By David M. Greenwald
I keep seeing people projecting that COVID will have a permanent impact on things like student housing and UC Davis enrollment. All of this of course is subject to change, but right now I’m just not seeing it in terms of long-term changes.
It will be interesting if we can get any kind of accurate analysis of what the actual picture looks like this fall. What I’m seeing around town right now is students coming back. It’s not normal levels for sure. But this doesn’t look like the ghost town that it was back in March either.
In general, people have kind of adapted. They will wear masks and social distance, and some activities have gone to Zoom. But you also see a lot of people eating outside and around town, whereas a few months ago, you couldn’t find anyone.
And of course around the country, the concern is that students are not being nearly careful enough and COVID cases are exploding on campuses.
Combine the fact that UC Davis has huge portions of its students in STEM fields that will require lab and other hands-on work with the general desire of students to get the full college experience, and my take is that those thinking this is going to be a game-changer in terms of housing needs in town is more wishful thinking than evidence-based.
That gets me to other big issue—economic development and commercial space.
My interview with Leanna Sweha (full disclosure: Leanna was a former board member of the Vanguard) was very interesting in that it once again was confirmation on the lack of wet lab space. This is not a 
Davis issue per se, as Davis has recently added space through the HM Clause – UC Davis Innovation Center partnership.
The problem as Leanna Sweha told the Vanguard is that space is scarce but it is also very expensive—and so for startups that is a huge barrier.
The AgStart project which is creating a public-private partnership could be the key to creating more wet lab space that is also affordable for startups and small companies looking to come to the region and expand.
“Over the last few years, there has been a couple of wet labs that have come on-line,” Sweha stated. One is at UC Davis—the UC Davis-HM Clause Innovation Center. That came on line in the last few years and created a 3100 square-foot off-campus facility that is administered and owned by HM Clause, one of the leaders in seed production.
There is also the Bayer Collaborator, which opened in West Sacramento a few years ago.
But, despite these spaces, Sweha said that “basically it’s full.” She said, “We just talked to somebody who’s interested in the lab at AgStart and he said before he learned about the lab at AgStart, he was concluding that there’s no lab space left in the state.”
While a slight exaggeration, Sweha noted “that’s how bad it is.”
That led us to a broader discussion on commercial space in Davis. I have been concerned here that the discussion has been largely uninformed by those familiar with the actual market.
Having Jim Gray weigh in is important, as he not only has decades of experience as a commercial real estate broker here in Davis, but he is not connected with current proposals at DISC (Davis Innovation & Sustainability Campus).
So, after points were raised about possible vacancies, he stepped in to largely debunk them.
First he noted that a number of the photos posted appeared to be dated as they referred the DTZ, his former real estate company that has not existed for over three years.
He said, “I am not sure of the status of those particular properties without studying them.”
From his perspective, having been in the business space for decades, “It is a wild misstatement to say that we have a large available supply of commercial space.”
He argued, “Our vacancy rate is amongst the lowest and the age of our properties is amongst the oldest. We are not innovating or adapting at a pace that will allow us to be globally competitive.”
Gray also argued, “With regards to commercial space and stating that there will likely be a need for less because of the Covid Pandemic — I think you are failing to see what is going on in the economy at large. There is growing demand for life science space.”
Here’s the kicker—of the 64,400 feet that is reported as under construction, half of it will be the New Nugget headquarters and 16,200 is going to be a new Seed and Molecular Biology Lab for a company moving in next quarter.
He said, “ That leaves a 16,200 square foot building that is available, actively on the market, and it is our understanding that it has had much interest in leasing it.”
His bottom line: “We need more supply! We need more ‘planned’ and ‘under construction.'”
Hey look—I’m not asking people to necessarily buy into his bottom line that we need more supply. That’s definitely a subjective assessment. But I do think that we need a fact-based and evidence-based approach here, and that needs to start by laying the facts on the table and understanding the data first—and then feel free to draw your own conclusions.
You may come to the conclusion that we lack sufficient space and yet still believe that DISC, for example, is not the right answer to that problem. That’s a fair point.
—David M. Greenwald reporting
The numbers, per Sept. 11 2020 article in The Davis Enterprise by Anne Turnus-Bellamy:
Commercial vacancy rate pre-pandemic appears to have been about 6.6%. Most of that is spoken for.
One wonders who is disseminating misleading photographs on this topic.
That’s my question – who is disseminating the photos – because two of those companies are now defunct.
Two responses, both based on this article’s generalization a specific situation more broadly across two sectors. That specific education tracks and businesses require lab space to function does not lead to the conclusion that all colleges and all businesses will still need the same space as pre-COVID.
– While STEM majors that require in-person lab space (and not all of those even require that, e.g., computer science and mathematics), other majors may function well enough with distance learning. Whether a college education is worth the cost has already been under discussion and this enforced diversion may be a tipping point. We may see if many students, particularly those who are less enamored with the “on campus” experience are satisfied with the on line experience. I suspect many community college students may find that being able to choose from a wider population of lecturers is worth the tradeoff. I expect that UCD may be less impacted by this trend than the less than elite private colleges, but that doesn’t meet that it will be bypassed by this potential trend.
– Commercial lab space is a very small proportion of total space. Office space for management, analysts and customer support is already closing. The San Francisco Chronicle has a story almost every day about the shrinking commercial real estate market and the closing of offices for major companies as they realize moving their workforce to remote work from home is as cost effective as having them in a central location. And Davis will not be immune from trend. I’m not sure of what the commercial leasing calendar is in Davis, but when I had an office, the lease for everyone was renewed in January. I think we need to revisit the vacancy rate in January when many businesses may choose not to renew to get a valid view of the true vacancy rate. If the commercial vacancy rate jumps significantly, then we need to ask the question as to whether this space can be repurposed for lab space. We might even encourage landlords to consolidate office space so as to open up some parcels for repurposing, (e.g., using tax credits).
