In early 2015, UNC-Chapel Hill released an extensive report about the business startups and spinoffs that faculty, students, and alumni have created. This report quantifies the impact of these businesses: 150+ businesses, 8,000 jobs created, and $7 billion in annual revenue for the state of North Carolina.
But what this report doesn’t detail is the direct impact of these startups and spinoffs on our local economy here in Chapel Hill, Carrboro, and Orange County. There’s a pretty simple reason for that: Few startups coming out of UNC stay in our community. So why can’t Chapel Hill foster a local startup scene when other college towns, like Boulder and Cambridge, have gotten national attention for the startup economies they’ve developed in their own communities?
It’s because of officespace—or more specifically the lack of officespace. Startups and spinoffs trying to expand and grow beyond the University campus have no place to locate to continue to do business locally.
This chart explains why there are so few startups in Chapel Hill
UNC’s InnovateCarolina initiative, which is tasked with developing and strengthening UNC’s innovation ecosystem, compiled a report on innovation spaces, both on- and off-campus, in 2014. This chart from the report really says it all:
Take a look at those two middle columns. Outside of 1789 Venture Lab, home to just nine startups currently, and LAUNCH Chapel Hill, which has space for no more than 16 startups at any given time, there is simply no space in our community for startups and spinoffs to locate.
So why don’t we have officespace?
The short answer is that, for a long time, our community actively said it did not want commercial development, retail, or officespace uses. A draft town document from 1985 stated plainly: “We envisage Chapel Hill as a primarily residential community in which a diversity of ideas, people, opportunities, and appearance is most highly valued.” This sentiment was expressed in local policies that greatly restricted the density of development, limited commercial and retail uses, and imposed complex, costly, and time-intensive regulations on all types of development.
Now, our community is experiencing the consequences of these policies. Our local governments are funded primarily from property taxes, which drive up housing costs and make our community less diverse, more white, and more wealthy. Retail stores that would have located in our community and provided our governments with vital sales tax revenue instead located just across the county line in Durham (and now Chatham). Other types of commercial and business activity that could have located here had no space to do business and had to go elsewhere. The result of these policies is a local economy that is primarily driven by the restaurants and bars of downtown Chapel Hill and Carrboro, which do not provide sufficient tax revenue for our governments to operate sustainability without placing an excessive property tax burden on residents.
To get the officespace we now need to reverse these negative consequences of past policies, we have to be bold in our policy changes and lean into positive change for the future of our community.
The solution is to make it possible—and easy—to build officespace in Chapel Hill
Talk of diversifying our economy by expanding our commercial and retail sectors has been ongoing in our community for years now. What’s been missing is actual policy change and action to turn this talk into reality. Currently, it’s not easy to build anything in Chapel Hill or Carrboro, let alone innovative and modern officespace. Our development approval processes are long, time-intensive, and expensive. By maintaining these processes, we are sending businesses who may otherwise want to stay local to Durham or Raleigh, where space already exists and is much cheaper.
We also have a tendency to overstudy our problems in Chapel Hill and never get to implementing the policies and strategies required to create the change we seek to strengthen our community. We have to move away from this tendency, become comfortable with change, and empower our policymakers and town officials to take action to create change today if we hope to be prosperous tomorrow.
The recent Downtown 2020 effort provides an example of how we can start creating a culture of doing rather than studying. Instead of conducting yet another analysis of downtown, the new Downtown 2020 strategy simply outlines five core areas of focus, connected with action items to be implemented over the next two fiscal years.
So why don’t we do the same right now to solve our officespace problem? Here’s an idea: Let’s start by implementing zoning changes near campus, in downtown, and along transit corridors to make it possible to build modern offices, coworking spaces, wet labs, maker spaces, and life sciences officespace by right.
From here, we could work on longer-term changes that will be necessary to make our community competitive for innovative companies. Our competitive advantage over neighboring Raleigh and Durham is that we are already a compact community with the second largest transit system in North Carolina, and data show that most Americans want to live in mixed-use communities that don’t require the use of a car. Because we have not sprawled, Chapel Hill and Carrboro are in a much better position than our neighbors to achieve this vision. By adding officespace to attract and retain new companies, directing additional money and resources to grow Chapel Hill Transit, and adding mixed-use development throughout our community, including a variety of housing choices to appeal to new private sector employees, we can gain market share with startups, reduce our overreliance on residential property taxes, and put our community on a sustainable path to being a leading sustainable, 21st-century community.
All it takes for us to start achieving this vision is to act now rather than keep studying a problem we’ve already diagnosed. Let’s say yes to positive change today, for a stronger community tomorrow.
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