Just a few years ago, the aging 10-story AT&T building, a couple of blocks off the Capitol Square at 316 W. Washington Ave., was sitting mostly empty.
Today, it is bustling with activity and has become the newest entrepreneurial hub in Madison, with some of the most vibrant young businesses making it their home. Along with its new identity, it sports a new name: the 316 Building.
The latest to sign is 100state, which will occupy 10,000 square feet on the sixth floor. The co-working and mentoring community now has nearly 300 members, executive director Gregory St. Fort said.
“We needed more space. We have a growing startup community; a lot of our companies are growing bigger,” he said.
Launched in June 2013, 100state outgrew its offices at 100 State St. in its first year and has been housed at 30 W. Mifflin St. since September 2014. It will move to the 316 Building in early 2017, nearly doubling its current space.
“We decided to be there specifically because there’s already a density in the startup community,” St. Fort said.
How did the migration occur?
Office developer Hovde Properties took a chance.
Hovde Properties already owned two other large office buildings Downtown: the Hovde Building, 122 W. Washington Ave., and the Churchill Building, 16 N. Carroll St.
“We were starting to have a great deal of interest from younger, startup, tech-related companies,” said Hovde Properties president Mike Slavish. But neither the Hovde nor the Churchill building had enough space available, or the type of space the young businesses wanted.
“They were looking for anything but space that their parents may have occupied. They didn’t want highly finished offices. They wanted raw, edgy, open office space,” Slavish said.
The AT&T building, built in 1970, was “intriguing for us,” he said. Only a block from Hovde’s own offices and two blocks off the Capitol Square, it was an “under-utilized asset.” AT&T had sold the building years earlier but still occupied floors two through five; the rest was vacant, Slavish said.
“We saw a really good opportunity to renovate this asset and put it into productive use,” he said.
So Hovde Properties bought the building in September 2014 and put it through a massive renovation. That included creating windows on the east side of the building facing Henry Street, which had none.
“We added 56 windows on that side. We had to cut into the limestone panels and add windows on that entire façade,” Slavish said.
On the West Washington Avenue side, windows that had been tinted dark brown were replaced with lighter frames, lighter-colored glass, and more energy-efficient glass. “We knew that was something we were going to have to do to attract tenants back to this space,” Slavish said.
Less visible was another challenge: Getting rid of the asbestos-laden fireproofing that laced the building’s interior and replacing it with a less toxic version, then rebuilding the offices. Crumbling concrete in the 110-space underground parking also was rebuilt.
The entire project, including the building’s purchase, totaled $25 million, Slavish said. The city provided $2 million in tax incremental financing, a process through which the funds are repaid via higher property taxes on the improved building.
“That was essential,” Slavish said. “When you renovate an old building like this, in some regards, it may be even cheaper to tear it down and rebuild it.”
The building also has the Red Sushi eatery and Barre Code gym on the first floor, as well as a fitness room with showers and a large bike storage area. Next up: A huge mural that will begin installation at the end of September.
Startups see the light
Around the time Hovde was eyeing the building, Filament Games was seeking more space. Its East Side offices at 2010 Eastwood Drive just off Atwood Avenue, were in a “really nice area” with a good “neighborhood-y vibe” but a “kind of sleepy” area, said Filament CEO and co-founder Dan White.
“You can’t beat Downtown for the energy. This is the center of business,” he said. Bus access, and the ability to walk or bike to work were also positives, White said.
Tenant representative Ross Rikkers, principal with Cresa’s Madison office, zeroed in on the 316 Building’s top floor.
“We negotiated a deal with Hovde and signed the lease before Hovde even signed on the building,” Rikkers said.
Filament moved in, in July 2015. The 10th floor offered high ceilings – “You could put a climbing wall in there,” White said – and floor-to-ceiling windows on both sides. “If you are standing in the middle of the office, you can look out on both lakes,” he said.
Filament, an educational game development company, has about 40 employees and is looking to add several more.
Filament creates online games for companies both in Wisconsin and abroad, from local school districts to EkStep, a company in India, to a Canadian broadcasting company. One of its latest games, for iCivics, is called Win the White House 2016 and lets players manage their own presidential campaigns.
The 10th floor of the 316 Building is “fantastic,” White said. “There’s not a day where I don’t appreciate the feeling of being up high in Downtown Madison. It’s a very peaceful sensation when you look out on the lake, a transition between the busy meetings of the day.”
After Filament moved in, it was “kind of a domino effect,” Cresa’s Rikkers said.
EatStreet, a mobile and online restaurant meal ordering service, leased the seventh and eighth floors. Hovde Properties had a staircase built in the middle of the space so workers could feel connected.
With 135 employees, EatStreet was outgrowing its space at 131 W. Wilson St. “We knew we wanted to stay Downtown,” CEO and co-founder Matt Howard said. “We looked at a bunch of different spaces,” including locations on the West Side that had more parking and were less expensive. “But the second we saw this, we knew this was it,” Howard said.
EatStreet won another big amenity from Hovde: balconies, big enough for employees to take their computers outside on a nice day.
The young company moved to the space in August.
Understory, which makes weather stations that track storms and send detailed data to the computer cloud, has been in the 316 Building for about four months.
Understory started in Madison four years ago, moved to Boston to participate in a business accelerator, and recently moved back here. The company needed a location with some specialized space.
“One of the major things we were looking for in office space was the ability for our engineers to prototype our sensor in a building that was located Downtown,” co-founder and CEO Alex Kubicek said.
It was a tall order to find a place Downtown with office space as well as room for some heavy-duty equipment.
The 316 Building has a loading dock, and Understory was able to create lab space beside it, as well as office space along with Filament Games on the 10th floor.
Understory will be equipping its lab with a CNC (computer numeric control) machine, a lathe, band saws, 3-D printers and laser cutters. It will probably be “the largest machine shop Downtown,” Kubicek said. His goal is not only to work on prototyping for Understory, but to let other companies use the equipment as well with Understory’s supervision.
Understory has 18 employees, 10 of them in Madison.
Its latest technology is a weather messaging tool that lets insurers send custom messages to their policy holders.
With Understory’s sensors, “we know a homeowner’s home is damaged before the homeowner does,” Kubicek said.
316 vs. StartingBlock
It makes a lot of sense that startups would want to work with other startups, said Troy Vosseller, co-founder of the gener8tor accelerator in Madison and Milwaukee. “They want to fuel off the energy those other companies provide,” he said.
Five of the young companies in the 316 Building are gener8tor graduates.
Another advantage to the location is that it is near the Network 222 building. Owned by the Fiore Companies, Network 222, at 222 W. Washington Ave., is a 1972 building that was renovated in 2003 and designed to attract a tech-heavy clientele. Its tenants include Sonic Foundry, whose Mediasite software and hardware are used to stream and archive presentations at schools and in businesses.
On the other side of the Capitol, though, the long-awaited StartingBlock just reached its fundraising and announced it is moving forward. Slated for the 800 block of East Washington Avenue, StartingBlock has been billed as Madison’s entrepreneurial hub. It is expected to start construction late this year and open in early 2018.
Gener8tor will be one of the primary tenants there. But Vosseller said he doesn’t think StartingBlock will serve as competition to the 316 Building.
“StartingBlock is going to have affordable and flexible and, in some cases, month-to-month opportunities for early-stage startups. It’s a place where I see them starting,” Vosseller said.
The 316 Building is aimed at startups that are more mature, he said.
“So I really view them as complementary, on a spectrum,” Vosseller said.
EatStreet’s Howard agrees. “We would not move from here; this is our long-term home. We built the space out exactly how we wanted it. It is the office of our dreams,” he said.