Pendo is living up to a promise to stay in downtown Raleigh as it quadruples the size of its workforce over the next year, taking on a large chunk of an old factory in the warehouse district.
An $11 million funding round announced last month is allowing for the two-year-old software company’s expansion outside HQ Raleigh and into another building owned by the startup campus’s landlord Empire Properties. The real estate company and restaurant operator specializes in historic redevelopments and space for startups and tech firms. Among the 40 such companies leasing space from Empire in downtown Raleigh’s warehouse district are Raleigh Denim, Magnus Health, Dropsource (formerly Queue Software) and Comparex (formerly CloudBearing).
Citrix’s Sharefile division has also planted roots in the district—opening its new building in 2014. And HQ Raleigh, now with 140 startups in-house, has broken ground on an expansion that triples its size in early 2017.
Real estate matters for startups, and not just because they need a place to work and collaborate in teams. Proximity and density are what cause the chance encounters among entrepreneurs that lead to new companies and initiatives forming and convince people outside the region there’s enough activity to move inside it. Density is one of the major tenets of a thriving startup ecosystem according to globally-recognized startup community builder Brad Feld.
Pendo CEO and co-founder Todd Olson echoes these thoughts in a news release today, saying he’s “committed to seeing the area continue to grow” and “excited for other technology companies to come to the area.”
Empire acquired the building in 2013, completing a buying spree that amassed seven buildings and 40,000 square feet of space between Cabarrus and Davie streets near Dawson Street. Empire CEO Greg Hatem says it’s all part of a vision his company cast in 2000 to make the warehouse district a hub of technology companies. It wasn’t long after that the dotcom bust happened, and many of the early companies occupying space there shut down.
Things are looking different now—he’s only got about 5,000 square feet left to lease in the district.
“I think people believe it now,” he told me on the phone today. “It took a long time, but now people believe you can convert old warehouses into great tech offices. They’re looking for that type of space.”
Hatem says his company has been successful working with startups because it can meet fast timelines required by fast-growing and moving companies, and Empire is set up to handle leasing, construction and property management. Hatem has also been willing to negotiate on lease terms, signing as little as two or three year leases and letting tenants get out of their leases (with no penalty) to take on new ones (in an Empire property) once funding comes in.
He also deals with companies as a fellow businessman rather than a landlord, he says. With 500 employees and many entities under roof, Empire feels many of the same growing pains as startup founders, says Hatem.
“It’s interesting how dynamic it is. These tech companies are typically not in a steady state—they’re either growing in one direction or the other,” he says. “It’s fun working with them to figure out their needs.”
The building Pendo will occupy was built by masonry construction company The Electric Motor and Repair Co. in 1937. It’s attached to a Dr. Pepper bottling facility that Empire is also renovating—executive recruiting firm Personify will move there from Cary next year. Other tenants in the complex include ad agency Baldwin&, MADabolic gym and a local office of L.A.-based stock photo provider Twenty20.
Pendo’s 21 employee count will at least double by the time the firm moves in the second quarter of 2016. Jobs open now range from a vice president of finance to corporate recruiter to front and back end engineers. Brand new space in the warehouse district, along with a rooftop deck overlooking downtown Raleigh, helps sweeten the deal for top engineering, design and business talent considering the company, Olson believes.
Pendo is recruiting nationally to fill its positions. Its mission is to build a very large software company that helps product teams more easily engage with customers and build the best products. It’s one of the Triangle’s biggest growth stories of 2015—the North Carolina Technology Association named it a top 10 startup to watch statewide.
According to Hatem, there’s more work to be done in downtown Raleigh to recruit more business. But Raleigh can only continue to attract companies like Pendo if it can offer affordable and large chunks of office space. And that can only happen if developers build taller.
“We’re kidding ourselves if we think we can take care of all the businesses that want to be in Raleigh by building two, three, four story buildings,” he says. “We need height and real density so we can have mixed use with retail, technology companies and residential on top.”
Earlier this year, Empire opened The L Building on the edge of the warehouse district and a block from Pendo’s new space. With 10,000 square feet of retail, 8,000 square feet of office space and 83 apartments, all wrapped around a 900-space parking deck, Hatem calls it an “optimal use of space”.
“We don’t want to miss the opportunity to bring in these great companies because we’re under-built,” he says.