June 22, 2009

City?s ?Flagship? Building Offers low-cost space downtown

Ashley Fletcher Frampton  /  Charleston Regional Business Journal

When biotech companies spin off from Medical University of South Carolina research, in the past they've looked to other cities for work space, according to Gautum Ghatnekar. Ghatnekar, who owns FirstString Research, a company developing scar prevention technology, said startups like his want to be near the research university, where he also teaches. But they can't find office space downtown without signing a long-term lease.

"I don't know if I'm going to get paid two months from now," Ghatnekar said. "How can I sign a five-year lease? That's silly." Ghatnekar has found the solution in the "Flagship," a new business co-working space that the city of Charleston opened June 1. His company is one of four now leasing workstations in the building at the corner of Calhoun and East Bay streets.

Rent for the 10 small office spaces, meant for startup and relocating companies, ranges from $400 to $750 a month. No lease is required for the simple but functional private spaces, which come with access to larger conference rooms. Instead, most businesses are expected to move on after about a year. Ghatnekar said similar space is readily available at Research Triangle Park in North Carolina and other technology hubs. But it's the first such space in downtown Charleston.

The 5,400-square-foot building, formerly a Hollywood Video store, is a technology business incubator as well as the new home for the city's Business Development Office and the Charleston Digital Corridor. The latter organization is public-private initiative that focuses on recruitment and growth of technology businesses. The Business Development Office, which Mayor Joe Riley created late last year in a reorganization of the city's economic development efforts, is largely an expansion of the Digital Corridor initiative but is meant to recruit all types of businesses, not just technology companies.

The Digital Corridor retains that focus. Ernest Andrade, director of business development, said the "Flagship" name conveys that the building is the city's premiere co-working environment and the most important part of its economic development effort. The city is trying to provide the resources a fledgling company needs to be successful, from office space to mentoring. Andrade said that will build loyalty to the area.

The approach is different from the one many cities take –- simply trying to outmatch one another's tax incentives, Andrade said. "If you look at traditional economic development, it really is a game of poaching," he said. The Flagship is one of several economic development efforts going on in the area. The city, Medical University of South Carolina and S.C. Research Authority are working to convert a former mattress factory on Meeting Street in Charleston's Neck area into 28,000 square feet of wet lab space for biotech startups. Construction started in the spring.

Ghatnekar said he plans to use lab space in that building, the SCRA MUSC City of Charleston Innovation Center, when it is completed. Private developer Alan St. Clair also recently opened a separate 40,000-square-foot incubator on the former Navy base in North Charleston. St. Clair's project, called the Lowcountry Innovation Center, has space for 15 high-tech businesses. Keith McElveen chose the Flagship for his startup company, Wave Sciences Corp., when he decided to locate in Charleston after spending the past several years in the United Kingdom. Wave Sciences Corp. provides audio, video and computer forensics, as well as advanced analog and digital signal processing systems and services.

McElveen said he considered returning to the Raleigh-Durham area, among other cities in the Southeast, when he moved back from the United Kingdom. But he chose Charleston in part because he sees a critical mass of computer engineers and researchers here, similar to the dynamic in the Research Triangle 10 to 15 years ago, he said.

McElveen participates in federal government contracting, so he also was enticed by the area's government contracting community. For a new company that wants to invest in marketing and operations rather than facilities, the Flagship space is a professional alternative to working out of a bedroom, McElveen said. It's affordable, larger workstations are available if he is able to add staff members, and it was furnished and ready to go on Day 1, he said.

"You don't spend a lot of time worrying about, 'Oh, I've got to go get furniture,' 'I've got to get an Internet connection,'" McElveen said. The small office stations are furnished with the basics –- phones, desks, computers and Internet. In its former offices on Meeting Street, the Charleston Digital Corridor offered several cubicles for rent. But those spaces lacked doors that could close for privacy and did not have private meeting spaces that companies could use.

The other companies now leasing space in the Flagship building are Surya Biofertilizers, which started last year in Charleston, and Palmetto Tech, which develops products for Blackbaud software. Andrade said he's had inquiries from other companies about renting Flagship space, but he's turned some down because they weren't the right fit. Some were further along in their operations or wanted to spread out among several spaces, he said.

McElveen and Ghatnekar said they enjoy the experience of working alongside other technology-oriented entrepreneurs. "You never know what's going to come out of these relationships," Ghatnekar said.