The Rice (University) Management Co. has big plans for this site: incubators, accelerators, collaborative spaces, maker space, green space and big views, a 24-hour live/work/play community for startups. President Allison Thacker discusses plans, connectivity and how the Innovation District will affect Houston’s entrepreneurs and its growing ecosystem.
Amanda: Hi, I’m Amanda Edwards, Houston City Council Member At-Large and leader of the Mayor’s Task Force for Technology and Innovation. And this is HXTV, championing Houston’s innovators and entrepreneurs, brought to you by PKF Texas, CPAs and advisors supporting entrepreneurs in Houston for over 15 years. My guest today is Allison Thacker, President of Rice Management Company. Allison, thank you so much for joining us today.
Allison: Thank you for having me, Amanda.
Amanda: Absolutely. So, you know why you’re here. I am super excited about the plans that are underway for our Innovation District. Just as little bit of background, you know that I worked with the Mayor’s Task Force for Technology and Innovation. There’s HX, and there’s a variety of people on board with this notion that we can increase density of entrepreneurs, innovators in our city by creating this Innovation District. You happen to be extremely involved in that. Can you tell us a little bit about your role with creating the Innovation District here in the city?
Allison: Yes, I’d love to. The Innovation District is a project that is being led by the Rice Management Company, of which I’m the President. That is the business group at Rice University that manages the endowment. This is a major investment for the University and for the Endowment and we’re extremely excited about it. I think that gets back to many of the same reasons that you were interested in getting involved in the Mayor’s Task Force and leading this initiative, which is, Houston is a very high potential city but we’ve had less success in technology than I think most of us believe we should have as the fourth largest city in the country, with a fabulous central location, an entrepreneurial culture, and many STEM employees here in the city. What is it that is causing this lack of significant entrepreneurial success and attraction of the city? One of the things that’s been brought up in research, as well as by your task force, is that this is a very spread out city, and that, in many ways, density and collisions are important to driving success and technology. As the Endowment owned a piece of property very much in central Houston, midway between the medical center, Rice University, most of our institutions of higher learning in the city, as well as the downtown business district, our view was, this might be the ideal location to try to bring together all the resources we have from around the city to try to drive Houston forward in terms of opportunity and density in technology.
Amanda: Tell us a little bit about when that idea came to mind where you said, now this is where the Innovation District should be, in relationship to the Sears building and its closure.
Allison: I think it’s one of those situations, in investing, something is called the Mosaic theory where you pull information from all sorts of different sources and at the end of the day you make that information into a Mosaic and it tells you the answer. In many ways, this was much the same. Rice has had a long history with this property. We originally were the owners of this and leased it to Sears in the 40’s for their first suburban department store in Houston, and of course, the city has grown up around that. With Sears’ issues on the financial side, we had the opportunity to repurchase the control of this land and buy it back from them. I think one of the questions from our team was, what’s the right use of over 15 acres in a central point in Houston, right on light rail? What you should arguably be able to have, as one of the most walkable districts in Houston, near neighborhoods such as: the museum district, Montrose, Third Ward, and Midtown. Our view was, while we could build many different types of real estate developments on this land and make money, that in fact, what this ought to do is capitalize on its location. If you thought about it, it really ought to be both a place to live, work, and play; a place with tenants who would value the culturally diverse neighborhoods that surround the location; and when you start to think about what that might be, technology is actually the industry that comes to mind first. The Endowment has always had a very substantial investment in Houston real estate, but we also invest over $400 million in real estate around the world. As we saw projects that have worked in other cities where we invest, be it Seattle, Santa Monica—so out in California, as well as in various east coast locations, it became very clear to us that actually this was a location that was ideally situated within Houston for this purpose.
Amanda: Absolutely. Tell us now a little bit more about what the plan is for building out this whole Innovation District. I think we’re starting with the Sears building itself, but it goes on from there. So, tell me about phase one and tell us what else can we anticipate?
Allison: Phase one, or really, phase zero as we’re talking about it is—I know, isn’t that interesting? It’s the actual renovated Sears building itself, which will be the first project to be completed, targeting the end of 2020. The goal for that project is to really set the DNA for the whole district. The idea is we want it to feel open, we want it to have great amenities, green space, to be welcoming to the community, to be inspirational. It’s a place where we envision partnerships with the school district to try to bring kids to see what is going on in technology and why is that a career that might resonate for them? One of the things our city needs to do is continue to create the workers of the future, the people that will have the jobs in these companies. The Sears building will be the first project that will be delivered, and I think then, we’ve hired a team to work on the larger master plan, led by shop architects out of New York, and they have a tremendous amount of experience developing technology-oriented projects around the country. They are helping us, along with the landscape architecture team, think about how do you actually make this an urban, walkable district? A place that’s built for people, where cars are welcome. Not a place built for cars where people are welcome. That’s a very different project for Houston. We’re largely looking at precedents from places outside of Houston to try to create a project that feels that way.
Amanda: Are we going to have housing connected to it, retail, coffee shops? Tell us a little bit about what the phases beyond the Sears building will look like or feel like, or is that still being determined?
Allison: I think there’s still a lot to be determined but the goal is to structure the setbacks and the streets, the sidewalks, as well as very much to work on pedestrian crossing and safety, to signal that and to build the type of environment that retailers and housing can survive in and create a dynamic streetscape. That’s a major part of the planning of the process. Our view is that the districts that are most successful that we’ve seen, are very vital. They’re 24-hour districts. They’re live, work, play. They’re places where people are in them during all parts of the day. Our goal is to create a neighborhood, a place where you’d want to be, a place where you’d want to visit, a place where you feel safe, and a place that excites you, where there’s things to see.
