When we think of the driving forces behind tech innovation, one image that may come to mind is that of the tech incubator or the seed accelerator. We wouldn’t be incorrect to imagine famed accelerators like Y Combinator, Techstars, or their likes.
These are the celebrities of the startup economy, the root organisms of tech ecosystems. But about eight years ago, the organisms that comprise tech ecosystems noticeably morphed into something far larger, more complex, more intentionally integrated into the whole of their host cities.
Many observers trace this latest trend to 22@, a.k.a. 22@Barcelona, an urban-renewal area in a post-industrial section of that city that was converted into a technological innovation district beginning in the early 2000s. About four years ago, observers like Bruce Katz, formerly a Centennial Scholar at the Brookings Institution, helped to clarify this trend in an influential essay, co-authored by Julie Wagner, called The Rise of Innovation Districts.
What is an innovation district?
Katz and Wagner’s formal definition runs like this:
A geographic area where anchor institutions and companies cluster and connect with small firms, startups, business incubators and accelerators. Physically compact, transit accessible, and technically wired, they offer mixed-use housing, office and retail.
The full study on which their essay was based, “The Rise of Innovation Districts: A New Geography of Innovation in America” (2014), demonstrates how innovation districts are a distinctly new, and unparalleled, development. Comparing them to the largest accelerators, even to startup hubs like American Underground, is like comparing tropical rainforests to a potted ficus.
In a case study of 22@Barcelona, Arnault Morrison provided a complementary definition of the innovation district:
A place-based urban development strategy that aims to regenerate an under-performing downtown neighborhood into a desirable location for innovative and creative companies and workers.
Because the context for this trend is both strategic and urban, innovation districts look like collaboration on steroids. They are not only transforming tech innovation, they are also transforming urban culture.
Katz was noted for saying that innovation districts “supercharge the innovation economy” because tech jobs are such powerful job multipliers. Wherever you plant tech jobs, five times more additional new jobs will grow.
Essentially, according to Katz and Wagner, “The suburban corridors of spatially isolated corporate campuses” that typify Silicon Valley and that have dominated the innovation landscape for 50 years are mere prologue to what we’re now seeing and where we’re now going (1).
Economist Enrico Moretti likes the label “brain hubs” for innovation centers like Boston, Raleigh-Durham, Seattle-Everett, Denver-Boulder, San Francisco, Tallahassee, Austin, Lexington-Fayette (KY), Madison (WI), and Portland (ME). What’s relatively new in all these places is the deep partnerships among entrepreneurs, city governments, private industries like housing and retail, “anchor” institutions like universities, and corporate tech giants.
Katz and Wagner have identified three general models of innovation districts:
- The “anchor plus” model, primarily found in the downtowns and mid-towns of central cities, is where large-scale, mixed-use development is centered around major anchor institutions and a rich base of related firms, entrepreneurs and spin-off companies involved in the commercialization of innovation. Kendall Square in Cambridge, MA, and the Cortex district in St. Louis are good existing models. New on the scene will be Discovery Park District, a 400-plus-acre, $1.2 billion “launch pad” being developed by Purdue University in partnership with the town of West Lafayette. According to the Indianapolis Business Journal, “When completed sometime in the late 2030s, it will host not just research and high-tech manufacturing facilities, but also retail, a convention center, walking trails and housing options ranging from student apartments to single-family homes.”
- The “re-imagined urban areas” model, often found near or along historic waterfronts, is where industrial or warehouse districts are undergoing a physical and economic transformation. Seattle’s South Lake Union area is a good example, as is Boston’s Seaport (almost no one there calls it the Innovation District any more). There has been some doubt about the status of the Seaport lately. Its Facebook page hasn’t been updated since 2015, and its Twitter account no longer exists. And yet, the Seaport will be home to General Electric’s new world headquarters, to be known as Innovation Point when it’s completed in 2019. Since 2010, according to one case study, the Seaport has created 5,000 jobs, and provided fertile ground for more than 200 startups. Two, 42-story residential towers opened last year featuring a quarter-million square feet of retail space. As with any innovation district, this one is not without its challenges, such as gentrification and the rising costs of living associated with that.
- The “urbanized science park,” commonly found in suburban and exurban areas, is where traditionally isolated, sprawling areas of innovation are urbanizing through increased density and an infusion of new activities (including retail and restaurants) that are mixed as opposed to separated. The classic example of this model is North Carolina’s Research Triangle Park. Founded in 1959, RTP is a 7,000-acre research park (the nation’s largest), home to some 200 companies. According to its 2011 master plan, RTP stands at a turning point. It must change not only to meet new challenges in a competitive marketplace, but also to meet the expectations of modern tech workers in terms of amenities, collaboration and social dynamics.
As Bruce Katz argues, exurban campuses, like RTP, isolated from its competitors and from the homes of its workers, are passe. He says, “Workers want be in urban places that are walkable, bikable and hyper-caffeinated, where they can bump into other people and share ideas.”
One aspect of this new “geography of innovation” that Katz is totally gonzo about is the role that cities themselves are playing, and will continue to play, in shaping the larger national and global economies. This has long been true, he argues, but has never been more pervasive than it is today. That’s because cities by their very nature are solutions-oriented networks without the partisan ideologies that plague national governments. As our population ages, our federal government, he says, will allocate most of its budget on healthcare and the military, leaving cities to meet the chalelnges of commerce, transportation, housing, infrastructure, even climate change and civil liberties. And, yes, technological innovation too.
“Cities are now in charge of investing in our future,” Katz has said, and “the United States and Europe are being remade from the bottom up.”
We at tekMountain recognize the critical importance of entrepreneurs, investors and founders to understand and to evolve with the changing dynamics of today’s tech ecosystems. Whether you call them tech hubs or “entrepreneurial clusters,” innovation districts are already reshaping the places and pace of technology. We have committed ourselves to tracking it and will return to this trend in future posts.