Research park shifts its focus

Outside funding sought to operate business incubator

More than 20 years after landing its first development, the Milwaukee County Research Park’s focus is shifting from selling land parcels to operating its business incubator — including plans to seek outside funding.

There’s a good reason for that change: The Wauwatosa business park is nearly out of land.

“We’re getting out of the real estate development business,” said Guy Mascari, the research park’s executive director.

The transition took a big step forward on Tuesday. The board of the nonprofit corporation that operates the research park approved plans to transfer its assets to the Milwaukee Regional Innovation Center Inc., another nonprofit group.

That vote came after the County Board unanimously approved the transition in December.

That new group will be operated by a 15-member board. It will include six private-sector people who reflect diverse professions, and four academics from University of Wisconsin-Milwaukee, Medical College of Wisconsin, Marquette University and Milwaukee Area Technical College.

The five remaining members will be appointed by County Executive Chris Abele, County Board Chair Theo Lispcomb and Wauwatosa Mayor Kathy Ehley.

The outgoing research park board has nine privatesector and academic members, and six government members, including five from the County Board.

Mascari said adding more academic members will help the group draw more startups for the research park’s incubator, known as the Technology Innovation Center. The center is an attractive location for new businesses launched by college faculty and staff members, he said.

Also, Milwaukee Regional Innovation Center, unlike the Milwaukee County Research Park Corp., is a 501(c)3 organization. Such groups are allowed to accept tax-deductible donations. That’s important. The research park’s business incubator needs central air conditioning, new windows and other costly improvements, said Mascari and David Dull, board chair. Dull is president and chief executive officer of Allis Roller LLC, a Franklin contract machining and fabrication company.

The new group will seek government grants, as well as donations from corporations, foundations and individuals, to help pay for those improvements.

The 80,000-square-foot incubator was originally built in 1915 as Muirdale Tuberculosis Sanitarium. The incubator opened in 1993, when it was partly remodeled for small tech businesses.

Abele and the County Board last year approved plans to lease the incubator to the research park for $1annual rent. That lease includes an option to buy the incubator for $1, with that property sale scheduled to occur by April 1.

Previously, the county paid for the incubator’s maintenance costs while getting part of the rent paid by the building’s tenants. With the new lease and upcoming property sale, Milwaukee Regional Innovation Center is responsible for those costs and keeps all of the rent.

So far, the maintenance costs have been about what was expected, Mascari said.

The incubator has an occupancy rate of 88%, Mascari said, but in 2015 had record annual revenue of $843,000.

That higher rent level was tied to creating more lab

“We’re getting out of the real estate development business.”

Guy Mascari, the Milwaukee County Research Park’s executive director

space for Agro BioSciences Inc., the incubator’s largest tenant. Lab rents are typically more than double the rents of office space, Mascari said.

Mascari hopes to attract more tenants like Agro, which has more than 8,200 square feet.

The business, which develops microbial products, was founded in 2013. It has grown from three employees to 28 during that period, said Tom Rehberger, president.

The incubator provides lab space at a relatively low cost — a big help for start-up businesses, Rehberger said. It also provides equipment, including an autoclave, that is shared by tenants at a reduced cost, he said.

“It’s been a great way for us to expand,” Rehberger said.

The focus on the incubator comes as the research park is running out of land to develop.

The park, which is west of Highway 45 and south of W. Watertown Plank Road, was first proposed in 1985. But its development lagged until the mid-’90s.

In 1994, PrimeCare Health Plan Inc., now part of United HealthCare Inc., one of the nation’s largest health insurers, bought 15 acres to develop the research park’s first office building.

Mascari was hired in 1995 to draw more developments. But there was little interest because county officials wanted to lease parcels to businesses, instead of selling them.

Local commercial real estate brokers helped persuade the County Board in 1996 to allow land sales.

The park began drawing developers and tech-oriented businesses, including GE Healthcare, and now has companies totaling about 4,500 employees.

Through November, the land sales totaled $16.8 million, with the county providing $5.5 million to the research park corporation under the 1996 agreement, according to a county report. The research park used that to fund its operations, including the incubator’s 1998 expansion.

Wauwatosa spent $55.4 million to help develop the park, including $27.6 million to help finance GE Healthcare’s facility.

Property taxes from the new developments paid those funds back by 2015. The park now generates $4.8 million in annual property tax revenue for the city, its school district and other local governments, said John Ruggini, city finance director.

The park’s newest project, the $23.5 million Meadowland Research and Technology Center, will be completed in June. The city is spending another $4.5 million on Meadowlands, with those funds to be paid back within an estimated 15 years, Ruggini said.

Developed by Irgens, the four-story, 155,000-squarefoot building will be anchored by insurance software provider Zywave Inc., which will move from the park’s Mayfair Woods building.

Meanwhile, VJS Development Group LLC has agreed to buy around 3 acres and the former sanitarium powerhouse. The firm plans to build a fourstory, 132-room hotel on the lot and a brewpub within the former powerhouse.

If VJS Development completes its $2.6 million purchase, the research park will have about an acre left for development, Mascari said.

The transition amounts to a success story for Milwaukee County, said Patricia Jursik, an outgoing member of both the research park board and County Board.

“I think Milwaukee County has done a good job of developing this,” she said.