Research Parks Forming Strategies To Adapt To End Of Building-Boom

Of Building Boom Faced with decreased federal funding and corporate cuts in R&D, science complexes turn to economic development and incubation for help. 'GOOD NEWS': University Park at Southern Illinois University has seen small companies blossom. Research parks, like other facilities that house working scientists, are facing some new economic realities. Growth has slowed since the mid-1990s, government funding of research is down, and corporate tenants are looking to please Wall Street investors by slashing staff. These challenges are making one thing clear to park administrators: Economic viability depends on finding new ways of doing business. "If the research itself is going down, who's going to want a research park?" says Louis Padulo, president and chief executive officer of Philadelphia's University City Science Center, the home of 140 tenants (including The Scientist). "What are you going to do with a research park?" Park administrators are exploring several ways to stay competitive. At the 11th international conference of the Association of University Related Research Parks (AURRP), held last month in Philadelphia, business-savvy presentations included sessions on using science parks as incubators that help new companies grow in a less risky environment; using technology for economic development; and getting discoveries from the laboratory to the marketplace. Officials say the research-park environment fosters the kind of science that leads to innovative findings. The typical park is a complex of buildings that house science-and technology-based businesses. It often is located near and affiliated with a university, giving employees access to lectures, concerts, labs, libraries, gyms, and ball games, and offering companies a pool of potential part-time employees (students) and consultants (faculty members). But there is an increasing acknowledgment that those who live by the sword, die by the sword. In other words, as Bruce E. Pearson, executive director of the Dayton, Ohio-based Miami Valley Research Park, observes, "A research park is only as successful as the universities, the federal labs, and the communities that surround it." In the 1980s and into the early 1990s, that meant good news. Despite some bumps along the way, the economy was relatively prosperous, and government funding of research remained consistently high. As a result, research parks grew in numbers and thrived. Twenty parks were established in the United States between 1950 and 1980, according to AURRP figures; the next 10 years saw the number increase fivefold. The growth has leveled off, however, with just 30 parks opening from 1990 to 1995, and only 10 more currently in the works. Padulo says the reasons for the slowdown are clear. "Two big bogeymen are . . . that the companies, in their downsizing mentality, have almost always cut research first, because it's long-term, [and that] this government in particular has been cutting back on research funding." CONCERNED: James O. Roberson warns of government funding cuts. James O. Roberson, president of the Research Triangle Park in North Carolina, is concerned about how cuts in federal research funding will affect his park. In this 95-company complex alone, the government spends more than $1 billion a year. As those grants and contracts are reduced, Roberson says, "there is going to be a significant impact on various organizations." He doubts that private-sector funding will be able to make up the difference: "I think you're looking at cutbacks in staff and probably in the applied research that's ongoing." Despite funding problems, officials still point to "synergies" as a reason companies should consider parks, but they are also developing more concrete tactics to make them attractive. Among the most highly touted alternatives is the establishment of "incubators" within science complexes. Incubators help new businesses grow by providing support services; consultation and advice; funding assistance; low-cost, flexible leases; and office services and equipment on a pay-as-you-go basis. The idea is hardly new, having taken shape during the 1970s (D. Morgan, The Scientist, Feb. 4, 1991, page 8). However, they are a recent phenomenon for research parks, which have begun to realize that they can be used to launch and nurture scientific companies. POTENTIAL: Louis Padulo states that research parks can still be vital. The University City Science Center in Philadelphia jumped on the incubation bandwagon early-more than 30 years ago, according to Padulo, who sees the idea spreading to research parks throughout the U.S. "These other places are saying, 'Hey, let's not just have Merck come in and set up one of its many R&D centers in our research park, but why not have an incubator in there somewhere where we can start growing the new Mercks, the Mercks of the future?'" he declares. 'FEEDERS':A Dinah Adkins touts incubators' pluses. Dinah Adkins, the executive director of the National Business Incubation Association in Athens, Ohio, contends that with corporate cuts in research and development, "it has become much more difficult in the last 10 years for people to develop research parks and just expect to site the research division of a Monsanto or a Motorola. "There are more parks vying for fewer of those research divisions," she explains. "People started looking at incubators as being feeders to research parks. The major corporations themselves have not been able to stay competitive simply by relying on in-house technology, so they have a great deal of interest in these start-up firms [in incubators]." Research-park incubators truly are fostering the growth of these fledgling companies, according to Wayne F. McGown, who directs the University Research Park at the University of Wisconsin, Madison. "We have many examples where companies literally started in [the University Research Park's] incubation center. One or two people had a patent or license and started a company, and that grew with the support of the incubator providing them with the kinds of service they needed. . . . There were very few companies where the company just folded and didn't make it." PREDICTION: Wayne F. McGown calls technology transfer "a key". Other facilities are examining the idea. Cummings Research Park in Huntsville, Ala., has no formal incubator, though it has seen "a lot of self-starters coming out of the laboratories," according to park director William M. Dean. As a result, park officials have formed a committee to consider establishing an incubator, and recently completed a feasibility study on the topic. "There's a lot of start-up and small companies that can use this type of assistance in a more formal way," Dean says. The Miami Valley Research Park is affiliated with four colleges and universities in the Dayton area as well as Wright-Patterson Air Force Base. Executive director Pearson describes the development of a "virtual incubator" to assist new companies with financial, technological, and business needs. "We have a technology-transfer organization that links the resources of Wright-Patterson Air Force Base into individual companies, where they can utilize the resources of a federal laboratory that they could only dream about creating," Pearson says. "We have a funding