Incubators give companies a start

Incubators give companies a start

New firms find space, bargain rents to begin increasing production

By Ann Meyer

Special to the Chicago Tribune

October 24, 2005

Tom Traficano spent three months searching for a manufacturing facility for his new business, but everything was too expensive or needed too much work.

Just getting property owners' attention was a problem.

"When you're looking for a small amount of space, zoned properly, it can be tough to get that," Traficano said. "Sometimes you never even get a call back."

Then, two months ago, through word of mouth, he found the Fulton-Carroll Center, a 410,000-square-foot business incubator on the West Side operated by the Industrial Council of Nearwest Chicago.

The facility's move-in condition was as enticing as the reasonable rent, and the landlords seemed eager to accommodate him, said Traficano, a former banker who started Chicago Commercial and Consumer Brands a year ago to manufacture dry spices, seasonings and confectionery mixes.

Within a couple of days of his first visit to Fulton-Carroll, Traficano had the keys to a 2,100-square-foot space, complete with the use of two freight elevators and a loading dock, all for about $1,000 a month.

"They're interested in getting people in here and up and running. They want people to be successful so they'll employ more people," he said. Already, Traficano is looking to add a fourth person to his staff.

Business incubators are catching on throughout the nation. The National Business Incubation Association counts about 1,100 incubators in the United States, up from 1,000 in 2002 and just 12 in 1980, said Meredith Erlewine, director of publications at the association in Athens, Ohio.

Most are run by non-profits that don't have the marketing budgets to promote themselves, but tenants often talk up the incubator's many advantages, including fair rents, flexible lease terms, a collegial environment and free business advice.

"It was a godsend" is how Matthew Kollar describes finding the Fulton-Carroll Center two years ago. Kollar, partner at Leftwing Scenic, originally bartered set-design work for space at Pegasus Theater, but after a couple years the company was ready to branch out.

The company leased 600 square feet of space at the Fulton-Carroll Center and has since expanded to 2,400 square feet, including a loading dock, for about $1,160 a month, about half what it would expect to pay in a different area, Kollar said. What's more, Kollar takes advantage of the business classes and other assistance the incubator provides.

The Fulton-Carroll Center is the largest general business incubator in the Chicago area, while two new science-and-technology-focused incubators are opening this fall.

One is at the former G.D. Searle complex in Skokie, which Forest City Enterprises plans to develop into as much as 2 million square feet of laboratory and office space. The first tenant, the NanoBusiness Alliance, a trade group, occupied 550 square feet in July, a spokeswoman said.

Meantime, the Illinois Institute of Technology on Chicago's South Side is actively leasing 6,000 square feet of space. University Technology Park incubator at IIT plans to expand to 30,000 square feet by 2007, said David Baker, vice president of external affairs.

The university also is working to create space for established companies, including those that graduate from the incubator, Baker said. It will begin reconstruction next month of an office tower at 3424 S. State St. and is seeking tenants, he said.

In Evanston, the Technology and Innovation Center houses 47 companies in 35,000 square feet in two buildings, though Northwestern University plans to reclaim one of the buildings, 906 University Place, in the spring, said Tim Lavengood, executive director. The center is building out an additional 8,000 square feet at 820 Davis St. and looking for more, he said.

Companies apply to get in and are evaluated based on the quality of the entrepreneur and the innovation, Lavengood said.

"We turn down most people," he said.

Due to the high price of real estate in Evanston, tenants typically rent about 800 square feet for $800 to $1,600 a month, though offices as small as 180 square feet are available for $300 a month, Lavengood said.

"We put up more walls and make the space smaller. That's one of the ways we can get the price down," he said.

Besides office space, tenants have access to conference rooms, kitchen areas, office equipment and business advice, including networking opportunities with successful entrepreneurs and free legal clinics.

Free business advice is an important part of most incubators, said Erlewine of the national association.

"The idea is the small businesses are going to get an orchestrated set of services that will help them grow faster and smarter than if they were doing it on their own," Erlewine said. "Then they become a solid employment force in that community."

Many stay in the area after they outgrow the incubator. Arc Technology Group, an e-mail newsletter firm, initially leased space from an Evanston firm offering its own version of a business incubator by carving up its facility for start-ups.

When a spot opened in 2001 in the Evanston Technology and Innovation Center, a full-fledged non-profit business incubator, Arc grabbed it and has been there ever since, said Robert Jacobi, Arc's founder.

"It's a great place to be," Jacobi said.

A built-in benefit is the proximity to other emerging businesses.

"There's a lot of community with a whole bunch of different companies in the technology space," Jacobi said. "It's more friendly" than a typical office building.

You don't have to be in a high-tech industry to appreciate the camaraderie of an incubator. Musician Joe Lanasa started Fulton Street Collective, an incubator for about 25 to 30 artists and creative businesses within the Fulton-Carroll Center. Studios start as low as $175, and members share 1,200 feet of gallery space. Many of the artists work together, critiquing each other's work or making referrals, Lanasa said.

"You have this whole community there to support you," he said.