OVERVIEW & ECONOMIC IMPACT OF RESEARCH PARKS. Greg Hyer, Associate Director University Research Park University of Wisconsin Madison

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1 OVERVIEW & ECONOMIC IMPACT OF RESEARCH PARKS Greg Hyer, Associate Director University Research Park University of Wisconsin Madison

2 University Research Park Overview 255 Developed Acres 37 Buildings 1.8 Million Square Feet $183.3 Million Assessed Value $3.6 Million Local Taxes 126 Companies 3,500 Employees $220 Million Payroll 75% BS Degrees 33% Advanced Degrees $64,000 Average Income

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5 Driving Regional Innovation and Growth The 2012 Survey of North American Research Parks 5

6 Survey Response 108 of 174 (62%) university research parks in Canada and U.S. responded 84% (91) respondents were in the US; 16% (17) in Canada An additional 30 parks replied only to park employment questions 6

7 What is a University Research Park Key Elements of AURP s Definition: A property designed for research and commercialization Partnership with at least one university or other research institution A focus on technology-led economic development - Foster new company formation and growth - Promote technology translation from the lab to the marketplace Universities, federal labs, non-profit R&D institutions Research partners Flow of talent Exchange of ideas Access to labs and specialized equipment Research Parks Communities generating innovation, technology and knowledge Growth of existing companies Creation of new companies Generation of Jobs and Income Commercialization of Intellectual Property Private Companies 7

8 RESEARCH PARKS BENEFIT UNIVERSITIES Construction/Leasing Agility Trailing Spouse Solutions Research Agenda Tech Transfer Source of Income University Entrepreneurial Environment

9 UNIVERSITIES BENEFIT RESEARCH PARKS Workforce Services Problem solving Research Park Relationships Assets Amenities

10 Survey results align with 2009 National Research Council study of research parks Research parks are seen increasingly around the world as a means to create dynamic clusters that accelerate economic growth and international competitiveness. They are widely considered to be a proven tool to encourage the formation of innovative high technology companies. They are also seen as an effective means to generate employment and to make existing companies more competitive. National Research Council, Understanding Research, Science and Technology Parks: Global Best Practices,

11 CONTRIBUTION OF UNIVERSITY RESEARCH PARKS TO REGIONAL INNOVATION ECOSYSTEMS 11

12 University research park goals and objectives focused on advancing innovation Innovation and entrepreneurial environment highest rated objective for university research parks Survey Question on Research Park Goals and Objectives Park Objectives Average Rating (Scale of 1 5 with 5 being Very High Priority) Create an environment that encourages innovation and entrepreneurship 4.72 Offer a place for faculty and students to work with industry 4.27 Serve as a landing pad for recruitment of industry (both national and international) to region 4.21 Serve as a location for existing businesses to grow and expand in region 4.10 Encourage commercialization of university Intellectual Property 4.09 Build university stature 3.83 Promote development/redevelopment in the neighborhood around the university 3.22 Generate income for university and developer

13 Ways university research park services bring focused attention to innovation (1 of 2) Promote Open Innovation: 98% offer services to advance university-industry collaboration services: Having on staff dedicated liaisons to advance relationship building Enabling industry accessing university research laboratories Connecting industry to students (internships, co-ops, hiring) 13

14 Ways university research park services bring focused attention to innovation (2 of 2) Advance Emerging Technology Ventures: 88% directly offer commercialization services including: Accessing state and other public programs Linking to funding sources Assist with business planning, marketing and sales strategy 14

15 Innovation is critical to university research park success Six key success attributes involving innovation are highly rated by university research park directors: Good match between the core competency of university and industry tenants Priority availability of multi-tenant space for incubator graduates Capacity to assist early-stage business organizations in commercialization Access to equity capital sources for research park tenants Priority access to university resources, facilities, faculty and students Availability of a formal business incubator in the research park 15

16 Innovation drives measurable economic results for university research parks 963 new businesses have graduated from responding university research parks in last five years 8 out of 10 of these start-ups still in business after graduation from incubator Startup Companies Incubated Through University Research Parks Status of Startup After Graduation from Incubator Percentage of Total Moved to multi-tenant space within park 24% Moved to own building in park 2% Left the park but remained in the region 43% Left the region 12% No longer in business 19% Other 1% TOTAL 100% 16