institution in the park whose charter is to fund these types of technology- transfer/incubator-type companies." Brian E. Donnelly, the executive director of the University Park at Southern Illinois University, Edwardsville, adds: "Many of those new, emerging companies are using personnel that were once within those downsized companies." Southern Illinois has no incubator, a fact Donnelly laments. "I kind of wish we did. My experience in this park has been this: We've wound up leasing small amounts of space to relatively small companies, some of which have blossomed into significant tenancies as they've grown. I'd like the opportunity to grow more companies here. . . . Incubators are good news. I think they're part of the wave of the future." An 'Economic Engine' Another major theme touched on by observers is the concept of the research park as a tool for economic development. By marketing themselves as places where good science can lead to a healthy economy, parks hope to attract quality tenants and encourage new companies to locate there. For starters, Padulo explains, research parks employ well-educated, highly paid professionals who are "the kind of people you'd like to have in your community." They buy theater tickets and books, he explains, and are active in parent-teacher associations and Little League: "Everybody loves that infrastructure that comes from having professionals, especially if they're scientists that are going to do R&D." That makes the research park "a real important economic engine," Padulo goes on. "That's why the city might build that building for free for the university, so they can attract [professionals] to come there and live there, just hoping for the income taxes and other stuff." Padulo adds that the actual research provides economic benefit to the community. "They think some neat products are going to come out of [the park]-maybe good things that would then require you to build a factory to make the thing. So that even the poor people, the poorly educated people, could get jobs, because of the widget that you guys just invented. They're always dreaming of that." In fact, Wisconsin's McGown contends, many of the research parks created during the boom years of the 1980s came with a mission statement directing them to be "an active participant in technology transfer, the transferring of basic research from the campus into applied research in the private sector, [and] a participant in the economic-development programs" of their cities, regions, and states. Only time will tell how successful this strategy is, but McGown predicts: "Technology transfer will continue to be a key ingredient of the mission of parks." An offshoot of that, he believes, will be greater faculty entrepreneurship, as professors are encouraged to take their research and either license or patent their findings, thus pulling in money for the affiliated school. "It ties in with the increasing need for universities to find their own sources of revenue," he states. HOW TO REACH AURRP Association of University Related Research Parks 4500 S. Lakeshore Dr. Suite 475 Tempe, Ariz. 85282-7056 Tel: (602) 752-2002 Fax: (602) 752-2003 E-mail: arcxb@asuvm.inre.asu.edu Acting executive director: Doug McQueen 300 members McGown is not the only park director who believes that universities, facing more limited public funding, will need to seek revenue here. "It's certainly going to be a challenge," agrees Roberson of Research Triangle Park. "There will be renewed emphasis on the part of research parks to find private research operations for growth." The Miami Valley Research Park, for example, is currently building a new, $30 million national center to develop composite materials and related technology. Wright-Patterson Air Force Base funds such research to the tune of $2 million annually, and the University of Dayton's Research Institute five to six times that. In addition, almost 500 men and women in the Dayton area hold doctoral degrees in composite materials. "This center will capture the synergies of this existing strength in a way that will be focused on the testing, evaluation, and prototype development of new composite materials specifically for the aerospace and automotive industries," Pearson forecasts. "It's an example of the ability of a research park to work within its environment and try to maximize and leverage this strength that resides in the community." "Suddenly, everyone in the world is interested in the idea of using [parks] for economic development," Padulo claims. "In the past it was thought of as a good thing to do with some land. It was economic development, say, for the school." Donnelly of Southern Illinois worries that not enough is being done in the U.S. to make people aware of parks' economic-development potential. "Research parks as they exist overseas, in places like France and Italy and the United Kingdom, Ireland, Finland, and in parts of the Pacific Rim, are very much a part of a conscious economic strategy to keep those countries competitive within a world marketplace," he states. "I think there isn't a sufficient consciousness in the United States of the role which research parks can play in keeping our economy competitive." As a relatively young "industry," research parks are still evolving, but there is enough of a history to enable parks to learn from the mistakes of the past. Current administrators note that should help them make better decisions. In the early 1980s, for example, the facilities tended to have a very narrow view of what companies they wanted as tenants, according to Doug McQueen, the acting executive director of Tempe, Ariz.-based AURRP. STUDY: Cummings Research Park may add an incubator, says William M. Dean. "We all tried to restrict our tenants to these high-tech, high-powered, newsworthy scientists who were going out and trying to cure cancer and inventing an atomic-powered mousetrap-something that was earth-shaking," McQueen recalls. "We found that we really needed to market to a broader range of tenants and relax our standards a bit." And the drive to encourage incubation had its roots in the erroneous assumption that parks could obtain tenants by encouraging established companies to relocate or to expand, notes McGown. "Very little of that happened. Companies weren't about to just suddenly relocate their major research because another university built a new research park," he states. "We found that the real market was to grow your own market. By the late '80s we were doing very little aggressive marketing and worrying more about how we could identify ways of supporting this grow-your-own way of approach." Now, as the late 1990s approach, research parks continue to try to adapt. "We're still in an evolutionary process," Roberson says. "Parks as we know them today are a recent phenomenon. Most have been developed since 1980. Many are still feeling their way as to the direction they'll take." "We haven't [adopted the strategy] of 'build it and they will come.' . . . We work at shaping our future," Dean comments. "We're mature enough to have seen the down sides, and we've enjoyed the benefits of upscale economies, but we're always trying to manage our future and keep the process going."

Research Parks Forming Strategies To Adapt To End Of Building-Boom

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