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
Interesting comparisons. Great to UCD’s success – particularly when you consider an ecosphere with virtually no mothership private sector employers.
What your comparison, as does the Studio 30 report, fails to acknowledge is the key role played by pre-existing local industries and experienced, local workforce and talent pool.
In not just about a handful of startups – it’s about the role of the culture and the medium (like a petri dish) necessary to germinate, incubate, foster and sustain a growing pool of talent.
When you are beginning near zero, with no momentum, it is all the more important to recognize the essential role of these stable, well-financed mothership employers and to have the ready capacity for attracting and retaining such employers as the nucleus to foster a sustainable, critical mass.
Failing to acknowledge the strategic significance of this essential linkage does a serious dis-service to our strategy discussions.
David, I would like to encourage you to read the dialogue between Tim Keller and myself on the subject of startups. The first of those began Monday, and can be accessed with this LINK.
In his third comment in that discussion Tim said something rather illuminating “The startups that appear on that list are ONLY the ones that are being developed from UC Davis licensed technology.”
The STEM field graduates you cite in your quote need to have been or will be part of a UC Davis licensed technology research project if they are going to affect the number of start-ups in any way. That is a very different event line than simply graduating from a STEM field. So UC Davis is actually not well situated to do far better than their history.
One can argue that UCD’s actions over the past 15 years regarding technology transfer to the private sector actually show a university that isn’t truly committed to transferring technology developed as a bi-product of its core competency … education and research.
On that note, UC has (as I recall) been very “business-like”… they claim that the ‘intellectual property’ of an individual, working for them, is UC’s… whether the work was done directly as pat of the employment, or not… UC considers itself a business, not a public institution… except when it comes to public funding, of course… explains a lot… housing, cooperation with host cities, etc.
That minor issue.
Enough with the rock throwing and finger pointing. History is history and what’s done is done.
Point is: This city hasn’t had a clear vision or planning strategy since its last true comprehensive plan update, and that’s no way to run a city. Davis was a welcoming, supportive partner to the university throughout the 20th century. Like it or not, that was a century of growth – resulting in the community we now call home.
But that was also a century with a targeted growth plan which was effectively completed by year 2004. For the past 15 years we have operated without a vision, a plan or a strategy to match.
We don’t need a general plan update to begin talking in earnest where we go next. It’s time to begin that conversation NOW – and with the University as our partner.
This is the very conversation and context within which we should be exploring and evaluating new opportunities such as those being presented by Aggie Research Center.
How do we get from our current bickering and belittling to the much larger conversation about the future we would like to see?
I predict more bickering and belittling.
Well said Doby from word one to word last. If I can pick out one portion that resonates the most, it is:
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If I can suggest a friendly amendment to your statement, I think “We don’t need a general plan update to begin talking in earnest where we go next. It’s time to begin that conversation NOW – and with the University at the table as our partner.
Keep in mind after reading this post that UC Davis gets MORE Research funding than UC Berkeley.
The explanation of the difference between Davis and Berkely’s is not “just” space. Innovation economies are entire ecosystems, including research, talent, space, capital, and even a social “scene” that values entrepreneurship.
I am working on ALL of those fronts, but unsurprisingly space happens to be the most difficult one for us because of Davis’ peculiar attitude about building things.
In Berkeley, they have multiple organizations already playing the role that I am developing Inventiopa into here. They have the good fortune of being VERY close to the center of startup capital in the country (we aren’t much further though… as witnessed by the fact that the guy who runs Berkeley skydeck’s venture fund actually lives here in Davis and commutes there!)
Developing more innovation space isn’t a panacea. The space DOES need to be tuned to those needs, and the business model for leasing that space has to be amended to be startup friendly… That is my role in all of this, and honestly… its not rocket science.
I liken this work to creating an coral reef. If you want a reef to be someplace instead of bare seafloor, you need some kind of structure at the right depth. (Something for the organisms to hold onto) But once you provide those spaces – the ecosystem fills itself in organically.
Strange, as I can’t remember the last time that places like Berkeley expanded its boundaries onto prime farmland to accommodate a development. Same thing is true throughout the economic powerhouse that is the Bay Area.
https://www.sfgate.com/bayarea/johnson/article/Berkeley-Farms-milks-competition-2526496.php
If anything, development proposals in Berkeley are more contentious, than they are in Davis.
