By David M. Greenwald
I will start this piece by disclosing that I have already voted and I indeed voted yes on Measure D (the renewal of Measure J), as I have said I would. But here I am going to argue that, in fact, some of the worst enemies of Measure J are its most enthusiastic advocates.
As I noted, in their arguments against DISC (Davis Innovation & Sustainability Campus), the opponents took aim at the fact that the TDM (Transportation Demand Management plan) is only promised in the Project Baseline Features and not laid out precisely.
In the ballot argument, opponents point out: “DISC is predicted to add more than 24,000 daily car trips onto Mace Blvd. when completed. But instead of guaranteeing specific reductions of this huge traffic burden on an already overly congested thoroughfare, the City is only requiring DISC to create a future Transportation Demand Management Program. But ‘figuring it all later’ is not a plan.”
As Matt William puts it, a lot of this is “trust me.”
It is easy to point a finger here—why not make this more precise? That’s what the voters want.
But the problem as was explained to me is that, if you make it too precise, the project lacks the flexibility to be able to attract commercial businesses. And if you make it too flexible, the project draws complaints from critics.
Critics of Measure J have a point here. Part of the issue is that we are used to housing projects. Those are relatively easy. We can specify all sorts of housing requirements in advance, we know the build out time for housing is relatively short, and housing demand is so high that they will be relatively easy to fill in a short period of time.
This is different. We are going to have to “trust” that there are enough protections written into the Development Agreement, the EIR, and the Project Baseline Features to ensure that the project reasonably delivers what has been promised to the public and the city.
At the same time, there are areas that are by necessity left to the future—the TDM, sustainability and even what companies will move in.
That is a big argument I continue to see—commercial demand. Is it here? The Studio 30 report, written a decade ago, noted that Davis had an historically low absorption rate, even though the Sacramento region had a much stronger one. Ultimately they projected about a 90,000 to 150,000 square foot per year average absorption.
Putting some sizes on that: Nugget headquarters is 32,000 square feet and their whole complex is about twice that. Mori Seiki, on the higher end, is around 150,000 square feet.
What does COVID mean for that? It’s hard to know, but most commercial real estate people I have talked to believe that there continues to be a very high demand. So we noted that the UCD site on Second St. with the greenhouses, about a 6.5 acre parcel with 25,000 square feet of greenhouse space, went on the market officially two weeks ago.
It is expected to complete the silent bidding public process in a few weeks and the owner expects to close escrow on it by the end of the year.
That gives us a sense for industry’s perception—that the land will be in demand in the near future for either filling the existing use or redevelopment.
Can we get to 90,000 square feet a year build out? That’s really a magic number, because over a 20-year period, that gets us to 1.8 million, which is a huge percentage of the DISC overall square footage.
I asked the question to two of our commenters, both of whom cited the EPS (Economic & Planning Systems, Inc.) report from 2017 which found that Davis had achieved an average absorption rate of 34,000 square feet a year.
But citing that report is problematic. We already knew from Studio 30 that Davis had a low absorption rate and had a limited amount of space for companies to move into. The 90 to 150 thousand figure is aspirational—if we have available space and an aggressive marketing campaign (it is why we hired a Chief Innovation Officers a few years ago).
Speaking to a commercial real estate broker, I was told that they believe in an eight-year period, Davis absolutely would average 100,000 per year and that it would achieve such levels about six or seven of the eight years. Moreover, over a ten-year period, one million square feet is achievable. The key, though, is to have space available—which we do not.
Davis had an unusual situation in 2014 where there was a high profile company that clearly needed to move to a bigger facility in five years. Schilling Robotics and Tyler Schilling went before the council at the time to explain their situation.
What happened? For varying reasons MRIC (Mace Ranch Innovation Center, the predecessor to DISC) took longer than hoped and they simply ran out of time.
But Schilling was always unusual—a local company, a five-year window to move, and a desire to stay in Davis.
Most companies cannot afford to announce their intention, wait for a project to gain Measure J approval, wait the additional two years or more while site maps and the planning process are worked out to gain approval to actually build, and then the two-year build horizon.
Basically, a company committing today might be able to open by the start of 2025, with an aggressive timeline and a favorable outcome. That’s why you are not seeing a lot of companies announce their intention to move to DISC.
As I watch this process play out, I have talked to a lot of knowledgeable people who are frustrated with the level of misunderstanding about how the industry works. One remarked to me how all these people think they know their business better than they do.
Is it better to move away from this model of Measure J for commercial projects? The level of specificity and guarantee that some people want is not realistic for a project of this sort. I have often recommended that the council simply pre-approve some land and then let developers plan a project.
That would allow the public to control future growth, but a planning department to future out what that growth looks like.
That requires foresight and trust—hard things to achieve. But if you want Measure J to work, people should think about ways to make it work for all types of projects.
—David M. Greenwald reporting
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