THE ECONOMIC CASE FOR THE

MARITIME CENTER AT FISHERMEN'S TERMINAL
April, 2018

Item No. 7C Attachment 1
Meeting Date: January 8, 2019

Prepared for:

ACKNOWLEDGMENTS
This report was prepared by The Maritime Alliance, Delawarde Consulting, and ECONorthwest for and under contract to the Port of Seattle. We received
assistance and direction from the Port, as well as valuable information and perspectives from numerous individuals during stakeholder outreach events.
Cover Artwork provided by:Intergovernmental Oceanographic Commission-Global Ocean Observing System (IOC-GOOS)
Artwork by Glynn Gorick depicting the Ocean Observing System

www.themaritimealliance.org

www.delawardeinc.com

www.econw.com

TABLE OF CONTENTS

TABLE OF CONTENTS
1
2
4
8
12
17
20
21
25
28

Executive Summary
Introduction
Growing Economic Opportunity in Washington's Maritime Sector
Benchmarking / Case Studies
Innovation Gaps in the Maritime Sector
Needs Analysis
Vision and Mission Statement
Business Plan
Operating Plan
Recommended Next Steps

Appendices

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY
The Blue Economy includes both traditional maritime industries and
innovative BlueTech sectors such as autonomous underwater vehicles,
electrification of marine vessels, offshore renewable energy, remotely
operated vehicles and sensors. While maritime is one of the oldest
industries in the world, the traditional industry has been slow to innovate
and yet very few regions are currently focused on the fast-growing,
innovative BlueTech sectors. This is beginning to change as ports and
regions around the world are promoting sustainable ocean and water
industries that optimize conservation and promote economic development.

The state of Washington is developing a
Maritime Blue Initiative with a vision of an
Innovation Center anchoring its efforts.

The State of Washington is developing a Washington Maritime BLUE
initiative with the vision of being a leading center for sustainable
maritime industries in the United States by 2050. This initiative calls for
the creation of a Maritime Innovation Center, which the Port of Seattle
has identified as a strategic initiative and is the focus of this report.
The Port proposes to renovate the Seattle Ship Supply building, which
is part of a larger redevelopment effort at Fishermen's Terminal with
support from multiple potential partners and stakeholders.
What is clear in our research of incubation programs is that co-location
of like-minded businesses or startups with collaboration from academia,
industry and policy-makers is critical to help facilitate the needed
culture for innovation in maritime.
The Maritime Innovation Center will: 1) raise the profile of maritime
industries in a crowded media space, 2) leverage regional expertise
in high-tech software and data companies to introduce disruptive
technologies in the maritime field, 3) introduce young people to exciting
new careers, and 4) support early stage maritime companies with a
hub-and-spoke model of collaboration across the entire maritime
sector in Washington State.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 1

INTRODUCTION

INTRODUCTION
The Port of Seattle hired The Maritime Alliance
(TMA) to develop a business plan for the
proposed Maritime Innovation Center and
conduct outreach to generate and evaluate
interest in the project. TMA enlisted the services
of Delawarde Consulting and ECONorthwest,
collectively known as the Project Team, to help
conduct this study and complete this report.
The Project Team reviewed materials provided
by the Port of Seattle and other sources to
assess the broader maritime sector in the State
of Washington and developed a list of relevant
contacts in academia, industry and government
which should be included in outreach efforts.
Our outreach efforts began with a series of
sector-based meetings organized by the Port
in August 2017. These effects were followed
by a Strengths-Weaknesses-Trends workshop
facilitated by the McDowell Group in October
2017 in order to get a baseline perspective
of the current state of maritime industries in
Washington and to begin developing a mission
and vision. Based on additional outreach and
meetings with maritime stakeholders around
Puget Sound, the Team developed an online
survey that was sent to approximately 400
relevant stakeholders in an effort to gather
additional data which is summarized in this
report and provided in the appendix. Finally,
the Project Team participated in a design
charrette organized by Miller Hull to develop a
series of conceptual designs for the proposed
Center, which the Team used to develop
basic assumptions about the use and scale of
available space for purposes of creating pro
forma financial models.

2 | ECONorthwest

"Washington State is a place where nature and humans are
inextricably linked... A place where ingenuity is measured not
only by it's success, but also by its impact in a changing world.
How we live, work, and play along the working waterfront is
an indicator, or model, of how we can live in coordination with
each other and our natural resources."
-Washington Maritime Blue website

INTRODUCTION

The 'Blue Economy'
represents the sum of
economic activity including
ocean and water industries.
The innovation center is proposed to occupy
a redeveloped Seattle Ship Supply building at
Fisherman's Terminal. The project will honor
the rich maritime history in region and foster
a new generation of entrepreneurs, fishers,
inventors, and workers working to build a
sustainable and robust maritime economy.
The innovation center would support
next generation inventions that drive the
competitiveness of Washington State's
Blue Economy, and would be a key pillar
of an effort led by the State of Washington
Department of Commerce to develop a
strategy for Washington Maritime BLUE: 2050
Vision for a Sustainable Maritime Industry.
The facility would bring together leaders
from education, industry, and government to
address challenges and opportunities within
an organized maritime cluster and support
classes, events, incubator activities, technical
assistance, and research and development
that ultimately helps the industry innovate and
sustain its competitive advantage.
The scope of this report is to evaluate
stakeholder interests, develop a vision and
mission for the proposed Maritime Innovation
Center, and suggest a business plan that can
inform future decisions about how to manage
and operate the space.

Blue Economy Cluster-A regional concentration of
related ocean and water industries that helps increase
its competitiveness globally through collaboration, events
and promotional activities and usually managed by a nonprofit organization.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 3

GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S MARITIME SECTOR

The global 'Ocean Economy'
is valued on a conservative
basis by the Organization for
Economic Cooperation and
Development (OECD) at $1.5
trillion (2010) and growing
to $3.0 trillion by 2030, on a
'business as usual' basis.

16 SECTORS OF THE BLUE ECONOMY

▪▪ Aquaculture & Fishing
▪▪ Biomedicine
▪▪ Boats & Shipbuilding
▪▪ Cables & Connections
Defense & Security
"If it's wet, it's Blue" ▪▪
▪▪ Desalination/Clean Water
▪▪ Marine Recreation
▪▪ Ocean Energy & Minerals
▪▪ Ocean Instrumentation

&
▪▪ Oceanography
Marine Science
Ports & Maritime
▪▪ Transportation
▪▪ Professional Services
▪▪ Robotics & Submarines
▪▪ Telecommunications
▪▪ Very Large Floating Platforms
Science &
▪▪ Weather
Climate Changes

GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S
MARITIME SECTOR
The growing Blue Economy is just beginning
to gain recognition globally as regions start
to recognize the importance of the ocean
for economic development, recreation,
sustenance, and quality of life purposes.
The role of the ocean in our daily lives is
continously increasing. When we think about
the "Big 5" issues for human life-water, food,
medicine, energy and "real estate"-we are
really thinking about the ocean. The Blue
Economy represents the sum of economic
activity related to the ocean and water in
all its forms, with an increasing interest to
further develop emerging industries in ocean
observation, renewable energy, and other
sustainable uses of the ocean to optimize
conservation and economic development.

4 | ECONorthwest

The global 'Ocean Economy' is valued on a
conservative basis by the Organization for
Economic Cooperation and Development
(OECD) at $1.5 trillion (2010) and growing
to $3.0 trillion by 2030, on a "business as
usual" basis. The global water and wastewater
technology industry is valued at approximately
$500 billion for a total Blue Economy of $2.0
trillion, and yet there is little recognition of this.
Today, there is no list of the top BlueTech
clusters around the world and, when that
list is created, the State of Washington will
be well-positioned to be included given its
available natural resources, maritime expertise
and geographic concentration of companies,
government research facilities, and university
labs that are focused on developing innovative
ocean technologies.

GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S MARITIME SECTOR

The proposed Maritime Innovation Center will
build on the rich legacy of maritime industry
and scientific discovery in Washington. It will
connect people and resources through a
hub-and-spoke model to encourage innovation
and promote BlueTech companies that will
contribute to the vision of Washington being
recognized as a leading center for sustainable
maritime industries.

ANNUAL ECONOMIC IMPACT OF THE MARITIME INDUSTRY IN WASHINGTON STATE

$20.7B

$17.1B
Indirect
Revenue

Indirect/Induced
Revenue

$37.8B

Combined Impact to
WA Economy

THE ECONOMIC IMPORTANCE OF THE
MARITIME SECTOR

Like many resilient industries that have
evolved over time, Washington's Maritime
market has adapted its industry to make
a more encompassing impact across an
increasingly diverse set of industry sectors.
According to the recent Washington State
Maritime Sector Economic Impact Study
(April 2017), "in 2015, Washington's Maritime
industry supported 69,500 jobs, $4.7 billion
in wages, and $21.4 billion in business
revenue". Among the key maritime subsectors,
commercial fishing and seafood processing,
boat and ship building, repair, and
maintenance provided the greatest number of
jobs and business revenue for Washington.
In addition to direct jobs supported, the
Washington maritime sector supported an
additional 121,600 jobs throughout the state
economy; for every direct job in maritime, an
additional 1.8 jobs were supported through
indirect and induced impacts. Maritime
sector wages had a ripple effect-every
direct dollar in labor wages was associated
with an additional $1.06 in wages elsewhere
in Washington. The multiplier effects of the

HUB AND SPOKE MODEL

-Northwest Fisheries Science Center
-Pacific Marine Environmental Lab
-Office of Coast Survey
-National Weather Service

-Washington Sea Grant
-APL & Collaboratory
-School of Marine and
Environmental Affairs

NOAA

-Fishing Fleet
-BlueNorth
-Trident Seafoods

-Private Equity Funds
-Angel Funds
-Corporate investors

-CoMotion Labs
-School of Oceanography
-Pacific NorthWest National
Marine Energy Center

University of
Washington

-Western Washington
University
-Northwest Center of
Excellence for Marine
Manufacturing Technology

Educational/
Institutions

Washington
State

Fishing Industry

MARITIME
INNOVATION
CENTER

Ocean
Instrumentation
Industry

Investment
Community

US Coast
Guard
District 13
US Navy

-Bremerton/Keyport
-NUWC
-Naval Base Kitsap

-Seattle Maritime Academy
-Northwest School of
Wooden Boat Building
-Schmidt Ocean Institute
-Washington State University

-Maritime Blue
-Washington State Ferry System

-SeaBird Scientific -Biosonics
-Kongsberg/Simrad -Sequoia Scientific

Marine
Industry

-Whidbey Island NAS
-Everett Homeport

-Foss Maritime
-Crowley Maritime
-Vigor Marine
-IO Currents
-Aerojet Rocketdyne

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 5

GROWING ECONOMIC OPPORTUNITY IN WASHINGTON'S MARITIME SECTOR

Puget Sound has all the components needed to be a world leader in BlueTech innovation-a
well-established maritime industry and a burgeoning tech sector. When you combine this with
the institutional assets in education, research and defense, the only thing missing is a forum
to connect it all.
Washington maritime sector activities also
supported a significant bump of $37.8 billion
in business revenues across Washington.
Washington's Maritime Sector is measured
through monitoring:

▪▪ Business establishments
including workers covered by
▪▪ Jobs,
unemployment insurance and those who
are self-employed

▪▪ Wages
revenues generated from
▪▪ Business
maritime activities
The total number of sector employer
establishments remained steady between
2012 and 2015, while the sector saw growth in
total employment over the same time period,
which suggests there is growth within each
establishment but not significant levels of new
firm formation. The reasons for the slower rate
of firm formation is complex, yet it seems clear
that intentional efforts to support entrepreneurs
by targeting constraints and focusing on
innovation may support continued wage and
employment growth overall in the sector.
The total employment growth within the
Washington maritime sector was about 2.6%
between 2012 and 2015. Among the maritime
subsectors, the largest increase of employment
6 | ECONorthwest

growth was observed within the self-employed
workers in the Commercial Fishing and
Seafood Processing subsector. Overall, the
largest subsector of total employment was the
Maritime Logistics and Shipping subsector,
which grew at a Compound Annual Growth
Rate of 1.3% from 2012-2015.
After adjusting for inflation, wages among
Washington's maritime industries increased
by $200 million from 2012-2015, primarily
due to the proportional impact of the Maritime
Logistics and Shipping subsector, contributing
$1.5 billion in wage disbursements. The
second largest contributor to wages and
salary during 2015 came from the $1.2
billion within the shipbuilding, repair and
maintenance subsector.
Business revenues from output, generated by
private sector operations within the maritime
sector, experienced meaningful growth
between 2012-2015. After adjustments
for inflation, the maritime sector increased
business revenue by $1.5 billion. Much of
this business revenue was seen within the
Commercial Fishing and Seafood Processing
sub-sector, contributing the largest proportion
of business revenue of about $9.4 million.
The Project Team notes that much of the
economic activity is attributed to legacy
or traditional maritime subsectors and

acknowledges that national systems for
evaluating economic activity in the Blue
Economy are outdated and likely do not
accurately capture BlueTech subsectors.
Therefore, it is recommended that public
agencies support efforts to develop new
approaches to evaluating the Blue Economy,
including the creation of satellite income
accounts and new policies to update the
North American Industrial Classification
System (NAICS) codes and other standards
to include BlueTech as a category. With new
methods and tools, economists and investors
will have greater ability to evaluate market size
and track economic performance of the Blue
Economy over time.
HARNESSING THE POWER AND
OPPORTUNITY OF INNOVATION

Maritime is one of the oldest industries in
the world. For much of human history, as
explorers traveled by sea to discover new
lands and opportunities or nations battled
in the high seas, maritime represented
the height of human ingenuity, technology
and innovation. Newspaper headlines and
stories of heroic figures who 'conquered'
the sea were celebrated, attracting young
and innovative talent to pursue careers
in maritime. However, when humans

BENCHMARKING / CASE STUDIES

discovered flight and developed a digital
world where information and status were
achieved at the speed of sound or light, we
collectively lost our connection to the sea
and the world's innovators focused their
attention on software for global commerce
and consumer technologies. There is
tremendous need and opportunity to bring
maritime into the digital world and develop
cleaner and more sustainable industries
to promote renewed enthusiasm for this
growing Blue Economy. With Seattle's global
influence in digital commerce, information
technologies and communications, there is
a unique opportunity to marry these in this
region. A Maritime Innovation Center will
serve as a catalyst in this effort.

Leveraging the maritime sector's propensity
for cultivating self-starting employment
opportunities with the region's hallmark
innovation and technology ecosystem
provides tremendous potential to create new
economic opportunities in the industry. A
business incubator and start up programs
can help facilitate the transformation of
existing business practices while also creating
space for new approaches and ideas. There
is tremendous potential to align innovative
technology development with education
and workforce development programs,
investment capital, research, and outreach to
promote further expansion of new sustainable
industries in the Blue Economy.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 7

BENCHMARKING / CASE STUDIES

BENCHMARKING / CASE STUDIES
The Project Team notes that ports and regions worldwide are taking steps to focus on promoting ocean technology innovations and entrepreneurship
in ways that fit their own unique set of circumstances.
We highlight a few efforts below in order to help position the Port of Seattle's proposed Maritime Innovation Center.

