BUSINESS SENSITIVE 1

University Research Park Feasibility Study and Business Plan Development

Presentation to CSSC Consortium Meeting

Battelle Technology Partnership PracticeJune 20, 2013

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Project Purpose and Methodology

• Purpose: Comprehensive assessment and development approach for advancing a University Research Park initiative based on the needs/opportunities at APG and across industry drivers in the region and how they can best connect with universities.

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University Research Parks Are Multi-Dimensional Drivers for Economic Development

• University Research Parks are place-based initiatives that promote physical, talent, technology and industry development and broader industry partnerships with universities and research drivers

Universities, federal labs, non-profit R&D institutions

Private Companies

• Research partners• Flow of talent• Exchange of ideas• Access to labs and

specialized equipment

Growth of existing companies

Creation of new companies

Commercialization of Intellectual Property

Generation of Jobs and Income

Research ParksCommunities generating

innovation, technology and knowledge

Universities, federal labs, non-profit R&D institutions

Private Companies

• Research partners• Flow of talent• Exchange of ideas• Access to labs and

specialized equipment

Growth of existing companies

Creation of new companies

Commercialization of Intellectual Property

Generation of Jobs and Income

Research ParksCommunities generating

innovation, technology and knowledge

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Today’s Agenda

• Overview of Key Findings and Potential Opportunities for URP

• Discussion of Potential Demand Drivers/ Opportunities for URP

• Discussion of Implications for Program Activities, Governance, Operations and Funding Approaches

• Next Steps

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Key Findings Point to Three Key Opportunities for Advancing the University Research Park Initiative

Growing Regional

Technology Industry Base

Fostering High Value

Place Strategy

Advancing Workforce

Development

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Overview of Key Findings and Potential Opportunities Identified

• Potential Opportunity: Growing the Technology Industry Base in APG Region

Key Factor Strengths Weaknesses

Technology Industry

Major gains in tech industry for APG Region

Increased presence of C4ISR related defense contractors

Tech industry growth stalled in APG Region after 2007

Innovation Many inventors living in APG Region

Significant base of SBIR and patent activity associated with APG tenant organizations

Few companies in APG Region assigned patents, few winning SBIR awards for APG tenant organizations and few venture-backed

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Significant Rise of APG Tech Industry has Stalled Since 2007

• The APG region tech industry employment peaked at 10,446 jobs in 2007 and has declined since to its current level of 8,587 jobs in 2011, a decline of 1,859 jobs or 18% from 2007

Trends in Technology Industry Employment – APG Region, Baltimore MSA and U.S. (Indexed 2001 = 100)

Source: Battelle analysis of Bureau of Labor Statistics (BLS), QCEW data; enhanced file from IMPLAN.

APG Region tech industry grew from 6,768 jobs in 2001 to 8,587 jobs in 2011, growth of 27%, well outpacing Baltimore region and U.S. nationally

2001-2011 Percentage Increase in Technology Industry for APG Region, Baltimore Region and U.S.

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Wide Divergence in APG Region’s Tech Industry Growth Rates Relative to the U.S.; Several Highly Specialized Sectors in the Region

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1.00

2.00

3.00

4.00

5.00

6.00

7.00

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-100% -75% -50% -25% 0% 25% 50% 75% 100%

Loca

tion

Quo

tien

t, 2

011

Employment Change Relative to U.S. (2007-11)Quadrant 3Divergent

Quadrant 4Emerging Potential

Quadrant 1Stars

Quadrant 2Transitional

Actual LQ = 129

Actual LQ = 14

Analytical LabInstruments

Engineering Services

Space Vehicle Propulsion& Parts

EnvironmentalConsulting Svcs

Computer SystemsDesign Svcs

Biotech R&D

Other Physical& Biological R&D

Wired Telecomm CarriersManagement Consulting

Custom ComputerProgramming

APG Region Technology Industries: Employment Size, Relative Growth, & Relative Concentration, 2011 & Trends 2007-11

Note growth rates relative to the US :

- Computer Programming slight positive growth rate but lagging strong growth in US;

- Wired Telecomm actually a negative 7% but US had larger negative

Source: Battelle analysis of Bureau of Labor Statistics (BLS), QCEW data; enhanced file from IMPLAN.

