Up to 2500 entrepreneurs will get Sydney CBD desks at subsidised rents, under a $35 million NSW government plan for a 17,000 square metre start-up hub.
Comprising levels 1 to 11 above Wynyard train station at 11-31 York Street, the hub's four cornerstone tenants are all established co-working spaces that will relocate or expand from elsewhere in the city when the hub opens by early 2018 – Fishburners, Tankstream Labs, creative industries specialist The Studio, and fintech specialist Stone & Chalk.
The NSW government will contribute $35 million over five years to fitouts and rent subsidies for the four, under a strategy worked out by Jobs For NSW, an agency set up in partnership with the private sector in 2016.
"We could have spent that money piecemeal but we wouldn't have got the bang for the buck we believe this will give us in terms of job creation," NSW deputy premier John Barilaro told The Australian Financial Review.
"The co-working spaces have been telling us they are full, they are constrained where they are, so this brings them all together in that precinct dynamic that we've seen work so well for San Francisco and Silicon Valley."
Jobs For NSW chairman, former Telstra boss David Thodey, said the CBD location of the hub would be instrumental to its success.
"This will be a great focal point for start-ups, and its proximity to Wynyard station was critical. Early-stage businesses thrive on collaboration and this is designed to make it as frictionless as possible," he said.
Complete ecosystem
The CBD-focused strategy is a reversal of earlier NSW government plans for an innovation precinct at White Bay in Sydney's inner west, but Mr Barilaro did not rule that out.
"As Sydney grows and develops we'll provide more of this support. Who knows where we'll be in five years, but I do know we are best off facilitating an arrangement like this, and then stepping back and letting the start-up ecosystem run it," he said.
Mr Thodey said 80 per cent of the hub's space was already accounted for, including some desks for Jobs For NSW staff and not-for-profit start-ups, but he encouraged venture capitalists and other service providers to start-ups to apply for leases.
"I think a hub like this works best when it is a complete ecosystem, although everyone but the start-ups will be paying their own way," he said.
Mr Thodey said the co-working spaces would ideally also become self-sufficient after the initial five-year support period had passed.
Level one of the hub will be a dedicated community and event space, including a "landing pad" for entrepreneurs from regional NSW to come and pitch to Sydney-based venture capitalists. The tenancy at 11-31 York St, which is owned by Memocorp, was vacated by education company Navitas earlier this year.
The NSW Government negotiated the lease in the 'B-grade' building with real estate services firm Cushman & Wakefield, which it revealed was struck at an average gross rental of $850 per square metre for the initial five year term.
Modelled on mega-hubs like Station F in Paris and the Cambridge Innovation Centre in Massachusetts, Mr Thodey said the Sydney Startup Hub would be the largest of its type in the southern hemisphere.
Kuala Lumpur's Internet City tech hub, master-planned by AFR Rich List member Patrick Grove, has flagged a 1.4 million square metre size but that is to roll out over 15 years.
Faced eviction
Fishburners will take 610 desks at the hub, up from the 390 it leases across locations in Shanghai, Brisbane and Pyrmont on Sydney's western CBD fringe, the latter of which it will now close.
"This is a quantum leap forward for us and for Sydney's startup community," Fishburners CEO Murray Hurps said.
Meanwhile, Tank Stream Labs will take over two floors at the new hub but retain its existing facility at a building owned by the Kahlbetzer family on Bridge St.
Chief executive Bradley Delamare pointed out the hub's location on York St was opposite Wynyard Green, "once the muster point for the Rum Rebellion and now home to disrupters of a different kind".
Stone & Chalk, which had faced eviction from its 50 Bridge St premises by the end of 2017 as co-sponsor AMP re-developed the building, will take two floors in the new hub and bolster its tenant capacity from 350 to 600.
"Affordable space remains the single largest barrier to building sustainable start-up ecosystems," Stone & Chalk chief executive Alex Scandurra said.
"Jobs for NSW have done an incredible job of bringing the entire community together, right in the heart of the CBD in an amazing, high tech space."
Re-disseminated by The Asian Banker from The Australian Financial Review