkspace we are committed helping out any of these companies whether it be inside our space or referring them to any of the surrounding coworking spaces in the Seattle region.

  • Leo Lam

    It’s sad to hear that it happened.

    There is also a new lilospace in the Old Rainier Brewery building. It’s smaller, but is dedicated to entrepreneurs, and it’s a really cool building with free parking.

    http://www.folilo.com/lilospace/

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