17 CONTRIBUTION OF UNIVERSITY RESEARCH PARKS AS REGIONAL ECONOMIC DRIVERS 17

18 Continued development of university research parks despite weak real estate market (1 of 2) Fourteen (or 13%) of survey responses were new university research parks formed since 2008 Year Research Park Established 2008-present % 5% 10% 15% 20% 25% 30% 35% Note: These new research parks had a build-out of 3.2 million square feet and are now home to 3,526 jobs 18

19 Continued development of university research parks despite weak real estate market (2 of 2) 80 university research parks have opened a new building since 2008 Year Most Recent Building Completed 2008-present

20 Broad growth, but recession and weak economic recovery has had an impact Average job gains for research parks from 2007 to 2012 were 27% well outperforming the economy overall. Still, two out of three research parks indicated a significant negative impact on growth and development. 31% reported lack of investment capital for buildings and more stringent underwriting criteria 27% reported higher vacancy in local markets placed downward pressure on rental rates 22% reported negative impact from reduced government R&D funding 22% reported less build-to-suit demand (single tenant facility) 20

21 Sizable employment impact, broad reach across technology industries Research Park Employment by Detailed Industry as Reported in the 2012 Survey Responses Industry Percentage of Total Park Employment R&D Employment as a % of Industry Employment Private Sector 79% 78% Software & Internet Services 19% 81% Aerospace/Defense 15% 95% Bioscience 14% 70% Sci/Eng Services 9% 85% Electronics 6% 98% Business Support Services 6% 49% Environmental Consulting 3% 97% Mgt/Business Consulting 2% 16% Advanced Materials 2% 55% Digital Media 1% 85% Alternative Energy 0.3% 81% Colleges and Universities 10% n/a Government 9% n/a Park Support (Retail, etc) 2% n/a 379,754 direct jobs found across 137 university research parks in North America Translates into total employment impact of 941,258 21

22 Future looks bright for growth of university research parks Nearly 8 out of 10 university research parks are expecting to increase their acreage in the next five years. 21% Yes, I plan to increase the total acreage 79% No, the total acreage will stay the same 22

23 CHANGING FACE OF UNIVERSITY RESEARCH PARKS TRENDS IN PHYSICAL DEVELOPMENT 23

24 Competitive advantage of university research parks Access to talent and facilities matter in attracting tenants Reasons Why Tenants Locate in University Research Parks Access to skilled workforce/including students Quality of buildings Flexible leasing space Prestige of being located in research park Cost Access to university faculty, facilities and equipment Interaction with other business in the park Business related support services Interaction with other non-profit organizations in the park 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Very High importance High importance Medium importance Low importance No importance 24

25 The average research park seems in line with 2007 Typical Research Park Based on Median Values from 2012 Survey Size 119 acres 7 buildings open 250,000 sq ft, 90% of space is currently occupied 25,000 sq ft incubator space Location Located in a suburb Population of fewer than 500,000 Governance Operated by a university or a universityaffiliated non-profit Tenants 26 resident organizations 64% for-profit companies 24% university facilities 4% government agencies Employment Typical park employs 850 Major industries include software, aerospace/defense and biosciences 25

26 The average research park seems in line with 2007 Typical Research Park Based on Median Values from 2012 Survey Finances Operating budget of less than $1 million a year Revenue primarily from park operations, but also university, state, local and other sources 28% of parks reported generating less than 5% retained earnings, 34% of parks reported no retained earnings Services Provide a range of business and commercialization assistance services including: Help accessing state and other public programs Linking to or providing sources of capital Business planning Marketing and sales strategy advice Access to subsidized space Technology and Market Assessments 26