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Overview of Key Findings and Potential Opportunities Identified

• Potential Opportunity: Addressing Workforce Issues

Key Factor Strengths Weaknesses

Talent Strong demand for high skilled workforce across range of skills to support broad missions – C4ISR, Chem/Bio, Business/ Financial

High educated/skilled residents in region (42% AA degree or higher)

Significant top talent generation of new university graduates just outside of APG Region

STEM activities in region growing new pipeline initiatives – Towson-HCC new 2+2 facility; UDel-HCC-Cecil-DTCC Regional Cybersecurity Education Alliance

Many of the high educated/skilled residents commute

Many of the newer and mid-to-small tech companies finding it hard to fill high skilled jobs and not connected to top talent being generated

Hard for universities to aggregate demand and serve needs of APG organizations and contractors

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Demand for High Skilled Talent in Region Mounting

• Beacon Associates 2009 assessment of forecasted demand across APG organizations over time –

• Note: Beacon study did not examine demand for IT skills

• Susquehanna WIA Occupational Projections for 2008-2018- Engineers – 115 average job openings per year- Technicians – 37 average job openings per year- Computer & Math – 101 average job openings per year- Business & Financial – 237 average job openings per year

- Note: At least half the demand for each occupational group due to need for replacement workers, not just new jobs

Range of Annual Demand: 2010-19 Key Degrees

• Associate Degree: 35-58 per year• Bachelor’s Degree: 127-200 per year• Master’s Degree: 99-217 per year• PhD Degree: 16-18 per year

EngineeringLogisticsBusiness AdministrationSupply Chain Management

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Source: National Center for Educational Statistics

Significant Talent Pool Among Residents and Near-by Universities

Technology Focus Areas Identified at APG Sens

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Number of Degrees, 2010

Universities in Broad Aberdeen Region 1434 2569 790 1387 3284

Maryland Universities in Broad Aberdeen Region 783 1523 297 662 1603

Share of U.S. Degrees, 2010

Universities in Broad Aberdeen Region 4.2% 4.3% 13.7% 6.2% 3.8%

Maryland Universities in Broad Aberdeen Region 2.3% 2.6% 5.2% 3.0% 1.9%

• Universities within 90 minute commute of APG offer a substantial base of university graduates just outside of the APG Region

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Work in Region

Work Outside of Region

College Educated 40,257 34,181

AA Degree 9,750 6,672

BS Degree 18,337 19,803

Grad/Prof Degree 12,170 7,706

Selected High Skilled Occupations

23,327 20,666

Mgt, Bus, Financial 15,298 14,828

Computer, Eng & Science

8,029 5,838

Source: Census America Community Survey Public Use Microdata SampleNote: Includes Cecil, Harford and Kent Counties

Highly Educated and Skilled Resident Workforce – But Many Still Commute Outside of Region for Work

• High Educated and Skilled Resident Workforce– 42% of APG Region

residents have a postsecondary degree

– 25% of APG Region residents work in occupations dealing with management, business and financial occupations (17%) or computer, engineering and scientific occupations (8%)

• Significant numbers of residents commute out of region for work

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Overview of Key Findings and Potential Opportunities Identified

• Potential Opportunity: Creating a World Class Technology District

Key Factor Strengths Weaknesses

Place Established significant Class A Office & Flex Market around APG

Planned redevelopment efforts for mixed use, transit-oriented development around MARC stations in region

Class A Office and Flex Market is scattered across Routes 40 and 22 – lacks sense of place

High vacancy rates found in Class A and Flex

Limited mixed use development

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Rise of Defense-related Tech Based Industry Base in APG Region Shaping Commercial Real Estate Market

Location of Defense-related Tech Industry Employment by Type of Facility

Source: Hoover’s Company Data Matched to CoStar Facilities; Calculations by Battelle

Defense-Related Tech Industries Mapped– Engineering

Services– Commercial

Scientific R&D Services

– Space Vehicle Propulsion

– Computer System Design

– Customized Programming Services

– Testing Laboratories

– Analytical Lab Instrument Mfg

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Post BRAC 2005 – A Class A Office Market Established in APG Region; Relatively Modest Growth in Flex Space

Timeline of Cumulative Inventory of Available Space --Total Rentable Building Area (RBA) in

the APG Region

Year Class A Office Space,RBA Sq. Feet

Flex Space,RBA Sq. Feet

2005 161,000 2,676,199

2006 201,000 2,706,531

2007 301,000 2,867,023

2008 386,000 2,958,523

2009 419,446 2,982,523

2010 731,334 3,033,643

2011 1,134,453 3,033,643

2012 1,425,153 3,033,643

Note: Data represent total inventory of existing rentable square feet as of the end of each year.Source: Battelle analysis of CoStar Property database for APG region (Harford and Cecil Counties).

