Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Sunday, January 26, 2020

Casebook illustration of agglomeration economies: Kendall Square and biotech

"Agglomeration economies" is a fundamental concept from urban economics. The Geography of Transportation webpage at Hofstra University defines them thusly:
Agglomeration economies are a powerful force that help explain the advantages of the "clustering effect" of many activities ranging from retailing to transport terminals. There are three major categories of agglomeration economies:

Urbanization economies. Benefits derived from the agglomeration of population, namely common infrastructures (e.g. utilities or public transit), the availability and diversity of labor and market size;

Industrialization economies. Benefits derived from the agglomeration of industrial activities, such as being their respective suppliers or customers. This favors the emergence of industrial clusters;

Localization economies. Benefits derived from the agglomeration of a set of activities near a specific facility, let it be a transport terminal (logistics parks), a seat of government (lobbying, consulting, law) or a large university (technology parks).:
The job market and the world economy is much more competitive and operates much faster, making agglomeration or "clustering" valuable again when in the post-war period through the first decade of the 21st century, automobile-centric land use and transportation development paradigms allowed automobility to trump the clustering value of place/location.

The Boston Globe has a nice article about Kendall Square in Cambridge, which is perhaps the leading center for biotech in the US, although San Diego and San Francisco would argue over who is #1 ("The suburbs are cheaper, but they don’t have what Kendall Square has for biotechs: serendipity").

(Also see "Alexandria Real Estate’s empire grows in Kendall Square: The area’s life sciences boom puts the developer on top," BG.)

From the article:
There’s no denser collection of biotech startups, big pharma companies, and venture capital firms anywhere else in the United States, and perhaps on the planet. They’re clustered on either edge of the Massachusetts Institute of Technology campus, and along Main Street heading into Cambridge’s Central Square. And they’re all paying the highest rents in New England: almost $100 per square foot for lab space and $92 per square foot for offices, according to the real estate brokerage CBRE. Both numbers are records.

What makes it worth paying such high rents, when you can be in the suburbs for half the price, or even in other parts of Cambridge for 60 or 70 percent of the cost of Kendall Square? I posed that question to the denizens of the neighborhood — as well as to some who have decamped for more affordable neighborhoods.

Everyone started by talking about a dynamic that’s tough to put a price tag on: serendipitous interactions with people at other companies. “There are countless interactions between biotech entrepreneurs, pharma leaders, and investors that happen virtually every day,” says John Maraganore, chief executive of the publicly traded biotech Alnylam Pharmaceuticals. “I walk to MIT, the Broad Institute, the Whitehead, all the time. I also walk to my partners over at Sanofi and Novartis, and also to potential partners all around the square.”
Clusters can be relative.  I used to believe that only the leading clusters had advantages, that secondary locations had no chance.

Now I don't believe that. There is a place for secondary or peripheral locations. They won't be Cambridge, but they can still be significant centers with opportunities for growth, especially locally.

But you really have to work it:

-- "Naturally occurring innovation districts | Technology districts and the tech sector," 2014
-- "Better leveraging higher education institutions in cities and counties: Greensboro; Spokane; Mesa; Phoenix; Montgomery County, Maryland; Washington, DC," 2016

(Reprinted.)
Learning from Europe: Knowledge locations in cities.  In 2013, I wrote about Helsinki, "Helsinki as an example of creative industries driving urban revitalization programs," for the Europe in Baltimore project conducted by the Washington Chapter of the European Union National Institutes of Culture.

Design is a key element of Helsinki's identity and economy.  And while writing the article, I learned a lot which has influenced my thinking ever since, about cultural planning, cultural production, systematic planning of new districts, specifically Arabianranta, where the Aalto University is now located, assigning cultural planners to districts, libraries, and more.

An article on Arabianranta,

"Developing creative quarters in cities: policy lessons from 'Art and design city' Arabianranta, Helsinki," Van Tuijl, Carvalho, and Van Haaren, Urban Research & Practice 6(2):211-218 · June 2013

introduced me to a new line of thinking about "creative quarters," which we might call Arts Districts 2.0.

The research was part of a larger project which resulted in the book Creating Knowledge Locations in Cities: Innovation and Integration Challenges.  (This is a pdf of the book.)

Note that Brookings Institution has a similar program, Innovation Districts, but I like the writings from Europe better.

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3 Comments:

At 10:37 AM, Anonymous charlie said...

You posted some interesting links on the law review journal and and LA gentrification.

What I didn't see in there was any context. The biggest is monetary policy which is driving this.

And the second is that metropolitan areas in the US are really doing OK in this economy but we are hollowing out the rest of the country hard. (precariot).

