Evolutional Interstitial Spaces: The Transition from Business Incubator to the Marketplace

I had a conversation recently with a professional colleague regarding small businesses that are currently growing in incubators/accelerators. I delineated a concept of how those companies can be provided small commercial space in projects that we develop. Rather than a small company spending a few months in an incubator/accelerator and then being cast out into the world, these businesses can be placed into a micro commercial space that provides them with a real, yet, humble workspace where they can begin to grow. By doing this we are creating a type of ecosystem of commerce which will rejuvenate the community, stimulate pedestrian activity, and create more development interest and investment locally.

This concept is not new here in San Diego. A few developers will work with growing companies and get them in early to build out their spaces during construction, thus eliminating the need for the budding company to go through the tenant improvement process.

“That’s exactly how the concept will work.” I thought. Simple. My colleague illuminated on the fact that an incubated business is fraught with risks and those business have odds stacked against them. Add the element of a rejuvenating community being tasked with inspiring a new company to maintain consistent growth and the recipe for failure is complete.

He was right. Then I thought about my own company: An unknown development company that is exploring the possibilities of making a jump from designing and permitting a single family home to developing, designing, and constructing a multi-family project. I would think that there would be at least a little bit of risk in that endeavor!

The conversation left me inspired and I challenged myself to compose a way toward a workable solution.

My first thought was that these incubated/accelerated businesses, many that were formed within the community, can be a critical component to uplift the area. Second, I measured that these small businesses would need some slack; flexibility that they could not find in the typical marketplace. They would still need to pay rent, but there would need to be a smooth transition if they indeed failed. This left me with the notion of a smooth transition in and a smooth transition out. Our optimism would always side on the company succeeding and expanding within the project or beyond to another building in the community.

We begin with the project. Let us say it is a ten unit multi-family project with a ground floor commercial space currently occupied by my architecture company. The front façade has two entry doors – one for the residential unit lobby and one for the architecture studio. To illustrate, imagine that the studio is 500 square feet and our current capacity for staff and seating arrangements can allow us some compression of space by simply reorganizing a few workstations.

Now we can take 100 square feet of the outer edge of the studio and delineate that the storage area. During construction of the project, we will include a third entry door at that edge of the building.

We then fast forward a few months and discover an intriguing business that has potential to establish itself and create much needed urban activity when people stop by to visit and shop. After some vetting and probing we agree to terms to sublease the 100 square feet to the small business. A partition will be built to separate the new space from the studio, and they will have access to their own restroom, which will also be included during construction. The small company now has access to their own storefront.

Our design will allocate areas for signage and lighting that can be changed as businesses evolve.

To assist these small businesses thrive and hopefully grow to become a full-time tenant in a future project we will provide them with many high quality designed fixtures that will attract attention. I will help them build out the space and provide custom furniture and a point of sale counter (if necessary). The reason I would provide these custom items is that these small fabrications become huge details and points of interest to attract investors and capital. I want to make these spaces top notch so we can create media and shed serious light on the fresh redevelopment that is happening in the community. Everything will be produced with economical materials and the design will make it look like the finest craft that money can buy. The dollars we spend to give these small businesses a boost will be returned to us in truckloads in the form of redevelopment capital and equity once we transform the neighborhood and imbue it with culture and purpose.

It is important to note that these small businesses must be able to fit with in the space. Obviously, a restaurant upstart will not be practical as there will be health permits and grease interceptors and grease ducts and exhausts. A crafty coffee shop or a barbershop or ice cream parlor or tech company will be perfect.

My company will also assist in the attraction. Along our storefront we will display intricately crafted architectural models. These projects do not even need to be real projects; they can be totally hypothetical. Their purpose is to get people looking when they walk by. It is similar to the spectacle of the Macy’s storefront displays at Christmas. When pedestrians walk through the city they want to be stimulated. Dirt is not stimulating. A hedge is not stimulating. Landscaping is not that stimulating. We have all seen these things before and we drown out those daily observances. If you are in the neighborhood walking to the train station and you pass by a window that contains a model of a skyscraper, a custom home, digital animations of cities and projects complete with miniature model people carefully poised, these items stimulate another part of the brain. Your mind wants to go there and it sends you on a mini journey as you walk past. This interest translates into visions and then you see the sign for coffee and cake: “YES! I WANT SOME OF THAT!” That is how a symbiotic relationship can be created in the urban environment between two unrelated companies. It is important that everything we create is of the highest design quality. It is acceptable to use economical materials, but the intention of the design and result must be priceless.

In the event that we do experience a failure, the furniture can be put away or recycled. The partition can remain, and the storage area will return. What about the new blank storefront? To solve this, we will build another partition that is parallel to the entrance but set back about five to ten feet. This small cubical space will now display arts from the neighborhood. Imagine: a small business closes down; a few bolts are removed and the sign comes down. The storefront which was empty for just a moment is now filled with a small sculpture and the designs from a second grade class that is researching urban planning. A filled space becomes an art space and back to a filled space again.

There is a sacrifice that comes with implementing strategies such as this. That 100 square feet of commercial has a cost. The price to build out the space and the furniture and fixtures can get a bit expensive. There is a cost of locating a growing architecture firm in an under-served community. It is difficult to recruit talent when your competitors are located in the center city which is already filled with the amenities.

My challenge is to understand the risk and sacrifice, then envision the rewards. First view this concept from ground level. I see activated storefronts. Even if some of the lots remain vacant or underdeveloped, we now have some new interest that will inspire pedestrians. Now, view the concept elevated 10,000 feet up. I see the beginnings of the creation of a new village center. I see the main corridors working as they should by creating connections. I see interested investors thinking if this is the new thing, is this the new hot spot? I see capital flowing here.

The important things to realize with that newness will create change. Some call this gentrification; some call it renewal. What is gentrification without the gentry? It is crucial that these small businesses be from the community and owned by those in the community. This will allow the businesses to create relationships with local familiarity. Our village, our people, our ownership, our developments, our hard work, our responsibilities.