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New York Tech Dossier: “Innovation Districts” in New York: Contentious Geographies of Growth

by Sharon Zukin, on 7 January 2020
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Sharon Zukin analyzes how city government in New York has supported concentrations of tech firms—“innovation districts”—and how communities have pushed back.

Series: New York Tech Dossier: The Dark Side of New York’s Tech Economy

Since the Great Recession of 2008, New York City has emerged among the biggest “startup ecosystems” in the world (Mulas and Gastelu-Iturri 2016; Startup Genome 2019). Public- and private-sector investment, growth in tech jobs, and agglomeration of companies and coworking spaces have reshaped areas of Manhattan and Brooklyn into de facto “innovation districts” (see map below). These concentrations of tech firms emerged largely unplanned, in privately owned office buildings and old warehouses. But they have also developed on city-owned land, with city government support, mainly from the New York City Economic Development Corporation (NYCEDC), a public agency.

Figure 1. Major tech locations in New York City, linked by new ferry lines and proposed BQX light rail; note Amazon’s failed HQ2 in Queens

Map drawn by Sebastian Villamizar-Santamaria.

Pushed by the financial crisis, NYCEDC assumed a new role after 2008 in formulating strategies for economic growth. This led it to initiate public–private–nonprofit partnerships with universities and tech and media firms, support expansion of a highly skilled tech workforce, and establish incubators and accelerators in collaboration with universities and real-estate developers. Although Mayor Michael Bloomberg marketed the city as a base for both millionaires and tech entrepreneurs, the current mayor, Bill de Blasio, shifted the focus to tech jobs for “all” New Yorkers while expanding a real-estate strategy.

Across both administrations, with new tech workspaces and jobs, New York has steadily built an “innovation complex” (Zukin forthcoming). But no area of the city has been formally designated an “innovation district.” Probably, the city government does not want to highlight one area at the expense of others or focus attention on public-sector support, a sore point after battles over Amazon’s HQ2 and a new “tech hub” near Union Square. Yet allocating land for “innovation” in a densely built, high-rent city exacerbates tensions between old and new economic ecosystems, their political advocates, and their social communities.

The innovation district model

Like New York’s focus on tech growth, innovation districts became prominent after the 2008 recession, when urban planners and researchers in many cities looked to Silicon Valley for lessons on how to develop new industries. They borrowed the concept from the regional industrial district model developed by Alfred Marshall and the Cambridge School of economics in the early 20th century because it seemed to explain the successful patterns of interorganizational collaboration established years later in northern California’s electronics industry (Saxenian 1994). Briefly, regional industrial districts develop organically because of functional interdependencies between producers.

After 2008, city governments, real-estate developers, and urban researchers at the Brookings Institution aimed to develop similar clusters of tech companies, digital workspaces, and research labs. They wanted highly skilled tech producers to work, mingle, and, most importantly for innovation, collaborate on new projects and ideas (Katz and Wagner 2014). Both organizationally and geographically, an innovation district would urbanize the regional interdependencies of Silicon Valley.

Journalists and researchers who wrote about urban innovation districts pointed to two more examples: “eds-and-meds” complexes of university and industry research labs in the US and Europe, and renovated industrial districts on the waterfront in London, Barcelona, and Bilbao. They related these to a rising discourse of “innovation and entrepreneurship” that was popularized by business gurus. But innovation districts also promised to spur real-estate development. This brought a new set of actors identified with the tech industry together with the “usual suspects” of the urban growth machine: elected and appointed city government officials, business leaders, real-estate developers, and university administrators (Logan and Molotch 1986).

To create an innovation district, a city government facilitates changes in land use, grants private developers long-term leases on city-owned land, and helps to brand devalorized industrial and commercial areas as “cool” (Stehlin 2016; Nathan, Vandore, and Voss 2018). This may benefit tech firms in cities like London, New York or San Francisco where digital products and services reach multiple markets. However, an innovation district may benefit real-estate investors at the expense of manufacturing tenants that lose their workspace when industrial neighborhoods are rezoned for tech and creative offices (Schrock and Wolf-Powers 2019).

Innovation districts: four ideal types

Between the 1990s and the 2010s, four types of innovation districts emerged in New York. As in San Francisco and London, each gradually became a “brand” that promoted not only tech companies and amenities for their workers, but also real-estate development.

The first type, the naturally occurring innovation district, emerged during the 1990s in both Silicon Alley—the Broadway corridor extending southward from the Flatiron Building near Madison Square Park to the old Financial District (Indergaard 2004)—and DUMBO, on the north Brooklyn waterfront. Three factors were important: vacant space and low rents in older, privately owned office and factory buildings; an embedded tech cluster that survived the dot‑com crash of 2000–2001; and proximity to venture capitalists and business customers. Over time, both districts benefited from public spending by the city government and promotion by local business improvement districts (BIDs).

The second type, the greenfield innovation district, took shape after 2010 at Cornell Tech, a new postgraduate engineering and business school on Roosevelt Island. The Bloomberg administration provided city-owned land, built infrastructure, and contributed cash, while the school’s founding partners, Cornell University and the Israel Institute of Technology–Technion, raised several hundred million dollars in corporate and philanthropic donations, including from the billionaire mayor. Cornell Tech not only offers “colocation” on the campus to big tech companies and faculty- and student-based startups, but also makes the wider geographical area, on both sides of the East River, attractive to tech firms and real-estate developers. Although other universities have “colonized” the areas around their campuses with tech incubators, with NYU especially prominent in both lower Manhattan and downtown Brooklyn, Cornell Tech is the only greenfield development.

