USD Discovery District announces first tenants as building prepares to start

Published by Siouxfalls.business on December 14, 2023.
This paid piece is sponsored by South Dakota Biotech.

The first tenants have been secured, and construction is starting for the first building at the USD Discovery District.

The two-story office and research building at 4600 W. Nobel St. came in 13 percent under the initial cost estimate, and the goal is to have footings and foundation work done this month.

ISG is the architect, and McGough is the construction manager at risk. The building will sit to the west of the USD — Sioux Falls classroom building and GEAR Center, allowing it to share parking and leaving the rest of the 80-acre campus open for development.

“We’re very pleased with where we’re at,” said Ryan Oines, chief operating officer of the USD Discovery District. “By early February, the precast will be delivered, we have design programs going for the first three tenants we have secured, and we are focusing on marketing and tenant recruitment.”

The office tenants all bring synergy in working with businesses: The South Dakota Small Business Development Center Network and the Prairie Family Business Association plan to move their offices into the USD Discovery District by late next year.

“Prairie Family Business Association is thrilled to be creating a dedicated office suite in the USD Discovery District,” executive director Stephanie Larscheid said.

“Our team is looking forward to space where we can host and conduct trusted conversations with our members. Many conversations we have with families, whether hosted in person, by phone or on Zoom, are highly confidential. This space will provide us with a visible presence and a welcoming environment to host families, peer groups and family meetings.”

There also are opportunities for the tenants to share resources and collaborate, all involved said.

Mark Slade, state director of the South Dakota Small Business Development Center Network, plans to move three programs and his team into the building:

• Small Business Development Center, which offers free and confidential consulting to startups, existing businesses and entrepreneurs looking to purchase a business.
• South Dakota APEX Accelerator, a free service that helps small business land government contracts and register their businesses with federal contracting opportunities.
• South Dakota Small Business Innovation Research, which works with investors, university faculty and existing businesses to pursue federal research grants in order to develop and commercialize new products and technologies.

The programs are funded by a combination of federal and state dollars and are hosted by the University of South Dakota.

“Being located in the Discovery District is great for a number of reasons,” Slade said.

“It’s easily accessible to clients that are from outside Sioux Falls, it’s close to the USD — Sioux Falls campus, including the GEAR Center, and it’s located within an incubator facility that will provide those entrepreneurs direct access to our services.”

The building is supported by $25 million in funding, including a $15 million appropriation from the South Dakota Legislature, $4 million from the city of Sioux Falls, and private contributions.

The current design offers approximately 36,000 leasable square feet, plus common areas and conference rooms. The building is being designed with the ability to scale HVAC capacity as lab space requires.

Ultimately, it’s expected to house biotech companies in addition to these support services. Those conversations are actively occurring, Oines said.

“Of our leasable square feet, we think we’ll be at about 25 to 30 percent built out when we open,” he said. “We’re talking with one company that works in biocompatibility, which is useful for anyone going through clinical trials, another is a small manufacturing organization, and we have some ancillary services that could work in a vendor relationship with our tenants.”

It’s important “to support young, fledging companies that don’t always have a lot of funding and need assistance, as well as later stage commercialization and research,” added Discovery District president Jim Abbott. “That’s an important part of what we’re here to do.”

A market study revealed that good tenants are key for the park and further help guide its development. For instance, it found that most research parks have approximately 60 percent office space and 40 percent lab space, which aligns with tenant needs as they’re in the product development stages. Potential tenants could include those that already have relationships locally through grant awards or existing clinical trials, or those currently in states with fewer resources than South Dakota offers.

“Access to workforce and capital clearly are the two most common factors companies require at the stage we’re pursuing them,” Abbott said. “We’re not an incubator in the way that the GEAR Center is. We’re looking for those later stage companies pursuing clinical trials and FDA approval.”

That’s the unique niche that this initial building can provide for the Discovery District and the broader biotech industry, said Joni Ekstrum, executive director of South Dakota Biotech.

“Biotech companies need to know that they can establish themselves or relocate at an early stage to South Dakota and we are going to have the infrastructure and wraparound services needed to support them,” she said.

“It’s incredibly exciting to see this building start to take shape and fill that key gap for our industry. Biotech companies at this stage of growth tend to have fairly immediate needs, so a clear timeline and soon essentially a move-in-ready building could be difference-makers.”

Once this building is going, the hope is that developers will be motivated to bring projects forward on the additional land available at the Discovery District, Abbott said.

“We’re not in a position to fund a building like this every time,” he said. “But I think having one completed building should fuel developer interest. We need to figure out what kind of amenities we need to attract people and businesses and find development partners who share that vision.”