ALTASEA-LOS ANGELES, CA

The Port of Los Angeles has a long term agreement in the form of a public-private partnership with
the non-profit organization Alta Sea to manage a 35-acre waterfront site that includes space for a
planned Engagement Center or Event Space, Science Hub for classes and education providers,
and a Research Hub and Business Incubator (~10,000 sq.ft). The campus will initially focus on with
space available to startups as well as large companies that want to locate adjacent to the water.

▪▪ Public/Private Partnership between the Port of Los Angeles and Alta Sea with a 50-year lease
35-acre waterfront site for combined research, co-working/incubator, education, and
▪▪ Repurposed
public event space
Focused on aquaculture and BlueTech sectors, including remotely operated vehicles (ROVs),
▪▪ autonomous
underwater vehicles (AUVs), and autonomous surface vehicles (ASVs)
Port provides extensive rent credits in return for educational programming. Rent credits lower the
▪▪ cost
for tenants, which would pay:
▪▪ $9/SF/Yr for incubator tenants
▪▪ $18/SF/Yr for medium-sized tenants
▪▪ $22/SF/Yr for large-sized tenants

CENTRE FOR OCEAN VENTURES AND ENTREPRENEURSHIP (COVE)-HALIFAX, NOVA SCOTIA

an old Coast Guard facility into a hub for scientific research, events, incubator space,
▪▪ Converted
ocean technology tenants, and workforce programming
▪▪ Significant government funding and support
▪▪ Focused on ocean technologies
by a nonprofit organization that is similar to a cluster, and its incubator is contracted out
▪▪ Governed
to another company that specializes in running incubators.

8 | ECONorthwest

BENCHMARKING / CASE STUDIES

NEWLAB-BROOKLYN NAVY YARD, BROOKLYN, NY

84,000 square feet from an old Navy Yard in Brooklyn into an urban
▪▪ Converted
innovation space with prototyping, 3D printing, CNC machines, wood and
metal shop with support staff.

focus on innovation and entrepreneurship, but no specific
▪▪ Inter-disciplinary
focus on maritime
York City Economic Development Corporation funded $2.5 million to the
▪▪ New
private, for-profit company New Lab to operate the center for five years
includes corporate sponsors and a mix of startup and mature companies
▪▪ Also
that pay rent

PORTXL-ROTTERDAM, THE NETHERLANDS

first Port Accelerator," spun out of the Port of Rotterdam, runs as an
▪▪ "World's
independent accelerator
co-working office space with fast-paced programming for startups
▪▪ General
that are selected through a competitive process in cohorts
proposition is the connection to the port and a growing number of
▪▪ Value
end-users at one of the largest ports in the world

RDM ROTTERDAM-ROTTERDAM, THE NETHERLANDS

from a defunct shipyard into a new interdisciplinary space that
▪▪ Converted
supports events, technical training academy, an incubator, storage space with
a wave tank, and other testing facilities

with a senior secondary vocational school and a higher
▪▪ Co-located
professional educational program
with funding from the European Commission, the Port of Rotterdam,
▪▪ Supported
and other sponsors
Focused on maritime technologies and other ocean related verticals including
▪▪ innovative
housing concepts over water and design

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 9

BENCHMARKING / CASE STUDIES

THE COLLABORATORY AT APL-UW-SEATTLE, WA

▪▪ Operated by the University of Washington Applied Physics Laboratory
▪▪ Specific focus on marine and ocean technologies
a synergistic ecosystem for marine technology research and
▪▪ Supports
development
▪▪ Hosted companies require demonstrated commercial capability
co-location space for 10-12 small-medium sized companies, events,
▪▪ Provides
meetings, shared access to APL resources and facilities
a forum to develop linkages between APL, industry and other
▪▪ Provides
institutions
CO-MOTION LABS-SEATTLE, WA

▪▪ Part of the University of Washington with three physical locations.
▪▪ Non-profit self-sustainability model
▪▪ Average 60-90 startups at any given time with a multi-industry approach
engineering, computer sciences, life sciences, clean tech and AR/VR
▪▪ Includes
for example
a wide degree of incubator and accelerator programs and networking
▪▪ Offers
with needed resources for business nurturing
PUREBLUE-SEATTLE, WA

▪▪ Tacoma-based accelerator
▪▪ Specific sector focus on water related technologies
Partially funded with grants from the U.S. Department of Commerce and an
▪▪ equity
sharing arrangement with a private LLC
parallels exist between the water industry and ocean/maritime with
▪▪ Many
respect to the present level of innovation, degree of fragmentation, and
attractiveness to investor

10 | ECONorthwest

BENCHMARKING / CASE STUDIES
HIGH DEGREE OF ENTREPRENEURIAL PROGRAMMATIC CONTENT
(Incubator and Accelerator Programs)

ANALYSIS OF CASE STUDIES

The diagram on this page showcases a
continuum of some of the entrepreneurial
hosting programs mentioned in this report.
Along the horizontal line, programs to the
right have an increasing degree of BlueTech
focus while moving towards the top shows
programs with a high level of programmatic
content including seminars on topics such as
accounting and finance, business plans, human
resources, investment funding, and more.
It is important to note that the University
of Washington has two exceptional
entrepreneurial programs, each with a
different area of focus. Co-Motion Labs
offers well-organized incubator/accelerator
programmatic support across a broad
range of industries with dedicated staff to
support 60-90 companies at a time. The APL
Collaboratory brings together 10-12 small
companies focused on maritime technology
co-located within a synergistic university
ecosystem to provide a forum for advancing
research and development and spurring
economic growth. Both programs are affiliated
with the University of Washington and offer
models and potential partnerships for the
Port of Seattle to consider as it develops a
Maritime Innovation Center. It is possible to
create a hybrid model, perhaps through a
private-public partnership with the University
or other organizations, to operate the Center
and serve as a convener that promotes
collaboration and supports innovation in the
maritime sector.

Proposed Center

(conceptual)

STRICT
INCUBATOR OR
ACCELERATOR
PROGRAM ONLY
(Not both)

STRONG OCEAN
OR MARITIME
FOCUS

RDM

NewLab

APL Collaboratory

HOSTING/ CO-LOCATION ONLY

The above diagram shows the case studies discussed in this report along two dimensions chosen to depict
comparisons specific for this Report. The cases shown are all highly successful against their own individual missions
and their position on this graph should not in any way be interpreted as a measure of effectiveness or performance.

There is not a clear recipe for how to make
business entrepreneurship and innovation
programs successful. What is clear in our
research of incubation programs around
the world is that co-location of like-minded
businesses or startups with collaboration
from partners in academia, industry, and
policy is critical to help facilitate the need for
culture innovation.
.

A cluster organization, like the one envisioned
through the State of Washington's Maritime
BLUE Strategy can be the bond that keeps
partners working together, engaged, and able
to project internationally. While the cluster
organization can be a potential operator of
the incubator, it is not necessary; however the
cluster organizer should be actively engaged
and ideally co-located with the incubator for
the reasons mentioned above.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 11

INNOVATION GAPS IN THE MARITIME SECTOR

INNOVATION GAPS IN THE
MARITIME SECTOR
To accelerate innovation, the creation of a
supportive and nurturing environment is
necessary. Four basic elements are required:
ideas, people to make inventions, customers
to purchase them, and a supporting culture to
facilitate the process.
By drawing on results from the previous
outreach section, we call out this synopsis of
the higher-level gaps that need to be prime in
any Innovation Center design process:

of public awareness was the most
▪▪ Lack
commonly mentioned element as well as all
the resulting issues it causes including lack
of linkages, specific resources, workforce
development programs, etc.

