Innovation district

The creation of innovation districts is a recent trend in that helps the economy. Since the 1950s, entrepreneurial clustering has been led by the spatial geographic model of Silicon Valley – suburban corridors with sprawling research centers and campuses. However, in the early 2000s mayors in European and American cities began dedicating zones in cities exclusively for the purpose of clustering entrepreneurs, startups, business accelerators and incubators. These spaces are easily accessible via public transportation, wired for public Wi-Fi, support mixed-use development, and nurture collaboration / knowledge-sharing.

The first official innovation districts were in Barcelona, Spain with 22@ and in Boston, Massachusetts with the Seaport Innovation District. Following these two initiatives, mayors across the globe have replicated variations of this model in their own cities. Today, there are over 80 official innovation districts worldwide.

Innovation Districts have proven to be effective solutions for cities to modernize their economies and pivot from traditional industrial-based production to technology-driven services. A wave of academic research is also emerging analyzing innovation districts’ positive effects on job creation and economic development.

Origins in Europe - Barcelona

The Rise and Fall of Poblenou

Barcelona, Spain is credited with creating the first innovation district with its 22@Barcelona Project that began in 2000. 22@ is an initiative that redeveloped the real estate of the industrial El Poblenou neighborhood in the Sant Martí district of the city. For centuries Poblenou was the leading manufacturing center of Barcelona. It housed companies that engaged in mass production of textiles, food / wines, construction products and metal structures.

However, between 1963 and 1990, Barcelona’s manufacturing center began to collapse and 1,300 factories were abandoned. In the once-thriving region of the city, there now was a mass-exodus of companies and residents. The Poblenou neighborhood was effectively abandoned and suffered from mass degradation of its real estate.

Redevelopment of Poblenou

The 1992 Summer Olympics in Barcelona gathered thought-leaders in the city to begin crafting a plan potentially to develop the El Poblenou neighborhood. Over the next 7 years, transportation initiatives were created to connect the then-isolated space to more vibrant parts of Barcelona. In 1999, this project was completed with the opening of the Avinguda Diagonal (Diagonal Avenue), which connected El Poblenou to the downtown area’s business district.

In July 2000, a unanimous vote by the Barcelona City Council approved the Amended Metropolitan Master Plan for the redevelopment of the El Poblenou area. The project was named the 22@ Project, representing a play on the previous urban classification name, "22a", that designated the exclusive use of an area for industrial production. According to the City Council, “Thus, 22@ Project is a permit to recover the productive vocation of the old economic hub of the city of Barcelona in order to create a new model of urban space according to the needs of the current knowledge-based society.”

The 22@ Project

The approved project called for the redevelopment of 200 hectares (0.8 square miles) of abandoned industrial land in the El Poblenou neighborhood into an innovation district, with the goal of concentrating and building knowledge-intensive activities and companies.

The project has 3 goals:

1. Urban refurbishment: Restore the vibrancy of the El Poblenou area of Barcelona through economic and social development. The renewed territory will create a diverse, balanced environment with production centers, social housing, facilities and urban open space aimed at improving the quality of life and of the workplace.
3. Economic revitalization: Transform the neighborhood into a thriving area that attracts companies building technologically relevant and knowledge-intensive solutions for the Information Age.
5. Social revitalization: Create an urban space that encourages networking and collaboration among companies, institutions and residents of the area.

Leaders of Barcelona recognized that this would be a multi-decade project and defined the scope of 22@ in their initial plans as follows:

• Potential total GFS: 4,000,000 square meters
  • Production Activity: 3,200,000 square meters
  • Facilities, housing, other uses: 800,000 square meters
• Existing Housing: Regularizaiton of 4,614 existing homes
• Social Housing: Creation of 4,000 new social housing units (minimum 25% rented)
• New green space: 114,000 square meters of land
• New facilities: 145,000 square meters of land
• New jobs: estimated 150,000
• Infrastructure Budget: €180 million

22@ Today

22@ is perceived as a success and has become the pioneering model for other innovation districts, including Boston’s Innovation District. Today, 70% of the industrial land in El Poblenou has been refurbished, led by 141 individual plans for this redevelopment. 85 of the 141 plans approved are led by the private sector, which has built 700,000 square meters of renewed facilities and 1,886 new housing units in the area.