The third ideal type, the reindustrializing innovation district, is represented by city-owned industrial properties on or near the Brooklyn waterfront: the Brooklyn Navy Yard, Brooklyn Army Terminal, and Bush Terminal. Since 2004, these big industrial complexes have been modernized for new types of production by a combination of public and private capital and, at the Navy Yard, by leasing land and buildings to private real-estate developers to construct advanced manufacturing facilities, film and TV studios, and tech and creative offices. Relative financial autonomy has also enabled the Brooklyn Navy Yard Development Corporation to pursue a “social mission”: maintaining and creating manufacturing jobs; training lower-skilled workers, community residents, and formerly incarcerated people to access those jobs; and establishing classes and internships for local high-school students (interviews, 2015–2016).

A fourth, “imaginary” innovation district, the “Brooklyn Tech Triangle,” was created in the early 2010s as a marketing concept for a large area made up of DUMBO, the Brooklyn Navy Yard, and Brooklyn’s historic commercial downtown. As an “imaginary” district, the Triangle projected a desired scenario of tech growth (Beckert 2016) for an area of the city that was experiencing uneven development: while tech and creative offices had filled most available space in DUMBO, and maker spaces and workshops were doing well at the Navy Yard, downtown’s old office buildings had high vacancy rates. The president of the Downtown Brooklyn Partnership—the borough’s largest business improvement district—and the president of the DUMBO BID came up with the vision of a “tech triangle” that integrated design offices in DUMBO, maker spaces at the Navy Yard, and corporate offices in the old downtown; this was first and foremost a branding strategy to fill vacant office space in the downtown BID’s domain (interviews, 2015–2016). The area did have assets for innovation: several hundred tech and creative firms, around a dozen college campuses with students who could be recruited to internships and jobs, and an aggressively tech-forward institution in the historic engineering school that NYU had recently acquired. Although the “Tech Triangle” had no legal existence, the concept got media buzz and, propelled by the BIDs and NYU, developed traction. This helped to fill empty office space and encouraged new commercial development.

Across these different types of innovation districts, public investment by the city government has played a constant, foundational role. The investment often takes the form of land. But land is in limited supply in New York. Because offices pay higher rents than factories, competition for land pits the new tech ecosystem against the city’s manufacturing economy.

Does manufacturing matter?

Manufacturing in New York City has long suffered from serious decline. Industrial buildings become physically, logistically, and financially obsolete; relocation, automation, and outsourcing to regions with lower wages and cheaper land are endemic. Moreover, the city’s political and financial elites show a historical bias in favor of high-rent commercial and residential development (Fitch 1993; Angotti 2008).

Yet, although the city’s biggest industries—clothing and printing—have drastically downsized, relocated, and automated during the past decades, viable manufacturers remain across a range of sectors, from food processing and craft breweries to woodworking and metalworking. Manufacturing employment has stabilized, and advocates argue that local fabrication to supply local needs fosters environmental sustainability. Moreover, the city’s large pool of less-educated, lower-skilled, and often immigrant workers need the full-time jobs that place-based manufacturing offers (Wolf-Powers et al. 2017). These workers also comprise important ethnic constituencies in New York politics.

For all these reasons, as development interests advance contentious zoning changes that would take land from industrial use and turn it toward “innovation” in the form of tech and creative offices, advocates are fighting. For example, in 2013, three companies bought and renovated a large, city-owned warehouse complex in Sunset Park, on the Brooklyn waterfront. They ended the leases of small clothing manufacturers who had employed members of the nearby Chinese and Latino residential community, renamed the complex Industry City and branded the 16‑building site “an innovation ecosystem” for workshops, design studios, artisanal food manufacturers, and tech and creative offices. The garment factories and their workers are gone, and other manufacturing tenants have been priced out (Hum 2017, 2018). But the site is still zoned for heavy industry—preventing the developers from filling the vacant space with other uses at higher rents.

For several years, community residents have prevailed on the local community board and city council member to block the developers’ application for a zoning change to create a “special innovation district” that would allow offices, hotels, and bigger retail stores (Kensinger 2018; Spivack 2019). In 2019, facing an “unruly crowd” at a community meeting, the local city council member said he would only support rezoning—without hotels or big stores—if the developers created a manufacturing facility to be managed by a nonprofit organization and provide specific benefits to local residents, and if the mayor commited in writing to more investment in Sunset Park (Enman 2019). The city has now moved the rezoning application into the approvals process, setting the stage for contention over the next several months, as activists who want to maintain Sunset Park’s industrial core and working-class identity push against the developers, construction workers’ unions, some remaining manufacturing tenants, and the city planning department to reject or significantly modify the request for an innovation district.

Innovation—at whose cost?

Behind their optimistic branding, innovation districts selectively maximize benefits for the tech industry, real-estate developers, and local government officials. When these districts are proposed for privately owned buildings, the New York city government tends to support zoning changes that favor higher-rent uses. On city-owned land, however, the city government has maintained industrial zoning and modernized facilities for both old and new manufacturing tenants. At no time, however, has the city government opposed Big Tech or retreated from its commitment to “innovation.” As a result, industrial space is being chipped away by the speculative boom in “tech and creative” offices in both Manhattan and Brooklyn. To make space for “more valuable” businesses in midtown Manhattan, the city planning department is pushing manufacturers from the historic Garment Center to new workspaces in city-owned industrial properties in Brooklyn.

New York’s experience suggests that sustaining social communities based in an older ecosystem requires a new vocabulary of protest and continual policy engagement in both individual communities and citywide. The existential issues raised by digital technology are joined to older struggles over buildings and land.

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To cite this article:

Sharon Zukin, “New York Tech Dossier: “Innovation Districts” in New York: Contentious Geographies of Growth”, Metropolitics, 7 January 2020. URL: https://www.metropolitiques.eu/New-York-Tech-Dossier-Innovation-Districts-in-New-York-Contentious-Geographies.html
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