Smart Energy Storage Gives Building Owners Control of Electricity Expenses

Source:cre.tech By: Janice Lin

 

Our electric power system requires a constant balance of supply and demand. In the past, we’ve traditionally overbuilt supply to maintain electric system reliability: ensuring that at any given time, there is enough power supply available to accommodate peak annual demand. The net result is that we have trillions of dollars of infrastructure that isn’t used very often, and greenhouse gas emissions from power plants that aren’t run very efficiently.

Energy storage, therefore, is vital to our electric power system. It is a solution to fixing our aging power grid, a critical tool in increasing the spread of renewable energy, and a bridge between the needs of utilities and their customers. Energy storage can be installed at many points in the grid. In fact, there are already tens of thousands of grid-connected storage systems installed at facilities throughout the world. But what is energy storage, and how can it be put to use, today, in facilities across the country?

Grid-connected energy storage is not a new concept. Currently, there are over 1,000 storage systems – equivalent to 150,000 megawatts – installed worldwide. Energy storage can refer to a wide range of technologies and approaches to manage power. There are a number of technologies relevant to commercial and industrial facilities, all of which are able to fit within the established architecture of a building:

  • Solid-state batteries: batteries are often paired with an intelligent software system that can charge and discharge them based on a building’s energy usage, weather patterns and historical use patterns.
  • Flow batteries: a type of rechargeable battery, where energy is stored directly in the electrolyte solution; benefits typically include a longer cycle life and fast response times.
  • Flywheels: these systems store electricity in the form of kinetic energy. If power fluctuates or goes down, the rotor will continue to spin and the kinetic energy that results can be converted into electricity. Flywheels are useful for power quality and reliability.
  • Thermal storage: thermal technologies enable temporary energy reserves in the form of heat or cold. Ice storage, for example, works by making ice during off-peak hours when rates are low. When demand increases and rates go up, the ice system turns off the AC and uses the stored ice to provide cooling.

Energy storage can be installed at many points in the grid – including factories and other commercial or industrial facilities. There are already tens of thousands of grid-connected behind-the-meter storage systems installed at commercial, industrial and residential locations throughout the world. These systems are providing a multitude of benefits to facilities, a number of which are especially advantageous to high rises: demand charge reduction, participation in demand response programs, maximized time-of-use rates and emergency backup.

Demand Charge Reduction

Depending on location, many commercial and industrial facilities are subject to demand charges on their energy bills. These charges are based on the 15-minute period in which the demand for energy is highest throughout the day and in some cases, can account for 50% of the total energy bill. While energy efficiency or solar PV can reduce total electricity consumption, these benefits do not always coincide with a building’s peak usage. Energy storage systems, especially those paired with intelligent software, can track a facility’s load and reduce demand charges by dispatching battery power during periods of peak demand, effectively ‘flattening’ the load.

Participation in Demand Response Programs

Demand response for commercial and industrial facilities traditionally involves ratcheting down usage at times of peak demand. Energy storage can enable participation in demand response markets without impacting on-site energy use or operations. By responding to utility price signals, storage systems can increase financial return from participating in DR programs, while also benefiting the grid overall.

energy storageMaximizing Time-of-Use Rates

Energy storage systems can shift consumption of electricity from expensive periods of high demand to periods of lower cost electricity during low demand. This reduces the risk of lowering the value of on-site solar if tariff structures change over time, and peak demand periods shift to the evening when the sun isn’t shining. This also allows facilities to make the most of time-of-use pricing and reduce tariff structure change risk to electricity cost.

Emergency Backup

Planning for emergency backup power is an essential part of a resilience plan. Historically, commercial and industrial facilities have invested significantly in local emergency backup infrastructure. With advanced storage solutions on the market today, there may be opportunities to upgrade this infrastructure to not only provide emergency backup, but also a host of other money-saving and money-making solutions. And by using this infrastructure on a daily basis for demand charge reduction, its reliability and availability in the event of an outage can be increased as compared to a standalone battery and diesel generator that is only during an outage.

