One of the big questions surrounding the potential development of Aggie Research Campus in Davis is whether UC Davis has the capacity to support the type of development needed to sustain such an innovation center—especially in light of proposed economic development at Aggie Square as well as in neighboring cities.
As we have argued, UC Davis has largely underperformed in economic development in comparison to other similar universities. But we also believe, based on data that we have, that UC Davis has a lot of untapped potential.
We asked the Greater Sacramento Economic Council (GSEC) how UC Davis compares in terms of startups and they provided us with a comparison to eight other research universities, including some of the top ones in California and top public universities in other states.
The findings here are both interesting and instructive. UC Davis is perhaps most comparable to UNC-Chapel Hill, having generated 245 startups between 2006 and 2019, an average of 18 per year. That is slightly less than the 264 by UNC. It is also more than both the University of Florida and Ohio State.
However, in comparison to other major western university, UC Davis is doing less well. Colorado and Washington have just under 50 percent more over that time. USC has a lot more, UCLA has twice the number and UC Berkeley is blowing away the competition.
In fairness, “UC Berkeley is in the top five for number of companies and capital raised among both public and private universities.”
So, over the last 14 years, UC Davis graduates have created 245 companies which have raised over $3.4 billion in capital.
As we know, UC Davis is well situated to do far better than this. As we have pointed out in past analyses, UC Davis produces a huge number of STEM field graduates but has an extremely low retention rate.
In GSEC’s presentation at the Vanguard event last August, for example, they found that the retention rate for UC Davis was only 23 percent of graduates ending up living in the area. Compare that to the University of Washington, which has generated 26 startups a year as compared to 18 by UC Davis, and the retention number is 62 percent.
That means that nearly two-thirds of the graduates of the University of Washington stay in Seattle Metro Area, while less than one-quarter of UC Davis graduates remain in the Sacramento Metro Area.
The talent is there with a huge number of UC Davis students graduating with STEM degrees.
As we have pointed out, the big problem is a lack of jobs in the private sector of these fields.
The top three industries in Davis were government, health care, and food services. As we have pointed out in previous analyses, other than UC Davis, there are limited high yield jobs in the Davis market.
Another big problem, as we have noted time and time again, is the lack of space. We have examined available commercially zoned property. That number is fairly low. But another analysis shows that Davis has a commercial vacancy rate of less than 5 percent with about 824,000 square feet of vacant space—and none that is currently under construction (the Nugget Headquarters would not be considered vacant, for example).
While 824,000 square feet seems like a decent amount of space (it’s about one-third of the projected amount at ARC), it is spread throughout the city. There is limited available commercially zoned property that is more than six acres in size, and the few parcels that are larger have considerable obstacles to development—for example, being a Superfund site.
Compare these numbers to the greater Sacramento area and you see a nearly 9 percent vacancy rate over 9 million square feet of vacant space with 2.1 million square feet under construction.
The opportunities are there since 2014, as UC Davis created 71 startups in the high tech industry—23 in pharmaceuticals, 12 in medical diagnostics, and 9 in cell and therapy and enzymes and proteins. While it has done well in medical technology, it has done surprisingly poorly in ag tech—just 3 in crop science, one in ag tech and one in food tech.
These should be the strengths of UC Davis, as the top agricultural science school in the country.
As Greater Sac put it: “UC Davis’ research specialties in life sciences, agriculture sciences and veterinary sciences mean opportunities for commercialization in Davis but also in the region.”
The basic problem—lack of available space. This is not a new problem. It was identified in the 2012 Studio 30 report.
The key point raised is this: “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.”
Studio 30 recommended a “close in hub or incubator” along with a larger and less constrained “edge site” that would offer “the right mix of University proximity and identity with the expansion capability to address job growth and rapid business expansion.”
It is pretty simple: UC Davis is developing the talent and has the capacity to do more, but they are losing that talent to other areas and that is precisely why they have invested heavily in Aggie Square—but it is also why they and the region would benefit from the capacity for economic development in Davis.
—David M. Greenwald reporting