By Nora Caley
From the March/April 2024 Issue
Business, research, and industrial parks have evolved from conveniently located clusters of buildings to hubs of innovation that can enable businesses to grow. These districts offer amenities and resources that can help businesses attract talent, bring new industries to an area, and improve local economies.
Research parks have their origin at Stanford University and its once isolated location. According to the Association of University Research Parks (AURP), in 1951 the dean of engineering at Stanford University worried that students were not getting exposure to industry because the campus was in a semi-rural area. He established what AURP noted was the first intentional science park, the Stanford University Research Park. The surrounding area eventually became Silicon Valley, the global high-tech hub. Since then, other regions have created their own science-focused parks of co-located businesses and universities.
On the office side, business parks offer lifestyle amenities such as fitness centers and branded restaurants, and productivity-enhancing flexible spaces and areas for collaboration. Following the onset of the COVID-19 pandemic, these extras can help employers attract talent, including workers who otherwise would rather work from home.
Office developers must create reasons for tenants’ employees to come in, as the office category is in the midst of a challenging environment. According to the Office Space Demand Forecast by the NAIOP Research Foundation, citing figures from CBRE, the national average office vacancy rate reached 18.4% in third quarter of 2023, the highest rate since 1992. The highest rates were in functionally obsolete office buildings, as tenants are not renewing leases and are opting for newer properties with amenities.
Also according to NAIOP, in its Industrial Space Demand Forecast released in August 2023, net absorption (the amount of space occupied minus the amount of space vacated) of industrial real estate will average 52.6 million square feet over the next two years. The association noted that this is a healthy rate, though lower than the peak amounts of the past two years.
Whether it’s a business, research, or industrial park, developers are finding ways to attract tenants, and economic development entities are heralding these modern areas as good resources for businesses.
