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Mayors across the U.S. are investing significant resources to develop what the Brookings Institution calls “innovation districts,” in an attempt to accelerate urban and economic development, catalyze job growth, and shift their cities’ reputations toward being incubators for progress.
These districts are also providing a new type of idea collision space during meetings and conferences for visiting organizations to engage local tech and creative thought leaders in different growth industries.
According to the House of Logistics & Mobility in Frankfurt: “The city of the future is an interdisciplinary knowledge sharing machine.” Innovation districts, then, are designed to be the engine powering the machine.
But what are they exactly? You can’t always see innovation districts physically in their entirety, beyond the buildings they inhabit, anymore than you can “see” Silicon Valley in Palo Alto, although people are attempting to do just that.
Rather, like Silicon Valley, innovation districts are a packaged network of public and private organizations intentionally located in close proximity for the purpose of sharing knowledge generated across a wide range of fields.
Another example of the concept in action is Cambridge, Massachusetts, where Harvard and MIT are surrounded by a vibrant startup community and hyper-caffeinated neighborhoods full of creative spaces for brainy people. Much of the city is basically one big creative space that benefits from the convergence of multidisciplinary research and development within its environs, far exceeding the sum of its parts.
Innovation districts come in a variety of forms, and not every neighborhood with a couple co-working spaces should be defined as such. So for our purposes here, we need a working definition covering the broad strokes.
In a nutshell: Innovation districts are defined geographic clusters consisting of academic and scientific research institutions, startup and enterprise companies, and business incubators located in amenity-rich, mixed-use urban cores. Representing a new platform for economic development, they provide a highly networked ecosystem designed to accelerate growth across a region’s scope of creative and advanced industry sectors.
Now imagine copying that vision, resembling the Silicon Valley and Cambridge model, and plunking it down in Middle America.
That’s exactly what many U.S. mayors, including Chattanooga mayor Andy Berke, are attempting to do in collaboration with their growing startup and research communities.
“The Innovation District of Chattanooga has really propelled our city to the next level, where companies are continually growing in our community,” said Berke, who spearheaded the development of the district. “We have businesses like Skuid, Bellhops, Southtree, and others that were startups a few years ago, and now they have more than 100 employees here in Chattanooga. In addition, it’s bringing more people downtown. By the end of 2017, we will have doubled the number of people who live in our downtown since I became mayor in April of 2013.”
As an example of how these innovation clusters drive growth, Access America Transport was a logistics startup that helped establish the Innovation District of Chattanooga in 2013 as one of its first tech company tenants. In 2014, Access America merged with Coyote Logistics, which was then acquired by UPS in 2015 for $1.8 billion.
Previous to that exit, the Access America founders had launched their second startup in the city, a venture accelerator called The Lamp Post Group, which to this day occupies numerous buildings in the district.
Likewise, marketing guru Gary Vaynerchuk opened his fourth Vayner Media office in downtown Chattanooga in 2015 to capitalize on the city’s growing talent pool, expanding his footprint beyond New York, Los Angeles, and London.
And for emerging startup talent working downtown, the Tomorrow Building is a new micro-unit, co-living apartment complex designed specifically for tech people who often don’t sleep a lot. The shared-space living model is evolving as a growing trend globally, and therefore, the Tomorrow Building was developed as an urban living laboratory to test the success of its design strategy in relation to its innovation district environment.
The Rise of Innovation Districts
Bruce Katz, centennial scholar at the Brookings Institution, and author of The Metropolitan Revolution, published “The Rise of Innovation Districts” report in 2014. It provides a framework for how and why cities should cluster their knowledge base to drive competitive advantage.
Last month, during the U.S. Conference of Mayors in Miami, Katz and his colleagues published: “Advancing a New Wave of Urban Competitiveness: The Role of Mayor in The Rise of Innovation Districts.”
Together, the two reports show the evolution of strategy for developing these knowledge industry hubs in urban districts, ranging from Cleveland’s Lake Erie waterfront to Seattle’s South Lake Union area. The first report was a broad set of theories around urban development in the digital platform economy. The second is an established road map with real-world case studies to help mayors and private organizations commercialize American know-how.
One early success story, the Boston Innovation District helped populate the Boston Seaport with an influx of new startups and economic incentives first devised in 2010 by then-mayor Thomas Menino. Surrounding the Boston Convention & Exhibition Center, the Seaport was the first officially labeled innovation district in the U.S., and according to the National League of Cities, the development project has brought more than 5,000 jobs to the previously empty area as of last year.
