Creating Innovation Districts That Work

In this preview from The Place Economy Volume 3, launching in June, Hoyne founder and principal Andrew Hoyne asks how we can create successful innovation districts that benefit everyone…

Historically, when people and industry have come together, efficiency and innovation have followed.

Call it agglomeration, clustering or commercial circularity, it has always shaped our cities. From intuitive groupings such as artist quarters and textile districts to the collieries and steelworks of the industrial age and master planned business and technology parks of the late 20th century, co-location and collaboration are nothing new.

Yet, when Bruce Katz and Julie Wagner from the Brookings Institution articulated the rise of innovation districts following 2008’s Global Financial Crisis, they found an exciting evolution of the knowledge sector for the experience economy—one focused on re-centering, re-thinking and re-urbanisation.

A knowledge precinct—or innovation district, depending on the scale, and who you’re talking to—is, “an urban cluster (where) knowledge is generated, exchanged and marketed by talented knowledge workers”.

The contemporary practice moves from work-focused knowledge precincts–such as science and technology parks, innovation parks—to multi-activity focused knowledge community precincts – i.e., work, live, play, and cyber.”

In some innovation districts, a large organisation anchors the precinct and attracts partners and collaborators —think Glaxo-Smith-Kline, Google or MIT.

Others were once stand-alone science parks that are becoming more like urban centres, or are post-industrial areas that have been regenerated.

Innovation districts in the US have many personalities, from California’s Silicon Valley, where the GDP is greater than several developed nations and tech innovations have shaped how humans do business and share information, to Pennsylvania’s Pittsburgh Innovation District, which has one of the largest concentrations of national R&D spending in the world.

Today’s knowledge districts and precincts are designed to benefit businesses, governments and economies, but the benefits aren’t always evenly or widely distributed.

▲ A render of Lumina, a destination for innovators in health and tech-related businesses within The Gold Coast Health and Knowledge Precinct.

The Cortex Innovation Community in St Louis, Missouri, for example, has a regional output of US$2.1 billion a year.

Home to companies such as Microsoft and Boeing, it generates annual tax revenues of US$255 million, and has been central to a 50 per cent increase in local property prices in the 14 years to 20184.

Overall, the precinct has attracted around 400 companies and nearly 15,000 permanent jobs.

So far, so profitable. However, in the city’s Central West End, where Cortex is based, crime is 208 per cent greater than the national average—clearly, here, the economic benefit of an innovation district hasn’t translated to universally positive community and social outcomes.

Meanwhile, Silicon Valley’s success has resulted in a much-publicised increase in housing prices across the Bay Area.

The average deposit for a home in San Francisco was US$250,000 in 2018.7

In San Jose, an income of US$200,000 (the average for a two-income tech worker household) can afford only 12 per cent of homes on the market.

While it serves as a warning for how innovation districts can scale to failure, a largely unplanned suburban corridor such as Silicon Valley is not representative of most knowledge precincts.

A place driven by commerce, creativity and technology, it was never designed to have a positive impact on its community in the same way as a strategically planned precinct.

▲ TropiQ, Townsville’s Tropical Intelligence and Health Precinct.

Many knowledge precincts set out ambitions for local jobs, local value creation and local community involvement.

If a knowledge precinct is to succeed beyond a single generation,

it needs to work for people of every background and be a destination beyond work and education. It needs to evolve with and for the community, just as it does for its commercial and research tenants.

As the NSW Innovation and Productivity Council notes, “For innovation precincts already anchored by a large institution, it is usually essential for that anchor to opt in self-consciously to what it means to anchor a precinct […] Many innovation precincts that have not succeeded are in locations where large institutions have embarked on an expansion and redevelopment process rather than an innovation process.”

Even planned precincts don’t always achieve the positive impacts expressed in their vision statements.

Australian studies show that while people who live near an innovation district believe it makes their city smarter and fuels economic growth, just 22 per cent are directly involved with it.

People on low incomes, or who don’t have a university-level education, are less likely to access educational opportunities or children’s programs. Community members simply don’t use the spaces.

The best innovation districts are places that have been planned and curated to foster connection and character – to invite community in, forge cross-sector relationships, and bring workers together.

When a precinct gets this right, innovation flourishes and investment flows. Businesses succeed and so do local communities.

A spirit of common endeavour creates a more resilient local ecosystem that over time delivers more jobs, value, and scalable business success.

This is a summarised extract from The Place Economy by Hoyne, a series of resource books which look at best practice placemaking around the world. Volume 3 is due to launch in June 2023. Find out more about the series here.

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