“If you build it, they will come” might work to attract baseball players and fans to an isolated cornfield. It won’t attract startups and mature companies to your suburban research park, however, especially now that work from home is leveling out to 28 percent of the week, according to Stanford economist Nick Bloom. Without the right funding, programming, and governance, this could spell trouble for more than two-thirds of America’s research parks and innovation districts that are currently reporting active building projects, according to a new study by the Association of University Research Parks (AURP).
In the post-pandemic era, the isolated research park is dead. Long commutes to lonely desks or lab benches have now been replaced by vibrant live-learn-work innovation districts. These places attract and develop talent, nurture startups, create economic opportunities, and address societal challenges in health, climate, and equity. Gone too is the era of universities, industries, and governments operating such facilities separately. Now the success of an innovation district, and its positive impact on the greater community, depends on how well they work together on policy, funding, placemaking, education, and research.
Soon, many research parks will be confronting big decisions, as did MD Anderson Cancer City, which opted to relocate its Smithville,Texas research to Houston. Atlanta’s Tech Square is home to more than 200 startups and Georgia Tech spinoffs. Ten companies that hit unicorn status with billion-dollar valuations grew out of Toronto’s MaRS Discovery District. Cambridge’s Kendall Square is home to more than 2,000 companies, nearly 40,000 people, and has the highest proportion of jobs in innovation in the country.
Why do some districts flourish while others fail?
Our review of the research by Urban Land Institute, The Brookings Institution, and Global Institute on Innovation Districts (GIID), plus our interviews with a diverse set of experts, reveal four success factors.
- Develop an authentic identity from your regional DNA to provide focus
Innovation Quarter in Winston-Salem, North Carolina, focuses on regenerative medicine, and The Pearl in Charlotte will focus on equitable health outcomes. These are examples of the identity, mission, and focus that are critical to today’s vibrant innovation districts. Research parks over the past five decades have been “a collection of buildings that may have a focus, but it’s a real estate play,” says Jason Kaplan, associate vice president of Innovation Quarter operations and academic resources at Wake Forest School of Medicine. “But an innovation district has a programming focus to push the mission forward. It creates connectivity with reasons to get outside of your building in areas for interaction that are more curated and focused.”
Creating an authentic identity based on your DNA requires well-orchestrated engagement with internal and external stakeholders to create a working touchstone that defines who you are, what you stand for, where you’re going, and why you’re there. Identity is more than branding; it’s also about history, legacy, and the anchor organizations. It should propel education, research, and work. For example, to find focus in university-industry collaborations, Marquette University’s Innovation Alley draws upon Milwaukee’s history and strength in brewing beer to find more sustainable solutions to fermentation. To achieve this focus, “the development process needs to be inclusive and integrated,” says Liesl Riddle, Ph.D., dean of the George Washington University College of Professional Studies. “Think about who’s at the table and how the activities in the district inform and advance institutional strategic plans.” The shared vision and focus enable investment, Riddle adds. “Growth depends on investment. You need to have a good story and incentives to attract industry, especially if they are already densely co-located nearby.”
- Enable sustainable and equitable planning, funding, and governance
Flourishing innovation districts successfully balance control and collaboration. “The ability for innovation districts to organize effectively can be the deciding factor in why one district fails while another succeeds and powerfully evolves,” as The GIID states. “Unless district leaders design effective models to lead and govern, they are destined to become stuck in organizational, if not political, gridlock.”
As observed by varied district leaders, strong private-sector leadership is shown to be essential for success. “Private investment attracts public investment, but private operation is key. Many innovation districts fail because they are too close to government and get mired in bureaucracy,” says Alex Ryan, co-founder and CEO of Synthetikos and former leader of partner solutions at Toronto’s MaRS Discovery District.
Alicia Knight, associate vice chancellor for real estate and development at North Carolina State University, says universities are also recognizing that they need to relax their grip a bit. “To be successful,” she says, “universities need to understand the tradeoff between a high level of control and the flexibility needed for successful partnerships.”