Meanwhile, San Antonio, Dallas, Las Vegas, Phoenix, San Diego, Philadelphia, Detroit, Seattle, Albuquerque, Oklahoma City, Kansas City, Indianapolis, St. Louis, Durham, Louisville, Providence, and others are moving forward in early and mid-stage development. Innovation districts, ranging from the Knowledge Quarter Liverpool to Carlton Connect Melbourne to the Jurong Innovation District in Singapore, are also growing in popularity internationally.
The end game for local government officials and economic development leaders is to commercialize all of the new tech and scientific developments taking place in their cities, and export them globally. Innovation districts assist with that by providing a structured platform for knowledge sharing and business development specific to local industry strengths, whether that’s cybersecurity in San Antonio or bio-med in Denver or media in Miami.
They also act like a front door to the region’s startup and research communities for visiting executives and researchers during high-level meetings and conferences.
“Our innovation district is designed to create collisions between smart and creative people in different fields of medicine, science, and engineering, with the idea that you can commercialize ideas at some point and create jobs,” Albuquerque mayor Richard Berry told Skift. ”That’s an upward spiral in our community. So the conferences that we bring to Albuquerque do a lot more than put heads in beds. We know that matters, but this is about science, technology, enterprise, entrepreneurship, and creating a culture of innovation on par with almost anywhere in the world.”
Mayors Take The Wheel
The newly released Brookings report on innovation districts portrays mayors as “conveners, champions, and catalysts,” rallying around their startup ecosystems to sell local innovation and elevate their cities’ business brands in the global marketplace.
In effect, the report is designed like a coach’s playbook. The objective is to help mayors get their city into the 21st century end zone. It reads:
“U.S. mayors have an instrumental role to play in the growth and evolution of innovation districts — a role that will likely evolve over time. Mayors can serve as conveners, providing a venue and platform for the development of a collective vision on the 21st-century imperative: collaborate to compete. Drawing on their skills as leaders, mayors can be champions by offering a vision for growing a successful innovation economy. Drawing on their regulatory powers, mayors can be catalysts by devising new tools or streamlining old rules to incentivize district growth.”
With the U.S. federal government mired in partisan gridlock, and President Trump threatening deep cuts to many urban programs, U.S. mayors are facing a stark new reality. It is now increasingly incumbent on them to tap their cities’ local resources within their private sectors and research institutions to drive economic growth and high-value job creation.
That is accelerating the development of innovation districts in both large and midsize U.S. cities.
“Washington has left the building,” said Katz during a presentation to local government and private sector leaders in Philadelphia in May. “You’re going to have to leverage your own assets. You’re going to have to unlock your own capital. You cannot rely on anyone anymore at, quote-unquote, higher levels of government.”
This requires an unprecedented amount of collaboration between the public and private sectors. Katz tweeted in February: “The power of cities is not like the power of nations or states. It is exercised by networks rather than governments.”
Although, as witnessed during the annual U.S. Conference of Mayors event, city governments are now getting more active in nurturing those networks — much more so than a year ago before Trump came to office.
The organization’s message was best summed up by two U.S. mayors in this post-conference promotional video. Providence, Rhode Island mayor Jorge Elorza said: “Cities are incubators for innovation and job creation.” Gary, Indiana mayor Karen Freeman Wilson said: “Washington keeps taking but mayors are leading.”
— U.S. Mayors (@usmayors) July 5, 2017
“Our innovation districts are popping up around the city where people in different businesses can interact with each other in a relaxed way, and develop their pipelines of innovation,” Philadelphia mayor Jim Kenney said during South by Southwest in Austin this year. “We’re seeing that grow on an ongoing basis, and I’m very excited about that.”
Citing partnerships between the city government, University of Pennsylvania, Drexel University, and local companies like Comcast as factors behind the success of Philadelphia’s University City Innovation District, Kenney stressed that city governments also have to understand when to have a light touch.
“Governments in general are not always known for being progressive when it comes to allowing new industries and new ventures to grow, but it’s something that we have to do. I think if we take advice from people who know what they’re doing, and what they’re talking about, we’ll be much more successful.”
