The Daily Tar Heel

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Tuesday March 21st

Chapel Hill's high rent and lack of parking deters start-up companies

Thirteen years ago, a UNC professor started a company in Chapel Hill that he said he hoped would grow in the vibrant, urban environment — but the area’s rising rent prompted him to move.

“We like it, but we just can’t afford it,” said Nick England, CEO of 3rd Tech, a company that develops computer graphics products for law enforcement and security purposes.

Although the office in Durham that he moved into about seven years ago is nearly the same size, it costs half the rent England paid in Chapel Hill.

His story is not unusual.

While 90 percent of UNC spin-offs stay in the Triangle region, only one in five companies are able to stay in Orange County, said Emil Malizia, a professor in UNC’s city and regional planning department.

“Reducing the cost of incubator space is one of the hardest pieces,” said Ewan Pritchard, director of industry and innovation at the NSF FREEDM Systems Center.

The center is located at N.C. State University and develops renewable energy technologies and partners with spin-offs — companies that are developed by university researchers.

Rent is one of the hardest incubator costs to control and a major factor in businesses leaving Chapel Hill, according to a study Malizia shared with Orange County Commissioners this week.

The study states that rent is above $20 per square foot and more than $30 per square foot in some areas of Chapel Hill. The report also states that parking is not readily available.

“Orange County needs more specialized niches in the startup landscape,” Malizia said in the report.

“We have very little affordable space in the county.”

While Orange County is struggling to retain spin-off companies, the startup scene in Durham is growing, according to the study.

England said Durham has more parking spaces, is an easier commute and has much lower rent than Chapel Hill.

“If you are selling shirts and beer, it’s a great place to be,” he said.

“But many spin-off companies like ours just couldn’t make a go with it.”

Working to keep businesses

But Orange County commissioners and the University are starting to look for on-campus and in-town solutions to retain spin-off companies.

“Keeping companies in the county would bring employment opportunities in as well as economic benefit,” said Cathy Innes, director of the Office of Technology Development at UNC.

“It would be great to have them in Orange, so the benefits accrue to the county where UNC resides,” she said.

To retain spin-offs, Malizia suggested county officials facilitate the development of office space for life-science companies and expand its loan program for new business development.

Other recommendations include creating more office and lab space in Odum Village and collaborating with the University’s spin-off incubator on W. Franklin Street.

“It takes several years to translate technology to full commercial practices,” Pritchard said.

“You want to protect them and keep them safe under your watch.”

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