Since 2000, 4,500 companies employing 56,000 workers have started in or relocated to 22@. Approximately 72% of the total employees in 22@ are university-educated. The 22@ Project also calls for continual community education in information-driven activities such as coding, product design and IT service training. Many universities have also established a presence in 22@ such as Pompeu Fabra University, University of Barcelona, Polytechnic University of Catalonia and the Open University of Catalonia. Several incubators and accelerators have been created such as Biomedical Park, the MediaTic building and Barcelona Activa. The population of the zone has grown by 130,000 since 2000. Furthermore, the city’s economic activity attributable to the El Poblenou territory has increased from 4% to over 15%.

Origins in the United States – Boston

Mayor Menino's Vision

Boston’s Innovation District is the first officially labeled innovation district to be created in the United States. In May 2010, long-time Boston Mayor Thomas Menino announced plans for the city to develop 1,000 acres on the South Boston Waterfront into an “Innovation District.” Inspired by the success of the 22@ model, the Mayor’s vision was to redevelop the mostly abandoned Seaport District into a hub for Information Age jobs and a new frontier for cutting-edge industries such as clean tech, health care information technology and mobile media.

The restoration of the South Boston Waterfront began with the completion of the Big Dig in Boston. This $14.6 billion project buried the formerly elevated Central Artery I-93 Interstate which previously cut off the waterfront from the rest of the city. Similar to the Diagonal Avenue in Barcelona, public transportation efforts were built to connect the Seaport to Boston’s vibrant downtown and allowed mass commuting to this once-inaccessible part of the city.

Mayor Menino’s vision for the Innovation District revolved around three core principles and three key strategies.

Core Principles:

1. Urban Lab: Experimentation is central to the ethos of the Innovation District. Its creators want to use the space to experiment clean energy, citizen participation, transportation, and social infrastructure. Successes will be scaled and translated to benefit all neighborhoods.
2. Sustainable Leadership: The redevelopment should maximize the 1,000 acres of waterfront land in the present while ensuring sufficient resources and enjoyment for future generations.
3. Shared Innovation: All Bostonions should benefit from the shared idea economy and the products that emerge from the Innovation District.

Key Strategies:

1. Promote collaboration: create a close-knit ecosystem and clustering to foster creative growth
2. Provide public space + programming: establish an abundance of collaborative open spaces and organizations. Create District Hall, the world’s first free-standing public innovation center.
3. Develop a 24-hour neighborhood: build innovation housing, provide live-work spaces, attract an innovative nightlife, build cultural institutions, protect local parks and green spaces.

New Models of Spatial Innovation

Boston’s Innovation District has pioneered new models of use for housing, company headquarters, shared work space and collaboration.

MassChallenge is the world’s largest startup company accelerator and is located in the Boston Design Center, a massive 20th century warehouse in the Seaport. Successful startup applicants to its competition are provided free shared office space, expert mentors, marketing / media resources, funding opportunities and the opportunity to receive a portion of the $1 million in grants MassChallenge gives to the best companies. MassChallenge is a non-profit organization and is primarily funded via partners such as Fidelity Investments, Verizon, Oracle, AmericanAirlines and Microsoft.

District Hall, located in the heart of the Innovation District, is the world’s first public innovation building. The location provides civic gathering space where the innovation community gathers to exchange ideas. District Hall is a building that houses open workspace, classrooms, assembly space and flexible use ‘pods’. Most services and amenities at District Hall are provided at little to no cost.

Factory 63 is a converted shoe factory in the Seaport that has been redesigned to accommodate micro-housing units for Innovation District residents. The units are less than 600 square feet in size and are designed to encourage density and entrepreneurial collaboration. The building also provides low-priced office space for startups and entrepreneurs to build their companies. This live-work space model has proved a successful and popular real estate model in the Innovation District. Other real estate companies are remodeling once-abandoned buildings into similar Factory 63 models.

The Innovation District Today

The Innovation District is the fastest growing part of Boston today and has stimulated significant economic growth in the city. Since the District’s launch, 5,000 new jobs have been created and over 200 new companies have formed. 40% of the companies located in the Innovation District share space in co-working spaces and incubators. Over 1,100 housing units have been constructed, including 300 innovation micro-units.

