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How Khoros fended off tech behemoths for new Austin HQ

After Spredfast-Lithium merger, company has 900 employees

By Erin Edgemon  – Staff Writer, Austin Business Journal

Sep 25, 2019, 8:49am EDT

Khoros LLC, the company created through the merger of Spredfast Inc. and Lithium Technologies LLC, bid on and lost space in three office buildings before finally securing a 79,584-square-foot lease in Northwest Austin. “We were literally losing to the Fortune 50,” Khoros Chief Financial Officer Sam Monti said. “The problem is I’m filing the same lease they are, but then they ask for your balance sheet and income statement.” Khoros, which has annual revenue in the range of $250 million, competed with firms that have over $20 billion in revenue, according to Monti. “I’m never going to win that with most landlords,” he said. When the marketing-technology company did secure a lease at Ladera Bend — a three-building office complex at 7300 RM 2222 formerly fully occupied by Samsung — it actually beat out a Fortune 500 company for the spot. Monti said the landlord picked Khoros because the company is likely to stay and grow in the property long term. The company currently has 450 employees in Austin and 900 globally. Khoros lists 40 job openings on its website, including nine in Austin for positions such as account executive, technical support engineer and Salesforce administrator. Khoros, which moved into its newly renovated office space on Sept. 23, offers companies a platform to manage their social media accounts and customer care and outreach online. Khoros reports more than 2,000 customers, including notable brands as PepsiCo Inc., AT&T Inc. and Johnson & Johnson. The strategic services division of the company, also in Austin, handles some monitoring duties for Facebook Inc. Finding contiguous office space of 50,000 square feet or greater in the Austin area right now is challenging, especially for startups needing to move fast and not pay top-of-the-market rates found in The Domain and Central Business District.

CoStar Group Inc. Central Texas Economist Sam Tenenbaum said there are only nine buildings in the Austin area with more than 70,000 square feet of contiguous space available. Only four of those were built after the year 2000. Chrissy Fuller, a principal at Avison Young who represented Khoros in its search for office space, said there were only a handful of buildings that were viable options for Khoros when it began looking for space more than a year ago. Along with Fuller, Carl Condon of Avison Young and Scott Finegold of Finegold Commercial Real Estate represented Khoros in the transaction. Matt Frizzell and Brian Liverman with Cushman & Wakefield represented the landlord, Rovira Inc. Ladera Bend and Northwest Austin were attractive to Khoros because it is a more reasonably priced submarket and it’s still close to downtown and where most employees live, she said. Free parking is also a big advantage. Monti admitted, though, that the combined companies lost an unspecified number of employees after the relocation was announced about 10 months ago. Spredfast previously had its headquarters downtown, while Lithium had its Austin office in North Austin off MoPac Expressway. The average gross lease rate in the Northwest office submarket is $35.17, according to a second quarter report from Avison Young. That’s much lower than the CBD and The Domain, where gross lease rates are $61.16 and $40.47, respectively. Khoros signed a 10-year lease for about half of Ladera Bend, which totals 158,407 square feet. The company occupies all of building one and portions of the second and third buildings in the complex. All Web Leads is the second-largest tenant at Ladera Bend. Monti said the new office space underwent a gut renovation beginning in January. Much of the office is now open individual workstations and collaborative work areas. There are offices for the executives and several conference rooms.

Urban Foundry Architecture designed the interiors. IE2 Construction Inc. was the general contractor. Ross Taylor, formerly of Avison Young and now with CBRE Group Inc., served as project manager. Vista Equity invested in both Spredfast and Lithium prior to their October 2018 merger. Before the deal, both Austin-based Spredfast and Lithium already had their largest offices in the Texas capital. Lithium’s care and customer support divisions were already in Austin, and it was also the headquarters for the company’s professional services. The original merger announcement said Khoros would be based in San Francisco. But the company decided to shift its headquarters to Austin because of the talent base and lower costs than the West Coast, Monti said. Austin has certainly become a popular place for Fortune 500 companies to set up shop. In the past few months, Inc. confirmed a lease expansion previously reported by Austin Business Journal and said it would bring 600 more jobs here, and Google Inc. said it leased an entire downtown skyscraper under construction. Apple Inc. is building a $1 billion campus in Williamson County, in addition to leasing more space around town.

Originally posted on Austin Business Journal


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