Case Study: Glenwood Demand Management Project

Glenwood is one of New York City’s largest owners and builders of luxury rental apartments. The full-service Manhattan real estate organization prides itself in being able to offer residents everything they need to live the “Manhattan lifestyle.” Like most high-rise properties in New York, however, Glenwood is affected by the demand that 13 gigawatts of peaking power places on the city’s grid during the summer air-conditioning season.

To address this problem, Glenwood participates in New York ISO and Con Edison demand response (DR) programs aimed at shedding loads during peak periods. Glenwood has been working with Demand Energy on an energy storage-based solution at a number of its residential properties. The systems are controlled by Demand’s Distributed Energy Network Optimization System (DEN.OS), which maximizes the economic returns of behind-the-meter storage systems, alone or in combination with distributed generation.

In 2012, Glenwood installed a 225 kW/2 MWh storage system with Demand’s DEN.OS software in its Barclay Tower property in downtown Manhattan. One benefit for building owners is the relative compactness and portability of such systems, which can be installed in constrained spaces such as garages and basements. The energy storage system allows Glenwood to switch operating modes from demand capping to DR without a financial penalty, and also helps Con Edison manage a more granular, location-based response to peak electricity demand across different sections of New York.

New York has some of the most expensive demand charges in the world. After the first year of operation, however, Glenwood saw a 14 percent reduction in its cost of energy and power, demonstrating the value and potential for battery-based storage to meet grid challenges throughout the year. The company is now working closely with Demand Energy to install an additional 1 MW/4 MWh of storage systems across ten Glenwood buildings for distributed grid support.

Energy storage is a proven group of technologies that has been in existence for decades. Thanks to tremendous technological progress in recent years, there is now a wide range of affordable and reliable storage options available, and a host of major companies are delivering grid-connected storage to the marketplace.

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Real Estate Adds Stable, Long Term Growth to Your Investment Portfolio

Source: Realty Biz News Written by Brad Walker

Modern communication networks have effectively shrunk the size of the planet. Information can now travel in seconds rather than the hours, days or even weeks it took data to cross the globe just a couple of generations ago.

This rapid flow of information means that a “bargain” never lasts for long in today’s financial markets. Once a promising investment opportunity has been identified, the money flows that direction until the asset price reaches (or often exceeds) perceived value equilibrium.

When you throw in ultra-low interest rates and sluggish macroeconomic conditions in the US and Europe holding bond yields down and central bank stimuli overheating global equity indices, investors cannot find many low-risk, reasonable-return investments today.

Astute investors understand that the beginning of an interest rate cycle is not the time to be investing in bonds and that that the risk-reward ratio is simply not attractive with stocks at historic highs on the strength of smoke-and-mirrors political promises.

Fortunately, the alternative investment class has grown notably over the last decade or two to include private equity, futures, commodities/precious metals and real estate. Recent surveys also suggest that real estate is the fastest growing category of alternative investment, with sovereign investment funds worldwide projecting an almost 10% increase in real estate investments in their alternatives portfolio over the next five years (from 38% to over 41% of total alternatives portfolio).

Overview of 2017 US Housing Market by Region

Although millions of Millennials have been living with their parents for the last few years, many financial analysts say this trend is winding down. They argue that Millennials and even older Gen-Xers are just now reaching prime home buying ages, and that many of these now not-so-young adults will be moving into their own places over the next few years.

The analysts argue this bodes well for the US housing market, especially as the ongoing economic recovery is also producing more jobs and driving up wages.

Most well-known housing market analysts expect housing prices nationwide to be up by at least 3% in 2017. January clocked in with a 3.3% annual rate increase in existing home prices, so we are on pace to meet that projection. That said, growth will vary dramatically by region and by city, with many second-tier cities leading the way as growth slows down in major markets like San Francisco, LA and Boston.

With notable exceptions like NYC, housing price growth in the Eastern US and the Midwest is expected to lag growth in the other areas of the country listed below.

Southeast

The Southeastern US has been experiencing solid growth in home values for almost a decade. According to Zillow, Orlando, Florida is one of the hottest cities in the country, and will see home prices increase by an average of 5.7% in 2017. Knoxville and Nashville, Tennessee appear on Zillow’s top ten list with a projected home price growth of 4.4% and 4.3%, respectively.

