Business may leave for lack of space

• By Matt Minde
• Published: July 7, 2011

• No Comments

For five years local resident Roi Qualls has talked quietly about the anticipated need for a larger space in the village for his business, e-Health Data Solutions, to grow into. In April, Qualls and Dane Anderson, an e-Health employee, attended a Village Council meeting where Anderson spoke publicly about their difficulty finding a suitable space for the business. And recently, the company’s three owners, only one of whom lives in Yellow Springs, gave notice that they will not renew their lease at MillWorks when it expires at the end of August, according to Ellen Hoover, who owns MillWorks with her husband Rod. While the company has not decided on where the new space will be, its owners are seriously considering moving outside the village.

The healthcare data management company employs 25 people, about 12 of whom live and work in the village. Since it began in 1997, the company has grown steadily, from serving two Ohio nursing homes in 1999 to 147 subscribers in 2004 to over 1,000 subscribers in 2008. It is among the top 25 income tax generators for the Village of Yellow Springs, and it is also a large customer of Servlet Internet Services. While the local employees have managed to expand into a little over 2,400 square feet at MillWorks, e-Health needs about 5,000 square feet of office space in the area to grow. According to President John Sheridan, who lives in Cleveland, no space in Yellow Springs currently meets all the needs of the business.

e-Health needs to grow

e-Health has four main criteria for its future space, Sheridan said, including handicapped accessible facilities that comply with the Americans with Disabilities Act and serve the same needs that the facilities of their clients are required to meet. The space must also allow the company to grow 25 percent over the next two years, provide a HIPPA-compliant secure location to store private healthcare information, and fall within a competitive price range.

Currently, according to Sheridan, e-Health has found spaces in other communities that meet all of its criteria and are available as soon as necessary, which for e-Health will be around Aug. 1. And while e-Health has explored many options, including Antioch College, Creative Memories, private homes and MillWorks, none of them meet all of the company’s needs.

“Unfortunately in Yellow Springs, space is limited in general, and unfortunately space is not competitively priced,” Sheridan said this week.

While space in Yellow Springs runs about $13 per square foot and still needs costly improvements, Cleveland has move-in ready space that meets all the criteria at $6 a square foot, while Fairborn has it for $9, and Springfield for $10, he said. The business is currently looking at the Credit Life building in downtown Springfield, which has 4,300 square feet of space with free parking. While Sheridan acknowledges that many of the local employees love living and working in the community, Yellow Springs appears to be about 30–50 percent more expensive than elsewhere in the U.S., which raises questions about the motivation of the real estate owners in such a socially responsible town, he said.

While e-Health was considering other spaces in town, the Hoovers offered to remodel the space at MillWorks to about 4,500 to 5,000 square feet, including four different options based on the extent of renovation and the length of the lease. According to Hoover, there has been no response to those options. Creative Memories Vice President of Operations Mark Lerud has been talking to e-Health through GEM Real Estate about leasing part of its 20,000-square-foot class-A office space on East Enon Road. The cost would likely fall within about $13-15 per square foot, Lerud said. But e-Health doesn’t need the entire space, and according to Lerud, dividing a large, open space and redesigning it for an operation that may need small, private offices can be expensive and could complicate the lease agreement.

Creative Memories would entertain offers to purchase the entire 94,000 square-foot-facility, most of which is unfinished warehouse/production space, Lerud said. In that case, the scrapbooking company would continue its current operations and lease back the manufacturing space. But the business does not want to sell just part of the building, Lerud said. According to Lerud, although Creative Memories has typically received about one serious inquiry per year since the building was vacated in 2008, it is currently talking to a second prospective lease client about the office space.

Village wants to retain business

According to Village Council President Judith Hempfling, e-Health is a very important business in Yellow Springs. As a hi-tech company that provides professional, high-paying jobs for local residents, and it has thrived in the creative community that Yellow Springs offers, Hempfling said. The business is growing, which is something that the community should be proud of and committed to trying to hold onto, according to Chamber of Commerce Director Karen Wintrow, who is also a Council member.

“e-Health is exactly the kind of employer that every community is interested in having,” Wintrow said. “They have a business model that’s progressive with strong marketing and a good product, and Roi is a good corporate citizen who has invested in community organizations and is a good community supporter. It’s a great synergy that’s happening.”

