Lease deal enables incubator to wriggle out of a tight spot

All that remains unused at the Fort Collins Technology Incubator is 500 square feet of windowless space.

But that would never do for the incubator’s newest client, Logisens, a company that specializes in stress-tracking and reducing products.

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The cramped and dreary spot would be counterintuitive to the company’s goal of stress-reduction; although, it could have made a good experiment.

Luckily, Logisens didn’t have to squeeze in between the other tenants, thanks to a deal between the incubator and a local property management company.

The Fort Collins Technology Incubator was founded in 1998 as a virtual incubator – without a brick and mortar office – providing professional, planning and critique services at discounted rates to qualified startup companies.

Kathy Kregel, executive director of the incubator, said this focus didn’t change after the incubator got walls last year. “Our deal is to provide the services,” she explained.

The city of Fort Collins provides the building at 200 W. Mountain Ave. and acts as the landlord to the incubator companies. The city doesn’t charge Kregel for her office in the building, where she screens companies applying for incubator assistance and provides accepted clients with services and guidance.

Right now, the incubator’s 6,500-square-foot building is home to two companies – Privacy Networks and Triad Systems Engineering – as well as a rotating office for Denise Brown, executive director of the Colorado Bioscience Association.

Several weeks before Logisens approached Kregel with a request for a location, she had received an offer of more space she couldn’t refuse – or at least had no reason to.

Robin Bachelet, broker of record for Poudre Property Services, had seen the need for expansion for the incubator when she came to visit with Privacy Networks. (Poudre Property Services is an investor in the startup.)

So when Logisens asked for office space, Kregel had a ready alternative to the windowless broom closet.

Bachelet’s building, the Collegio, is located near the intersection of Laurel Street and College Avenue. Logisens occupies 1,650 square-feet in the building. The budgeted market value of the lease is $15 per square foot, but it is available to Logisens for closer to $9 per square foot.

“It’s an investment in the future,” Bachelet said. “I had an empty space, and they had a need.”

She added that there is room for Logisens to expand as it grows and room for more incubator companies to join it.

“I would love to have more incubators in here,” she said. “They seem like a really good risk.”

Having incubator companies as tenants has its advantages. Before becoming an incubator client, companies undergo a rigorous application process. The business plans are screened for viability; therefore, there is less of a chance that one of the companies will default.

Bachelet added that a second location, a 2,300-square-foot garden level on West Elizabeth Street, would be available to incubator companies for around $5 per square foot.

“I think this is a perfect answer for expansion,” Kregel said. She estimates there are three companies in the hopper that might have a need for affordable space.

Maybe not completely perfect. An important element to the incubator concept is the atmosphere created by having several innovative companies sharing space in a large building. However, funding isn’t available to make this happen in Fort Collins.

The incubator receives $100,000 from the city of Fort Collins, the Northern Colorado Economic Development Corp., Colorado State University and the Colorado State University Research Foundation to operate each year.

Markus Pratz, director of investor relations and business development for Logisens, said the company is lucky to have landed space at the Collegio building.

“It’s a very nice location,” he said. The 10-employee company has room and time to grow in its location. Typically, incubator companies have a three-year limit in the incubator building. But this doesn’t apply to Logisens because its contract is with the property management company, not the incubator.

“If we can make it, we could stay here forever,” he said.