The right funding and governance should consider the importance of creating covenants for continuing maintenance of the innovation district, including for PPPs, governance, and the district’s overall operating model. A useful example is the Cortex Innovation Community that oversees the development of its 200-acre urban hub of ideation and entrepreneurship in St. Louis. Funding includes government grants and subsidies from the city, the state of Missouri, and the federal government. It also employs tax increment financing, or TIF (approximately $168 million in TIF bonds), to allow the use of future tax revenues from the district to pay for current development costs. The TIF funding also required 25 percent of labor hours to be performed by minorities, five percent by women, and 15 percent by apprentices participating in approved programs. Other funds come from donations by private individuals, foundations, and corporations, as well as from an annual membership dues structure applied to associated businesses, universities, and other organizations.
- Create a flywheel with the right people, places, and programming
Along with the mission focus, governance and funding approach, the best innovation districts create an intentional mix of occupants, a physical design that capitalizes on a valuable urban location, a public realm experience with attractive spaces and amenities, innovative infrastructure, and an intentionally designed suite of services and programs to attract and support growing enterprises—everything from professional services to venture capital.
Innovation districts also face added pressure to spur urban recovery after the pandemic. McKinsey’s report, Empty Spaces and Hybrid Places, concludes that office attendance post-pandemic is down about 30 percent on average and predicts 13 percent less demand for office space and nine percent less demand for retail in the median global cities studied. North Carolina State’s Knight captured this sentiment well, observing: “Post-covid, everyone wants to be together, but no one wants to come in just to work. There has to be more to it than just commuting to the office.”
Ford’s Michigan Central Mobility Innovation District offers a compelling public-private model, bringing the city and the automaker together in Detroit’s oldest neighborhood, Corktown. Like other leading districts, the Michigan Central Mobility District also demonstrates innovation through its physical design, which hinges on climate-action-oriented infrastructure and a vibrant public realm.
New innovation districts such as The MIX (Minnesota Innovation Exchange) in Minneapolis understand the power of place so acutely, they are now planning the public realm even before building or renovating research facilities. Groups like NAIOP have studied tenant mix optimization and noted that in addition to a diverse mix of companies, adjacent services can include digital/web providers, marketing agencies, human resources and legal/finance advisors, as well as venture capital (VC) providers that early-phase companies tend to need. Other services might address the consultative expertise frequently needed for startups to overcome financial, regulatory, technical, and political barriers so they won’t be “stuck in ‘pilot purgatory,’” says Synthetikos’ Ryan, pointing to Toronto’s MaRS Discovery District as a positive example.
- Assess, increase, and communicate social, economic, and environmental impact
The social impact of innovation districts is significant, as seen in GIID data as well as case studies of inclusive innovation hubs. An equity focus also opens the door to university partners pursuing these goals. One significant example is seen in New York City’s Brooklyn Navy Yard, which created an “equity incubator” focused on supporting startups and businesses with Black, Indigenous, and people of color (BIPOC) leadership and ownership. The Equity Incubator’s mission is to offer mentorship and bring the area’s workers a range of valuable skill sets needed in the future, as it also energizes the city’s capacity for startup success.
In Washington, D.C., The Penn West Equity and Innovation District brings together the Golden Triangle Business Improvement District, George Washington University, and other partners with equity as an explicit goal. Sustainability may be a focus for innovation districts as well; one recent example is the New York Climate Exchange, located on New York City’s Governors Island, created to develop the green economy and deploy climate crisis solutions.
Leading districts focus their occupants, design, and programming to make an impact, including job and venture creation, workforce development, experiential learning opportunities for students, and applied research. Forecasts and assessments are critical to make the case. We produced a long-term infrastructure strategy for New York City’s life sciences R&D sector. Commissioned by the New York City Economic Development Corporation (EDC), the detailed economic, industry, and real estate analyses considered the metro area’s many assets that could attract and support the life sciences industry while also identifying gaps. This ultimately led to a state and city commitment of $1 billion toward life sciences in New York City and continued support through the most recent City of Yes for Economic Opportunities.
Putting it all together
Successful innovation districts help people and places prosper. Sometimes this prosperity is visible in generating startups and spin-offs or in increased real estate values. Other times it’s less obvious. For example, the Atlas of Innovation Districts found that the creation of every innovation job generates four jobs to support it. To have this kind of success, districts need a unique focus; sustainable governance and funding; synergy among their people, places, and programming; and focus on measurable impact. Together, these make the case for impact, growth and new intellectual capital. For every innovation district, this process is a valuable component of making the case—why here, why now, and why us. And it’s an elemental piece of the bigger picture: creating equitable, sustainable innovation districts that prosper.