"middle class" people in metro areas are seeing a lot of constraints but still housing is broadly affordable. In particular in global compassions, the US as a whole is still very affordable.

Metro areas a bit less but still not bad.

https://www.imf.org/external/research/housing/

For all the alleged supply constraints the US is doing ok.

(I think as an aside that we're seeing a push for housing as a a service -- basically your vienna model of providing public housing for 75% of people)

IN any case, what is interesting is whether cities have any use. Your example of kendall square is good. Biotech could exist anywhere but its in 3 centers.

you might enjoy this:

https://www.1843magazine.com/features/soft-power-how-the-feather-trade-took-flight


"Mr Feather’s company is one of the biggest in Xiaoshan, a suburb of Hangzhou, near Shanghai, which is known as China’s “down town”. Xiaoshan has played a pivotal role in China’s emergence as a down superpower. Many such specialist towns grew up in China over the past three decades as the country became the world’s biggest exporter of manu-factured goods. In nearly every industry the formula was similar: after a few entrepreneurs blazed the trail, entire towns devoted themselves to a particular activity, drawing on a vast pool of rural migrants. One town was known for making zips, another for lighters, yet another for vibrators.
Xiaoshan is located in the coastal province of Zhejiang, at the intersection of several key industries. Farmers in the surrounding countryside raise ducks. In the 1980s some local residents opened clothing factories, creating demand for down. Others started producing electric fans, which were a critical tool in the industrial production of down: workers could dry feathers mechanically rather than laying them out in the sun, as they used to. And so it began. Feathers were collected from farms and shipped to Xiaoshan, where they were cleaned and sorted, separating soft downy balls from prickly quills, to leave the finest, fluffiest plumage. Hundreds of down producers set up there."

Again a classic Jane Jacobs model of cities. Not sure that biotech is really the same -- as a lot of the clustering has to do preening in front of investors.


(again side note how much this convention is dominated by the example of SF -- which is really more about geography than anything else. Imagine a DC surrounded by water up the beltway -- no inner suburbs.)


The feather author is good, 2 other pieces:
https://www.economist.com/essay/2019/02/23/the-story-of-chinas-economy-as-told-through-the-worlds-biggest-building

https://www.economist.com/china/2018/06/23/china-is-trying-to-turn-itself-into-a-country-of-19-super-regions

And the second suggests there is value is "Super-regions".


 
At 1:51 PM, Blogger Richard Layman said...

Saxenian...

The scale is a lot different now because of China and how IT and telecommunications/Internet creates an interconnected global system of nodes.

I will read that stuff. Thanks.

2. Today's Times has an article about a research-graduate center being funded in Portland, Maine, along the lines of the Cornell-Technion initiative in NYC, but much smaller.

Portland at least is in striking distance of Boston. I saw a mention in the Globe (didn't read it) of this, making the point that Northeastern was opening a facility in Maine while otherwise colleges have been closing in Maine, NH and Vermont. But didn't realize it was a tech-specific focus.

In my cited piece about DC ("naturally occurring research centers") which was actually spurred by a "query-challenge" by the director of a BID in SE, and then seeing today's NYT piece, I got to thinking again about MoCo.

They have the University System of Maryland center, and the Uniformed Services medical school. I looked at NIH teaches some graduate classes.

But they don't have a tech university of their own.

But then, how much of the IT related business development in NoVA is smaller start up oriented?

E.g., lots of CSC and Mitres. Now Amazon.

That's a Saxenian thing too. She contrasted the big corporations developed in the Rte. 128 corridor in Boston (out of Draper Labs etc.) vs. the start up culture in Silicon Valley.

====
for the Eastern Market study, was reading a book called _Civic Agriculture_. The author, now deceased, was also very interested in "community capitalism" (smaller vs. big business) and cited some reports done for Congress in the 1940s, including one by C. Wright Mills.

I want to get around to writing about it.

 
At 1:55 PM, Blogger Richard Layman said...

wrt housing, it's about the super strong markets vs. the average markets.

And to me, the biggest thing is again, demand has increased while supply has not increased in substantive ways, especially given the cost of new construction being priced at today's prices.

Even in 1960, the US population was only 180MM.

People can't seem to grapple with the fact that today's population requires a quantum change in density.

My neighborhood now is "suburban". But the difference between it and the core (and even my old neighborhood) is that the houses are mostly one story, so they are long on the horizontal dimension. Houses in the core are not as wide and have two stories so they fit about two houses in the same one lot as where we live.

... SLC has 200,000 residents and is 110 sq. miles. DC is 700+ and 62 sq. miles. SF is between 800 and 900 and 42? sq. miles.

 

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