An old-fashioned brass bell mounted high on a wall in the sleek hallway at the high-tech bioscience incubator VelocityTX is there for celebrating accomplishments and milestones.
Randy Harig took hold of the bell pull in April and gave it a good ring when the Texas Research and Technology Foundation closed on its purchase of the historic G.J. Sutton property.
As CEO of the foundation, which owns and operates the nonprofit’s growing subsidiaries in a former cold storage plant on San Antonio’s East Side, Harig saw the acquisition as a major victory in expanding its footprint for the good of the community.
But the Sutton property is one on a long list of recent gains for the foundation since its leaders began shifting from operators of a suburban research park into building a modern-day, urban innovation district.
In the last two years, the foundation that’s based on economic development principles also opened VelocityTX with two anchor tenants, graduated several startups, brought the Alamo Angels investing network into its fold and established a subsidiary that buys legacy businesses. It also sold off much of its land on the far West Side.
On May 18, the nonprofit will lay out its next steps and ask city leaders, philanthropists and others for financial support as they work to expand economic opportunity around research and development in the bioscience sector.
“We have one shareholder,” Harig said. “And that’s the community.”
The foundation got its start in 1984 and really hit its stride two decades later when ILEX Oncology, a startup incubated at the Texas Research Park on State Highway 211, was bought by Genzyme Corp. for $1 billion.
When in 2015 Microsoft purchased a parcel of land in the 1,500-acre research park for its data center, “that changed everything,” said Rene Dominguez, president and chief operating officer of the Texas Research and Technology Foundation.
“That provided really the momentum and money needed to change the strategy,” he said. “At that point, the research foundation had substantial funds and wanted to deploy them in a very meaningful way.”
In late 2017, it purchased the long-vacant Merchants Ice Building at 1305 E. Houston St. for $4.5 million. The foundation then embarked on a redevelopment plan to house what would become the foundation’s incubator for startups and a facility to support researchers looking to commercialize their inventions in the bioscience industry.
The project has so far cost about $60 million, but that figure will likely double, Harig said. The City of San Antonio has kicked in millions of dollars by way of economic development incentives to support public improvements, and the project was eligible for historic tax credits.
San Antonio-based BioBridge Global moved its biomanufacturing subsidiary GenCure to VelocityTX in March 2020.
Becky Cap, chief operating officer at GenCure, said the location aligned with the company’s goals to better serve the community in terms of donor outreach. But it also puts the company in a place where it can provide jobs, training and good salaries in an area where those opportunities have fallen short.
It’s become a selling point in attracting business. “The customer response is really interesting,” she said. When potential customers see GenCure’s proximity to the airport, highway and downtown, and new housing and other developments occurring, she said they also see the potential for “the right kind of talent” moving in to support their manufacturing efforts.
Cap also participates in supporting other startups at VelocityTX, which in turn helps to build a network for GenCure without depending solely on travel to conferences and trade shows in other parts of the world.
“It has broadened our horizons and made it easy to make those connections,” she said.
Though about 80 people now work in the offices and labs at VelocityTX, hard hats and reflective vests are sometimes more visible around the campus than laptops and lab coats.
Build-out on 20,000 square feet of tenant space for Scorpion Biologics, a biomanufacturing company focused on cell and gene therapy, is underway, as is redevelopment of a four-story building that Dominguez said is already 87% pre-leased. The entire project is expected to be completed in 2023.
Next up is a four-story parking garage across East Houston Street from the campus. The garage will service both VelocityTX and the 6-acre Sutton property, creating what Dominguez characterized as a contiguous “super hub of activity” within three to eight years.
Foundation leaders are eyeing the Sutton plot, where they plan to build offices and lab facilities as well as devote green space for community use, as space for military medical research and have begun talks with several Department of Defense institutions. When complete, the complex could support almost 2,500 jobs.
“The Sutton property alone provides a huge opportunity,” Dominguez said. “If we can focus on making Sutton successful, we’re more than halfway there in terms of the overall impact we want to have on the East Side.”
With the help of consultants, the foundation has been pressing the city and county for two years to formally designate a 70-acre “innovation district,” something similar to the Cortex Innovation Community in St. Louis.
With VelocityTX and Sutton at its core, the district’s influence would encompass another 120 acres that includes two historic districts — St. Paul Square and the Dignowity Hill residential neighborhood — along with other commercial amenities such as restaurants and some undeveloped land.
The designation would provide “all the tools necessary to drive redevelopment,” Dominguez said, such as land use strategies, tax increment strategies, master planning, development support services and incentive development.
It would also address housing and gentrification as development grows, he said. “We’re not anticipating displacing people, but there needs to be thoughtful policies developed to help the residents as we do.”
Harig said with urban innovation districts cropping up around the country, the time was right for the foundation to sell land in the Research Park and focus its efforts downtown.
“But long term, I don’t like to beg for money every year and I don’t like the insecurity of not knowing what the future is,” he said. So he found another solution.
Inspired by local theater mogul John Santikos’ bequest to direct profits from his business holdings to charity, Harig sought to create a similar arrangement for the foundation.
Out of that came Community House, a subsidiary that buys out legacy businesses, invests in their growth and, through a trust, uses the profits to help finance the mission of the foundation.
Community House commits to retaining the business name and its employees, as it has with a 78-year-old construction materials company previously owned and operated by the founder’s daughters and their spouses.
In 2020, the foundation acquired Allen & Allen and set it up for rapid growth — 47% in the first year and 60% in the second. “It’s turned into a real nice powerhouse and we actually have more expansion coming,” Harig said of plans to open a lumberyard in Johnson City.
The job to build up an established company is not unlike that of the work that VelocityTX does in boosting an early-stage company, he said. “It’s fun,” and there’s more to come.
“Now that we’re on the flip side [of the coronavirus pandemic], we’re looking at a couple of different companies to expand the House and I’m super excited about it,” Harig said. “I can already see that will be it will help us be sustainable a year faster than we thought we were going to be.”
But even a bigger portfolio of companies can’t fully support a community project the size of the proposed innovation district, Dominguez said. While the plan is set in motion, public and private sector support is key.
“We’ve sold property, we’ve seeded the plan, we’ve created the master plan and created proof points along the way to show that this is absolutely possible,” he said.