Boston’s Innovation District has brought more than 5,000 new jobs to the area since 2010. But how sustainable is the clustering concept when the public sector takes a hands-off approach and the rent skyrockets?
This is a guest post by The Intersector Project.
In January 2010, during his fifth inaugural address, then Boston Mayor Thomas M. Menino declared his vision to redevelop the city’s Seaport District into a new “Innovation District.” “A new approach is called for on the waterfront,” he said, “one that is both more deliberate and more experimental. Together, we should develop these thousand acres into a hub for knowledge workers and creative jobs.”
Emerging in urban centers across the country, city-level innovation districts are geographically distinct areas intended to attract cutting-edge companies, research institutions, startups, accelerators, and other related entities, creating a dense community of innovators and entrepreneurs. Understanding how city-level innovation districts can harness the strengths of each sector – business, government, and nonprofit – is particularly important in an era of urbanization, limited public resources, and increased public expectations of public sector innovation.
At The Intersector Project, where we seek to empower practitioners across sectors to collaborate to solve problems that cannot be solved by one sector alone, we’ve recently completed a study of the Boston Innovation District, the development of which provides an outstanding example of a government-led economic development approach involving collaboration across sectors.
A Mayor’s Vision
Mayor Menino’s vision for the District had four main features, which set the tone for how development took shape.
Industry-Agnostic. One of the main features of the District was to be open to industries of every kind, allowing for broad inclusivity and enabling the District to be less dependent on the growth of a single industry. The philosophy was “if you identify as innovative, you are more than welcome,” notes Samantha Hammar, former Communications Strategist for the District.
Clusters. The second feature of the District was the clustering of innovative entrepreneurs to increase proximity and density, reflecting the notion that “people in clusters innovate at a quicker rate, sharing technologies and knowledge easier.” Captured in the District’s “Work, Live, Play” motto, this also created a drive to retain talent through a work-life environment favorable to creativity and exchange.
Experimental. The third feature was the public sector’s adoption of an experimental framework characterized by expedited decision making and planning flexibility. Mitch Weiss, former Chief of Staff to Boston Mayor Thomas Menino and now a lecturer at Harvard Business School, recalls: “[The Mayor] expressed a vision, but there was no plan per se.” There was a sense of urgency, however, and a willingness to experiment by seizing opportunities for stakeholder engagement and recruitment that left no time for extensive studies or complex assessment plans. “We had the bare bones of a strategy and a slight vision for what we wanted to do. Then, we built it along the way,” remembers a Boston Redevelopment Authority (BRA) staff member.
The City as Host. A fourth feature was to position the city as the host institution instead of the host being a university or research firm. The identification of the District with the city meant that the neighborhood would be free to develop organically, create momentum, and allow innovation to disperse across the city.
Developing the District: Successes and Challenges
Over the course of the next five years, The Mayor’s Office and the BRA led development of the District, catalyzing investments and stakeholder engagement that brought the District to life, and breeding additional cross-sector activity and partnerships along the way. They successfully worked to secure anchor tenants like MassChallenge and Babson College, develop public meetup spaces like District Hall, encourage affordable housing and a variety of dining and entertainment options, and more.
By the summer of 2015, Boston’s Seaport was in a state of transformation. More than 5,000 new jobs have been created in the Innovation District since 2010, as over 200 startups have set up shop in the area. About a quarter of these firms have fewer than 10 employees, and approximately 40 percent are housed in shared workspaces or incubators.
From software and digital marketing to manufacturing and design, the Innovation District’s young firms span a wide array of industries and business models. Zipcar, LogMeIn, and Rethink Robotics are just a few of the more prominent startups to call the Innovation District home. The support infrastructure that these young companies need to grow, including incubators and accelerators, as well as law, design, advertising, and other professional services firms, has also moved to the District, providing a healthy ecosystem for innovative companies to thrive.
While the Innovation District project supports several key takeaways for cross-sector collaboration (more on those can be found in the full text of the report), it also illuminates the tension between clustering on one hand and the public sector’s relatively experimental, hands-off approach on the other.
Weiss argued in 2010 that “proximity matters perhaps more than ever for invention and innovation.” Yet the sustainability of the District as a geographic hub of innovation as it was initially conceived remains in question as high-end new developments crowd out early stage entrepreneurial activities. Rising rents and capacity constraints have compelled a number of local startups to head to other parts of the city, including Downtown Crossing and the Financial District. While residential buildings slated for construction in the District will include a portion of micro/innovation units, rents even for these units are soaring as demand to live in the area rises. In the commercial market, average rents in the Innovation District reached Back Bay levels (about $53 per square foot) by early 2014, putting pressure on cash-strapped early stage ventures.
“Looking back, I wonder whether we could have made some contingent arrangement” such that, if certain financial conditions were met, developers would be required to “do more for innovation… like set aside more space or commit to an [innovation investment] fund,” notes Weiss.
A more dynamic, regional startup ecosystem might instead involve early stage startups moving from district to district in search of cheap rent, or relocating to different parts of the city as they grow and mature. In this model, the “cluster” is defined more broadly and regionally, and density of innovation activities is somewhat less important. From an employment and tax revenue perspective, it may in fact be very positive for the city. Kairos Shen, former Director of Planning at the Boston Redevelopment Authority, shares this perspective: “So long as the city continues to have different locales that can actually… grow and change… that’s all we want. The goal is to have a city that continually can transform and accommodate.”
For more on these questions, as well as on the traditional and nontraditional roles of the public sector in driving the District forward, see our full study of the Boston Innovation District.
About the Authors: The Intersector Project is a non-profit organization that seeks to empower practitioners in the business, government, and non-profit sectors to collaborate to solve problems that cannot be solved by one sector alone. We present real examples of collaborations in many places, across many issues and illuminate the tools that make them successful. Visit us at intersector.com, and follow us on Twitter @theintersector.