Amanda: One of the things you mentioned early on when you first started to talk about it was that it was connected to light rail. Connectivity is going to be very important. We know, people in the tech space, they want to be able to get someplace by bike, by train, by bus, or various other modes of travel. Can you tell us a little bit about how that plays into the way you are designing the space?
Allison: It is a major trend and we’ve seen it taking shape in other major markets with kind of a declining car ownership model. A little bit less of that has been happening in Houston, to date, but I think sitting at the university we have a very interesting laboratory, right? You can see student proclivities changing about how many of them want to bring a car to work, how many of them instead want to skateboard, scooter, bike, walk, use the bus system, use the light rail. I think our view is that by improving the surrounding experience, the sign posting, and the amenities even at the station there at the light rail, we believe that we can get ridership up even more. It makes a ton of sense in an urban city like this. People want to spend less of their time commuting and more of their time living. One of the things that’s been most exciting to find about this project is the collective Houston excitement.
Amanda: So everybody is smiling just like me.
Allison: People are excited, right? I think the first glimmer of this that we saw was when the President of the University, David Leebron, went to his colleagues at other universities such as University of Houston and University of St. Thomas, and really every institute of higher learning within Houston, and he said, we are interested in making an innovation district on this property that we have. The view is not to have it be the Rice Innovation District, the view is this is for Houston, and so therefore, we need to have everybody there. And we said, would you like to participate? Here’s what we want to do: we want to engage in this six-month long exercise with your university alongside the time we’re doing it with ours and say what programs are in our university that ought to be together, with others, with corporate, with startups, with other universities; and then, what should be elsewhere? And it was interesting because everyone said yes. Not only did everybody say yes, but some people called us that we didn’t think would possibly be interested and they were like, oh, we want to get involved. That is kind of magical, and so I think one of the things that we are committed to doing on this project is to saying ‘yes, and,’ as opposed to ‘no,’ or ‘what,’ about this. Our view is the more participants we can bring into the project, the better off we will be. Some of those have been about, how do we collaborate with metro, or with TxDOT, about the infrastructure of the roads, of the infrastructure of the rail system. What are the ways we can make this project truly world class for Houston by bringing everybody to the table?
Amanda: Tell me more about the Sears building, the crown jewel of this buildout for the innovation district.
Allison: It’s been an incredibly intriguing project so far because this is a building, art deco inspired, but built by Sears as a department store, right? It’s built with very few windows because they want you to come in and shop, not see the outside. It’s like a casino. In order to repurpose the building and make it a place where people want to work, in particular, young people, tech employees really are looking for light and also access to the outdoors. We hired a team, Hines will be leading the redevelopment project but we’re working with shop architects out of New York as well as a firm called James Carpenter Design Associates, who is, I would say the most innovative and at the forefront of light interventions into buildings. We will be taking the building and actually adding two glass floors onto the very top of it. The building is interesting, remember, it sits in between the medical center and downtown. It actually has incredible views from the roof. I don’t know if you had the chance to actually go stand up there and look around, but it’s a very interesting rooftop. Because this building was built practically as strong as anything could ever have been built—no shoddy techniques here—we can, with very little structural intervention, add two floors to the top of the building. And that does two things: one is, it adds to the rentable square feet of the building and makes the building economics superior, but it also gives us the chance to bring in some more corporate oriented, larger tenants into this building. One of the things that drives entrepreneurial success is being able to have access to customers, and so the way we visualize this building, it’s going to be about 270,000 square feet of rentable space. About a third of the building is going to be actively subsidized activities; things like incubators, accelerators, very early stage co-working space, food and beverage; excellent amenities for people who are working in the building but also people visiting the building. There will be university space, a maker lab, and hopefully some more exciting and shared spaces for the whole building’s tenants and some places for them to interact together. That’s one of the big things that we see happening in tech buildings around the country is the idea that you don’t need to own everything yourself. An AR/VR room makes no sense for my company to have alone, but if I could share it with 30 other companies, that would be something incredible to have. What about a space where you could practice your pitches for when you are going to go for the big money meeting? It’s very useful but not something you need all the time. About a third of the building is going to be spaces where we are building amenities that will help companies dramatically improve their available amenities vs. what they could probably afford on their own through sharing uses. About two-thirds of the building is going to be rentable, kind of more typical office space, although still very much in the tech context. We will be opening up one side of the building with a glass curtain wall, letting in a lot of light, cutting additional windows, and one of the central features will be a light well coming down through the center of the building, hopefully making light available to every floor as well as the lower level.
Amanda: You mentioned a lot of fabulous amenities and the like. What about Houston Exponential?
Allison: We absolutely hope that Houston Exponential would see this building as the number one place they had to be. How could it be anywhere else?
Amanda: I’m so excited about this project and I’m sure there are many others, in fact, I get many emails about young entrepreneurs, people who have been here a long time. You name it, people are contacting us and they want to know more information. Where should people go to learn more about the Innovation District, website, or is there some information that they can go to?
Allison: This is a great time to be talking about that because the endowment is just getting to the point where we are ready to go public this month with some new images, renderings of phase one of the project, a website to allow people to reach out to us and get involved. I think over the last year has really been about planning, from a physical standpoint, what’s possible in the project. Over the next six months we’re really planning the district, which is, how do we create the infrastructure that allows it to have that active streetscape and high quality development? Now we are entering into the phase where we’re ready for much more engagement with the community, with potential participants, with people who might want to be potential tenants of the project.
Amanda: Excellent. Well, we are excited and I want to thank you for being here today. I want to thank you for the work that you’re doing. I look forward to working with you and, of course, any time that you want to share any sneak peek information on the Innovation District, please don’t hesitate. So, again, thank you for being so inclusive in your process. And that’s going to wrap up our discussion with Allison Thacker today. We want to thank her for joining us on behalf of Rice Management Company. And this is HXTV.
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