Udder nonsense…. ( See what I did there? )
Teet for tat, you might say
David – There is a serious disconnect here between the conclusions stated by you and other commercial development proponents (Studio 30) regarding the lack of local start-ups originating from UC Davis (“The basic problem – lack of available space”) and the reality of the local commercial real estate market.
You state that there is 824,000 sq ft of local vacant available real estate in Davis (“and it is spread throughout the City“) and over 9,000,000 sq ft available in the Sacramento region. Yet somehow from these rather startling high numbers you and other ARC proponents claim that local entreprenuers cannot find available small spaces for start-ups and infer that newly-constructed, high-end Class 1 facilities at ARC will solve this problem.
I’m not sure how you come to this conclusion. Start-ups don’t intially need new expensive Class 1 facilities for space. They need inexpensive small spaces that doesn’t stretch their budgets too thin while they develop or commercialize new technologies or implement their business development plans.
According to your numbers for available commercial space, it seems there is a wealth of such leasing opportunities already available in the greater Sacramento region. So tell me again why do we need new and expensive high end commercial space at ARC for such new start-ups?
It might “Seem” so – but you are wrong.
There are answers two to this question:
1) Because “innovation space” is only a sub-category of commercial space. For the purpose of a R&D intensive startup like what we have here in Davis, Retail space doesn’t work, most professional “office” space doesn’t work if the landlord wont allow you to install ventilation and other lab utilities, and large light industrial space like all of the Buzz boxes in Sac doesn’t work.
“Innovation space” has flexible utilities, Can be easily demised into smaller units (in the range of 2,000 square feet) and has a landlord who isn’t scared of the things that the company wants to do in that space. For that kind of space, there is almost zero availability in Davis. Also, having talked to the developer of the woodland park directly, THAT development isn’t going to be built to serve these needs EITHER.
2) A solution in the “greater Sacramento region” is NOT ACCEPTABLE. The people who will work in these spaces live in Davis, or in “North North Davis” It is unfair to expect them to have to cross the causeway in order to find a job or a site for their company.
People living in Davis want to be able to work in Davis. Companies who want access to the incredible talent pool that is in Davis, want to set up shop IN DAVIS.
Its time we embrace our destiny as host to a world-class research university rather than expecting all of the necessary accommodations to be provided elsewhere.
Tim makes good points in response to the point Alan made. I would add 3) a solution in the “greater Sacramento region” does nothing to address the City of Davis’ $13 million per year Budget Shortfall.
With that said, here’s a couple of follow-up questions for Tim. How much actual specialized “innovation space” does Davis need? How much of the proposed ARC footprint will such “innovation space” represent at full build-out?
But we really don’t know either if ARC “does nothing to address the City of Davis’ $13 million per year Budget Shortfall“
Regarding how much space… (from Matt’s question) I cant speak for the developers as to what will be built, but I can speak to what I think should be built and what our community can sustain.
My vision for inventopia is to occupy as much as 50 acres of the MRIC site. Maybe half of the planned mid-rise commercial space, some of the manufacturing space, All of the research cropland space, and additional outdoor space to establish multiple test pads for pilot-scale processing plants. (for testing new energy systems and ag processing techniques)
The people who will fill this space range in size… The incubator space is probably only 20,000 – 40,000 square feet, which is intended for 40+ companies that are still at lab scale and cant afford / don’t need their own dedicated space. From there I would like to have a variety of scale-up size options: Small-unit commercial space with space sizes from 1-2000 sq ft. And medium size commercial spaces in the 5-6000 square foot per suite range.
I would say that the needed commercial space that we should provide (over the course of a decade or more) is EASILY the size of the Interland commercial park – maybe double if you look at a 10+ year buildout horizon.
I agree with Alan … we do not know. That is one of the many Emperor’s New Clothes aspects of the proposal.
Hopefully we will learn more when the Finance and Budget Commission hears the economic and fiscal analysis in April and May. I fully expect some robust questioning by the FBC.
This is complete speculation. If that is true, why have the remainder of the 2nd St properties not been fully developed decades ago…or the 14 acre lot at Cowell and Chiles which is still on the market?
And if they live in North North Davis, there is plenty of cheap, small spaces sitting idle in Woodland. My question remains not satisfactorily answered, “…why do we need new and expensive high end commercial space at ARC for such new start-ups?“
Not true at all Alan.
Cowell and Chiles property is owned by Fulcrum. They proposed building more in that space but got such a run-around from the city that they decided to put that project on hold (I heared that straight from them.. not speculation) It is the ritual opposition to any development that exists in this community that keeps developers away.