Southwest

Utah is a housing hot spot in the Southwest part of the country. Zillow anticipates home prices in both Salt Lake City and Provo will move up by 4.3% in 2017. Denver is also seeing strong demand for housing, with home prices expected to climb by 3.2% this year.

West

Seattle continues to be an economic powerhouse and a magnet for new residents. Zillow is projecting that home prices in Seattle increase by 5.6% in 2017. Portland is just 170 miles south of Seattle, and Zillow is projecting housing prices move up by 5.2% in 2017 in this dynamic city. Sacramento, the capital of the Golden State, is also experiencing a real estate boom these days, with home prices expected to appreciate by 4.8% this year.

Medium to Long-term Investments Make Sense for Most Baby Boomers

Baby Boomers have different investment needs than earlier generations of retirees.

Up until the Great Recession, demographers and economists projected that most Baby Boomers would retire and move south much like the preceding generation. However, the stock market crash of 2008 decimated the retirement plans of many Baby Boomers as well as savaged their home values.

The net result is that a lot more Baby Boomers are working longer than they or the demographers expected to try and make ends meet. Related to this, an increasing number of boomers are staying in their family homes to remain near their jobs, children and grandkids.

Moreover, those Baby Boomers who are retiring are increasingly opting to stay in their homes rather than downsize. Part of the reason for this is their children (Millennials) have had a hard time finding decent jobs and moving out. Some surveys have suggested that 20% to 33% of the adult children of Baby Boomers are still living at home and one in three is still getting some kind of financial support.

These surveys also suggest that even when their children have moved out, BB parents want to have a big place for their kids and grandkids to come visit. For a large number of BBs, that means deciding to stay in the family home.

Whether you want to call it postponing retirement or reinventing it, it is clear that BBs have a different idea of how to spend their “golden years” than their parents and grandparents did. Given that pensions are disappearing, Social Security payments only cover a fraction of the cost of a middle-class lifestyle in a major city, and interest rates are so low, BBs have to think out of the box to support their “retirement”.

As mentioned above, many older Americans are choosing to stay in the workforce longer, but that’s not possible for everyone, and age does place limitations on the ability to work. Improvements in medical care also mean BBs can expect to live longer, so most can afford to take a longer-term perspective on their investments.

When you put all the pieces of the retirement puzzle together for BBs, a thoughtfully selected portfolio of real estate investments emerges as an ideal solution. No investment is risk free, but BBs who seek steady long-term income and appreciation have many low-risk real estate investment vehicles to choose from today.

Southeastern U.S. Experiencing a Growth Spurt

Source: National Real Estate Investor By: Dan Wagner

Due to rapid growth, the Southeast is emerging as an economic powerhouse with a diversifying base.

With two international gateway markets in Atlanta and Miami—together accounting for more than 50 percent of the region’s international commercial real estate investment—and strong growth and educated workforces in smaller cities such as Charlotte, Tampa and Nashville, the Southeast region would form the sixth largest country in the world with a growth rate that would exceed any in the top five.

The Southeast boasts an industrial expansion fueled by both import and export activity, as well as increases in manufacturing employment and activity. Overall industrial vacancy is at a record low for the region. Atlanta, Orlando and Memphis provide strategic locations for e-commerce users, and Memphis has seen an excessive amount of distribution activity relative to the market’s size. The region benefits from port markets such as Savannah, Miami and Charleston as well, and industrial health will continue to strengthen with the widening of the Panama Canal.

The increase in population and employment growth, coupled with strong market conditions, could prompt an office construction boom throughout the region. Nashville in particular has accounted for one third of all office space constructed in the Southeast over the last two years, with 3.5 million more sq. ft. projected over the next two years. Additional construction in Nashville and throughout the Southeast could mitigate the leverage currently held by landlords, who have been able to lift rates consistently. In 2016, every market in the Southeast hit record highs for office asking rent, which rose by more than 10 percent, though the region still provides a great value compared to other U.S. regions.

Retail has followed the trend, with vacancies hovering near historic lows and asking rents near historic highs. Despite the increase in e-commerce, retail development is expected to continue, though it will be at a more conservative pace than pre-recession levels of construction. Markets with the largest amount of new retail development expected are Atlanta, Orlando and Tampa.