Soaring rent prices in the Innovation District have raised concerns that the rapid real estate development in the area is pricing out entrepreneurs and startup companies – the organizations and people the District is designed to attract. In just a few years, rents have increased 43% in the Seaport, with the average rent at $52.92 per square foot, approximately at the same level of Boston’s affluent Back Bay neighborhood.

Other Notable Innovation Districts

Cambridge (Kendall Square)

The Kendall Square innovation district is anchored by surrounding Massachusetts Institute of Technology in Cambridge, Massachusetts and in close proximity to Harvard University, Massachusetts General Hospital and other world-leading research institutions. In the 1950s, MIT began deploying university-owned land to innovative private sector companies and developing partnerships with local organizations to support the commercialization of ideas stemming from the university. In the ensuing decades, life sciences and pharmaceutical companies began to cluster in the area. Today, Kendall Square houses over 150 biotech, IT, technology and clean energy companies. Firms such as Google, Microsoft, Amgen, Biogen and Novartis have large offices in Kendall Square. Hundreds of startups have been formed and are headquartered in the Kendall Square area as well. Significant real estate development has occurred recently, with approximately 1,000 new housing units built in the area since 2005.

Kendall Square is also home to the Cambridge Innovation Center (CIC), an organization headquartered in an MIT-owned building that rents office space to startups. CIC has pioneered the model of co-working space for entrepreneurs and knowledge-sharing in a high-quality environment. Founded in 1999, CIC has housed over 1,400 companies and attracted more than $1.8 billion in venture capital investment to its startups. Today, over 600 startups are located in CIC.

Philadelphia (University City)

University City in Philadelphia, Pennsylvania is a partnership of leading educational institutions, private sectors companies and local residents that aims to revitalize West Philadelphia through innovation and entrepreneurship. Members of the partnership include The University of Pennsylvania, Drexel University and The Children's Hospital of Philadelphia. The area has become a hub for life sciences, nanotechnology and IT companies in the past decade.

The University City Science Center (UCSC) is the oldest and largest urban research park in the United States and acts as an anchor institution for University City. Founded in 1963, the Science Center is a collaboration of 31 nonprofits throughout Pennsylvania, New Jersey and Delaware. The UCSC has a 17-acre campus in West Philadelphia and houses over 2.5 million square feet of office space to startup companies and laboratory experiments. The campus also offers incubation, support services and programming assistance for entrepreneurs. The co-working space also dedicates resources to migrate technology from the laboratory into the marketplace.

Seattle (South Lake Union)

Seattle's South Lake Union neighborhood transformed in the late 2000s from a degraded low-rise industrial complex into one of the most thriving innovation hubs in the United States. In the early to mid-20th century, South Lake Union was a prosperous manufacturing center for Washington’s biggest industrial companies. Wood making, ship building and airplane manufacturing companies all were located in the area. However, South Lake Union experienced a significant decline in businesses and residents in the 1980s and 1990s. However, as a result of major development plans by Paul Allen's Vulcan Real Estate, the neighborhood has persuaded the area’s leading companies and research centers to relocate to South Lake Union. In 2000, the University of Washington relocated its medical and bioscience campus to South Lake Union. Subsequently, the area has become a hub for some of the West Coast’s leading science organizations including Fred Hutchinson Cancer Research Center, Battelle, Seattle Biomedical Research Institute, Seattle Children's Hospital and PATH. In 2007, Amazon.com announced it would relocate its global headquarters to South Lake Union. Amazon’s relocation has accelerated residential housing growth and entrepreneurial activity in the neighborhood.

Detroit (Detroit Innovation District)

The Detroit Innovation District is a cross-sector initiative dedicated to curbing the city’s economic decline and population loss through the attraction of technology companies to Detroit’s downtown and midtown area. In 2014, Mayor Mike Duggan established the Detroit Innovation District Advisory Committee with Nancy Schlichting, CEO of Henry Ford Health Systems, at the helm of the organization. The initiative dedicated 4.3 square miles of greater downtown Detroit to house small business incubators, train local aspiring entrepreneurs, and attract anchor institutions to the area. The area comprises only 3.1% of the city’s land area, but already hosts 55% of the city’s jobs and 11% of all companies in Detroit.