Some innovation districts are not officially labeled as such. They may have grown organically over the last half-decade. For example, in Pittsburgh, Google and Uber moved in to exploit the University of Pittsburgh and Carnegie Mellon University’s research in robotics, advanced manufacturing, and artificial intelligence. Although, the city made it official last year with the launch of the Pittsburgh EcoInnovation District linking downtown and the universities.
The development of other officially named innovation districts, including the Chattanooga Innovation District and Albuquerque Innovation Central, can be directly attributed to their mayoral and city council initiatives. Some, such as the Cortex Innovation Community in St. Louis and OKC Innovation District in Oklahoma, have been largely stewarded by their local business community and chambers of commerce.
While still others, similar to Philadelphia, including Cleveland’s Health Tech Corridor and the Montreal Innovation Quarter, were initially developed in large part by their local universities and medical research institutions.
‘The benefit of having our universities supervise the Quarter is that we have a long-term strategy that doesn’t change when our government changes,” said Damien Siles, director of the Montreal Innovation Quarter.
He explained that’s what happened in the 22@ Barcelona district when it lost significant government support following the 2015 election of socialist Mayor Ada Colau. The early success of 22@ Barcelona, which is considered the world’s first intentionally designed innovation district, is what originally inspired Brookings’ research on the subject.
The Rise of The Rest
AOL founder Steve Case is traveling the country these days to try and shift the perception of midsize cities between the coasts from “flyover country to innovation hubs.” His venture capital company, Revolution, launched the Rise of the Rest initiative to educate, promote, and fund startups from Cleveland to Albuquerque. The program’s mission is based on the idea that any midsize city can be its own version of Silicon Valley due to cheap cloud computing and machine learning, and the exodus of talent from increasingly expensive gateway cities.
Those macro socio-economic trends and technological developments are further propelling the rise of innovation districts in midsize cities not necessarily known for their global competitiveness.
The Cleveland Health Tech Corridor is one of the country’s best case studies for how an innovation district can shift a Midwestern city’s fortunes and reputation based on its expertise in advanced industries. The Corridor links the Cleveland Clinic, Louis Stokes VA Medical Center, and Case Western University with the downtown Huntington Convention Center of Cleveland and the $465 million Global Center for Health Innovation.
“Our research shows that there is an enormously wide gap in perception among those who have visited Cleveland versus those who have never visited,” said David Gilbert, president and CEO of the Destination Cleveland convention and visitors bureau. “Now we have the Health Tech Corridor where developers are building this whole new tech quarter area, building numerous headquarters and incubation innovation spaces. And so that helps elevate Cleveland’s reputation in medical circles as a hub for medical innovation.”
Local business and academic leaders in midsize cities also tend to have something to prove to the world, which commonly generates heightened motivation and momentum throughout a local startup community.
“Yeah, we have a bit of a chip on our shoulder,” said Jake Orville, CEO of Cleveland HeartLab, who relocated to the Health Tech Corridor after sourcing potential sites in Boston and Los Angeles. “We want to prove we can compete with any city in the world when it comes to medical innovation.”
Both Gilbert and Orville suggested that Cleveland’s collective desire to rise above the “flyover country” stigma further motivates local stakeholders to welcome conference delegates more openly, because they’re hungry to show off their medical products and healthcare services, and export them globally. An innovation district, then, becomes like a shopping mall for knowledge.
“The Health Tech Corridor allows us to offer meeting planners these incredible opportunities for connection, for tours, for people to see some of these spaces themselves,” said Gilbert. “And there are times when that opportunity can be the difference maker in deciding to host a medical-related meeting or convention here.”
The Rise of Gig City
A lot of eyes are on the Chattanooga Innovation District. Many cities throughout the Midwest and South suffered the decimation of their manufacturing economies in the late 1900s, and now they’re trying to leverage their innovation economies to resurrect their downtown cores and re-establish their corporate job growth rates, local tax base, and civic pride.
Most importantly, they’re attempting to pivot their cities’ brands from images of the 20th century rust belt to a 21st century brain belt.
Chattanooga is emerging as a new model for economic development, and earning an inordinate amount of national media attention, based on the development of its innovation district. Supplementing that, the city’s 10-gig Internet service is ranked among the fastest in the country, which earned Chattanooga the nickname, “Gig City.”
Furthermore, the city developed a whimsical Chattanooga is Literally Perfect marketing campaign this year, with the tagline “The Tom Hanks of Cities,” designed to attract young tech and creative talent to the city who want both a good job and a home they can afford.
