Network

Case Study

Abstract

In 2004 the City of Scottsdale, the ASU Foundation for a New American University and Arizona State University joined forces to create SkySong the ASU Scottsdale Innovation Center. A mixed use development located on 43 acres just three miles north of ASU’s Tempe campus, SkySong brings together large companies, entrepreneurs, student entrepreneurs and ASU units in a collaborative environment that supports company growth. ASU SkySong acts as the connector to the university for both SkySong companies and the general business community. SkySong is an economic development driver for South Scottsdale and the university is a key player in the economic development landscape of the Phoenix metropolitan area.

Problem/Background

The genesis for SkySong came from the 2003 Morrison Institute for Public Policy’s “Which Way Scottsdale?” report, which noted that the city was “behind the curve in hooking into” cutting-edge, technology-based industries. The report suggested the Los Arcos Mall location, at the southeast corner of Scottsdale and McDowell Roads, as a potential site to spur such activity. With the previous failure of a number of plans to rebuild at the site, ASU, the ASU Foundation for the New American University, and City of Scottsdale officials reached an agreement in May 2004 to buy and develop this central location in the McDowell Corridor. Scottsdale acquired the 42-acre site and leased 37 acres to the ASU Foundation, while also funding $40 million in infrastructure upgrades at the site. The ASU Foundation and two partners stepped forward to develop the property into a mixed-use development.

In addition to the land redevelopment, ASU was seeking a way to increase its connection to the entrepreneurial and business communities in the Phoenix metropolitan area and beyond. Navigating the university, the largest under a single administration in the United States, was challenging for many organizations. The university needed a way to project its interest in simultaneously working with the business community and supporting the economic development of the area.

Solution

SkySong the ASU Scottsdale Innovation Center was conceived as a place where the business community could interact. It was to be a home for large companies, entrepreneurs, student entrepreneurs, and selected ASU units. Before construction began, ASU undertook an extensive survey of incubators and their services to best integrate the university’s entrepreneurial programs within its industry outreach activities and the SkySong complex. In addition to delivering programs and services to local entrepreneurs and businesses, ASU added a global dimension to SkySong by deciding to offer soft landing services to international companies locating to the United States.

Ultimately the university created an incubator to house startups with larger companies leasing office space from the developers.  For entrepreneurs that were not ready for space, ASU developed several accelerator programs to encourage early collaboration with SkySong and the university. ASU’s Entrepreneurship and Innovation Group, based at SkySong, operates the Edson Student Entrepreneur Initiative for ASU students as well as AZ Furnace which forms companies around intellectual property from the three state universities as well as the Dignity Health group. In addition to the formal accelerator programs, ASU also offers advisory services to local entrepreneurs.

Beyond the office space, ASU also manages 16 conference rooms to host events and meetings open to the business community including local associations, companies and others in order to create additional community interaction with SkySong. Three hundred and twenty-five apartments will open in October 2013 and retail opportunities will eventually be added to the site to round out the traditional definition of a “mixed use” development.

Finally an iconic shade structure was added to the site to offer outdoor event space. Besides specific university related events, SkySong has hosted other community activities and will participate in a public arts display in 2014 which will be integrated into the shade structure. The structure has become the visual identifier for SkySong and continues to drive inquiries about the development throughout the metropolitan area.

SkySong is a mixed-use development that supports companies from the startup phase to revenue generation, offering services throughout their development.  In addition SkySong serves as an access point to the university for the general business community. Having a dedicated team at an accessible location like SkySong enables the university and business community to interact more easily; thereby positively influencing the economic development of Scottsdale. By including the global element, SkySong also broadens the footprint of the City of Scottsdale opening new avenues for business growth.

Currently SkySong consists of two office buildings with a total of 300,000 square feet of office space. SkySong will break ground on two additional office buildings in September 2013 and 325 rental apartments will open in October 2013. At full buildout 1.2 million sq. ft. of office and retail space will be available for lease in addition to the apartments.

Results

The first two buildings opened in March 2008 and have been 98% leased since early 2012. SkySong is a location that companies choose because of its connection to ASU, its central location, and its amenities including its silver LEED certification. In addition, more than 6,000 people visit SkySong monthly for a variety of business meetings and conferences hosted in ASU-operated meeting spaces.

For the City of Scottsdale, SkySong has been an attractive mixed-use development that is serving as the foundation to a regeneration of the McDowell Corridor. More than 1,000 workers are now located at SkySong, and the estimated economic impact for the City of Scottsdale is $397 million. For ASU, it is a full-service facility to serve its entrepreneurs and corporate clients. It puts the university into Scottsdale, a key suburb of the metropolitan area. The university also fulfills its economic development mission as it assists businesses, both large and small, with their development. Through ASU SkySong the university is also more accessible, allowing companies to engage more easily with the university to further their own development. SkySong has also provided the university with additional options for its students through projects and employment with companies working with ASU SkySong or physically located at SkySong. Finally it allows ASU units to collaborate more closely. By co-locating Arizona Technology Enterprises, ASU’s technology transfer office, and the ASU Entrepreneurship and Innovation Group, faculty spin-outs receive full service assistance from answers to IP questions to recruitment of a management team for their companies. By locating the student accelerator (Edson) at SkySong, ASU has professionalized the program, helping students realize they are truly entrepreneurs in addition to being students pursuing a degree. For the ASU Foundation, SkySong has provided an additional investment vehicle for the university. It is the showcase location for the university’s off-campus real estate development.

A serendipitous result of ASU SkySong’s success has been the opportunity to expand the programming from SkySong to other parts of the community. The visibility given to ASU SkySong and the creativity of the Entrepreneurship and Innovation Group has led to a new collaboration with the Scottsdale Public Library as the first node of the new Alexandria Network. Following the SkySong theme of community collaboration and connection to the university, the library is now partnering with ASU to provide entrepreneurial resources. Supported by the ASU accelerator programs and staff, libraries throughout the region will be reinventing themselves as a hub for business activity furthering the reach and image of ASU as a supporter of the business community.

Future Considerations

SkySong is sustainable.  The university is a committed partner to the complex and it has already survived one of the worst real estate downturns. Pre-leasing has begun for Buildings 3 and 4 and the timeline is gradual, with full build-out planned for 2030. SkySong’s success has led to the emerging revitalization of the surrounding area, as hoped for when SkySong was designed. In addition to the SkySong apartments another local developer will build an additional 500+ high-end rentals adjacent to SkySong to open in 2014. Other neighborhood improvements include a grocery store renovation and expansion and new restaurants. The City of Scottsdale is also embarking on an entire rejuvenation of the local area, called the McDowell Corridor, and SkySong is the anchor development for that project.

SkySong is just the beginning of a revitalization of South Scottsdale. It already serves as a catalyst for the area with its office and residential spaces as well as its future retail businesses. Currently it is estimated that SkySong’s overall economic impact will total $9.2 billion and house 5,000 jobs by 2038. With further development throughout the McDowell Corridor, SkySong will be a central part of a thriving community within the Phoenix metropolitan area.

Finalist Presentation

UEDA Awards of Excellence Finalists presented at the Annual Summit in Pittsburgh on October 28, 2013. Summit attendees then voted for the best initiative in each category.