FINDINGS OF PROJECT TEAM OUTREACH

One of the major assignments to the
Project Team was to work with the maritime
stakeholders in the region and establish
entrepreneurial focus points for the proposed
Maritime Innovation Center. As the maritime
cluster is inclusive of many small and
fragmented segments it is important to
formulate the mission, vision, and goals of
the Center in as simple a form as possible for
proper focus.
In formulating our proposed mission and vision
for the Center, we gathered information from four
primary sources that were heavily biased on
input from interested stakeholders, as opposed
to pre-existing literature. These sources are:
1. Strength, Weaknesses, and Trends Workshop
2. Regional Outreach Events
3. Personal Interviews
4. An Online Survey

12 | ECONorthwest

INNOVATION GAPS IN THE MARITIME SECTOR

Innovation as
described is an
idea followed by
invention combined
with a commercial
success.

SWT Workshop Outcomes

Elements to Broaden
Maritime Innovation
Ecosystem
Public awareness

Idea Area Topics For
Future Exploration

Ballast water
▪▪ solutions
▪▪
Workforce
▪▪ development
vessel
▪▪ Alternative
propulsion
▪▪ Specialized
investors
linkages
▪▪ Stronger
amongst existing
resources
(knowing where
to go)

to the
▪▪ Access
right lab and

testing facilities
(having access to
use them)

As a diverse and fragmented industry,
steeped in many longstanding traditions, it is
expected that there would be considerable
areas of concern to address. In our analysis,
we report on key findings from each source
and articulate outcomes into two primary
areas which support creation of the Center:

elements needed to broaden
▪▪ Supportive
the maritime innovation ecosystem
Area Topics to identify important gaps
▪▪ Idea
in the industry (note some of these are
quite specific and others are rather open
ended)

A synopsis of each source follows:

1. SWT Workshop
A workshop to discuss the region's maritime
Strengths, Weaknesses, and Trends (SWT) in
Seattle facilitated by Heather Haugland of the
McDowell Group (See Summary in Appendix)
The SWT exercise clearly indicated that the
region has a vibrant marine industry built on
strong heritage with world renowned local
assets and institutions. However, the public
awareness of maritime is not keeping pace with
better-known industries. This lack of awareness
is believed to be slowing the pace of innovation
and causing a workforce shortage and skills
gap. Important trends include:
low carbon vessel
▪▪ Alternative
propulsion system
use of surface and
▪▪ Increasing
undersea robotics
change (with attention to changes
▪▪ Climate
in the Arctic)
challenges to the seafood
▪▪ Numerous
industry from both the resource collection
and consumer product standpoint

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 13

INNOVATION GAPS IN THE MARITIME SECTOR

2. Public Outreach Tour

Public Outreach Outcomes

Regional Outreach Events in Anacortes, Port
Hadlock, and Bremerton facilitated by Heather
Haugland of the McDowell Group (See
Summary in Appendix)

Elements to Broaden
Maritime Innovation
Ecosystem

Regional outreach event findings aligned
closely with the SWT Workshop. In the North
Sound meeting, workforce development
was emphasized along with leveraging local
expertise on environmental sustainability.
Some frustrations were expressed in getting
some of the smaller local companies to think
of themselves as collaborators as opposed
to competitors. At Port Hadlock, the region's
reputation for high quality, craftsmanship, and
local cutting-edge laboratory research was
emphasized. Concerns cited include:
for the working waterfront
▪▪ Plans
local innovations into longer
▪▪ Transforming
term prosperity for the region by retaining

▪▪

successful companies that otherwise are
acquired and/or move out of the region.
Duplication of effort (i.e whatever is done
in the Center should be complementary
to other resources in the region and
non-duplicative).

the
▪▪Gaining
cooperation

of local micro
-competitors to
collaborate

Idea Area Topics
For Future
Exploration
Hybrid energy
systems

▪▪

▪▪Renewable
marine energy
Undersea
▪
▪
Dealing
with
the
▪▪ impacts of climate robotics
▪▪Net-pen fisheries
change (public
recognition of)

3. Personal Interviews

KEY POINTS

Interviews with approximately 40 individuals
by Delawarde Consulting (See Personal
Interview Summary in Appendix Item)

The key points from outreach informing
the suggested mission and vision
statements include:

Personal outreach focused more on specific
needs for the Center to fulfill wants from a
broad cross section of industry players. While
most subjects had narrowly defined interests
along their organizations' specific missions,
there was a strong desire to accelerate the
pace of innovation across the board in marine
and ocean technology. One example that
came up multiple times was the automation of
the fisheries observer program.

Center should support entrepreneurs
▪▪ The
and established companies; raise the

industry profile to attract investment; and
forge stronger connections across the
existing maritime/ocean tech industries and
the broader tech industry in Puget Sound.

region is rich in maritime resources
▪▪ The
and heritage, but this is under recognized

by the general public and policy makers
who are being overshadowed by high-tech.

mechanism for driving innovation in this
▪▪ Asector
is widely supported.
existing Seattle Ship Supply building
▪▪ The
is recommended for becoming the central
forum and organizing element within a
hub and spoke model because of its
location and surrounding resources and
representation of heritage.

14 | ECONorthwest

INNOVATION GAPS IN THE MARITIME SECTOR
Personal Interviews Outcomes

Elements to Broaden
Maritime Innovation
Ecosystem

▪▪

Unique needs of the
maritime industry:
­- Median
entrepreneur age in
40's
- Fragmented
market; limited Total
Addressable Market
(TAM) headroom
- Uneducated
investors

4. Online Survey

Idea Area Topics
For Future
Exploration
Alternative
propulsion
systems

▪▪

▪▪Robotics
▪▪"Pin boning"
Fisheries
▪▪observer
program
automation

▪▪Modernizing
the fishing fleet
Specific
co-location
▪▪ spaces for BlueTech ▪▪Fish net
technology
entrepreneurs
Higher margin
▪▪seafood
▪▪Identified "step
out" spaces
for successful
enterprises

space with
▪▪Hosting
both hardware and

software support for
BlueTech

linkages
▪▪Formal
so industry and

academia/govt. can
work well together

education
▪▪Public
about local seafood
industry

products for
US consumers

Decreasing
▪▪environmental
footprint and
improving
compliance

An online survey was sent to over 400
stakeholders conducted by ECONorthwest
(See Summary in Appendix section)
The Maritime Innovation Center Survey
was developed to gauge interest in and
preferences for a proposed Center from a
targeted population of maritime industry
contacts and related stakeholders. The Center
is proposed to comprise three programmatic
elements: (1) an incubator/accelerator,
(2) active connections between industry
and academia within a maritime focused
"innovation network," and (3) education
and training resources that would serve
the maritime community. A model facility
is anticipated to provide a full spectrum of
services to growing maritime businesses while
catalyzing innovation within its communities.
The survey was designed to generate broader
recognition and understanding of the needs of
targeted stakeholders. The survey questions
allow the Port of Seattle to better understand
the views of startups and SMEs in maritime
and BlueTech sectors with a potential interest
in a Maritime Innovation Center. The survey
was sent to stakeholders who have been
identified as potentially having an interest in a
Maritime Innovation Center.
Since the survey was not administered to
a random sample of the population, the
results cannot be extrapolated beyond the
respondents who completed the survey.
However, the individuals who responded

indicated a large amount of interest in the
Maritime Innovation Center and the respective
results show the preferences for individuals
who most likely could become involved
with the facility at some point in the future.
A narrative summary of major takeaways is
included below:
a plurality of the respondents
▪▪ Overall,
self-identified as being affiliated with the

Maritime Business sector (40%), with the
second largest category self-identifying
as Government (17.7%). Responses
from these sectors largely mirrored the
remaining sample throughout the survey,
with minor variations highlighted below.

regards to views of the maritime
▪▪Inindustry,
the Maritime Business sector

has a slightly lower opinion of maritime
industry visibility than the remaining
sample, while the Government sector
felt that the maritime industry had lower
"innovation" performance.

the entire survey sample, the top
▪▪ Across
three business and innovation barriers for

firms trying to grow in the maritime industry
were (1) lack of public policy and incentives
support, (2) workforce talent, skills, and
development, and (3) understanding of the
business/opportunities within the maritime
sector.