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Location of Office and Flex Space Office Parks By Type of Facility

Source: Hoover’s Company Data Matched to CoStar Facilities; Calculations by Battelle

But Development is Scattered Largely Around APG – Otherwise Would Be a Signature Technology Park

APG Region Closer Look In Immediate Area of APG

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Commercial Real Estate Market is Weak in Region

• If APG Region had a 15% vacancy rate in Class A Office and Flex Space Markets would result in an additional 559,259 net sq ft occupied and an additional 2,796 jobs gained

• In light of high vacancy levels, the leasing rates remain high for Class A Office and Flex Space around APG

Year End 2012 Levels of Vacancy and Leasing Rates for APG Region and Baltimore MSA for Class A Office and Flex Building Markets

APG Region Baltimore MSA

Market# Blgs

Total Rentable Space

2012 Net Absorption

Vacancy Rate

Leasing Rates

Vacancy Rate

Leasing Rates

Class A Office 17 1.43 MSF 72,540 41% $31.02* 15% $24.53

Flex Buildings 149 3.03 MSF (-44,118) 21% $16.84* 11% $11.26

* Leasing Rates reflect selected areas of Harford and Cecil County designated as industrial .Source: Battelle analysis of CoStar Property database for APG region (Harford and Cecil Counties).

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Program Activities Suggested for the Three Potential Opportunities to Advance the University Research Park Initiative

Growing Regional

Technology Industry Base

Fostering High Value

Place Strategy

Advancing Workforce

Development

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Growing the Regional Technology Industry Base: Furthering Pro-Active Outreach Marketing

Target SBIR recipients from APG organizations

• Nearly 400 SBIRs awarded by APG organizations from 2010-2012. Few to APG companies or even Maryland companies

• Battelle outreach identified interest to have presence at APG to enhance client relationship and access

• Key issues for these companies were:– Flexible leasing terms

short term stays– Favorable rental cost – Some interest in access to

classified space• Key advantage of linking SBIR

companies to APG prototyping facilities – Meet milspecs and protect IP

Increasing Presence of Contractors Working on C4ISR

• Many defense-related contractors continue to operate both in APG Region and Monmouth County

• In 2011, the Monmouth Region defense-related tech industry employment stood at 14,870 … this is down from its 2001 level of 17,957

• Still, it is still much higher than the 5,795 found in APG Region in 2011.

• Examples of firms in both regions: Booz Allen Hamilton, CSC, DSCI/D&S Consultants, Engineering Solutions and Products, General Dynamics, Lockheed, Millennium Services, Northrop Grumman, SAIC

Growing Chem/Bio Industry Presence

• With presence of USAMRICD opportunity to attract more Nuclear, Biological and Chemical Industry Group members located in Northern Virginia to APG Region

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Growing the Regional Technology Industry Base: Fostering Technology Commercialization and Start-Up Venture Activities

Need more pro-active effort to incentivize commercialization in APG Region

• Develop a network of advisors resident in APG Region with technology, market and business expertise -- similar to what Innovation Center for the Rockies has done

• Offer fund for assessment and validation -- similar to Central New York Grants for Growth – unique feature might be to link with rapid prototyping found at APG or existing tech industry capabilities found in region

• Create Entrepreneurs in Residence similar to Pittsburgh to help in guiding effort

• Address weak presence of emerging, innovative companies in APG Region, with a few notable exceptions of homegrown, high-growth tech companies

• Four venture capital backed companies since 2003 in ThomsonOne Venture database

• Four SBIR funded companies across all federal agencies from 2008-2012

• Build upon base of inventors living in APG Region driving patents

• 1,328 patent applications and awards from 2001-2012 -- but few assigned to companies in APG – largest holders of patents from inventors living in region are Black & Decker, Army, DuPont, Applied Nanostructured Solutions, Gore, JHU, UMBC

• 214 patent applications and awards assigned to individuals living in APG Region and 44 assigned to universities

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Advancing Talent & Workforce Development: Clearinghouse for APG Related Education and Training Needs

• New initiative by APG to create an educational partnership with the APG Region to establish a clearinghouse function for education and training to better match needs/requirements of APG with educational providers– Would address the mushrooming of ad-

hoc relationships and lack of coordination in education and training found at APG

