At last week’s Innovation Park Forum, one of the audience questions was “Is there enough of a market for space to support development of all three proposed innovation parks plus Nishi Gateway over the next 15 to 20 years? Should we try to pick ‘winners,’ or just say ‘the more the merrier?’ ”
Yesterday’s Sacramento Business Journal noted that Davis is now processing nearly 7 million square feet of development at the Davis Innovation Center and the Mace Ranch Innovation Center.
They write, “The Mace Ranch Innovation Center would add up to 2.6 million square feet of office, research, retail and hotel uses on 212 acres east of the city. The Davis Innovation Center would include up to 4 million square feet of building space on a T-shaped property of about 208 acres on the northeast side of the city.”
Not mentioned is about 110,000 square feet of innovation space at Nishi.
Doing the math, the city is projecting about a 350,000 square feet per year build out over 20 years. One of the big questions is can the city accommodate that rate of growth and, to answer that, the projects will hire a consultant to do a market absorption study. In the past, Rob White has cited similar rates of growth around Davis over the last five years during a bad economy.
The Studio 30 Study from 2012 recommended Nishi plus one of the peripheral spots either in the East or the West, with a slight lean toward the east.
Studio 30 wrote, “The current isolated and dispersed sites that are available and appropriately zoned are not adequate in terms of size, location, or configuration (and related constraints) to address the emerging market need of an Innovation Center.”
The study continues, “With available reasonably priced land and effective marketing to innovative high tech companies, Studio 30 estimates Davis could absorb up to 10 percent or around 100,000 square feet of the 1-1.5 million industrial/ office square footage absorbed annually in the Sacramento region. Because of this Studio 30 estimates Davis needs at least 200 acres for business development and expansion over a 20 +/- year time horizon.”
They continue, “A combination of one “close in” hub or incubator with one (or in some future time, two) larger, less constrained (and presumably less costly) edge site offers the right mix of University proximity and identity with the expansion capability to address job growth and rapid business expansion.”
“The Gateway or Nishi site offers the best opportunity for the close-in/incubator. The site will require University partnership and cooperation. Close proximity to UC Davis, downtown, regional transit and City amenities make this site best for implementing the desired attributes for start-ups, small firms, and University research-oriented businesses. Though not sufficient to meet needs of midsized businesses it could serve as a catalyst for establishment of early phase companies and promote downtown business development,” Studio 30 finds.
Nishi is currently undergoing its own planning process in conjunction with the university. For more information see – http://nishigateway.org/.
In the meantime, Studio 30, just like the city, has avoided attempting to pick winners and losers in determining which Innovation Park is the better option.
“The East and West sites both offer larger scale “move-up” opportunities with excellent acreage, infrastructure, location, and car, bike and transit accessibility,” they write.
They did note, “The East site seems preferred at this time because it offers a readily available agricultural mitigation strategy, and may have less neighborhood development concern.”
This was actually before Mace 391 became a permanent agricultural easement. That easement strengthens the protection around Mace. At the same time, as we printed yesterday, Jim Provenza warned that an agricultural easement surrounded by urban development is likely not to remain in agriculture.
However, while Studio 30 might give a slight edge to the East, it was only slight. They write, “the West site has recently gone through additional land planning studies, and may also offer successful agricultural mitigation. The West site is slightly favorable in terms of University and downtown/ proximity. Both sites offer interesting opportunities for innovative agricultural related research, urban farming elements, and sustainable/green site and building design opportunities…”
Based on that they conclude, “both sites should be pursued for now.” They write, “Development on any of these sites will entail substantial entitlement challenges (such as agricultural mitigation); in particular, a community Measure R vote will present a major challenge for future development.”
That is a big political question – if we end up rolling out Nishi, Mace Ranch, and West Innovation Centers, with nearly 7 million square feet, does that present a political problem? While housing is not the same as a business-oriented development, one of the lessons we learned from Covell Village’s beating at the polls a decade ago was that, in their haste to develop the entire property, they went too big, too fast, and lost.
At the same time, picking winners and losers at this time makes little sense. By allowing the projects to move forward at their own market driven pace, to study the market and absorption, we can get a better sense.
What would happen if we picked “a loser” and the “winning” development lost investors or ran into problems?
At the same time, at some point the city and developers need to do additional polling to determine the viability of three Measure R votes, the timing, and how they should be rolled out.
350,000 square feet is about 3.5 times the recommendation by Studio 30, but it’s not clear that Studio 30’s analysis is the way to go. They simply looked at the annual square footage absorbed into the Sacramento region and estimated Davis could absorb up to 10 percent. The more robust analysis looked at a 15 mile radius on an annual basis and assumed Davis with land availability and an invigorated UC Davis could draw at least that much on its own.
Clearly playing a role in that analysis was the loss of Bayer in the summer of 2013, and the need to keep some of the larger and fast growing companies at home, in addition to attracting new companies and providing space for both startups and growing companies to succeed.
The economics will be worked out through studies and analyses, but the city, the council, and the developers need to be mindful of the political dynamics, as well.
—David M. Greenwald reporting