Atlanta and Orlando, along with Miami, are also poised for the most hotel development in the Southeast. With six consecutive years of U.S. economic growth, leisure and business travel have increased, stabilizing hotel performance. The revamp of leisure travel in Florida and along the coastal markets and business travel in Atlanta, Charlotte, Nashville, Miami and Orlando has increased the hotel demand.

Multifamily supply has caught up to the population surge in the Southeast, with deliveries outpacing absorption in 2016 for the first time since the recession. However, with 48 percent of the country’s net migration flocking to the Southeast, there is still a high amount of activity and interest in urban multifamily assets.

CBRE’s 2017 Southeast U.S. Real Estate Market Outlook touches on each city’s strengths in more detail.

Dan Wagner serves as Southeast research director for CBRE.

20 years ago, Alabama’s auto industry started rolling with first M-Class

Source: madeinalabama.com By:Dawn Azok

TUSCALOOSA, Alabama – Twenty years ago today, the first customer-ready M-Class SUVs began rolling off the Mercedes-Benz auto assembly line in Tuscaloosa County, launching new eras for both the automaker and the state of Alabama.

For Mercedes, the M-Class was the first mass market SUV, and its success helped spin off a full range of similar models for the premium German automaker while also influencing the offerings from competitors.

For Alabama, the start of M-Class production was also the start of the modern auto industry. Minivans, sedans, pickups and more SUVs have followed, as Honda, Hyundai, Toyota and hundreds of suppliers set up shop in the state.

“In the 20 years since Mercedes began producing vehicles in Alabama, our partnership with the company has grown stronger today than ever before,” Governor Robert Bentley said.

HudsonAlpha Breeds Serial Entrepreneurs

Source: Businessalabama.com Written by Nancy Mann Jackson

A flare for growing biotech companies is a characteristic of the genomic researchers of the HudsonAlpha Institute. The co-founder and one of his first associate entrepreneurs are good examples.

Nurtured in his science and business by HudsonAlpha Institute’s founder Jim Hudson, Jian Han has followed Hudson’s footsteps as a serial entrepreneur of biotech firms.

Nurtured in his science and business by HudsonAlpha Institute’s founder Jim Hudson, Jian Han has followed Hudson’s footsteps as a serial entrepreneur of biotech firms.

When the HudsonAlpha Institute for Biotechnology opened in Huntsville in 2009, it promised to boost genomic research, economic development and educational outreach.

The institute has delivered on all three counts, bringing together some of the world’s leading thinkers in genomics with innovative entrepreneurs and educators. Together, they are working to improve human health and quality of life by participating in ongoing genetics research and developing products, services and companies that make that research accessible and available to improve people’s lives.

HudsonAlpha’s campus spans 150 acres and now includes three buildings housing 27 growing companies and approximately 300 employees in the companies and the nonprofit research center. While the institute’s success relies on strong research and viable products and services, the most important ingredients are passionate entrepreneurs who have a vision and dedication to see it through. With a number of successful startups under its belt, HudsonAlpha has become a breeding ground for visionaries who often start not just one company but many companies in succession. Here’s a look at two of those prolific business-makers and what keeps them going.

Jim Hudson

Born and raised in Huntsville, Jim Hudson was the son of an entrepreneur. His father was his partner in Hudson’s first businesses, which were an iron and aluminum foundry and an antenna company. But Hudson’s first love was science, and after selling those businesses in 1981, he returned to school to pursue a master’s degree in molecular biology.

“While I was a scientist first, I was always looking for business opportunities that tied in with my research,” he says. Eventually, he founded Research Genetics, a Huntsville company that produced arrays of artificial DNA for use in genetics research. As the company grew, Hudson began working toward incubating other biotechnology companies. He would encourage his employees to launch their own businesses and in return for being a co-founder of those companies, he provided office space, supplies and business services at no cost.

When Hudson sold Research Genetics in 2000, it had grown to 260 employees and $28 million in revenue. When the new owner relocated Research Genetics to California in 2002, many of those employees were laid off.

