Agenda - 03-13-2012 - 4b - Laserfiche WebLink

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9 mass of business firms needed for rich communication and interaction that lead to positive externalities called knowledge spillovers. Innovation is expected to be richer when entrepreneurs working in different sectors with different technologies are able to interact frequently and informally. Startups are formed that combine technology and creativity in new ways. Urban places have the additional advantage of sufficiently large markets to attract business and professional services, restaurants, bars, entertainment venues, etc. When adequate housing and public transit are added to the mix, pedestrian traffic amplifies the urban scene and further increases the demand for retail and personal services. Firms providing maintenance, repair, catering, conference/meeting space, entertainment and fitness will also tend to locate near theseplaces. Furthermore, employees find greater job security in urban areas. Talent working for startups knows its employer could fail or fail to grow. Such talent is far more comfortable working around similar companies that could offer alternative employment opportunities. Current sta.tistics for the Triangle area already reflect the preference for urban locations. The lowest office vacancy rates are in downtown Durham (7.2%) and downtown Raleigh (4.3%) compared to 13.5% vacancies in suburban areas. The ULI reported that office markets in core areas are recovering faster than suburban areas. In 2011, the vacancy gap between CBD and suburban areas widened, and rents rose in CBDs but remained flat in the suburbs. Interestingly, the trend is driven by large corporate entities consolidating space downtown to accommodate young knowledge workers who prefer urban places.4 Furthermore, most young growth companies appear to prefer urban locations more than suburban office parks.s OCED intends to serve any company interested in the county from large established ones to startups and meet their different space requirements in both urban and suburban areas. These companies would increase the commercial tax base which is a high priority in Orange County. Se~mented Demand - Spin-off companies associated with UNC generally fall in two market segments. The first is the life-science segment with companies in biotechnology, pharmaceuticals and medical devices. The second segment is broader. It includes IT (hardware, computer services or software), clean/green technology companies and several contract service providers. Life-science companies have large appetites for funding, need sophisticated and specialized facilities and require many years to move from basic research to marketable products. If their technology and products achieve success in the market, they are often purchased by larger companies and consolidated outside the Triangle area. Their facility requirements can include 4 Jeffrey Spivak, "Urban Office Momentum," September 14, 2011 from ULI. 5 Cities axe relatively dense places fostering interactions and communication among diverse firms that accelerate knowledge generation and diffusion. The spatial concentration of firms also reduces their carbon footprint. 6