Maritime Business sector was
▪▪ The
less concerned with understanding

business/opportunities and more
concerned with access to investors
and funding. The Government sector
was more concerned with a lack of
research and development resources.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 15

INNOVATION GAPS IN THE MARITIME SECTOR
Charrette Collage

Survey Demographics

Funder/Invest or
Non Mari time business
Industry group
Academenic/Research
Workforce development
Other (mix of business/gov/research)
Government/Economic dev elopment
Maritime business
0%

10%

20%

30%

40%

50%

Of the hundreds of people who took the survey, people in the maritime business were the largest group. In
addition, the survey had representation from other major stakeholders in the innovation space.

top three trending technology issues
▪▪ The
transforming maritime businesses were: (1)

was no single overwhelming
▪▪ There
emphasis in response to open-end

regards to the proposed Maritime
▪▪ InInnovation
Center itself, all sectors

the Maritime Business and
▪▪ Both
Government sectors saw themselves

electrification, (2) ship and vessel design
innovation, and (3) marine renewables.
The Government sector identified these
same issues, while the Maritime Business
sector saw autonomous and underwater
vehicle and systems development as more
transformative than marine renewables.

indicated that the facility should promote
knowledge transfer, business incubation,
and workforce development roughly
equally, while hosting public events was
seen as less important.

16 | ECONorthwest

questions focused on specific components
of the Maritime Innovation Center itself;
however, respondents provided additional
detail in areas of maritime economic
development, facility configuration,
incubator/accelerator services, and public
policy objectives.

getting involved predominantly in workforce
development, while the remaining sample
was most likely to become involved with
knowledge transfer and joint applied
research activities.

of the common incubator features,
▪▪ Intheterms
most important across all sectors was
access to laboratory, fabrication, or testing
space, with event space and office space
identified as the least important. This
theme continued to appear in the question
about specialized incubator features, with
equipment-related features ranking at the
top of the list for all sectors.

NEEDS ANALYSIS
When considering a plan to build an activity
system and program for increasing the
likelihood for innovation, it is important to
take note of assets already in place within
the region. Since the maritime sector is also
quite complex with many subsectors, the
supporting resources are equally complex
with overlapping priorities in other areas.
While by no means an exhaustive list, we
make note of the following examples:

▪▪ Natural Resources
▪▪ Existing Entrepreneurial Assets
Marine Architecture, and
▪▪ Shipbuilding,
Marine Transportation
▪▪ University of Washington
▪▪ Other Educational or Institutional Assets
▪▪ Federal Assets
▪▪ Seafood & Fishing Industry
▪▪ Ocean & Marine Instrumentation Industry

The Washington State martime sector
NEEDS ANALYSIS
needs to be more innovative.
SIGNIFICANT BARRIERS TO GROWTH
IN THE MARITIME SECTOR

Excellent

As part of our research we surveyed
approximately 400 people and asked them
to assess a large range of business and
innovation challenges in the maritime sector.
The list shows the top identified challenges.
1) Lack of public policy & incentives support
2) Workforce talent, skills, & development
3) Understanding business/opportunities
within the maritime sector
4) Access to investors & funders
5) Lack of research & development
resources

Needs Improvement
0%

20%

40%

60%

The Washington State maritime sector needs to be more
innovative: 2 out of every 3 respondents felt that the
innovation performance is not comparable to other industries.

NATURAL RESOURCES

EXISTING ENTREPRENEURIAL ASSETS

The physical and geographic attributes of
the Puget Sound Region is an enormous
advantage that is often overlooked in its
ranking of importance, so we listed it first.
Included in Puget Sound is:

As one of the world's leading tech regions,
Washington state is fortunate to have a
well-established culture of innovation. This
culture is supported by over 50 existing
entrepreneurial hosting programs (incubators,
accelerators and the like) in Puget Sound
alone. While this is encouraging from the
overall standpoint of having a startup culture
with the needed support structures across
broad industries, there are no start-ups with a
specific focus on the maritime/oceanographic
industry, with the exception of the University
of Washington's APL Collaboratory. The
Collaboratory's unique distinctions are
explained in the benchmarking section.

▪▪ A large shoreline
▪▪ Deep water port
▪▪ Proximity to Alaska & Arctic
▪▪ Proximity to Asia/Pacific Rim/BC
▪▪ Protected freshwater harbor
▪▪ Sustainable fisheries
air and abundant energy and
▪▪ Clean
water resources

It is important for any plan going forward to
leverage and showcase these attributes.
THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 17

NEEDS ANALYSIS

SHIPBUILDING, MARINE ARCHITECTURE,
AND MARINE TRANSPORTATION

While Puget Sound is not unique in the US
for having shipyards and architects, it is
unique in the variety of commercial activities
supported. We note that not only are there
existing skill sets and capabilities for wellknown shipbuilders such as Vigor (Tacoma,
Seattle, Port Angeles), shipbuilding expertise
also extends to the Naval Shipyard, aluminum
boats, and the local craftsmen in Port Hadlock
skilled in traditional wooden boat building.
Marine logistics companies such as Foss
Maritime and Crowley Maritime have a large
presence in the region. This large installed
base can serve both as a needs source and
where innovative technologies can be applied.
In addition, Washington State operates the
largest commuter ferry system in the country,
which also creates opportunities of scale for
clean alternative propulsion systems.

18 | ECONorthwest

UNIVERSITY OF
WASHINGTON

UW is not the only
educational institution
involved in maritime
or ocean activities;
however it clearly stands out because of the
number and size of programs it has that are
either supporting or can support maritime/
oceanographic programs. This includes:

▪▪ Washington Sea Grant
Physics Lab (including
▪▪ Applied
the Collaboratory)
▪▪ School of Oceanography
▪▪ School of Marine and Environmental Affairs
Northwest National Marine
▪▪ Pacific
Energy Center
Labs entrepreneurial
▪▪ Co-Motion
hosting program

OTHER EDUCATIONAL OR
INSTITUTIONAL ASSETS

Washington University (has
▪▪ Western
programs in Marine Sciences, Energy,
and Autonomous Vehicles)

Center of Excellence for Marine
▪▪ Northwest
Manufacturing and Technology (Skagit
Valley College)

Maritime Academy
▪▪ Seattle
(Seattle Central College)
▪▪ Northwest School of Wooden Boat Building
▪▪ Schmidt Ocean Institute.
▪▪ Washington State University Food Science

NEEDS ANALYSIS

Everett, and Whidbey Island. The Naval
Undersea Warfare Center (NUWC) facility
in Keyport has a large testing range
for underwater vehicles and expressed
willingness to cooperate with interested
users (entrepreneurs in early proof of
concept stages)

Coast Guard District 13-D13's Area
▪▪ US
of Responsibility encompasses four states
and the entire Pacific Northwest coast

Northwest National Laboratory
▪▪ Pacific
(PNNL)-Part of the Department of Energy,
FEDERAL ASSETS

