Prime Properties, Prime Communities: Choosing Locations for Growth-Oriented Companies Executive Summary
June 20, 2014 – Hosted at Newton Marriott, Newton, MA
Moderator: Greg Bialecki, Massachusetts Secretary of Housing & Economic Development
Panelists (see Appendix A for more information):
Tim Healy: CEO, Chairman and Co-Founder: EnerNOC
Anita Worden: Co-Founder and Chairwoman: Solectria Renewables
Joseph Zink: President and CEO: Atlantic Management Corporation
Three Perspectives on Location: Boston’s Innovation District, Lawrence, and MetroWest
Tim Healy kicked off the panel discussion by describing EnerNOC’s experience in Massachusetts. EnerNOC is a publicly traded energy intelligence software company that creates software to help companies manage their energy costs. EnerNOC began in New Hampshire but only lasted there for about 6 or 8 months before realizing that it needed to relocate to Boston for an ecosystem in which it could become the world’s global leaders in energy software. EnerNOC has seen tremendous growth since going public in 2007. Revenue at that time was at $26 million and now it is just under $5 billion. EnerNOC employs 1,100 people and the average age is 32. These young workers look for elements of community so to this end, EnerNOC has created an employee-organized farmshare program, designed their space to host community/cultural arts events such as comedy nights, bands, reading nights, and they are looking into rooftop options. “Millenial generations prefer urban amenities,” Bialecki added.
Located in the Gateway City of Lawrence, Solectria Renewables is a solar inverter manufacturer, serving as the connection point between solar panels and the grid. Their products range from 3kilowatts (for residential use) to 750 kilowatts on the commercial/utility scale system. Lawrence was proven to be an ideal place for growth; nine years ago Solectria rented 4,000 square feet of space and it is using 86,000 square feet at the same location today without having to move. Facility costs are also lower in Lawrence than they would be had Solectria located closer to the city of Boston. Now, Solectria can put those savings in facility costs toward their bottom line. Bialecki added that Gateway cities like, “[t]he Lawrence’s, the Lowell’s, the Worcester’s have great local artists and creative communities is a very attractive aspect to those places and it makes for fun and engaging neighborhoods as well.” Solectria is looking ahead to foster installation growth. In 2007, Governor Patrick set a mandate to install over 250 megawatts of solar. This goal was met in 2013 and so now, Solectria has a goal to install 1,600 megawatts of solar by 2020. This anticipated growth would put Massachusetts as number six in the U.S. in terms of solar installations.
Three years ago, Joe Zink stood in an empty 1.5 million square foot parking lot and envisioned a live-work-play-stay corporate campus. He wanted to create an environment where people could come to work and have the services they need. This development – Marlborough Hills – would include residential units on site, hotel rooms and biotech and retail offices. (These retail spaces are to include food service, fitness and daycare.) The $8.8 million initial investment in Marlborough Hills has “turned into something big,” Zink explained. This investment included team involvement from the city and community of Marlborough, the state of Massachusetts and the tenants of Marlborough Hills, all striving to create a live-work place. Zink believed in the potential of the I-495 area and saw a migration pattern of high quality companies from Boston to campus alternatives. Boston and Cambridge only encompass 52.5 miles so if you’re in Boston, and “[i]f you need a large campus and you need a number of acres to put a large number of people together so they can collaborate and work together, there’s not a lot of options.” Currently, at Marlborough Hills, the Hilton Garden Hotel will be opening this fall with 153 rooms, the Avalon has 350 residential units, and retail transactions are being finalized. Historically, zoning was set up in a way that used to separate uses (industrial, residential, and retail), but now people can come to work and have the ability to bring those uses back to the way they used to be, helping to save time and allowing people to focus on work. People are also buying houses in the suburbs by I-495 for value, which broadens the workforce in that part of the state. “In each case, we’re talking about the importance of the locational decision for your business.” Zink said. “There isn’t one right answer to that search.”
