May 23, 2011

Knowledge Base

John P. McDermott  /  Post and Courier - Business Review

Ex TV Station Transformed Into High-Tech Business Hub

One of the city of Charleston's newest office addresses operates on a quirky premise: The quicker tenants move out, the better. Then again, Flagship2 was not conceived as a conventional nine-to-five workplace.

'We know we're really onto something,' said Mayor Joe Riley, who will help dedicate the building June 8.

For several months the city has been transforming the darkened former home of WCSC-Channel 5 at East Bay and Charlotte streets into a larger version of its original 2-year-old Flagship business incubator next door.

Riley said the city is taking this hands-on approach to economic development to nurture cash-starved startups during the most critical stage of their development by offering them modern and relatively affordable work spaces.

The hope is that those firms will grow and create high-paying local jobs after they 'graduate,' Riley said. He summed up the first Flagship phase as 'a tremendous success.'

'We found ... that our instincts were correct: That small flexible space that is not easy to come by and is comparably affordable for these companies would be very attractive,' he said.

The concept favors early-stage ventures from the high-tech and creative fields, from software to architecture to marketing. Between the two adjacent downtown buildings, they will house about 28 firms once Flagship2 is filled, said Ernest Andrade, the city's director of business development.

'I think that's pretty substantial,' he said.The city has had no problems attracting prospective takers. Inquiries for space in the second building have poured in from business owners far and wide, and most of the space already is leased.

The roster includes local entrepreneurs and firms that have relocated to Charleston from out of state.

A software outfit from California that's looking to come to the East Coast was still expressing interest in one of the remaining units last week. Another call came in Thursday from a Texas business. 'What drives it is a community of companies,' Andrade said.

In the gap

The Flagship idea stemmed partly from Andrade's other role, as director of the Charleston Digital Corridor, which promotes the city to high-tech employers and other 'knowledge-based' businesses. He said it seeks to fill a gap that most private-sector real estate developers have largely ignored.

'To a great extent, the commercial marketplace has not recognized the evolving workforce,' Andrade said. 'There is an evolving workforce of freelancers, consultants and highly qualified individuals who either have left large employers or have been victims of the economy.'

Renovated by the city at a cost of about $500,000, Flagship2 can be described on the inside as urban- industrial chic, a mix of old brick, exposed duct work and flowing panels of brightly painted drywall. The spacious main lobby is appointed with a pair of funky molded plastic chairs. A lounge-like meeting room nearby is anchored by an elevated stone-top conference table wired with out-of-sight, high-speed data portals.

Richard Stanton, the founder of an Atlanta-area technology firm that climbed its way up the Inc. 500 list a few years ago, said he relocated his young family to Charleston for personal reasons.

'We wanted a better lifestyle that was closer to the beach and in a smaller city,' he said. 'Charleston is just an ideal place.'

Stanton is leasing one of the larger units in Flagship2 to launch his newest high-tech venture: His HurryHurry! is gearing up to put its own twist on the online 'deal of the day' trend pioneered by

Stanton said his new space, now mostly empty, can accommodate about 15 to 20 hires. Stanton said he liked the fact that the newly renovated building is 'tech focused' and in a desirable downtown location, which should make it easier to recruit employees.

A spacious lobby and conference room are among the tenant amenties at the new Flagship2 building, which for years was the home of WCSC-TV. Ernest Andrade (left) and Craig Coffman.
The 'lightning fast' data network that Comcast installed at Flagship2 was another big selling point.

'It's the fastest Internet I have seen in any location,' Stanton said.

Kenneth Cantey is one of Stanton's neighbors in Flagship2. An engineer, he moved to Charleston from Boston in 2002 to work on the Ravenel Bridge project.

More recently, he had been running his Freeland Construction Co. as a home-based enterprise. When his payroll doubled to 10 employees over six months, it forced him to seek a more formal office setting.

'We pushed it to the max and past that. ... You can only have meetings at Starbucks for so long,' he said.

Another impetus for Cantey was a federal minority business certification program he is enrolled in that requires all participants to have 'certain tools in place. An office is one of them,' he said.

When he learned about the Flagship, he put his name in the mix. Cantey said the level of 'buzz and energy' created by the diverse tenant mix makes for a collaborative and collegial work environment.

'There is a lot of synergy between companies that allows us to do what we need to do,' he said.

Temporary only

As idyllic as that sounds, the city stresses that its two Flagship properties are not meant to be permanent addresses.

Andrade said tenants are expected to leave when they are ready, enabling another qualified upstart to move in. In that sense, rapid turnover is viewed as a measure of success.

On the flip side, the role of landlord requires a high degree of flexibility and nimbleness on the city's part.Leases are typically for a year or less, but the terms can be extended if a tenant demonstrates promise and need.

Laggard renters who overstay their welcome, on the other hand, will be asked to leave, though Andrade said he has not yet had to take that step. 'It's our burden to be gentle but also firm,' he said.

And while it's inevitable that some successful Flagship alumni will seek their fortunes outside Charleston's city limits, the mayor said that's a risk he has to take.

'That doesn't bother me one bit,' Riley said. 'Many will locate in the city, but we have a regional economy. I work hard, very hard, to bring business development into my city. But I work hard to get regional business development, too.

'As goes the city's economy, so goes the region's economy, and as goes the region's economy, so goes the city's economy. If a business is incubated here but needs to grow in another part of the region, then we've helped contribute to the economic health of the region.'

**Space program
**The city of Charleston gave the nod to its first Flagship venture in early 2009 and expanded on the concept last year. The two business incubators are housed in leased buildings owned by John Rivers' Mazyck Holdings.

Rents for Flagship tenants vary depending on the space. Rates average in the low-$20 per-square-foot range.

The incubators are managed by the city's Charleston Business Development.

**Location: 475 East Bay St., at the corner of Calhoun St.
Opened: June 2009.
Size: 5,100 square feet.
Offices: Up to 12, measuring 75 to 150 square feet.
Renovation cost: $120,000.
Previous occupant: Hollywood Video rental store.

**Location: 78 Alexander St.
Opened: Spring 2011. Dedication is June 8.
Size: 13,700 square feet.
Offices: Up to 17, measuring from 300 to 5,000 square feet.
Renovation cost: $500,000.