A recent NAIOP research report explores the factors leading to the success of these unique development projects as well as the challenges they must overcome.
INNOVATION DISTRICTS are widely believed to be an effective way to promote the formation and growth of knowledge-intensive businesses. A report prepared for and published by the NAIOP Research Foundation in July 2016 provides those interested in innovation district development with a better understanding of the factors contributing to the success of these projects, as well as the challenges they must frequently overcome. “Case Studies in Innovation District Planning and Development,” by Dustin C. Read, Ph.D., J.D., an assistant professor of property management and real estate at Virginia Tech, presents case studies of four projects in different settings and phases of development. It also offers suggested “best practices” for real estate practitioners and policymakers. Those best practices include the following:
- Ensure that development decisions are driven by a vision that promotes connectivity.
- Recognize the importance of scale and the role it plays in creating an innovative environment.
- Use amenities, design features and programming to serve “insiders” and bring in “outsiders.”
- Don’t underestimate the importance of effective leadership and governance structures.
“Successful innovation districts offer an ecosystem where knowledge-intensive businesses can thrive across multiple stages of development,” Read notes.
The four case studies presented in this report demonstrate that innovation districts can take on a variety of different forms and emerge in a host of different settings. They may be developed on infill or greenfield sites, involve relatively straightforward or extremely complex financial structures and leverage a diverse array of public-private partnership arrangements. Design features, tenant mix and programming can also vary dramatically from project to project, depending upon the district’s economic objectives and policy goals.”
The report’s case studies explore the following four districts:
The Cortex Innovation Community in St. Louis, Missouri: A roughly 200-acre district in the heart of Midtown St. Louis, Cortex is the product of a partnership among many local institutions, primarily BJC HealthCare, the Missouri Botanical Garden, St. Louis University, the University of Missouri-St. Louis (UMSL) and Washington University in St. Louis. Beginning in 2002, the partnership began to transform a once blighted industrial area into a setting ripe for entrepreneurial activity in the life sciences and biotechnology fields. An ambitious master plan calls for approximately 4.5 million square feet of mixed-use space, 13,000 jobs and over $2 billion in capital investment. Over 1 million square feet of office, lab and retail space have already been constructed at a cost exceeding $500 million.
SkySong, the ASU Scottsdale Innovation Center, Scottsdale, Arizona: This 42-acre mixed-use development project will include over 1.2 million square feet of office, lab and meeting space at buildout, as well as 12,000 square feet of retail space and 325 apartments. SkySong is located on the site of a former defunct regional mall. Arizona State University, the ASU Foundation for a New American University and the city of Scottsdale joined together in 2005 to redevelop the property in hopes of revitalizing the area through the attraction of rapidly growing technology firms.
Tech Center at Oyster Point, Newport News, Virginia: This $450 million technology park will eventually include 11 buildings and 940,000 square feet of office and lab space on a site adjacent to the Thomas Jefferson National Accelerator Facility. The first phase of the project includes 250,000 square feet of retail space anchored by Whole Foods as well as a nearby 288-unit apartment complex. Construction of the technology park is expected to begin in 2017.
Technology Square, Atlanta, Georgia: This 1.3+ million-square-foot mixed-use development, which already features eight new buildings and over 3,000 structured parking spaces, is expected to grow dramatically by 2018, with the completion of a new mixed-use tower featuring lab, office and retail space. The first phase of the Midtown Atlanta project was completed in 2003 at a cost of approximately $380 million. It was spearheaded by the Georgia Institute of Technology (Georgia Tech), which led a public-private initiative to accommodate its expansion and to revitalize an eight-block area near its main campus that was in dire need of capital investment.
The report is a “must read” for anyone considering becoming involved in these types of real estate ventures.
For a copy of the full report, go to www.naiop.org/innovationdistricts