How do you keep it from turning into a hipster combine, a place to find a weird looking lamp or bedazzled crafts?
Tough admission standards. This is a program for the best of the best, this isn’t about providing post-graduate hangout space. The center should be an attractive alternative for graduates who have their choice of corporate positions. Each technology workhouse member will essentially be living for free, so that investment can’t be used on neat ideas with limited advancement. Applicants will need to show through prior research or collegiate background they are capable of creating professional and developed documents. The applicant will need to not only provide an innovation concept at the time of admission, but with each 3 month period provide proof of advancing the idea, judged by peers, with a maximum term of 24-months.
Each 3 month period Technology Workhouse members will have access to angel investment opportunities with local businesses and investors to make their case for their product. Feedback and rejection, as well as funds to move an idea into commercial production, are all important elements of this phase.
This is also the phase which begins to create jobs locally. In order to be capable of investing with the Technology Workhouse member the interested party must show they have a residential or business presence in Fairfax County as well as agreeing, at a minimum, 50% of non-manufacturing jobs created from the product must remain in Fairfax for 5 years, and 50% of manufacturing jobs created from the product must remain in Virginia for 5 years.
Could this create some hard to track situations? Yes, of course, all businesses will always look to skim their costs and increase flexibility to the greatest extent possible, but the intent is that this will create a tent pole to Fairfax, which beyond the required number of jobs, will encourage a company to provide supportive services locally as well. If a region continues to create great products and ideas for a business, they are unlikely to take just one golden goose egg and run away. This is empirically supported by the history of tech hubs around the world, most notably Silicon Valley.
Additionally, this isn’t about consistent output. The idea is to hit a home-run. If a few products are gobbled up and robbed elsewhere for production, then that will be a shame, but the ultimate goal would be to create a hub for an Apple, a Google, an Amazon, an Oracle, etc. Whatever losses are incurred would be made up by the new billion dollar industry waiting to be created, and the best companies in the world know that the genesis location of an idea is equally as important to continue the business as the cheapest place to get it built.
What would it look like, and how much would it cost?
We are not talking about a 3000 person tech campus. With that kind of a population, ideas will fall through the cracks, some members will skate on by with no results for two years. The population has to be small enough that administration is minimal while the cost of aggregating the tools and building make sense. Something closer to 50 members makes sense for the onsite housing needs and availability of funds.
The upfront capital costs should have a lifespan of 50 years, with a 50% renovation cost (in today’s dollars) after 25 years. 50 members will need approximately 60,000 square feet of space. You don’t want to have this housing look like dormitories. The best of the talent pool will not collect here if it reminds them of their freshman year cheap housing. The working area will need a 20,000 square foot technology/office space, a 15,000 square foot industrial space, and a 5,000 square foot common recreational space. The location should be central to local amenities, transportation, etc.
Using a high density model, assume a land cost of $2 million dollars for a quarter acre. This can be purchased along side of another private project as an annex or expansion in order to avoid purchasing a random small slot of land. Assume high end residential features (kitchen, bathrooms, nice exterior and interior finishes) at approximately $150 per square foot, for a cost of $9 million. High end office and research space will cost approximately $90 per square foot, for a capital cost of $1.8 million. Industrial space will be less expensive, though much of the inventory required to stock it will be more costly, with approximately $35 per square foot, for a capital cost of $525,000. Lastly, the common recreational space will be approximately $40 per square foot, for a capital cost of $200,000.
Sum up the above and you have a $13,525,000 upfront capital cost for a 50-year life span, with a $6.7 million renovation cost at year 25, or approximately $20,225,000 for 50 years. Amortized over 50-years with an anticipated interest rate of 3% this becomes $39,000,000 in total cost with annual payments of $781,000.
How about the space fit out?
Assume 50 work computers updated on a cycle every 4-years, for a total 50-year cycle cost of $875,000 ($1400 per computer). There will be a need for approximately five high end common workstations updated every 2-years, for a total 50-year cycle cost of $625,000 ($5000 per workstation). Add in approximately $150,000 every 10-years for technology tools such as 3d-printers and high end software, and $100,000 every 10-years for industrial tools and materials, for a total 50-year cycle cost of $1,250,000. Add in an annual budget of $10,000 for common space equipment and improvements, for a total 50-year cycle cost of $500,000. Lastly, add two staff positions for administration ($125,000 annual salary each) and a maintenance contract ($40,000 per year) for a total 50-year cycle cost of $14,500,000.
Sum up the operation costs and you have $17,750,000 operation cost for a 50-year life span, or approximately $355,000 per year in 2013 dollars.
This concept would cost about $1.15 million per year, or approximately 0.03% of Fairfax County’s budget, and far less than the cost of incentivizing business relocations. For this minimal cost this area could generate new industries, new income that would more than pay back for this investment, and solidify itself as a knowledge and business center of the east coast. Most importantly, it creates industries that are not dependent on federal expenditures and diversify this region away from political dependency.
It will be an attractive choice for non-traditional college graduates who want to create great things, not just join a corporate workforce where their creativity is stifled. It removes the high upfront costs of getting from idea to product, and clusters great thinkers together with each other and investment sources. This concept removes the extraordinary cost of living as a decision factor for emerging start-ups, a condition currently which all but forces our best and brightest to enter corporate positions as opposed to branching out on their own.
Fairfax has more assets than just being close to DC. After decades of heavy investment in education, nearly 50% of all tax revenue goes directly to education, and a healthy business environment Fairfax faces a decision on its future.
Will Fairfax be satisfied to remain overflow office space for DC; a tax and lease haven of cost cutting corporations whom, without a constant trough of federal spending, are just as likely to move to a cheaper area? Or will Fairfax expand its own business development atmosphere, build upon the local entrepreneurial spirit and investment pool, to focus and convert an envious talent pool of creators from the confines of corporate productivity.
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