Western Regional Center-Houses
▪▪ NOAA
the largest variety of NOAA programs

at a single location in the United States
(Includes National Ocean Service, National
Marine Fisheries Service, Office of Oceanic
and Atmospheric Research & National
Weather Service). It employs the largest
NOAA staff outside the Washington, D.C.,
metropolitan area

Navy-The Navy has a large
▪▪US
presence in the region including major

facilities in Bangor, Bremerton/Keyport,

PNNL features many locations in the
Pacific Northwest including a Research
Center in Seattle and the Marine Sciences
Laboratory in Sequim

SEAFOOD & FISHING INDUSTRY

A significant portion of Alaska's fishing
fleet has been based in Seattle for over
100 years. As a consequence, there are
highly experienced shipbuilding, repair and
maintenance services in close proximity to
Fishermen's Terminal. The Chittenden locks
allow fishing boats to spend their off season
on fresh water, which means less corrosion of

hulls and other equipment as well as unique
opportunities for innovation and testing. After
fishers harvest their catch the seafood must
be processed, marketed, and delivered to
consumers. Many of these companies are
also present on the ship canal and elsewhere,
as the catch is processed and exported, with
opportunities for innovation at each stage of
the supply chain.
OCEAN & MARINE INSTRUMENTATION
INDUSTRY

Puget Sound is one of the leading parts of
the country for underwater technology which
includes robotics, sensors, and platforms
for providing the necessary information
for climate forecasters, ocean operators
(industry), and public safety. While numerous,
most of the companies in this segment are
small and have close relationships with one
or more of the groups listed above-two of
the better-known are SeaBird Scientific and
Kongberg/Simrad.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 19

VISION AND MISSION STATEMENT

VISION AND MISSION STATEMENT
VISION STATEMENT

Puget Sound in Washington State becomes a world leading hub for
sustainable maritime and ocean industries by creating an ecosystem of
innovation that drives productive collaboration among academia, industry
and government.
When people think about sustainable BlueTech industries, we want
them to think about Puget Sound in the same way the world equates
finance with New York or technology with Silicon Valley.
MISSION STATEMENT

To provide relevant, timely, and targeted support for early stage marine
and ocean-oriented companies in the creation of new innovations to
modernize the industry and create good-paying Blue Jobs. This support
will be achieved by leveraging local assets and providing the necessary
linkages to leverage the collective strength.
STRATEGIC OBJECTIVES

▪▪ Create local economic development
the necessary linkages (hub and spoke) and accelerate maritime
▪▪ Build
industry growth
▪▪ Attract new entrepreneurs to BlueTech
▪▪ Retain local companies and talent
the region's orientation towards environmental sustainability,
▪▪ Leverage
technology innovation, and maritime heritage
▪▪ Attract investment
▪▪ Workforce and development

20 | ECONorthwest

BUSINESS PLAN

BUSINESS PLAN
OVERVIEW

The Port of Seattle owns the Seattle Ship
Supply building at Fishermen's Terminal (FT)
and is renovating the 12,000 sq. ft. structure
as part of a broader redevelopment effort
at FT. The Port of Seattle has an unrealized
opportunity to renovate the existing property
into a Maritime Innovation Center which
would include incubator office space,
fabrication space, and event space for
workforce development programs and public
outreach. The renovation effort would support
the region's and state's efforts to grow the
maritime sector.
POTENTIAL OPERATING AND
GOVERNANCE STRUCTURES

This proposal suggests a strategic move
forward by the Port of Seattle to invest in
renovating the existing building into the
symbolic and functional home for the future of
the region's maritime industry and innovation
center. To support the project, the Port of
Seattle should consider the following issues
regarding its role in hosting a physical space
and partnering with the broader public and
private interests in the maritime industry.
There are a number of operational and
governance structures under which the
proposed Maritime Innovation Center might
operate-these range from direct provision
models including Port management of the
Center to forming one of many types of formal
partnerships with either public or private
organizations. Deciding the appropriate model
THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 21

BUSINESS PLAN
TOP FIVE RATED INCUBATOR SERVICES

Access to specialized spaces will be key
Access to specialized spaceselements
will be key elements
the innovation
center: People
who took the survey felt that access
ofofthe
innovation
center.
to lab, fabrication, and testing space should be priority offering for the innovation center.

Survey respondents were asked to assess
a large range of incubator services. This
list shows the top identified challenges.

Event space

1) Shared resources with research centers,
testing facilities, universities and private
companies

Offi ce utilities and IT support
(computers, telephones, etc.)

2) Guidance and mentorship from
business leaders/investors
3) Business support service provider
assistance (e.g. HR, legal, marketing)

Conference, break space, and
collaboration rooms

4) Access to general equipment for testing
or fabrication of prototypes

Laboratory or fabrication or testing
space

5) Classes/training for workforce and
skills development

0
requires an evaluation of the model's tradeoffs
with respect to several key criteria that would
be related to executing on the Center's
mission. The key criteria to consider include:
access to capital: different types
▪▪Facilitate
of entities (i.e., public, private, nonprofit)

▪▪

will have different sources of capital that
they can access at different costs and
legal limitations.

Financial exposure: tax exempt status
and ability to realize economies of scale
or leverage in-kind contributions are
both factors which influence the financial
viability of the proposed Center and differ
among ownership and operating models.

22 | ECONorthwest

flexibility: the ability to
▪▪ Operational
deliver Center activities via contracts,

▪▪

partner with other academic and peer
institutions, and engage in a mix of
public and private activities.
Accountability: each entity will
have unique success metrics and
accountability mechanisms.

The best model will be one that facilitates
access to low cost capital, minimizes
operating costs (is tax exempt and able to
achieve economies of scale on the operations
side), and is mission-driven and accountable
to stakeholders.

2

4

Importance, low to high

6

OPERATING OPTIONS

There are options available to the Port that
it could employ to operate and govern the
center. These include:

of Seattle governed and operated by
▪▪Port
a contractor (i.e. private group, economic
development agency or universityaffiliated enterprise)

governed and operated by a
▪▪Non-profit
contractor (i.e. private group, economic
development agency or universityaffiliated enterprise)

public-private partnership that includes
▪▪ Adesired
aspects of other models

BUSINESS PLAN
INCUBATOR AND ACCELERATOR
PROGRAM ACTIVITIES

A key component of the Center will be the
business incubator and accelerator program.
The Center is anticipated to be a provider
with special expertise in serving early
state business ventures. It will also provide
space, facilities, and business mentorship
programs to support growth in maritimeoriented business. The incubator space and
accelerator services could create tailored
programs to meet the needs of participating
businesses. The incubator would cater
to entrepreneurs developing early stage
business ideas and technologies in search
of viable business ideas. The accelerator
program could cater to businesses with
defined products and business plans trying to
scale their efforts.
The Center could be fitted out to provide
for the following space capabilities and
amenities; however, final decisions would
need to be made regarding service breadth
and program requirements:

access for participating companies to
▪▪ 24/7
offices and co-working spaces
break space, and
▪▪ Conference,
collaboration rooms
▪▪ Event space
or fabrication or testing space,
▪▪ Laboratory
such as a tool workshop and 3-D printers
▪▪ IT support (computers, telephones, etc.)
space environments (easily
▪▪ Flexible
reconfigured office furniture, rolling doors,
cubes, private "phone booths," etc.)

to water/marine infrastructure
▪▪ Access
and equipment

The incubator/accelerator program will feature
the following programmatic elements:

▪▪

Advice (e.g. legal, accounting, marketing,
permitting) and assistance (including
support for obtaining access to private and
government loans)

▪▪
▪▪ Classes, seminars, and/or on-the-job training
and/or mentoring from business
▪▪ Guidance
leaders or investors
with hiring (entry-level employees or
▪▪ Help
experienced professionals)
▪▪ Industry events and promotions
resources with research
▪▪ Shared
centers, universities, test facilities,
Business training (writing plans, budgeting.)

and private companies

MARITIME AND TECHNOLOGY TENANTS

The Center could also offer access or
a satellite office for anchor tenants from
existing maritime sector businesses that want
to co-locate with and support early stage
innovations. The Center should also have a
strategy for "step-out" space as companies
grow and mature, as well as "step-in" space
available to companies from outside the
region that want to test the local market.

