Is Chapel Hill Missing the Boat on High Tech?

Chapel Hill is home to one of the nation’s leading research universities. One might think that it would also be home to a covey of high technology companies that either ‘spin out’ from the university or simply want to be near an academic center. Alas, that is not the case.  Why are there so few biotechnology, information technology, or other high tech businesses in our town?

It’s not that possibilities are lacking. UNC has spun out approximately 300 start-up companies over the last several decades. However, once these companies begin to prosper and emerge from on-campus ‘incubators’ they are forced to leave town because no suitable facilities are available.

Many of the spin out companies are quite small, but others are quite substantial.  Quintiles, a company that performs clinical trials for the pharmaceutical industry, was an early UNC start up; it now has thousands of employees and is worth billions.  A much more recent example is Bamboo Therapeutics, a UNC spin out that was just bought by Pfizer pharmaceuticals for about $150 million.  High tech companies like these provide good jobs. They also greatly benefit the Town’s tax base because they pay far more in taxes than they consume in services. But Chapel Hill, thus far, has not made much effort to pursue these sorts of businesses.

Other towns have taken a different approach. Boulder, Colorado and Ann Arbor, Michigan are two university towns somewhat comparable to Chapel Hill. Both, however, have done a much better job of attracting and retaining high tech business and now have dozens of companies and thousands of jobs in that sector. Boulder attracted high tech business by focusing on creating a high quality of life.

On a much larger scale, Cambridge, Massachusetts has built on the intellectual horsepower of Harvard and MIT. Its Kendall Square area is now home to approximately 600 small high tech companies,  as well as some major IT and ‘big Pharma’ companies such as Google, Microsoft, Amgen, Biogen and Novartis, with total investment reaching many billions of dollars.

However, you don’t need to travel to Boulder or Boston to see successful examples of high technology development.  Next door in Durham, the American Underground is doing a pretty good job of this. Even more impressive is the Wake Forest Innovation Quarter that has converted the old tobacco factories in Winston Salem into a gleaming new high tech center. How do these high tech clusters come about? As we learned recently by by visiting the Wake Forest site, it takes a lot of planning and effort.

We initially thought, perhaps naively, that you just needed to build a few labs and offices and things would take care of themselves. Not so. Developing a modern innovation district is more than just labs. It also involves housing, amenities such as restaurants, entertainment and retail, and even the arts, all planned in an integrated manner. Clearly this requires vision, leadership and close cooperation between the university, the municipality, and developers. Sadly, this kind of coordination and vision seem to be lacking in Chapel Hill.

To be sure, over the last few years, UNC has placed a premium on ‘entrepreneurship,’ and many services are available to assist faculty and students who seek to transfer their technology to the commercial sector. But that ends at the campus boundary.

Until very recently, there has been little coordination between the university and the local government on this matter. In particular, there is a dire need for commercial space, particularly ‘wet-lab’ space, suited for high tech companies. In the absence of such facilities within town, small high tech companies are forced to re-locate to Wake or Durham counties or even out of state. This is really quite sad because Chapel Hill already has many of the features needed for a contemporary high tech focus, while places like Winston-Salem must build them from scratch. Chapel Hill has the amenities that would be attractive to high technology businesses and their sophisticated employees. We just need the physical work space.

Chapel Hill leaders and the local chamber of commerce have so far missed the opportunity to leverage our university resources. The Chamber’s recent forum on real estate touted more apartments and condos in our future. This year the Chamber plans a visit to Boulder Colorado. What will they learn?

Chapel Hill is in danger of becoming a bedroom community with fewer employment opportunities. The owners and employees of the multiple companies that spin out of UNC work and pay their business taxes elsewhere, to the benefit of other communities, and then commute home to Chapel Hill and complain about the high residential property taxes. This situation needs to change.

Read about the June 7th High Tech Forum sponsored by C.H.A.L.T.


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