Commission hears update on San Luis business incubator; consultant to review lease rates and program options
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Summary
Staff and consultants described the 20,000-square-foot San Luis Business Incubator (seven suites), current tenants and lease structure; consultants will evaluate market rates and program services to help make the incubator revenue-neutral and expand programming such as co-working and community kitchen ideas.
San Luis economic development staff and outside consultants briefed the Economic Development Commission on Oct. 1 about operations at the San Luis Business Incubator and a consultant-led review of lease rates, services and program design.
Rogelio Martinez, the department's administrative coordinator and on-site manager for the incubator, said the 20,000-square-foot facility on approximately 3.8 acres in the San Luis Industrial Park is divided into seven suites (suite sizes cited in the presentation range from about 1,400 to 4,200 square feet). He said the incubator was built before 2013, opened to the public in 2015 and is currently at capacity.
Current tenants listed in the presentation include JVR Trade LLC (candy distribution), Honest to Date (date packaging and distribution, using part of the space for headquarters and storage), CL Technologies LLC (consumer electronics distribution), AZ Med USA (refurbishment and distribution of medical equipment and supplies), Beto's Cabinets LLC (cabinet manufacturing and installation), HEK Construction (residential construction services) and Pacific Style LLC (textile/ fabric manufacturing). Martinez said the combination of tenants accounts for roughly 25–30 employees across the facility.
The incubator provides on-site services including water and sewer, high‑speed internet (CenturyLink at present, with plans to upgrade to Allo fiber), a conference/teleconferencing room, paid parking, on-site training programs and connections to technical-support partners and workforce programs. The city holds a long-term ground lease for the site (presented as a 75-year lease) and staff described the incubator as a municipal facility operated by the Economic Development Department.
Ruth Martinez, representing the consultant team working on a program evaluation, said the current review will: analyze market lease rates and comparable tools (consultants referenced standard market-data sources), evaluate the incubator's financials to seek revenue neutrality, and recommend program or service adjustments to better support local entrepreneurs. Rogelio and staff described past tenant outcomes that included subleasing arrangements used by longer-term tenants to incubate smaller startups.
On leasing terms, staff described a revised structure intended to be more accessible for startups: an annual lease option plus a three-year lease option. Under the current structure presented to the commission, the three-year term would start at $0.44 per square foot in year one and rise to $0.79 per square foot by the third year; the annual-lease option would be a fixed $0.79 per square foot. Staff said the city aims to balance affordability for new firms with the need for the incubator not to operate at a loss.
Commission members suggested increasing community awareness of the incubator's location and offerings (social media, chamber mixers and public events), expanding programming to include coworking desks and a community kitchen for food vendors, and continuing relationships with regional partners including the Small Business Development Center (SBDC), Arizona@Work and local nonprofit partners. Armando Esparza said the department is coordinating with partners such as SBDC, PPEP/PMHDC, Chicanos Por La Causa and the county chamber of commerce to expand training and outreach.
Esparza and Rogelio invited commissioners to join site visits and business-retention outreach. The director described a related department initiative — a formal Business Retention and Expansion (BRE) program — that will use a customer-relationship management (CRM) tool to track visits and follow-ups and to measure outcomes across the business community.
The commission did not take formal action on the incubator item; staff said the consultant will deliver a rate-and-program recommendation as a draft report for further discussion and possible future action.