After spending so much time and effort to build a strong community of biotechnology professionals in the Huntsville area, Hudson didn’t want to watch it fall apart. He formed the Partnership for Biotechnology Research to “keep the community together,” bringing in speakers from all over the world for quarterly meetings.

As a founder of HudsonAlpha Institute for Biotechnology, Hudson continues to invest in new companies and serve as a mentor and supporter of other companies based on genomics research. “I’m a scientist by nature, but I have a desire to take my education and use it in business,” Hudson says. “I continue to believe that biotechnology is second only to electronics in its potential to improve life for all of us.”

Garrett Dunn, a lab technician, loads cartridges into a reader in Han’s lab so the software can process data from it.

 

HudsonAlpha’s unique combination of nonprofit research and commercial businesses makes it an ideal place for biotech entrepreneurs, and past success seems to be building a generation of serial business owners.

“When you experience success and make enough money so that you’re no longer worried about your own financial picture, then you want to start more companies to make a difference in the world,” Hudson says.

“We believe capitalism is the best way to bring our research to make a difference for the most people. Here, we have a truly dynamic, supportive environment. We meet together every week and share ideas and root for each other.”

Jian Han

Growing up in China, Jian Han was the son of a leading Chinese physician and researcher. His father introduced many new technologies in China surrounding infertility treatments and genetics testing. For instance, he invented
chorionic villus sampling (CVS), a prenatal genetics screening procedure.

Because of his father’s passion, Han decided to come to the United States to study medicine. After his father’s death, while Han was a student at the UAB School of Medicine in Birmingham, he felt driven to launch a company to bring the work of his father’s lifetime to the marketplace.

While still at UAB in 1996, Han launched Genaco, which commercialized the technology his father developed and earned Chinese FDA approval. As the business grew, it drew the attention of Hudson, who owned Research Genetics at the time. “He asked me to come to Huntsville and offered free space, free Internet access and other perks,” Han says. “You can’t get much better than free.”

Han relocated Genaco to Huntsville and, in 2006, sold the business to Kiagen, a German company. By then, he was hooked on Huntsville and on biotech entrepreneurship. In 2007, Han launched iCubate Inc., a molecular diagnostic company, to market his proprietary technology that allows users to rapidly detect multiple pathogens in one test. Two years later, he launched iRepertoire, which commercializes applications of arm-PCR technology, which Han developed for infectious disease diagnosis and immune repertoire analysis.

“Most people who start several businesses have a passion to solve a problem; they recognize the need in the marketplace and feel driven to do something about it,” Han says. “For me, it started as a way to finish the story my father started.”

And the Huntsville community and HudsonAlpha have been instrumental in Han’s continued work to build and grow biotechnology-based companies. “Huntsville has a lot of business activity and entrepreneurial spirit, and a nice angel network,” he says.

Han says it’s almost a tradition in Huntsville to invent a technology, get it recognized by a larger company, and then sell it, satisfying investors and freeing the entrepreneur to move on to the next big thing.

“It’s like raising a pig,” he says. “Once you grow a company to a certain size, you let it go.”

Nancy Mann Jackson is a freelance writer for Business Alabama. She lives in Huntsville.

Office Construction Completions Expected to Hit Peak in 2017

Source: costar.com Written by Randyl Drummer

Vacancy Rates Likely to Increase in High-Construction Markets as Infusion of New Supply Hits Markets from San Francisco to New York City

Apple plans to start moving 12,000 employees into its new 2.8-million-square-foot "Spaceship" campus this year.
Apple plans to start moving 12,000 employees into its new 2.8-million-square-foot “Spaceship” campus this year.

Steady growth in office-using employment over the last few years and rising demand from big employers for a diminishing supply of newer high-quality office space have combined to create a fertile environment for new office construction, and developers are ready to deliver.

This year will likely be the peak in the cycle for the delivery of new office projects, according to CoStar Portfolio Strategy forecasts. The U.S. office vacancy rate has continued to steadily decline, moving from 10.7% in 2015 to 10.4% in 2016. Vacancies are expected to hold fast at 10.3% in 2017 amid ongoing demand for existing space from tenants, according to analysts presenting CoStar’s State of the U.S. Office Market Q4 2016 Review and Forecast presentation.

