Getting down to business

Getting down to business

Pasadena Economic Development Manager Eric Duyshart takes the temperature of the city’s various business sectors and their prospects for growth.

By Noela Hueso 11/01/2011

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Pasadena, like so many cities across the country, continues to weather the battered economy — reflected in higher unemployment, slower retail sales and missed opportunities. But the news isn’t all bad: Medicine and education, along with the scientific research and engineering sectors, continue to flourish in the Crown City, while plans to strengthen the economy and revitalize neighborhoods continue unabated.

How have Pasadena’s various business sectors been doing since the recession began in 2008?
ERIC DUYSHART: The recession hit Pasadena hard. There were several companies that saw a lot of job loss when the mortgage industry collapsed, most notably IndyMac and Countrywide. The retail sector has certainly slowed down. Sales in our business districts of Old Pasadena, South Lake and the Playhouse District are flat. We have competition from Glendale, Los Angeles and Arcadia. Engineering and medical sectors, on the other hand, are doing very well. The Department of Energy’s artificial photosynthesis grant to Caltech [announced in July] equates to millions of dollars coming into our community for research; likewise, some of our large engineering firms have big overseas contracts.

What is Old Pasadena doing to keep the interest of its current patrons and attract new ones?
ED: You see the area stepping more into events, such as the 12-hour music festival “Make Music Pasadena” [on June 16, 2012]; they’ve got farmers markets, they’ve got dance activities. There are ongoing discussions to put a mix of office-retail-hotel space in the Parsons parking lot just north of Old Pasadena.

How do Pasadena’s challenges compare to other cities in California and across the country?
ED: The challenges are very similar. Our unemployment rate is on par with the nation, a bit better than L.A. County. You’ve got businesses that have been in place for a number of years whose customers suddenly don’t have enough money to make big purchases. Discretionary dollars are diluted between local stores and other stores in the region. Online sales, too, are a slow threat to regional establishments.

How important is Caltech to the community?
ED: The recent news that didn’t get much play is the fact that Caltech has been named the top university in the world by the new Times Higher Education’s global ranking. That is a big deal. Although Caltech’s position may shift a bit from year to year in this international ranking, Pasadena is, without a doubt, home to one of the very best research institutions. So I would say Caltech is very important to our community and our country.
Our unmatched strength is the fact that we have the university and its ongoing research activities from year to year, which bring resources into our community. Its Office of Technology Transfer works with the faculty and divisions within JPL to transfer Caltech patents to the commercial sector. As a result, an average of eight companies are developed from Caltech patents every year. About half of these businesses want to stay in Pasadena to be close to the university, but only an average of two actually do stay because we don’t have land on which more companies can establish their business locations. They go to the Bay Area or San Diego, or even Monrovia, which gets a lot of our spinoff companies. That’s both a blessing and a curse. It used to be frustrating when companies didn’t find space here and would just go two cities over. But at the same time, we’re happy that Monrovia has some good light-industrial space, so that people who live in Pasadena can go to work there and not get transplanted. In that respect, it’s just a
reality we have to appreciate.
But Pasadena should leverage the fact that many still want to locate near Caltech. These knowledge-based small companies build on our strengths.  Retaining a higher
percent will benefit Pasadena and surrounding cities and will be an important part of
our future economy.

What is Pasadena doing to keep these new businesses here?
ED: On a regular basis, the city’s economic development staff works with Caltech to track the needs of start-up businesses and connect them with available space in Pasadena. Caltech and the city also initiated the Entretech organization several years ago — this group has helped to solidify the Pasadena area as a technology cluster by providing resources and sponsoring tech-focused networking events. The Pasadena BioScience Collaborative, which is chaired by Mayor Bogaard, works to provide start-up lab space on Foothill Boulevard for early biotech companies.  Also, the City of Pasadena provides certain building permit fee waivers for R&D businesses when they need to complete expensive lab improvements.

How much do you think these new-tech transfers will impact Pasadena’s economic prospects?
ED: Caltech is not going anywhere. It will continue to generate great researchers and novel ideas. Even if we lose some of these promising companies, many of these start-ups will easily fit into Pasadena commercial space and prosper. Pasadena is a great place to live and work. But we will increase our long-term stability and success if we become the preferred location for every business idea that starts here.

Give me an example of
a successful company
that stayed.
ED: Thirteen years ago, Dr. Michael Giardello, using an idea that originated in a Caltech lab back in 1992, founded Materia, a catalyst technology company. The company has grown in Pasadena; they’re on their third location; they have almost 100 employees and have transitioned from the solely R&D phase to selling product and bringing on various partners. Giardello is a poster child for what we want in Pasadena. He’s a Caltech graduate; he bought a house in the city and had his family here.

When gauging how Pasadena is faring, do you compare it to other cities?
ED: We do. For retail, we pay attention to Glendale, Arcadia, Burbank and Santa Monica. For office space, we look at the tri-cities of Glendale, Burbank and downtown L.A. For technology, we look at Santa Monica, Culver City, San Diego, Orange County and Monrovia.

Could we ever be another Silicon Valley?
ED: We have the intellectual capital — and it’s not just Caltech, it’s USC and UCLA; it’s City of Hope and other local hospitals — but we don’t have the abundant land. There’s not one spot where you can stand and look at four corners of an intersection and say, they’re all high-tech companies. It’s a challenge bigger than Pasadena, it’s one that all of L.A. County faces.

What is Pasadena doing to help local businesses that are already here?
ED: Several years ago, the city applied to the state to be designated an enterprise zone. Now that the designation is in place, local businesses are allowed to take advantage of hiring credits and sales tax credits for equipment purchases. We started business improvement districts in Old Pasadena, the Playhouse District and South Lake. We’ve facilitated the organization of business associations in East Pasadena’s Hastings Ranch area and … along North Lake and East Washington Boulevard. We have a monthly business seminar series called “The Art of Small Business Survival” for entrepreneurs that discusses various topics to help them succeed.

Speaking of houses,
how is the real estate
sector doing?
ED: Housing values are pretty strong. Property taxes are still going up, but the amount of rent commercial property owners can ask for has been flat and has actually gone down in a few cases. If I’m the owner of an office building, I’m getting nowhere near what I could have asked for three-and-a-half years ago.

Are more people
moving into the area?
ED: There was an assumption that there would be 142,000 people in Pasadena for the 2010 census (up from 133,936 in the 2000 census). The number was actually lower. We have about 137,000 or so.

Do you see things
changing any time soon?
ED: I don’t think you’ll see any dramatic shifts in our local economy from a capacity standpoint, and the amount of space we have available for new development is certainly limited. We want to make sure that people are coming here to shop, for entertainment and for dining. That’s something that needs to not just stabilize but needs to have a growth curve. If you’re not growing, you’re losing out to your competitors.

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