As regions around the country consider their futures and think about how to become the “next Silicon Valley” or the “next Route 128 Corridor,” it could be instructive to look at Pittsburgh and how it is utilizing assets from its past industrial economy to nurture the growth of the city’s burgeoning robotics industry. The Pittsburgh region is fortunate to have outstanding universities producing a steady flow of talent to fuel innovation and populate the workforce. Carnegie Mellon University, in particular, is incubating and commercializing numerous ventures and is a driving force in the creation of this new industry, which includes major players such as Uber, Google, Argo AI, and Caterpillar.But for an industry to grow, it needs a large supply of suitable real estate – sufficiently flexible to meet the unique needs of diverse companies at every stage of development. In Pittsburgh, the Regional Industrial Development Corporation of Southwestern Pennsylvania (RIDC) has been fulfilling that need. As a self-sustaining, private nonprofit organization, RIDC's mission is to support economic development in communities around the region by breathing new life into large, vacant facilities once home to the giant steel and coal companies that abandoned them a generation ago. Since RIDC is a mission-driven nonprofit with a large portfolio, it can afford to take a long view of success, often building on spec and working in partnership with early stage companies.
Here’s what some of the players in the Pittsburgh market have told us they are looking for when they make location decisions:
- Uber Advanced Technologies Group, who worked with RIDC to build a test track for driverless vehicles, values a property owner that is “pro-innovation” and “great about supplying transition space as we [grow].”
- HEBI Robotics is located in RIDC’s Lawrenceville Technology Center, a former steel mill. They said: “Finding the right space that can accommodate light manufacturing and offices can be a challenge.”
- Seegrid is located in RIDC Park West, a former Westinghouse Electric facility. “Robotics companies are a challenging business and unpredictable. It’s good to be in a place that understands that and is flexible and accommodating.
”Innovative, entrepreneurial companies, particularly those at early stages, apply the same kind of mindset to their real estate needs as they do to other parts of their business. They need locations that provide flexibility, understanding and synergy, and landlords who can help them see around corners as they plan for the future. For instance, if they multiply in size in a short period of time, will their lease – and their landlord’s portfolio – provide them with options? Does the developer understand this nascent industry – are they willing to invest in a property early on, essentially betting on their tenants’ future success? Is there a critical mass of companies in their field nearby that create a feeling of energy and excitement across the property or campus?
Many of these companies also make social responsibility a priority, and they want to align themselves with developers and property owners who share their values. Are they connected to the city’s civic life? Do they have a reputation for working well with the communities they build in? When they rehabilitate old sites, are they doing so in an environmentally sound way? Are future construction plans being developed with an eye toward not only innovation, but sustainability?Certainly, there are many factors that contribute to the creation of an industry hub in a particular geographic location, but availability of the right type of properties to house them is clearly one of them. Another key part of the equation is having a vehicle in place, as Pittsburgh does with RIDC, that is mission driven, not-for-profit and that has the wherewithal to take a long-term view of projects. It serves the multi-faceted purpose of revitalizing obsolete properties, putting them back on the tax rolls, spurring economic development and job creation – and fulfilling a vision for the region as a whole as well as for the individual companies it works with.
Donald F. Smith, Jr., Ph.D is the president of RIDC of Southwestern PA.