Going back to last week’s discussion of available land in the city, my analysis is that once we look at what’s available at the ground level, we don’t have anywhere near 40 to 60 years’ worth. While we have pushed the notion of a peripheral innovation center for several years now, the reality is that if MRIC (Mace Ranch Innovation Center) is not going to go forward, the city will have to figure out a way to zone land it needs for economic development – in some form or another.
That is probably a discussion the council will have to have once staff comes back with a more granular analysis of the land.
But here’s a point worth noting – on Tuesday, a public commenter pointed out that the EPS (Economic & Planning Systems, Inc.) Site Evaluation for 3820 Chiles concluded that the city has 40 to 60 years of land for R&D Development.
He told council during public comment, “There is an abundance of land already zoned for and better located for a business park.” He noted that, on a stretch, “there are already 20 acres of office/ R&D land. Without counting the land for this project, EPS estimates that there is a 40 to 65 year supply of vacant land in the city suitable for R&D and flexspace use. Twelve to 20 years of that is regarded as shovel-ready.”
The first problem with this analysis is that EPS appears to have simply taken the city’s estimate from 2015 of 156 acres and estimated how long that would take at current rates of growth to build out.
There are a lot of problems with doing it that way. Granted, the city’s initial analysis looked only at vacant parcels that are currently zoned for commercial uses. That means that any parcels that are currently developed but either unused (there are a few on Second Street) or underutilized would not count.
It also doesn’t take into account, for instance, our report on the 15-acre parcel on Chiles and Cowell, that Jim Gray believes will not be developed any time in the near future.
There are differing opinions on the Frontier Fertilizer site, with some believing development there is at least 20 years off while others believe it might be usable a good deal sooner.
How much land is there that we can develop commercially? A lot of that depends on the use. There are a few parcels that could be developed that are 6 to 10 acres, but a lot of the 27 parcels identified by the city are quite small.
EPS itself that did the evaluation of 3820 Chiles Road – a property that is not vacant, but has an existing structure formerly used by the university – and questioned the commercial viability of that size, which was over 6 acres.
They write that “one reason the site is not viable for office/R&D/Flex development is that it is not located in a larger innovation or research park or district, such as the Interland Research Park (Now University Research Park) or along 2nd Street. The City will be better able to attract new office/R&D/Flex users in available space in these existing or new innovation park/ districts.”
The key is that most commercial interests “are simply not interested in developing a 5 to 7 acre site for R&D.”
But there is a second factor here with the EPS estimate of a 40-60 years’ supply of property. On page 12 of the report, they write “it is estimated the City has an approximately 43 to 63 [years’] supply of vacant land for future office and R&D/ Flex Development.”
While some have simply stopped reading there, we can look further. The assumptions upon which that estimate is based are limited. They are assuming that we will continue to average 39,000 square feet annually, or about 2.2 to 3.7 acres a year.
Putting those numbers into perspective is helpful.
Mori Seiki by itself added 185,000 square feet and Nugget, which is moving into a business park in Mace Ranch, is adding 65,000 square feet, itself nearly doubling the estimated annual build out.
Those numbers help us reach an alternative conclusion. The conclusion is that the critics are right – if the city continues with its current rate of build out, its current trajectory of economic development, then even with the limited amount of space available in the city, we could survive for the next 40 to 60 years with the current portfolio.
As we have pointed out a number of times – the current trajectory is not sufficient. We have over the years shown that our per capita retail sales are far below both other communities in the region and also comparable college towns in California.
Our lack of economic development and commercial development along with other factors has strained our budget, which is why, in 2010, we evaluated the viability of economic development in the form of Innovation Centers.
When Studio 30, now nearly a decade ago, looked at a similar prognosis, they recommended the city pursue a “Dispersed Innovation Strategy.” They concluded: “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.”
Unlike the current average absorption of 39,000 square feet, they estimated in 2010 that Davis could absorb up to 100,000 square feet per year. They estimated that Davis needed at least 200 acres of land for business development so it could accommodate around a 20-25 year time horizon (MRIC is estimated at 2.4 million square feet, so it would take 24 years to build out at the projected rate).
We have up to this point focused heavily on supply. There are good reasons for doing so, as supply is limiting our ability to attract new commercial efforts.
However, what becomes obvious as we look at the differential between the EPS report’s projection of 39,000 square feet per year and the Studio 30’s estimation that the city could absorb 100,000 square feet per year is that we need a strategy and mechanism to get there.
The city was positioned a few years ago to make those kind of moves, but for the last several years, economic development has dropped off the front burner – innovation centers were put on hold or moved to other cities entirely. With the new focus on the city manager and new hires, the city is once again positioning itself for a major push to attract and retain new companies – but it needs the facilities and the tools to do so.
—David M. Greenwald reporting