Which leads me to the other point on why your objection is off-base. Startup companies, (and indeed even most well-established companies) are NOT developers. They don’t want to wait to get a construction project approved – they want to move into a space that exists and get on with their business.
Saying that there is some un-developed land doesn’t at all mean that the demand is speculative. I see the demand first hand. Other people who get exposed to these inquiries will tell you the same thing… Maybe talk to Sarah Worley from the city – or any commercial real estate broker. There is NO doubt that we need more supply of small, flexible R&D space in this town.
And by the way, repeating that Davis doesn’t need “Expensive and High End” space for startups is also a losing argument. If you look at the analogous institutions in Berkeley (QB3 and CIRTIS among others) They ARE in very nice, well-appointed facilities. What makes those kinds of facilities accessible to startups is the fact that they are shared among multiple tenants. So yeah, both the startups, and the early-stage companies AND the large corporate institutions that want to tap into Davis’ talent pool will want to be at ARC.
Because they need DEVELOPED SPACE. Companies that start in Davis, or who want to come here for talent are NOT going to go through the hassle of getting a new building permitted and approved. We need ready-to-go spaces of the right sizes and types.
Why cant they be in woodland? Hell I dont know Alan – why cant YOU be in woodland? The answer is the same.
The hassle of getting a new building approved and built is a huge problem. Look at the hotel on Cowell – by the time it went through the planning process, the various delays, then a lawsuit, then built it is going to be five to six years. THat’s for a hotel. A hotel. If you are a company looking to move here and see a five to year uncertain process, why are you going to come here? Your window is closed.
I think your question is good with respect to 2nd Street and Cowell and Chiles.
There are several answers here though…
1. A lot of the remaining parcels on 2nd are impacted by the superfund site.
2. You need a consistent ED program to be able to do the work, recruit and bring in high caliber companies.
But the Cowell and Chiles site is an good illustration of the difficulties here. There was a proposal a few years ago for a business park there, Pannatoni (sp). Would have been a perfect development for Davis. But as I understand it, the family who owned the land didn’t have their act together. The proposal fell through. We lost out on the park. And they went elsewhere. This illustrates another problem – if something goes wrong right now, we don’t have an alternative spot to hold a 14 acre development. So we lost out on a project because we lacked flexibility when a problem arose that had nothing to do with the city.
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I agree with your premise wholeheartedly, and I linked two of your points by bolding them in the quote above. If we had a consistent ED program the problems that derailed the Panattoni proposal would have (1) been well known before the fact, (2) would have had a preformulated action plan ready to deal with them, and (3) would certainly not have qualified for the label “nothing to do with the city.” That is just a cop out for not taking the basic steps needed to succeed.
Reading Tim Keller’s and Alan Pryor’s posts one after the other makes for very interesting reading. and a lot of follow-up pondering.
One thing that is clear is that a better understanding of the 824,000 square feet of available space is needed in order to have an informed conversation.
I suggest an article on that would be much more valuable than another article on traffic.
100% Agree.
Matt,
To Alan pryor’s comment and your your reply above, I wouldn’t hold my breath waiting for Finance & Budget to weigh in.
They have demonstrated zero interest in exploring the whys and wherefores of Davis’ revenue model – much less in exploring its underperformance as a byproduct of its profound failure to plan for and embrace the types of commercial, industrial, research and manufacturing employers most often found in university host communities.
Truly, their idea of generating “more revenues” only appears to involve advocating for more and higher taxes.
Are more and higher taxes likewise Alan’s solution to our budget challenges and community prosperity – because we’ll never get there simply by continuing to squeeze the turnip?
The parcels along Second Street (please use the legal name of the street, instead of the Finance Dept – originated distortion), are not as ‘impacted’ as you might think… depends on definition of “impacted”… DMG (original portion, before Mori Seki) partially sits atop part of the plume from Frontier Fertilizer. No problem. Cleared by EPA and DTSC… for non-res, non-‘sensitive’ uses. Those involved in commercial real estate (if they are competent) know this.
The plume goes NNE from Frontier. Second Street parcels are not affected, Faraday parcels only slightly so, and even then, a knowledgeable broker/developer would know that.
Facts are fun. Wish Lib Arts majors would learn how to use them. Before they opine.
Guess it gets to one’s definition of “impacted”… I’ve reviewed the studies… I understand the science…