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Thursday, July 24, 2014 |  Madison, WI: 69.0° F  Fair
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New University Research Park a big deal
Second-phase construction could add 10,000 to 15,000 jobs

Mark Bugher: 'This university is really a hotbed for
faculty, student and staff entrepreneurship and idea generation.'
Mark Bugher: 'This university is really a hotbed for faculty, student and staff entrepreneurship and idea generation.'
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Mark Bugher has a dream - a big dream.

Bugher, director of the University Research Park, already oversees an institution that provides jobs to 3,500 employees in Madison. But he has his eyes set on more.

University Research Park 2, the next phase of the park's construction, could add 10,000 to 15,000 more employees. That's not a typo. The little brother of the well-established research park is seen as having massive potential.

"This university is really a hotbed for faculty, student and staff entrepreneurship and idea generation," says Bugher, "and that creates companies."

While the idea is simple, the process is not. A complex partnership of public and private, the research park is an unparalleled collaboration among the UW-Madison, city of Madison and a host of private companies.

The current University Research Park bustling on the west side already pays more than $260 million a year in payroll into the city's economy, plus $3.6 million a year in property taxes, according to the park's website. And the next phase of University Research Park, set to begin construction this summer on Madison's far west side, could support three to four times as many employees.

"It's an estimate trying to compare the density of the current park to the density of the new facilities," says Bugher. "The second phase was approved by the city with a much different density configuration."

The new park, he explains, will have bigger buildings and smaller lots, as well as a significant number of mixed-use buildings for retail and other commercial purposes. There will also be several high-density residential buildings, with more medium-density housing nearby, in what Bugher dubs "more of the live-close-to-your-work philosophy."

Building along these lines, using New Urbanist design principles, allows for a higher density, which planners hope will be more attractive to new companies.

The new look may also ease the strain that an extra 10,000 employees could create on traffic in the area. In good Madison form, the new park will include an extensive pedestrian and bike transportation system, including underpasses under major roadways

Still, concerns about increased traffic were the biggest obstacle in the project's relatively smooth ride through the city approvals process.

While the patient work of mass grading, or preparing the ground for construction of roads, is already under way, that's just one step in a long process.

"I think we're talking about it happening over a period of time, but my experience is that where we've built these types of parks they've been spectacular successes," says Tim Cooley, the city of Madison's economic development director.

The idea of a research park is that it brings together all manner of energy and innovation into one physical environment. Says Cooley, "The cluster dynamic becomes a place of unique knowledge, skills and expertise that companies from all over the world want to be near. There's a real synergy of that."

Despite the city's apparent enthusiasm, the Research Park has received no tax incremental funding or other direct city support, though it did receive about $6.6 million in federal stimulus funding for roadwork.

"We think it's a spectacular project," says Cooley. "Anything that can help define Madison as a central creative hub of an innovation region helps the city as a whole."

Already, the park's planners are fielding inquiries from potential tenants, but construction of actual buildings is still too far off for solid deals now. The most urgent concern is the need for venture capital. Without investors willing to build on the new lots in the park, or at least to rent what the park builds, the price tag looks daunting.

Bugher says the average investment would probably be in the range of $8 million to $10 million. If 50 lots are built, that's $500 million. Adding on another $15-$20 million for infrastructure and $10-$20 million for the land brings Bugher's "very, very hypothetical" estimate of total cost to about $550 million, not including furnishings and equipment.

He's confident the necessary capital can be raised from investors who see opportunity in a research park near a major university, building on a track record of past success. And he thinks Madison has advantages even over Silicon Valley and other classic hubs of innovation.

The life sciences and biotechnology, which are particular strengths in UW research, also happen to be major focuses of many companies in the current research park. In fact, many companies there now are direct spin-offs of faculty research.

The spin-off process starts with an idea. Some promising research done by a UW faculty member or student appears to be potentially marketable. That idea is then disclosed to the Wisconsin Alumni Research Foundation, which examines it for viability and exclusivity.

Next, the faculty member is given an opportunity to build a company around that technology to create a product, which Bugher says is encouraged by UW-Madison leadership, "from the chancellor on down."

One striking example is James Thomson's work with stem cells. After WARF worked out the patent, Thompson started a company called Cellular Dynamics Inc., which Bugher reports now has about 40 employees hard at work in the current research park.

One reason University Research Park 2 is seen as vital and necessary is to counteract the "brain drain" faced by Wisconsin and similar states.

What often happens is that the university graduates qualified people who are unable to find suitable work in Wisconsin. Thus they end up moving to the coasts or larger urban centers, places like Raleigh, Seattle, Austin and even Minneapolis, where the job hunt is easier and the social life more vibrant.

"Those are the kinds of places where people feel like they can be at home as a creative, energetic, educated young worker," says UW System spokesman David Giroux.

But Giroux says that the problem of brain drain is more myth than substance, and that the university's effort is focused more on attracting out-of-state students than holding on to those raised in Wisconsin. Still, he said, the research park can only help.

"When you create research parks, you create these pockets of innovation and entrepreneurship," Giroux says. "Not only does it have a local impact, but word starts to get out that there's a cluster of high-growth, innovative businesses, next to the UW campuses, and that's a place to be."

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