Of course, deciding what to do will require a vision of what the City’s economic pathway might look like. And we are currently missing a hint of that vision from our City’s leaders. This should be the centerpiece of this year’s election campaign.
To the extent they are able, I agree, whole-heartedly…
“right now I’m just not seeing it in terms of long-term changes.”
And in November of last year, none of us were “seeing” the changes that COVID -19 would bring to our lives. I don’t pretend to know how long this pandemic will be affecting our daily life. But what I do know is that those who do the best will be those who are most flexible and able to adapt to whatever the new circumstances will be, not those who pretend that things are ever going to be exactly as they were before. Most particularly, in my view, those who fare the worst maybe those who cling to the idea that to not reclaim the past as it was is in itself a failure.
Tia: I did say “right now” but I do believe that students are probably much less impacted long term than some of us older folk.
My previous post was my opinion only. However, I would like to give one example of how the student population may never need to be back to its previous in-person levels.
Let’s look at those in-person labs. In order to achieve safer levels indoors, one need only lessen the number of students in a lab at a given time, all appropriately distanced, and all masked. This could be achieved by converting previously used lecture space to lab space. Providing all lectures as distanced learning and utilizing space for needed labs. If too costly, labs could be halved or quartered as to numbers of students and offset in time. This would require more cost in TA or junior faculty time, but not the cost of renovation.
I see that the argument has (now) shifted toward a “lack” of “wet lab space”.
This is not a commercial category, in-and-of-itself. Such space is extremely expensive to build, and is not going to have a “vacancy rate” in the same manner as other space. It is essentially “build-to-suit”.
Regarding all the fanfare related to AgStart, it actually moved to Woodland (from Sacramento) approximately 5 years ago.
It’s new (very-small, shared) combination lab, office, and kitchen space (costing only $1.3 million) is being subsidized by “the U.S. Economic Development Administration, Yolo County, the City of Woodland, the Yocha Dehe Wintun Nation, and a number of other private donors.”
One of those private donors includes the makers of Round-Up. I haven’t looked into what the others do.
As part of a 501(c)(3), one would also have to look at what type of taxes that AgStart would actually pay.
Here’s a link for the citation/quote above (regarding donors):
https://www.agstart.org/thelabagstartpr
I could provide a link to an article showing that it actually moved to Woodland (from Sacramento) 5 years ago, if anyone is interested.
“I could provide a link to an article showing that it actually moved to Woodland (from Sacramento) 5 years ago, if anyone is interested.”
I would be interested to understand why you think this is an important point? In the article posted on Tuesday, Leanna talked about the fact that John Selep five years ago or so when SARTA dissolved spun this off, moved it to Woodland at that time, and now they are starting the wet lab space in the Wiseman Building across the court.
Here’s the initial quote: “When complete, the $1.3 million Lab@AgStart will feature a fully equipped shared-lab and kitchen space as well as a co-working office space. Around since 2015, AgStart developed out of a project of SARTA (Sacramento Area Regional Technology Alliance), and John Selep, the president of AgStart, kept the company going by creating its own 501(c)(3) and locating in Woodland.”
A couple of reasons, although it’s not the main point.
Given the timeframe, this presumably could have been accommodated at MRIC (which failed), the Davis Innovation Center (which failed), perhaps some of the commercial sites shown in the photos above, etc.
(By the way, those photos do not show the full extent of available sites in Davis.)
Other people raised the issue of space in Davis. Leanna actually pointed out there is limited wet lab space over all and that both Davis and West Sac have landed space recently. My purpose of posting this was in response to Matt and Jim Gray’s comments about overall space. I have no idea what those photos actually are or when they were taken because two of the companies depicted are actually defunct, so those cannot be current.
Again, “wet lab space” is not its own (separate) commercial category.
Again, you’d have to look at this from a broader geographic perspective, as well. Including the permanent vacating of commercial space in the region, state, and country (as a result of Covid and a permanent shift toward telecommuting).
But even prior to that, there was TONS of space in the city and region to accommodate something like this.
The problem is that it needs to be subsidized. As usual, it’s not viable on its own. Space is not the issue.
I don’t want to continue a back and forth here. I will simply state I disagree with Ron and I have explained my position above. Anyone else with a question, let me know.
Seems to me that you’re the one who has no idea what you’re talking about (though I see that you’ve now modified your response to me regarding that).
And just as important – are those photos actually a complete list of available space? I don’t think so. In any case, one of those photos shows a very large space, indeed. (I can’t see it in this article, but noticed it when Matt originally posted it.)
Now, if I was running a blog advocating for development, that’s one of the first things I’d try to check out.
And available space would include land, existing vacancies, and planned/soon-to-be-available developments (such as the site of Hibbert’s, University Research Park, etc.).
Unforutnately, we’ve pretty much lost University Commons (and MANY other properties in which the city has been allowing conversions to residential). Frankly, University Research Park proposal primarily falls into that category, as well. Having housing above a commercial activity can significantly limit potential commercial uses.
But again, peripheral business parks don’t seem to be viable, on their own. In DISC’s case (and others), they are apparently counting on the housing to “subsidize” the commercial component.
Actually, the same appears to be true regarding University Research Park.
And, University Commons (of course). By the way, did we ever confirm that they actually reduced the commercial space there (compared to the earlier proposal), in order to make it a few feet shorter?
(Pretty sure that they didn’t reduce the residential space/units, to accommodate that “goal”.)