“The city I grew up in was dying because we were a steel and foundry town where the companies had picked up and left to where labor was cheapest, which was overseas,” said Berke. “Just a few years ago, no one thought of Chattanooga as a technology city. But because of our ultra-high-speed broadband and innovation district, we’ve been all over national media about how we’ve evolved as a collision space for new ideas.”
According to Berke, innovation districts are designed to increase density because talent and money follow talent and money. Once a city can establish a geographical environment as a place for academic, business, and creative innovators to collide ideas — and the city council can support it with the necessary funding and political will — that drives momentum as a magnet for new outside investment.
“Innovation occurs most often where there’s density, so we want visitors and our people to be interactive, to exchange ideas, because that breeds creativity and leads to innovation,” said Berke. “When we launched the innovation district, it was a signal to the market for companies and creatives to come to a specific area of density to start their businesses or shop their new ideas. We’ve really seen that happen. That kind of density is growing our city.”
Another consistent in successful innovation districts, many of them have a headquarters building or complex that performs like a physical anchor and portal into the district’s ecosystem. Boston’s District Hall and Cleveland’s Global Center for Health Innovation are examples.
In Chattanooga, The Edney Innovation Center plays the role of the central public gathering space for meetings, events, and general information about the district and all of its actors. The Center has three anchor tenants: CO.LAB, Society of Work, and The Enterprise Center, the latter of which is a public-private partnership stewarding the direction of the district.
Ken Hays, president and CEO of the Enterprise Center, said the non-profit organization he oversees has three goals, as outlined in the organization’s 2016 report: development of the downtown innovation district to catalyze the local innovation economy; advancement of Chattanooga’s potential as a research laboratory and test-bed for gigabit and smart grid enabled applications; and promoting digital equity and diversity for the benefit of all Chattanoogans.
“Inclusivity is a huge conversation for us because it’s so integral to the future success of our city,” said Hays. “That’s the digital equity component of our strategy where basically we’re trying to break down the barriers between the haves and have-nots. If we’re going to be a leader in the innovation economy, we’ve got to provide for more people.”
In terms of research and application development, The Enterprise Center is involved in bringing companies together that are active in 5G and Internet of Things (IoT) technologies to prepare services for a world when bandwidth is no longer an issue. Those products and services could be highly exportable when 5G infrastructure is ready in three to four years, and the city is eager to develop itself as a living laboratory to test new developments in IoT for locals and visitors alike.
“Part of what we’re trying to do is blend the innovation economy into every aspect of the city, now and in the future, and share what we’ve learned with as many people as possible,” Hays said. “We now work regularly with the Chattanooga Convention and Visitors Bureau to show how people coming here can use the entire city as a convention experience, for example. People can now use different venues like The Edney Center, which couldn’t have happened a year ago.”
The Edney even has a dedicated “collision floor” with what Hays calls “state-of-the-art Web casting ability” to attract groups seeking a non-traditional event space.
The next step in the evolution of the Chattanooga Innovation District is an attempt to quantify its impact on economic development. The Enterprise Center is collaborating with the Metro Ideas Project, a local research think tank focused on public policy, to evaluate and identify key performance indicators for the district.
The project will be rolled out in two phases, scheduled to be completed by the end of the year:
- Phase 1: Evaluation of the effects and impacts of Chattanooga’s innovation district internally. The primary objective of this phase is to develop a core set of measurable indicators to measure the economic, place-based, innovation, and civic engagement effects of an innovation district.
- Phase 2: Preliminary analysis of the external effects and impacts of Chattanooga’s innovation district on the rest of the city and county. The primary objective is to establish a baseline for measuring impact in the months and years ahead, with a secondary objective of gaining an understanding of the effect the Innovation District has had upon resident perspectives in border neighborhoods, community stakeholders across the county, and significant firms within the region.
Berke emphasized that a big return on investment for developing the district revolves around how people view Chattanooga. The challenge is continually getting more people to visit the city, so they can experience the district and feel the energy downtown, and ultimately see the city in a new light.
Driving more conference business to Chattanooga is one way to accelerate that brand repositioning nationally.
“One of the most important things for me to do as mayor is to build a brand that attracts companies and talent and residents,” said Berke. “Meetings and conferences establish our brand around the world. We want to see people come here and have a great time, because someday they might come back to build a new branch for their company. So, the building of our brand is a central part behind the success of our city, and right now, the district is telling the world that we’re a place for innovation.”