Topics and Responses:
Importance of Green Facilities
While the panelists represent businesses that have chosen to locate in the urban core a gateway city and a suburban location, Bialecki was struck by the similarities in how they each chose location. One of those similarities in locational decision-making was the significance of a developer focused on a “green building environment.” Al three panelists addressed the importance of green facilities during the Q&A portion of the Annual Conference. Tim Healy noted that EnerNOC is one of Massachusetts’ biggest clean energy employers which just celebrated its 1-year move into the Seaport District. Healy said Boston is a “hub for energy, high-tech industries.” In alignment with green facilities and being eco-friendly, 85% of EnerNOC’s employees take public transportation to work. More than half of their employees commute roundtrip between 0 and 10 miles, 12.7% commute between 11 and 15 miles, 22.6% travel 21 miles or more, 29% walk to work, 28% bike to work, and 26% of EnerNOC employees drive alone to work. The average age of EnerNOC’s employees is 32, and that generation’s values/ideals align with the corporate mission of clean energy and people at EnerNOC want to be involved. Solectria generates some of its own energy from rooftop panels and serves residential, commercial and utility-scale customers. “We are the brains of any energy harvested from the Sun,” Worden said. Zink echoed the sentiments of Worden and Healy, explaining that people are now engaged about energy as it’s become part of the employee conversation.
Startup Communities in Massachusetts
“There’s a spirit of entrepreneurialism here in Massachusetts and I don’t think that’s going away anytime soon,” Healy said. “There’s an unpredictability that comes with a startup, as to when that expansion will need to take place.” According to Worden, the “environment for startups is very supportive here in the state” and Massachusetts has been “incredibly supportive” of Solectria.
Finding Qualified Talent
Solectria admits to having a hard time finding the right talent. They must provide engineers with the right amenities and the right salaries, and they must also train assembly line workers on-site. Solectria understands that they need to retain their staff and offer upward mobility. Being at the crossroads of Route 93 and Route 495 in the Merrimack Valley, Solectria has great access to talent across Eastern Massachusetts and Southern New Hampshire (while 80% of its workforce on the manufacturing floor is from Lawrence). Solectria relies on community colleges for talent and was also awarded a grant through the Federal Reserve Bank of Boston which allowed it to employ a workforce that ranged from high school to a manufacturing level. Like EnerNOC, Solectria has experienced serious growth. They have gone from four employees nine years ago, to 180 employees today, and expect to have more than 300 employees over the next five years to serve the needs of the solar landscape. “The software and technology sector has a scarcity of talent,” Healy said. However, EnerNOC says it doesn’t struggle because it’s one of the only employment options within its field.
Greg Bialecki Remarks:
As Secretary of Housing & Economic Development, Greg Bialecki and Governor Patrick’s administration have focused on economic growth in Massachusetts. His remarks at the conference focused on environmentally friendly buildings, business expectations, and transportation infrastructure. “The Massachusetts economy is on the move,” Bialecki noted. Last year, Massachusetts added more than 55,000 jobs, which is the most in a single year since 2000. “There’s a lot of energy in the Massachusetts economy. With this 21st century economy, part of the re-grouping that we need to do [relates] to… the expectations of the education …and the workforce development systems versus …the expectations of employer responsibilities.” Bialecki and Governor Patrick’s administration have also examined where people want to live, work, and play, and which communities and regions are growing. Specifically, Bialecki said that if we want to grow and connect, we need to spend more money on infrastructure. “Good transportation planning is understanding that it’s a means to an end…” Bialecki referred to the fall 2014 opening of the first new subway station on the T in 20 years (on the Orange line at Assembly Square). Bialecki took his role as moderator of the Annual Conference as an opportunity to extend a “thank you” to local communities whom he and the Patrick administration have partnered with on development projects. “Whether stuff gets built here, whether it gets built fast, whether there’s prompt and predictable permitting, is largely a local matter…”
Four breakout sessions followed the panel:
- Marketing Matters: Positioning Your Location for Competitive Advantage: This breakout session was led by Scott Madden, Senior Partner at Connelly Partners, and Christopher Steele, Chief Operating Officer at Investment Consulting Associates. They explored how to attract companies, leaving attendees with the rule of thumb that community comes first and facilities second. The challenge in New England is that each town/city is so different and so are the regulations that pervade them. The leaders also consulted individual cases from attendees on the sub-topics of digital marketing, targeted versus traditional marketing, search engine optimization, finding relevant vendors and conveyed the point that business objectives should drive market strategies. Scott’s presentation slides can be found here. Chris’ presentation slides can be found here.