“The big news in 2017 for the office market is that we’re expecting a 55% spike in construction deliveries, increasing from 58 million square feet of new office space in 2016 to over 90 million square feet this year,” said CoStar Portfolio Strategy Director of Research/Office Walter Page, who co-presented the review and forecast with Managing Director Hans Nordby and Managing Consultant Paul Leonard. “While some of those will be projects that were pushed back from last year, we’re just at that point in the market cycle where it’s time for new supply.”

The hefty totals projected for this year are the result of the large number of new office projects started in 2015. The 129 million square feet of new office space started in 2015 included such massive mixed-use developments as 30 and 55 Hudson Yards, and the $1.2 billion One Manhattan West office tower in New York City. An even larger total of 138 million square feet of new office space was under construction as of Jan. 1 of this year.

For the most part, major construction is concentrated in a handful of large metros. New York City has seen a jump of 107% while Southern California, where construction has started to pick up substantially for the first time since the recession, is up 27% in two years time. Texas office construction is down 35% since 2015, largely due to the construction shutdown in Houston, where energy sector tenants have put large blocks of space on the sublet market.

The 138 million square feet under way is still significantly lower than the 2000-2001 period, when over 200 million square feet was under construction. This has allowed national office vacancies to remain well below long-term averages, Page and Leonard said.

“We’re expecting that 2017 will be a peak year for this cycle, but we’re not going back to the levels we saw during the last cycle,” said Leonard.

That being said, most large markets are seeing construction levels as a percentage of total office inventory that are well above their historical averages. In the San Jose market, for example, construction totaling 9% of total office inventory, 10 million square feet, is under way, compared with 1.4% nationally. While pre-leasing is quite strong, potentially rising levels of backfill space that may become available when companies move into their new quarters is a concern, Leonard said.

New York City, which rarely registers among the construction growth leaders based on percentage of inventory due to the massive size of its base, currently has 19 million square under way, with the massive Hudson Yards comprising roughly half of that total.

“The Hudson Yards project alone is almost equivalent to the entire under-construction supply in the San Jose market,” Leonard said.

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The impending wave of new supply will have an impending ripple effect on demand fundamentals such as net absorption, occupancy and rental rates in several large markets in coming quarters. Absorption totals for newer 4 and 5 Star office properties, which has fallen from 64 million square feet to 42 million square feet nationally over the past year, is expected to rise this year as several large build-to-suit projects, including large projects by Google and Apple, including Apple’s 2.8 million-square-foot “spaceship” headquarters campus, finally reach completion.

Office vacancy rates for newer buildings could shoot up to 25% in San Francisco, while vacancy rates for newer vintage buildings could potentially double in Denver and rise significantly in New York City and Los Angeles.

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Meanwhile, high levels of construction in CBD submarkets are causing rental rates in the urban core to slow, narrowing the rent gap between downtown and suburban properties. In markets like Chicago, downtown construction comprises 75% of total construction within the entire metro, while urban core property makes up 40% of total stock within the Chicago metro. The same trend is occurring in New York City, Denver, Seattle, Washington, D.C. and Los Angeles, restricting rental rate upside in those CBDs.

“High levels of construction are beginning to put a limit on rent upside,” Page said.

However, strong demand growth markets that have had relatively little construction since 2006 such as Tampa, Orlando, Minneapolis and San Diego may present windows of opportunity for developers. But that window could close fast.

“The next developer to build a building in those markets is probably going to do pretty well, but for the third or fourth outfit, they’re probably too late,” Nordby said.

Breather, the App That Lets You Rent Office Space by the Hour, Is Expanding to New Cities

Source: Entrepreneur.com Written by: Carly Okyle

Breather, the App That Lets You Rent Office Space by the Hour, Is Expanding to New CitiesFEBRUARY 10, 2016

Flexible work spaces are super hot right now. And, for one big name in the space, things are about to get hotter.

Breather, an app that allows entrepreneurs, freelancers and other flexible workers to rent classy, curated office spaces by the hour, announced today that is expanding to new cities. The move is the result of a deal with commercial real-estate firm Cushman & Wakefield, which has signed on as Breather’s exclusive broker.