– Would offer APG organizations a dedicated resource to help them better aggregate needs and identify potential education partners

– Offer educational partners easy point of access and better awareness of requirements

• Still unfolding … but holds great promise beyond its specific function for APG– Potential opportunity to deepen

partnerships with universities to offer defined programs to APG

– Create a broader initiative to more fully engage contractor community and serve their individual and broader community needs for talent development

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• For tapping resident workforce that commutes:– Identify potential local resident job

candidates– Raise awareness and approaches

to gaining security clearances– Target education and training to

close any gaps on specific software applications or knowledge of federal contracting, etc

• For STEM pipeline and broader access to large base of university students nearby APG Region better connect through internships, connect firms to student projects, tie-in with univ career services, etc.

Advancing Talent & Workforce Development: Talent Connector for Students and Residents

– Tap into skilled, experienced resident workforce who commute

– Tap into growing STEM pipeline within region (TU 2+2 and UDel Regional Cybersecurity Education Alliance)

– Tap large base of undergraduate and graduate students from nearby universities

• Objective of talent connector would be to ensure that APG Region is recognized as a talent rich community

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Advancing Talent & Workforce Development: Cybersecurity Education & Applied Research Institute

• Opportunity for Advancing Cybersecurity:– Need at APG for advanced skill development and more hands-on, experiential

learning for cybersecurity developers, analysts and operators– Opportunity for advancing collaborations with universities, such as in applied

research and development - Includes system of systems engineering design, analysis, testing and experimentation

as well as modeling of cyber-agent behaviors• Focus on:

– Raising competencies of existing 100-200 APG cybersecurity workforce found across CECOM, CERDEC, ARL (SLAD, CISD), ATEC … often formal training as EE and have learned cyberskills along the way

– Building pipeline for new workforce with defined programs with nearby universities … opportunity to link with the University of Delaware-led Regional Cybersecurity Education Alliance and other universities

– Broader contractor needs• Still seeking to address:

– How to build upon proposed APG Education Partnership for Clearinghouse to better aggregate demand for specific curriculum, certifications or degree programs.

– Is there a value proposition to APG in having more proximity in accessing education and training services or a more applied technology center?

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Advancing Talent & Workforce Development: Chem/Bio University Collaborations

• Value for Advancing Chem/Bio University Collaborations:– Need at APG for advancing partnerships around systems biology,

growing focus on countermeasures and other emerging technology areas

– Growing next generation of DoD scientists – creating relationships and engaging top PhD and postdocs in specialized area of chem/bio

– Shared research & development opportunities for addressing countermeasures, improved diagnostics and engineering devices (hard wall on actual work with pathogens)

• Focus on:– Raise collaboration opportunities with military (USUHS) and civilian

universities – seek collaborations to generate R&D funding … look to Broad Agency Announcements of DHS or DARPA and then team with universities or industry

– Possible reuse of USAMRICD wet lab facility that is being replaced – may need some upgrading – place to house collaborations

– Collaboration opportunity on a new high-throughput ADME* facility to test use of novel compounds

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Foster High Value Place Strategy Locations: Promote Mixed Use Redevelopment As Part of APG Region Technology District

• Best practice in research parks points to continued focus on advancing “live, work, play” environmentso A far-reaching change in the

physical development of university research parks that began over last decade – i.e. NC State Centennial Park, UCSF Mission Bay, UCO Fitzsimmons Life Science District

o Results of soon-to-be-released 2012 updated AURP benchmarking finds the newer model is continuing to emerge—strategically planned, mixed-use campus expansions o Housing – beyond for studentso Retail – more than just

restaurants

• Opportunity for APG Region is to move to create “Technology District” o In sync with Master Plan

developmento Create identity – add

signageo Advance broader range of

incentives for mixed use development

o Target not only technology businesses, but high skilled administrative, back office operations leveraging residents who commute

o Be able to market the Technology District as a “live-work-play” environment

• Likely First Mover Opportunities: Planned Mixed Use Transit-Oriented Development

o Aberdeen MARC Station

o Perryville TOD/ Greenway Plan

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Summing Up Program Activities Across Potential Opportunities for University Research Park Initiative

Growing Regional

Technology Industry Base

Fostering High Value

Place Strategy

Advancing Workforce

Development

Initiatives

Targeting emerging, innovative companies serving APG

Advance Chem/Bio Industry Presence at Edgewood Post

Target technology commercialization services to

“APG Regional Inventors”