Table 2: Maritime Innovation Center Program Concept

PROGRAM ELEMENT

RENTABLE SF

Incubator space

3,600

Anchor office space

1,300

Accelerator space

800

Event space

2,300

Common area/
Conference/Admin

4,000

TOTAL

12,000

Source: ECONorthwest, 2018

MARITIME INNOVATION CENTER
SPACE CONCEPT

The Port of Seattle has completed preliminary
space and design concepts to map out the
potential space program within the Seattle
Ship Supply building at FT (See Summary
Report and Conceptual Drawings by Miller
Hull in Appendix Section). The concept for the
facility is for a 12,000-square foot building that
includes five programmatic components:

▪▪ Incubator office and fabrication shop space
▪▪ Accelerator office space
▪▪ Other tenant office space
▪▪ Event space
tenant space; conference rooms,
▪▪ Shared
and Center administrative office space

Table 2 above shows the facility space needs
by component and informed by a design
charrette coordinated by the Port of Seattle's
architect. ECONorthwest describes each
component in detail on the following page.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 23

BUSINESS PLAN

The space program serves as a guide
for future physical planning and financial
assessments.
Collectively, the Center office space,
other tenant office space, and incubator/
accelerator space comprise the office areas
within the Center.
Center office space
This component includes the office space
for Center administration office space
and operations.
Incubator and Accelerator tenant office space
This component includes a mix of rentable
co-working, independent stations, and
dedicated office space needed to support the
individuals and firms in the Center's programs.
Incubator and Accelerator tenant fabrication/
flex space
This component includes a mix of fabrication
and flex space that can be used as a
workshop and/or office space depending on
the needs of the current program tenants.

24 | ECONorthwest

Anchor tenant office space
This component includes office space for
additional tenants that would benefit from
co-location within the Center. These tenants
might include other more established
businesses in the maritime sector that can
lend advice and guidance while having
access to innovations and startups.
Shared tenant space
The shared tenant space includes common
areas which would be available to all office
tenants and their guests. These shared
spaces include: a reception area, a mailing,
printing, and production station, a storage
room, a break room with a full kitchen, and a
conference room that seats at least fifteen.
Event space
The event space is a venue for the Center and
industry groups to host events. The space
should be flat and open, allowing for a variety
of uses including meetings, audio/visual
events, and gatherings. The specific design of
the event space should also allow for double
duty as flex space for office and incubator
tenants.

OPERATING PLAN

OPERATING PLAN
This section presents an operating forecast for
the Maritime Innovation Center. An operating
forecast shows revenues and expenses
associated with operations only. It does not
include investment items (e.g. capital costs)
or finance items (e.g. debt service payments),
both of which factor into the feasibility of a
project. These are assumed to be a condition
of Port of Seattle investment in the Ship
Supply Building. This forecast describes
facility operations, presents revenue forecasts,
breaks down costs by segment, and
concludes with an operating income forecast.
The forecast is built upon:
gathered on performance
▪▪ Data
benchmarks, models and best

management practices and an inventory of
specialized equipment from other similar
incubators or innovation centers

▪▪ Real estate market data
▪▪ Information on comparable facilities
▪▪ Consultation with industry associations
REVENUE SEGMENTS

This forecast assumes that the Proposed
Maritime Innovation Center will generate
revenue from the following sources:

tenants: Revenue estimates
▪▪ Incubator
assume that tenants will pay on average

$200 per month for memberships. Under
the space program above, the Center
might have space for 50 dedicated
spaces at full utilization; however, it might
overbook the site to account for time of
day fluctuations on utilization. These rents

reflect that this is a new facility with stateof-the-art offerings in office, fabrication,
and event space (current co-working space
in this part of the office market range
between $150 to $300 per membership).

tenants: Revenue estimates
▪▪ Accelerator
assume that tenants will pay on average

$200 per month for memberships for
dedicated office space capable of holding
3-4 employees.

tenants: Revenue estimates assume
▪▪ Office
that office tenants will pay $25 per square

foot per year (triple net rents). These rents
reflect that this is a new facility with stateof-the-art offerings in office, fabrication,
and event space (current office rents in the
immediate range between $25 to $35 per
square foot per year).

space: The facility will include
▪▪Fabrication
fabrication spaces to be managed
by the proposed Maritime Innovation
Center. This space would be covered by
individual memberships.

event space­: ECONorthwest estimated
▪▪ The
event center revenues using per square
foot rental revenues from the proposed
event space. It assumes that the Center
would generate revenue from 30 paid
events paying current market rents for
event space in the area (it will also likely
host unpaid events).

In total, the Proposed Maritime Innovation
Center is anticipated to generate $228,000 in
revenues per year, or $19,000 per month.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 25

OPERATING PLAN
OPERATING EXPENSES

This section summarizes the operating
expense assumptions used in the financial
forecast for two program assumptions. First,
the program will likely need to run on a very
lean budget at start up and make choices
about enhancing its services as the center
and its programs mature. At the time of this
report, it is assumed that the Port will operate
the facility with specialized staff who are
knowledgeable about business startups in the
maritime sector. The analysis also assumes
that the Port will use 1) its existing staffing and
operating capacity in the Fishermen's Terminal
area to provide gap coverage for events and
other building maintenance, and 2) rely on
in-kind contributions from project sponsors to
supplement basic operations of the Center-
outside of any firmer financial commitments.
The operating expense model does not include
three essential cost items that are assumed
to be covered by the Port of Seattle: 1) cost
to lease the land, 2) start up and tenant
improvement cost to fit out the space, and 3)
debt service to support facility construction.
Table 3 lists the operating expense
categories and their annual estimated
expenses. Each category is discussed in
more detail as follows.
The calculations for the four operating
expenses are:

▪▪

Payroll and Benefits: Currently, it is
estimated that the facility will need 1
full-time and limited hourly staff and
would scale staffing based on need and
economic conditions

26 | ECONorthwest

: ECONorthwest estimated the
▪▪ Utilities­
Proposed Maritime Innovation Center

benefits generated by the facility. The financial
performance of the facility could be improved
through more aggressive rent structures of
office tenants or through public and private
support of its mission.

