NY Opens Energy Park to Spec Development

John McCloud is editor of Industry Property Journal, from which this article is excerpted.

Malta, NY—The New York State Energy Research and Development Authority has opened the Saratoga Technology + Energy Park (STEP) here to speculative development. Until now, developers could bid only on projects proposed by Nyserda, an Albany-based public benefit corporation created in 1975 by the New York State Legislature. But the slow pace of development prompted the agency to switch tactics.

Established in 2001, STEP is a 280-acre site master-planned for 1.25 million square feet of office, lab, and light manufacturing. The idea was to develop the former federal defense research facility as a technology park devoted to clean energy, energy efficient and environmental technologies. So far, however, the development has failed to meet expectations of its sponsors, despite an offer of $10 million in incentives to companies that expand clean-energy technology manufacturing in the state.

Some say it is just a matter of time before it takes off. “STEP is unique,” says John Ball, COO of United Group of Troy, NY. “I think it’s largely a matter of spreading the word to make the development work.”

But so far, only one project is under way, a 105,450-sf building to be anchored by Starfire Systems Inc., a developer and manufacturer of ceramic materials and products for the aerospace, energy and microelectronics industries. The company currently operates from an existing 30-year-old building in the park. United Group won the bid to develop the $18-million structure and began construction in April.

The building, configured to support a variety of tenant functions including offices, research lab space, scale-up light -manufacturing and pilot plant light-manufacturing, will also house a division of Marietta, GA-based Lockheed Martin Corp., Electrovaya Inc., a Toronto-based manufacturer of batteries and portable power systems, and the Center for Economic and Environmental Partnerships Inc., a nonprofit corporation to promote development of New York’s environmental industry.

Nyserda president and CEO Peter Smith says the agency hopes the loosened development approach will speed completion of the park, which was envisioned as a major component of the state’s effort to transform the upstate New York region into a major technological center. It is already being promoted as Tech Valley. STEP is adjacent to the Luther Forest Technology Campus, site of a planned $3.2 billion computer-chip plant for Advanced Micro Devices Inc. of Sunnyvale, CA that was announced last year.

Smith believes the Starfire project, especially in combination with the AMD facility, will spark greater interest in STEP by proving the development is not some pie-in-the-sky concept but a viable business park. “This shows companies are willing to put their dollars on the line to bring STEP to reality. The lease to Lockheed Martin shows that even major corporations are eager to locate here,” he says.

Construction of a second building, a $24-million alternative energy research lab for the New York Department of Environmental Conservation, is expected to start at STEP before the end of the year. According to Smith, DayStar Technologies Inc., a solar-cell manufacturer based in Halfmoon, NY, is considering building a facility at STEP. But the company says it will not make a decision until it raises the $30 million needed to fund the project, which could take as long as two years.

Under the new guidelines, developers and manufacturers may submit proposals for projects of at least 40,000 sf intended for companies engaged in activities related to clean energy or environmental technologies. Acceptable activities include research and development, assembly, deployment or production in the alternative energy field. Buildings must be designed in accordance with New York State Executive Order No.111 and the STEP Conceptual Design Guidelines and must achieve a minimum LEED certification from the US Green Building Council in Washington, DC.

United Group’s Ball says his company would like to do more projects at the park, but probably will not build any purely on spec at this time. However, he expects completion of the first building, which is slated for the end of the year, to attract the attention of other potential users. He says greater awareness of the state incentives should also generate interest. Individual companies are eligible for up to $1 million in incentives. “The opportunity to locate near other companies involved in alternative energy exploration is an attraction in itself,” he adds.