Dan Gilbert, chairman and founder of Rock Ventures and Quicken Loans, has served as an anchor-individual in Detroit who has assembled leaders from all types of Detroit organizations to revitalize the city. In 2009, Gilbert relocated Quicken Loans to the present-day Detroit Innovation District. In 2012, he did the same and relocated Rock Ventures to the area. The success of Gilbert’s companies and civic leadership has catalyzed the resurgence of technology companies and entrepreneurs in the city.

Raleigh-Durham (Research Triangle Park)

The Raleigh-Durham area is home to one of the largest research parks in the world, Research Triangle Park. The park was a pioneering model in the 20th century for the sprawling research centers based in suburban corridors. It presently covers 7,000 acres of land and 22.5 million square feet. Over 190 companies and 50,000 employees work in the Research Triangle Park and it hosts some of the largest biotech and pharmaceutical companies in the world, including GlaxoSmithKline and Cisco Systems.

Leaders of the Research Triangle Park in 2012 unveiled a master plan to reinvent the physical location of the park. Believing that the current layout was not conducive to collaboration, competition and knowledge-sharing, they recognized the need to redevelop office into an innovation district-like layout. The 50-year master plan will be centered on a 100-acre site in the middle of the present-day Research Triangle Park in order to promote high-density workspace and living. A new commuter rail system will also be developed in order to connect the Park to downtown Durham and Raleigh.

Recent Research

Many academic institutions and think tanks are analyzing the various models of innovation districts and their effects on economic growth and job creation.

Ed Glaeser, an urban economist at Harvard University, is pioneering research on the benefits of entrepreneurial clustering in urban settings. His work has concluded that “employment growth is strongly predicted by smaller average establishment size, both across cities and across industries within cities.” Specifically, Glaeser studied the effect of a 10% increase in the number of firms per worker in a given city and concluded this was associated with a 9% increase in employment growth in the ensuing two decades. Many civic leaders are leveraging the conclusions of Glaeser’s work to demonstrate the importance of building startup accelerators, creating co-working spaces and encouraging density / collaboration in cities – all characteristics of innovation districts.

Bruce Katz of the Brookings Institution has published a significant amount of research on innovation districts. He dedicated a section to innovation districts in his book The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy. He and Julie Wagner also published an in-depth report in 2014 entitled “The Rise of Innovation Districts: A New Geography of Innovation in America.” In their research, Katz and Wagner discuss the components of successful innovation districts and the various models that have emerged in the past several years.

A book on innovation districts written by Arnault Morisson titled "Innovation Districts: a Toolkit for Urban Leaders" was published on August 15, 2015.

Proven Models

Bruce Katz and Julie Wagner identify in their 2014 report three primary models in how innovation districts are created:

1. Anchor plus: This model is characterized by the revitalization efforts / redevelopment centering on a leading institution in a city. The institution itself plays a vital role in redeveloping the surrounding real estate into innovation-friendly locations and attracting entrepreneurs, startups and talent to the area. The most frequently cited examples of this model include Cambridge, Massachusetts’ Kendall Square and St. Louis’ Cortex district. MIT has significantly shaped the development of Kendall Square and Washington University has led the redevelopment of the Cortex district in St. Louis.
3. Re-imagined urban areas: Followers of this model focus the efforts of building an innovation district around degraded real estate, most likely in the outskirts of the city. Re-imagined urban area innovation districts are typically located along historic waterfronts that once served as thriving manufacturing hubs in the 20th century. It is common for significant investments in public transportation to accompany this model in order to reconnect this once-thriving part of a city to downtown residents. Examples of this model include Boston’s Innovation District (redeveloped South Boston Waterfront), Barcelona’s 22@Project (redeveloped Poblenou neighborhood) and Seattle’s South Lake Union.
5. Urbanized science park: This model is characterized by re-imagining suburban or exurban areas into less sprawling, isolated geographies. Examples of this model include Raleigh-Durham’s Research Triangle Park, which was one of the preeminent research corridors in the 1980s and 1990s. However, in November 2012, leaders of Research Triangle Park unveiled a master plan to reinvent the area to attract more nearby living and working, and promote physical spaces that encourage “random collisions” and open innovation.

References

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