Continue outreach to existing C4ISR contractors to deepen

activities ongoing in APG RegionInitiatives

Support establishment of Education

Partnership with APG for Educ & Training

Clearinghouse

Create “talent connector” for the APG

Region to broader regional university talent

and to high skilled residents who commute

Advance a Cybersecurity Education and Applied Research

Institute

Advance Chem/Bio University

Collaborations

Initiatives

Establish APG Technology District promoting mixed use development

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Organizing for Success

Guiding Principles• Form should follow

function• Steering versus rowing• Seek leverage and broader

public-private partnerships• Best practices can inform

how to design

Potential Opportunities Implementation Approaches

• Governance• Operations • Funding Approaches

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Battelle Ideas for Implementation to Grow the Regional Technology Industry Base

Program Activities

Governance Operations Funding Approaches

Best Practice Examples

Targeted outreach marketing to companies doing business with APG – i.e. SBIR cos, C4ISR cos, NBC Industry Group

Economic Development Advisory Board

Primary economic development function

Existing economic development funding

Dayton Development CorporationChamber of Commerce of Huntsville/Madison County

Commercialization services to APG Regional Inventors

URP Board to oversee & advise on activities, funding

Economic development function for staffing to do outreach, generate network, solicit proposals, create mentoring

Need an ongoing source of public funding – might be able to structure some returns

Seek support from angel investors/serial entrepreneurs

Oklahoma’s Innovation to Enterprise (I2E) – OKC and Tulsa primarilyCNY Grants for GrowthInnovation Center for the Rockies (previously just Boulder County)

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Battelle Ideas for Implementation to Address Talent and Workforce Development Program Activities

Governance Operations Funding Approaches

Best Practice Examples

Educational Partnership Clearinghouse

APG OrganizationsUniversity Center at HEAT / NMHEAB

University Center at HEAT

State, Local, APG, Educational Institutions (?)

Suburban MD Technology Council

Talent Connector for Students and Residents

University Center at HEAT / NMHEAB

Economic development function given need for close working relationship with companies

Possibly tap university relationships of STEM Pipeline and Clearinghouse

County, Contractors (direct to students and universities)

Oklahoma Project BoomerangIowa Life Changing’s smart career move

Cybersecurity InstituteURP Board in conjunction with APG Organizations

Identify university lead with guidance of APG Possibly house as part of CERDEC technical support lead

Aggregating APG requirements

Air Force Institute of Technology

Chem/Bio University Collaborations

URP Board in conjunction with APG Organizations

Identify a university lead with guidance of APG

Aggregating APG requirements

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Battelle Ideas for Implementation to Create High Value Place-based Development

Program Activities

Governance Operations Funding Approaches

Best Practice Examples

Technology District involving mixed use development

Economic Development Advisory Board

Collaboration of County and City – create an overlay district?

Economic development function

Use of tax mechanisms – Tax Increment Finance, PILOT like in Prince George’s County

Private developer investment

Consider Business Improvement Districts – Chapter 461 -- HB 1182 Laws of 2010

Growth of mixed use approaches for redevelopment

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Broad Implications for Implementation

• Breadth of opportunities and related program activities encompass large part of overall economic development – Key elements include: physical development, business development,

innovation/commercialization and education & workforce development

• Implication #1 University Research Park Initiative will require broad support as a top economic development priority of APG Region to succeed– For Harford County, this suggests it is governed overall by the

Economic Development Advisory Board

• Implication #2 Collaboration across county, city, state government with APG will be critical – Beyond collaborations between Harford and Cecil, even within

Counties will need collaboration on master planning – Engage state authorized boards (NMHEAB) along with broader state

support for initiatives to promote technology industry growth around APG

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Thank You and Discussion

Growing Regional

Technology Industry Base

Fostering High Value

Place Strategy

Advancing Workforce

Development

Initiatives

Targeting emerging, innovative companies serving APG

Advance Chem/Bio Industry Presence at Edgewood Post

Target technology commercialization services to

“APG Regional Inventors”

Continue outreach to existing C4ISR contractors to deepen

activities ongoing in APG RegionInitiatives

Support establishment of Education

Partnership with APG for Educ & Training

Clearinghouse

Create “talent connector” for the APG

Region to broader regional university talent

and to high skilled residents who commute

Advance a Cybersecurity Education and Applied Research

Institute

Advance Chem/Bio University

Collaborations

Initiatives

Establish APG Region Technology District promoting

mixed use development