February 27, 2003

Cooking up a new business? Think incubator

  • Group builds $3M incubator for startups in Tacoma
    William M. Factory Small Business Incubator


    Developers and investors waiting for the mid-to-large-size office market to improve have a few more years of contemplation. However, prospective building owners ready to construct attractive commercial structures that cluster small offices designed for entrepreneurship can achieve market rate occupancy.

    Targeting small companies as tenants with smaller space needs rather than larger firms with large office demands provides an essential function in today’s otherwise weak commercial real estate market. Small businesses are particularly attracted to buildings with qualities that provide capabilities to increase company revenues, allowing them to afford higher rents per square foot.

     William M. Factory Small Business Incubator
    Images courtesy of William M. Factory Small Business Incubator
    The William M. Factory Small Business Incubator in Tacoma will provide space for fledgling companies in a low-overhead environment.

    An example of a building that provides small firms with the presence of a big company is a new $3 million, 20,000-square-foot small business incubator facility at 1423 E. 29th St. in Tacoma under construction by the William M. Factory Small Business Incubator.

    The incubator aims to revitalize the local economy and strengthen the business-friendly image of Tacoma/Pierce County. The strategy is to create a place to grow enterprises in a low-overhead environment, allowing entrepreneurs to put their limited funds into business operations rather than large floor spaces. The incubator anticipates a September 2003 completion.

    The combination of good location, high-quality space and on-site business services that the incubator offers should absorb the demand for office space from local entrepreneurs.


    With its proximity to Interstate 5 and Portland Avenue, the Tacoma incubator is well positioned for companies relying on freeway access as congestion stifles connecting routes. Another advantage is the close proximity to the city’s downtown, the Port of Tacoma and Sound Transit’s Freighthouse Square station.

    After years of inactivity, the Portland Avenue corridor will benefit from construction investments. Across the arterial from the incubator is the site of the Puyallup Tribe’s $200 million gaming resort scheduled for completion in early 2005. Just over a mile south is a planned $200 million residential redevelopment of the Salishan neighborhood by Lorig Associates and the Tacoma Housing Authority, slated for a 2004 groundbreaking.


    The incubator will have a distinctive appearance that makes maximum use of natural lighting. Visitors enter through an atrium lobby while nearly all offices benefit from being located around the building’s perimeter.

    Interior spaces include common areas with cooperative use of work areas, conference rooms and shared use of copiers, printers and other business equipment. Other features include view balconies of Commencement Bay and Mount Rainier, secure parking and a security system.

    The facility comprises 24 building offices of 200-400 square feet that are equipped with category 5e wiring, multiple dataports and available business furniture. An anchor tenant space of 2,500 square feet is also available.


    Co-located in the building will be incubator staff, resources and consultants. These business-related services provide added value to the building for tenant companies. Technical assistance includes daily management, marketing advice and specialized support.

    An in-house technology center will maintain the facility’s over 100 workstations and site licenses for Microsoft software. Technology staff train and support business owners to use computer hardware and software products, assist companies to set up and maintain Web sites, and are available for other technical issues that arise.

    Technology has proven to be an excellent tool for small business owners geared for growth. The problem is that often they find themselves bogged down by technical details and can’t afford the time nor expense to make their business “wired.” The technology center allows them to have this competitive advantage, without the headache, so that they can concentrate on growing their businesses.


    Merit Co. is the general contractor for the incubator.

    The incubator is an ideal place for startup technology firms who lack venture capital to afford large offices and purchased equipment, but can achieve growth potential through shared work areas and equipment.

    Another good fit are specialty contractors who benefit from the incubator’s bid resource center and professional offices but have off-site storage of construction equipment. Incubator staff are familiar with blueprints and contract documents, facilitating supply quotes, skilled trade workers and job estimates.

    Also, service companies whose customers are typically other businesses and don’t need retail space would find the incubator very desirable. The building enables entrepreneurs to direct and mange the flow of goods and services that are made and delivered from off-site locations directly to end-user customers, avoiding inventory space costs and reducing transportation expenses.

    Importantly, it is not only the quantity but also quality of commercial buildings that stimulate the region’s economy. The incubator model offers possibilities for additional specialized office buildings that benefit other industry sectors — such as export/import, research and development activities, and professional services involving real estate, accounting, legal and medical practices.

    It may require more work initially to attract and lease offices to specialized small business sectors, but there is great potential for occupancy from these growth segments of the economy that are priced away from mid-to-large-sized offices.

    Across the country incubators are developing alternative building rent arrangements, such as collecting a percent of a company’s site-based transactions and/or obtaining a share of any purchase of the tenant firm by outside buyers.

    The new William M. Factory Small Business Incubator is financed through a combination of public and private sources, including a $1 million US Bank loan. The building’s development team includes Boe Architects, Merit Co. as the general contractor, AHBL Engineers, landscape architect Jeff Glander and project manager Heery International.

    The incubator’s move into the facility brings it back to its roots in East Tacoma. The incubator was founded in 1986 on Portland Avenue in a converted restaurant three blocks from the new building site. In 1998, a successful incubator company bought the leased complex for its headquarters while the incubator moved to downtown Tacoma with the goal of returning to the Eastside.

    Tim Strege is the executive director of the William M. Factory Small Business Incubator, and president of the Washington Association of Small Business Incubators. He holds a master's degree from Harvard University and completed post-graduate studies at the London School of Economics and Harvard Law School.

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