Unlocking CRE Opportunities in Today’s Technology Landscape

May 31 4 min read

The three rules of real estate, “location, location, location,” may be a cliché, but for venture capital funding, the phrase has proved true for the last 20 years. The venture capital industry and Silicon Valley are closely connected, so much so there is an informal “20-minute rule” where startups outside a 20-minute drive of a venture capital firm weren’t a priority for funding. This has led to insatiable demand for real estate within the Bay Area, concentrating funding and talent on a hyper-specific geography that’s left vast swaths of other locations behind. However, over the past year, higher interest rates and the collapse of Silicon Valley Bank have reduced funding to many unprofitable companies, with many exiting startups scaling back operations and eliminating staff.  

One alternative to the boom-and-bust nature of private markets has been the CHIPS and Science Act of 2022, which authorized $10 billion for the Regional Technology and Innovation Hubs Program (Tech Hubs), which seeks to grow industries of strategic importance and plant the seeds of future tech hub growth in regions outside of Silicon Valley. These technology hubs partner with state universities and local entrepreneurs to attract and retain graduates in more rural and affordable areas, creating these highly specialized business clusters. Below are some industries and locations covered by this new era of government-guided industrial policy:  

The Nexus for Advanced Resilient Energy (“SC Nexus”) This hub is in South Carolina, in the tightly connected MSAs within the Upstate and Midlands regions (Greenville, Spartanburg, Anderson, Columbia, and surrounding counties). This is an Advanced Energy hub, specifically developing and driving innovative research in designing and manufacturing control systems fundamental to a clean energy transition. Of significant importance is:  

  • Advanced Manufacturing of small modular nuclear reactors, offshore wind turbine manufacturing, hydrogen production and storage, and development of batteries and photovoltaic solar panels.  
  • Battery innovation and testing to develop and test the next-gen stationary battery components for large-scale energy storage. This includes vanadium flow, self-healing silicone anodes, and improved thermal safety technologies.  
  • Grid re-engineering to develop and demonstrate new products using grid-storage AI and ML to enable efficient weather and cyber-resilient distributed systems.  

Central to this region’s success is the Savannah River National Laboratory in Jackson, South Carolina, along with a growing list of established private sector companies, such as Bosch, BMW, Duke Energy, Pomega, and Westinghouse, looking to take advantage of the substantial federal grant funding and workforce growth and development projects currently taking place in this area.

According to Rob Williams, a Vice President with Stream Carolinas, recent technology companies to establish operations in South Carolina include EnerSys, Omron Automation, Tesla, Mojave Energy Systems, TIME Bicycles, and Erchonia Corp. “South Carolina has proven itself effective in attracting top technology firms due to its low cost of living, friendly business environment, and commitment to growing the technology industry through programs such as SC Nexus,” explains Rob. “Put simply, South Carolina is a place where companies and their employees can thrive.” 

Texoma Semiconductor Innovation Consortium (TSIC) This hub offers a decentralized model of semiconductor chip production. By exploring the manufacture of bare semiconductor wafers in “Fablets,” which are mobile and distributed labs containing semiconductor manufacturing, production, and testing, it is possible to have a highly reactive semiconductor supply chain. This is especially important for the military and defense industries because it provides multiple chip redundancies and eliminates disruptions.  

Southern Methodist University leads this tech hub in Dallas, encompassing 29 counties in North Central Texas (including Dallas and Fort Worth) and Oklahoma. The North Texas Region is the birthplace of integrated circuits and has an existing advanced ecosystem of telecommunications and defense contractors. Companies involved in the TSIC area include Fujitsu, Lockheed, Toyota, GlobalWafers, and Texas Instruments, to name a few. The TSIC tech hub will strengthen existing business relationships between industries and companies dependent on stable semiconductor supply chains. The Fablet concept is looking to disrupt the production of modern microprocessors, the most complex devices ever invented or manufactured by humans.

Randy Cooper, Vice Chairman of Stream’s Tenant Representation Division, has observed the direct impact. “The buzz around tech is palpable, especially in North Texas, where firms are investing billions,” Randy notes. “For instance, the investment in Sherman, Texas by Texas Instruments could reach $30 billion. Consequently, there’s a growing interest from tech companies to locate nearby, fostering collaboration in research, development, and employment opportunities. Some in Congress are even comparing the semiconductor industry’s expansion in Texas to ‘the most significant technology revolution since the Manhattan Project.'” 

South Florida Climate Resilience Tech Hub – This region is the most exposed geography in the United States to climate-driven catastrophes, from sea level rise to hurricanes. As a result, this hub focuses on sustainable and resilient infrastructure, from extreme building codes, clean cement, and marine infrastructure to artificial reefs and seawalls to help prevent or mitigate future climate disasters. This hub partners with Miami Dade College and Florida Memorial University, venture capital funding, and 20 commercial partners to develop solutions to future climate problems. 

“Miami is rapidly emerging as a prime destination for tech companies,” notes Carlyle Coffin, Senior Vice President at Stream’s Miami office. “Major players are establishing headquarters here, while smaller firms are also flourishing. With Florida attracting more young professionals, the industry’s growth is inevitable. Apple’s recent announcement of a new 45,000 square foot office in Miami is a testament to this trend.”

In much the same way that life science laboratories sprung up in key locations (San Francisco, San Diego, and Boston) to meet the growing demand of venture capital-funded biotechnology startups, there will also be a need for creative office and R&D laboratories in these key areas focusing on these key technologies in the future. With the United States shifting priorities and providing a strategic roadmap (along with generous federal funding, grants, and workforce development plans) for industries to promote the goals of national security and climate change resilience, there is much opportunity for industrial and office developers to explore options in these hubs and ride the next wave of federal-assisted new technology startups.  

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