The company plans to break into Los Angeles, Chicago, Washington, D.C., Toronto and London this year. Right now, it’s in New York City, Boston, the San Francisco Bay area and Ottawa, Canada.

Traditionally, entrepreneurs have either had to sign long-term leases for office space or work out of coffee shops. In the last few years, alternatives such as Breather have created on-demand solutions, offering workers rooms for meetings and other events with the swipe of a finger.

“We’ll never eliminate the office, but the office needs to adapt to the person,” says Breather’s co-founder and CEO Julien Smith.

Image Credit: Breather

Things have been moving quickly for Breather, which has raised more than $25 million in venture capital since launching in 2012. Two years ago, the Montreal-based company offered just three spaces for rent in New York City. Today it offers 50, says Smith.

In total, Breather says it currently has 100 spaces available for rent across North America and hundreds of thousands of users. Rates vary by city and space; in New York, a room can be rented for anywhere from $25 to $100 an hour. The average customer books a room for between two and five hours, according to Smith. Rooms can also be rented for up to a few weeks.

Related: How This Company Is Helping Businesses Make the Most of Excess Office Space

Breather is not alone in taking advantage of the demand for flexible work environments. LiquidSpace, available in 46 states as well as Australia and Canada, has raised $26 million since Mark Gilbreath and Doug Marinaro founded it in 2010. The company offers a variety of short-term options, as well as options that can last for a year or more. Co-working space WeWork has raised $1 billion from investors. WeWork, which offers month-to-month rentals, is in 14 cities in the U.S., plus Israel, the U.K., Canada, Netherlands and Germany.

Image Credit: Breather

For Breather’s CEO, the next up and coming area is Asia, although the company hasn’t announced any formal plans to expand there yet.

As the company grows, Smith hopes to make Breather the go-to spot for the flexible workforce. “Freelancers are a big portion of the population now. I really think that we can be a big part of the everyday worker’s existence,” he says.

Silicon Valley’s Real Estate Crunch Is A Golden Opportunity For Other American Cities

Silicon Valley’s Real Estate Crunch Is A Golden Opportunity For Other American Cities

huntsville-alabama

When Curse CEO Hubert Thieblot told his employees last year that he was moving the company’s San Francisco headquarters to Huntsville, Alabama last year, they thought he was crazy.

About 20 of his employees quit because they didn’t want to relocate.

“It was very controversial,” said Thieblot, who had lived and run the company out of San Francisco for at least five years. “A lot of people did not like me for that decision.”

But today, the profitable, 110-person person company operates out of an Alabama city with a population of just under 200,000 people and the highest number of Ph.Ds per square mile given Huntsville’s history with NASA as the nation’s “Rocket City.” Curse just closed $16 million in funding earlier this week too from the China-centric venture firm GGV Capital.

“If you want to build a long-term company, you might have a better chance of keeping people outside of San Francisco,” Thieblot said. “The job market is too crazy here.”

Indeed, the cost of living and commercial real estate is also pricing smaller startups out of San Francisco. I’m seeing bootstrapped founders, who have yet to a take full round of funding, trickle into surrounding cities like Oakland, Daly City and the Bayview neighborhood of San Francisco, if they’re not considering urban hubs in other parts of the country altogether.

Jon Wheatley, a British entrepreneur who co-founded DailyBooth, wrote a good post about this when he decamped for St. Louis, Missouri to dream up new projects.

“If you’re trying to bootstrap, being based in San Francisco is awful,” he said. “The leading cause of startup death is running out of money. Moving to a cheap city and doubling (or more!) your company’s runway will more than likely vastly increase your chances of eventual success.”

Are we supposed to cry for these entrepreneurs, like the teachers, public servants, artists and the elderly who have already faced several decades of gentrification in San Francisco?

Um, no. Not really.

From a national perspective, it’s a good thing to see these job opportunities become more geographically diversified. (I mean, did you see the first quarter U.S. GDP numbers?! The economy contracted at an annualized pace of 2.9 percent.)

net-total-migration

While the rest of the country is only starting to see the kind of job recovery that may make the Federal Reserve finally raise interest rates later this year, the San Francisco Bay Area is bursting at the seams.