27 Key trend in physical development shift to Live-Work-Play picking up momentum Growth of mixed uses from housing, food and other retail, and hotel/conference complex is picking up Types of Facilities Found within Research Parks: Current and Planned Currently in Park Planned Within 5 Years Other Facilities Specialized laboratory facilities 74% 45% University instructional facilities 45% 27% Food/Restaurants 40% 41% Conference center 26% 22% Other education facilities 19% 13% Hotel 13% 25% Other retail shops 12% 30% Student housing 8% 11% Other residential 7% 21% 27

28 The shift to Live-Work-Play environments found in both new and existing research parks Today only 6% of university research parks are fully mixed use having food/restaurant, retail and housing Within 5 Years, 21% of existing research parks expect to be fully mixed use Implications Research parks transforming into hubs for place-based development strategies Focus on creating highly desired live-workplay environments to attract technology professionals 28

29 2012 Survey suggests The Best is Yet to Come Role of university research parks in advancing regional innovation and contributing to regional economic development across North America well established University research parks served to buttress impact of recession for many regions of North America Growing transformation of university research parks into hubs for signature live-work-play developments Need for continued university and other economic development stakeholder support and access to sources of financing to reach full potential 30

30 Mission To encourage technology development and commercialization that advances the economy and benefits research and related educational programs at the University of Wisconsin-Madison.

31 PACE OF URP DEVELOPMENT BY DEVELOPER Developer Owner URP

32 SNAPSHOT OF URP S PORTFOLIO: ~700,000 SF 100% 90% 100% 90% 100% 90% Other 80% 70% 60% 50% 40% 30% 20% 10% Office 0% Category of Space Flex/R& D 80% 70% 60% 50% 40% 30% 20% 10% 0% Type of Space Primaril y Office Labs included 80% 70% 60% 50% 40% 30% 20% 10% 0% Type of User Adv. Mfg./Food/ Energy Software/IT /Creative UW Profession al Services Life Science

33 MG&E Innovation Center Opened in ,000 Square feet 37 Companies 85 Incubator Suites

34 URP: A Driving Force in State's Economy University Research Park Contributes more than $827 million to the economy annually Supports 9,200 jobs Generates state and local tax revenue of more than $43 million each year

35 2014 Total Academic Research & Development Expenditures* Top Five Institutions 1. Johns Hopkins University - $2,2,242, U. MI/Ann Arbor- $1,349, U of Wash/Seattle- $1,176, University of Wisconsin at Madison - $1,108, U of San Francisco - $1,084,031 *Source: National Science Foundation

36 Biotech is big business at the University of Wisconsin-Madison 800 faculty 2,000 graduate students 60+ departments More than $1 Billion in research spending UW ranks among the best for technology transfer

37 Processed over 350 invention disclosures made by UW-Madison faculty and staff in Filed 200 U.S. patent applications on UW-Madison technology in Obtained 150 issued U.S. patents Signed 56 new license and option agreements in WARF holds equity in 37 UW start-ups Total WARF contribution to UW-Madison since its inception: $1.24 B. Gave $51 million to UW-Madison Graduate School last year to support research

38 Commercializing UW Technologies Stratatech Corp. Stratatech s full-thickness, living skin substitute Photo courtesy of UW-Madison Living skin substitute discovered in UW Medical School lab Company has grown from small footprint to nearly a floor of office, R&D lab space & manufacturing building Product could create new care standard, improve lives of burn, other skin injury patients Preliminary clinical trial results positive

39 Attracting Game-Changing Technologies Exact Sciences Corp. Moved from Boston in 2008 Focused on more accurate, noninvasive colorectal cancer screening Grown from 3 to >200mployees Test on Market Step in non-invasive screening test Photo courtesy of Exact Sciences Corp.

40 Advancing UW Competitiveness UW-Madison Institute for Influenza Research Partnering with UW, WARF to support state-of-the-art facility for leading influenza researchers ~$9M, 25,000SF facility with BSL 3 Supports millions in grants, contracts Globally recognized work on viral replication, transmission and research tools Dr. Yoshihiro Kawaoka Photo courtesy of UW-Madison

41 University Research Park 2 66 Sites on 370 Acres 210 Companies Potential 6,000 Employees Potential Urbanist & Midwest Prairie Design 3 Phases Starting in 2013/14