- Behind the Scenes Process of Site Selection: How Companies Choose the Best Fit: Many participants with experience in government and private company site selection joined Brian Cohen, Senior Vice President and Director of Consulting of Transwestern|RBJ, to discuss the many factors that go into corporate moves and expansions. Companies often start with large selections and it is up to them to figure out what restrictions they want to place. Each company has different requirements for future locations ranging from access to talent, easy permitting, or transportation. In the beginning stages, site selectors are always looking to take locations off the list. With every restriction, areas are taken off the map, and after this process, the company is left with only about 10 locations that would actually work for them. Employee retention is another important factor to consider when choosing a new site. There are services that can calculate clusters of where current employees live and, if the company moves, which areas will be at a bigger risk for drop off. In the end, each company will have different criteria for their best fit. No situation is exactly the same and it is the responsibility of the site selector to determine what the company is willing to risk and what they hope to accomplish with a move.
- Win-Win: Creating an Incentive Package that Both Your Community and Company Will Love: Lynn Tokarczyk, President of Business Development Strategies, led this session which focused on securing state and local tax incentives for business expansion. Lynn reviewed the various types of incentives that are available; the eligibility criteria; and the partnership that is required among the business, municipality, and town to create a successful incentive package. Discussion and questions developed around “failure to perform” on the business side; special incentives for Gateway Cities and manufacturing companies; and recent changes in Massachusetts law governing incentives. Lynn’s slide presentation can be found here.
- ReadyMass 100: In this breakout session, MassEcon’s Senior Director Doug Kehlhem explained how to get a property onto this esteemed list of top Massachusetts locations. Each of the ReadyMass 100 properties has been rigorously evaluated by a team of real estate experts in concert with MassEcon’s state partners and is certified for immediate occupancy or development. The properties have met criteria relating to infrastructure, permitting, size and readiness.
Thank you to our sponsors:
Appendix A: Panelists
Greg Bialecki has served as the Secretary of Housing & Economic Development for the Commonwealth of Massachusetts since his appointment in 2009. As Governor Patrick’s chief housing and economic development advisor and cabinet member, Secretary Bialecki has oversight of 14 state agencies that carry out the Administration’s top priorities in business development, housing and community development, consumer affairs, and business regulation. The focus of his Secretariat is the creation of homes and jobs in the Commonwealth. To that end, he has aligned the state’s housing and economic development priorities to coordinate policies and programs that ensure Massachusetts maintains its global competitive edge.
Tim Healy co-founded EnerNOC in 2001 and serves as its Chairman and CEO. In 2007, he led EnerNOC’s initial public offering, which was named IPO of the Year by the Association for Corporate Growth Boston and Mass High Tech magazine, and received the Ernst & Young Entrepreneur of the Year Award in New England. More recently, EnerNOC was recognized with a 2012 Platts Global Energy Award for Industry Leadership, and Healy was honored as CEO of the Year by the Massachusetts Technology Leadership Council. Today, EnerNOC is one of the world’s largest full-service energy management providers with over 700 employees and operations in the United States, Canada, the United Kingdom, Australia and New Zealand.
Anita Worden is an experienced and successful business leader with a proven track record of creating solid management teams and financial backing. From 1989-2005, she was the Co-Founder, President, and Board Member of Solectria Corporation. Worden is also one of the Co-founders and currently the Chairwoman of Solectria Renewables. She is a graduate of the Massachusetts Institute of Technology.
Joseph Zink is the President and CEO of Atlantic Management Corporation. His responsibilities include acquisition of existing product and future development opportunities. He also oversees all federal, state, and local permitting issues for the Company. Zink holds a Bachelor of Science in Finance from Babson College. He is involved with several charities and foundations that focus on children’s education and healthcare, online computational systems, and filed two patents as co-inventor. He is the review editor of Frontiers in T Cell Biology and an editorial Board Member of Cancer and Clinical Research.