The city is at its highest employment levels ever and the population is expected to reach 1 million people by 2032. The city grew by 32,207 people between 2010 and 2013, but only added 4,776 housing units in the same period. Hence, our housing crisis.

Screen Shot 2014-07-10 at 8.52.20 PM

Similarly, commercial rents are nearing dot-com period highs. The Information reported last week that the average price per square foot for so-called Class A office space in San Francisco is $64.45, just shy of the dot-com bubble peak of $67.20 in the third quarter of 2000.

Commercial real estate developers are all scrambling to get their projects entitled as quickly as possible before they run into a nearly twenty-year-old San Francisco law called Prop M, that caps the amount of office space that can be built in a given time period.

Many startups are coping by operating distributed teams, with one founder here in Silicon Valley and another working with engineers in a different part of the country (or world).

Jason Citron, a veteran founder who sold OpenFeint to GREE for $104 million two years ago and is backed by Benchmark in his new hardcore tablet gaming company Hammer & Chisel, works in Burlingame while his co-founder Brandon Kitkouski is based around Dallas.

“His family’s in Texas. He’s got a nice house. If he had it in the Bay Area, it would cost millions of dollars,” Citron said. “He was commuting for awhile, but that was hard. The Bay Area is at capacity. It’s freaking expensive.” (And by the way, why is housing affordable in Texas? Houston had more housing starts than all of California in the first quarter of this year. Am I saying we should be Houston? No. I’m just pointing out policy trade-offs.)

Similarly, Jen Lu, who started YC-backed toy company ZowPow, splits her startup between San Francisco and Portland. Her co-founder Brian Krejcarek moved back to Oregon after living in San Francisco for many years.

“It’s been a good thing for us,” she said. “We’ve been looking to hire engineers and it’s just really hard to do it here because it’s so competitive and expensive. But he has a network and is able to find talent there.”

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Some of the Valley’s best-known investors are also encouraging geographic diversification. Andreessen Horowitz is incubating a startup called Teleport, which will help knowledge workers improve their quality of life by moving to places that maximize the difference between their cost of living and take-home pay. Marc Andreessen recently published an essay in Politico, arguing that other regions across the U.S. should remove regulatory hurdles around specific technologies they want to attract — be they self-driving car, stem cell or Bitcoin-related startups.

Is this bad for the Valley over the long-run?

Between giants like Google, Facebook and Apple and then later-stage companies like Uber, Square, Dropbox and Twitter, the region has a healthy mix of employers.

Yet the heated real estate market favors capital-rich, growth-stage companies right now, often at the expense of other kinds of creative experimentation, be it a longstanding artist’s collective or a not-yet-Ramen-profitable entrepreneur. The cost of living and the competition for talent simply doesn’t give startups a lot of time to find product-market fit here unless they’ve raised a lot of capital.

In contrast, Google, founded in 1998, and Facebook, founded in 2004, came of age when the Valley was weathering slower economic times and it was easier and cheaper to form a cluster of AAA technical talent inside any single company.

Is that worrisome? Maybe a little. When you look at other cities that have historically been dependent on a single industry like Detroit, the population declines started after power consolidated to a handful of companies like GM, Ford and Chrysler, which then began distributing their plants around the country in the 1950s to avoid the risk of production disruptions from worker strikes. (These changes predated competition from Asian auto manufacturers by at least a generation.) Ideally, you want a mix of firm sizes, and younger and older companies.

But ultimately, these things come and go in waves, and the Bay Area is an undeniably attractive place to live no matter what. A decade ago, the world’s leading mobile OS was built out of Helsinki by Nokia. Today, both of the world’s leading mobile OSs, Android and iOS, are here in Silicon Valley.

Cities have to maintain a certain equilibrium between people moving out and people moving in. Right now, the escalating costs and sheer limits of Bay Area’s housing and transit infrastructure are tilting that balance back out to the rest of the country.

So if you’re a mayor of another U.S. city and you want to attract jobs, now would be a good time to drop by a Y Combinator or 500 Startups demo day to make a pitch.

We have our hands full.