Hempfling also sees that e-Health and the village have both benefitted from each other.

“Clearly, e-Health has thrived in Yellow Springs, and it’s been a very important business to the village — I’d hate to lose it,” Hempfling said. “We’ll do what we can as a municipality to find a space, is the bottom line. It’s important that the Village do its part to make clear that we understand the importance of these businesses to the health of the community.”

A team of Village leaders has been meeting to help find a solution to the company’s needs. Village Economic Sustainability Coordinator Sarah Wildman has pooled efforts with company and Village leaders, as well as representatives from Greene County and the state of Ohio. The team has worked with property owners of larger spaces in town, such as Antioch College, the Humanist building, the former Nonstop space on Xenia Avenue and the lumber yard.

Wintrow is aware that Yellow Springs is competing with surrounding areas that offer a greater number of options at lower prices, she said. And though Yellow Springs has a unique, innovative, walkable and active community, which increases its value, local leaders are considering other incentives to retain e-Health. Hoover, who is also a member of the Economic Sustainability Commission, recommends that the Village offer a financial incentive tied to job retention by, for instance, using some of the Village’s remaining Revolving Loan Funds as a grant contingent upon job retention/creation and a 6–10-year commitment to stay in the area. Yellow Springs is an enterprise zone, so tax abatements would apply to the property owner, which might impact any renters, according to Hempfling.

Challenges to retention

But the main drawback for Yellow Springs is its lack of class-A professional office space. According to Wintrow, the village has long needed high-quality, corporate-suited office space that’s move-in ready and able to be leased, which businesses can use to free up capital and write off as an expense. Mark Duckwall of Yellow Springs Chiropractic trolled the village for five years for professional office space before accepting that in order to stay in the community he loved, he would have to leverage private resources to purchase and remodel the former art gallery on Corry Street. Not only were business loans for a doctor who has practiced in the community for over 30 years unavailable at the time, but he had to oversee a contracting job, which was a stress that diverted energy from his practice. In the end, the business was able to secure a partial loan from U.S. Bank and make room for two more chiropractors to share the office, but had Duckwall not been committed to the community and all that it has to offer, he could have jumped into a place in Fairborn that was twice as big for the same price and been closer to 675 and 70 percent of his patient base.

Local residents Dan Dixon and Jeff Kohler had an experience that ended differently when they faced a similar predicament with their business LaserLinc. In 2007 the partners moved their growing business from a 1,400-square-foot space in Yellow Springs to a 20,000-square-foot finished space in Fairborn. In an interview this week Dixon said that he desperately wanted to stay in town and tried for years to find something, including possibly the Creative Memories space that e-Health is now considering. That the space in Fairborn cost about half of what he was paying in the village was much less a factor than that the space was big and available to move in immediately. Since leaving Yellow Springs, LaserLinc went from 14 to 24 employees and more than doubled its sales, including 30–40 percent growth last year over the year before.

“Yellow Springs is great — it’s a wonderful place to run a business, and everybody preferred Yellow Springs where we all walked to Tom’s and the barber shop and shopped at the Winds Wine Cellar and were part of the community,” Dixon said. “Now we’re in an industrial park, and everyone hates it, but it works. We have a lot of room, and we can be here for decades.”

While the village has begun to create more business space, current endeavors are taking longer than expected, including the Center for Business and Education, which could break ground this year, and Antioch College. Other solutions were in the works as well, including class-A mixed-use office space at Village Station, which was stalled due to lack of lease commitment and the economy. While long-term solutions, such as the Economic Sustainability Commission, are being explored, the short-term problems have yet to be resolved. But Village leaders are aware of the issues and are working to address the needs of individual businesses.

“This is a priority to find an opportunity for [Roi] to stay here in any way possible,” Wintrow said this week. “It’s a decision he and his partners are pretty close to being needing to make.”

While e-Health has immediate business needs, Sheridan also said this week that even if the business leaves the community now, it won’t rule out coming back in several years if the situation changes.

“If we go somewhere, we might be gone for two years or so, but if there’s an opportunity to come back, we’ll consider it.”

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