The
▪▪ Maintenance/Janitorial/Grounds:
model segments this expense item into

RESERVE/CAPITAL FUND

utilities on a per square foot basis at its
current location and applied this cost to the
number of square feet at the new location
that are not leased to tenants

three sections: the fabrication space, event
space and office space. The fabrication
additional professional service assistance
which will be needed

Our analysis assumes that
▪▪Marketing:
the proposed Maritime Innovation Center
will need to have a budget for marketing
the site to prospective tenants and to
advertise events

Our analysis assumes
▪▪ Event/Programming:
that the proposed Maritime Innovation
Center will need to have a budget for
hosting and programming events

Materials and Supplies: The
▪▪ Consumable
proposed Maritime Innovation Center will

need to purchase general office supplies to
maintain its operations

FINANCIAL FORECAST-
NET OPERATING INCOME

Table 3 shown on the following page outlines
the financial performance of the proposed
Maritime Innovation Center for its first 10
years of operations allowing time for ramp up.
ECONorthwest anticipates that the Center will
not generate a net-positive operating income.
This is the purely financial outlook, since it
does not take into consideration the important
economic, fiscal, and community development

The facility will need to fund operating
reserves as well as a capital replacement
fund. Generally, a capital replacement study
will need to be undertaken to determine a
replacement schedule and cost obligation
estimate; however, a rough standard of
$1 per square foot per year (seen in other
similar facilities) would be needed to target
approximately $12,000 per year for the fund.
OTHER FUNDING CONSIDERATIONS

Many incubator facilities are governed in such
a way that allows outside revenue support
from government and industry sources. Given
their unique mission, finding opportunities
for corporate sponsorship, government
grants, philanthropic, or industry support is
a reasonable basis for funding. For the Port
of Seattle and its economic development
mission, there are several funding
considerations to explore:

▪▪ Direct support through their existing tax levy
support through charges on
▪▪ Indirect
its existing or future maritime real
estate holdings

Further work by the Port would need to be
conducted to test the feasibility and revenue
adequacy of any of the options listed above.

OPERATING PLAN

Table 3: Net Operating Income
YEAR 1

YEAR 2

YEAR 3

YEAR 4

YEAR 5

YEAR 6

YEAR 7

YEAR 8

YEAR 9

YEAR 10

Revenues
Incubator space

$38,100

$89,300

$92,400

$95,700

$99,000

$102,500

$106,100

$109,800

$113,600

$117,600

Anchor office space

$32,500

$33,500

$34,500

$35,500

$36,600

$37,700

$38,800

$40,000

$41,200

$42,400

Accelerator space

$26,400

$27,200

$28,000

$28,800

$29,700

$30,600

$31,500

$32,500

$33,400

$34,400

Event space

$18,600

$19,500

$20,500

$21,500

$22,600

$23,700

$24,900

$26,200

$27,500

$28,900

Revenue Total

$115,600

$169,500

$175,400

$181,600

$187,900

$194,500

$201,300

$208,400

$215,700

$223,300

Operating Fee (Staff Costs)

$112,200

$114,400

$116,700

$119,100

$121,400

$123,900

$126,300

$128,900

$131,500

$134,100

Supplies/Equipment/IT

$20,000

$20,400

$20,800

$21,200

$21,600

$22,100

$22,500

$23,000

$23,400

$23,900

Meeting and Event Expenses

$2,500

$2,600

$2,600

$2,700

$2,700

$2,800

$2,800

$2,900

$2,900

$3,000

Marketing

$5,000

$5,100

$5,200

$5,300

$5,400

$5,500

$5,600

$5,700

$5,900

$6,000

Operation Costs

Professional Services

$5,000

$5,100

$5,200

$5,300

$5,400

$5,500

$5,600

$5,700

$5,900

$6,000

Utilities

$30,000

$30,600

$31,200

$31,800

$32,500

$33,100

$33,800

$34,500

$35,100

$35,900

Maintenance

$60,000

$61,200

$62,400

$63,700

$64,900

$66,200

$67,600

$68,900

$70,300

$71,700

Leasehold Excise Tax

$24,700

$25,600

$26,500

$27,400

$28,400

$29,400

$30,400

$31,500

$32,600

$33,700

Operations Total

$259,400

$265,000

$270,700

$276,500

$282,400

$288,500

$294,700

$301,100

$307,600

$314,200

Net Operating Income

$(143,800)

$(95,500)

$(95,300)

$(94,900)

$(94,500)

$(94,000)

$(93,400)

$(92,700)

$(91,900)

$(90,900)

Source: ECONorthwest, 2018.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 27

RECOMMENDED NEXT STEPS

RECOMMENDED NEXT STEPS
The Port of Seattle should consider these
findings and deliberate on the following set of
decision points.
and refine conceptual drawings
▪▪ Develop
for the layout and needs requirements

of the proposed Maritime Innovation
Center including architectural renderings,
site layout, and office and workshop
components.

a long-term funding strategy
▪▪ Structure
for the Maritime Innovation Center that

includes a holistic approach to Fishermen's
Terminal and other ideas for promoting
innovation that creates and encourages
new sources of revenue to the Port.

a broad-based advisory
▪▪ Reconvene
committee to inform future decision

making, inclusive of public agency officials,
education and university partners, industry
leaders, sponsors, and other stakeholders
as appropriate.

commitments from public and
▪▪Develop
private project sponsors. The Port has

signaled its commitment to support
innovation in the maritime sector. Other
regional and state economic development
interests, and maritime industries, have
shared interests. Additional work should
be done to identify which groups would
like to be directly involved in sponsoring
the innovation center, including
determining levels of financial and other
in-kind support necessary to launch the
facility.

28 | ECONorthwest

governance and operating
▪▪ Determine
structure. As the project moves forward,

the Port will need to select a preferred
operating model and develop a strategy
that is most appropriate, including but not
limited to, the possibility of negotiating
a memorandum of understanding,
developing a public-private partnership,
issuing a request for information, or
evaluating other options internally or
externally with non-profit, for-profit, or
university operators.

the policy side, it is recommended that
▪▪ On
public agencies support efforts to develop

new approaches to evaluating the Blue
Economy including the creation of satellite
income accounts and efforts to update the
North American Industrial Classification
System (NAICS) codes and other standards
to include BlueTech as a category.

APPENDICES

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APPENDICES

LIST OF APPENDICES
PROPOSED MARITIME INNOVATION
CENTER GREEN PAPER
This is a short policy brief discussing how
an innovation center could interface with
a dynamic economy and local economic
development efforts. This paper was used to
preface attendees at the Maritime Innovation
Center Workshop.
MARITIME INNOVATION
CENTER WORKSHOP
The Port of Seattle hosted a workshop on
October 17th with a variety of stakeholders to
identify the major strengths, weaknesses, and
trends of Puget Sound's maritime sector, as well
as gather input to form a vision for the center.
This document summarizes the workshop.
MARITIME INNOVATION CENTER
DESIGN CHARRETTE
As the Port redevelops Fishermen's Terminal it
wants to restore its Seattle Ship Supply building
and turn it into a facility that can support
entrepreneurs and established companies. The
Port contracted with the Miller Hull Partnership
to complete a design charrette for the Ship
Supply building as a location for the Maritime
Innovation Center.

MARITIME INNOVATION CENTER
OUTREACH MEETINGS IN ANACORTES &
PORT HADLOCK
To establish background and focus for the study,
the Port hosted three outreach events. The first
was a SWT workshop in Seattle on October
17 (summarized previously). The second
and third events were outreach meetings
in outlying Puget Sound communities, with
the aim of gathering input from stakeholders
outside the immediate vicinity of Seattle. These
outreach efforts recognize that many innovative
solutions, technologies and best practices have
been accelerating in small and rural maritime
communities around the state. This document
summarizes the proceedings of the two outreach
meetings, held on December 13-14, 2017.
MARITIME INNOVATION CENTER
INTERVIEW SYNOPSIS
As part of the discovery process to develop the
plan for the Center, interviews were conducted
in person or on phone with 35 people (28
distinct organizations) representing a broad
spectrum of interested entities. This document
summarizes key findings from those interviews.
MARITIME INNOVATION CENTER SURVEY
The Maritime Innovation Center Survey was
developed to gauge interest in and preferences
for a proposed Maritime Innovation Center
from a targeted population of maritime industry
contacts. The survey was designed to generate
broader support and understanding of the
needs of targeted stakeholders. This document
summarizes the key findings from the survey.

THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 31

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THE ECONOMIC CASE FOR THE MARITIME INNOVATION CENTER AT FISHERMEN'S TERMINAL | 33