Why business clusters are an increasingly urban affair

Silicon Valley: the cluster effect in action. Image: Getty.

Below a kebab shop in Shoreditch, at the end of a corridor covered with old Czech newspapers, an appointment-only establishment serves cocktails with a theatrical twist. Holy Smoke is essentially cognac, but comes hidden in a bible accompanied by smouldering frankincense and myrrh; Old Castro is rum poured over dissolving candy floss. Reviews of Lounge Bohemia on social media range from hip to hype.

Sustained by the well-paid workers of the East London tech scene, such bars are increasingly en vogue. They might not seem like an obvious magnet for productivity, yet some firms have located in or re-located to the area to recruit or retain the talented people who drink in them. A technology hub has emerged, which the government has branded “Tech City”.

The attraction of city living for the workers of the digital economy helps explain a shift in the innovation landscape. Rather than building on green-field sites, as the Silicon Valley pioneers did in the 1940s, a rising number of high-growth companies are choosing to locate and congregate in the core of cities, which offer advantages such as access to skilled labour and knowledge sharing.

“We are seeing the biggest rural urban migration in history,” said Peter Madden, chief executive of the Future Cities Catapult, a government-funded program to stimulate innovation. “Fashions have ebbed and flowed, but the last 150 years has been very urban.”

Competition for talent pits cities against each other: from Berlin, New York and Paris, to Beijing, Tel Aviv and even new upstart tech scenes such as Beirut. Investment brochures boast about a creative scene with art galleries, bars, restaurants and temporary “pop-up” installations. Eased visa restrictions, investment programs and direct incentives complete the offer.

This has led to a revived interest in business clusters – geographic concentrations of interlinked businesses – as a means of attracting mobile investment to stimulate growth. But building expensive out-of-town facilities would be unsuitable for footloose digital economy firms, many of whom require little more than a good internet connection. The new tools of economic development are downtown co-working spaces, and start-up incubators and accelerator programs.

Research by the Centre for Cities think tank and McKinsey, a consultancy, identifies 31 “economically significant clusters” in the UK: from financial services in London to Scottish whisky. Accounting for 8 percent of UK business but 20 percent of output, they are a “major contributor to growth”, and offer high salaries.

Centre for Cities Analyst Edward Clarke says it’s not possible to classify all of the 31 clusters as either urban or rural: many, such as Motorsports Valley in the Midlands, straddle large areas which include both. But he insists the most productive clusters “benefit from the fact that they are in cities”.

While fast-growing digital economy firms hog media attention, however, research-oriented firms in other industries – bioscience, for example, or motorsports – still require access to purpose-built facilities. “It depends where the focal point or the node is,” says Nigel Walker, head of access to finance at the Innovate UK agency. “Shoreditch is a village with artistic flair, and that wouldn’t work on a campus. But something that needs access to experimentation facilities, then maybe a campus is necessary.”

Governments continue to invest in them, from Russia’s Skolkovo Innovation Centre on the outskirts of Moscow to the Paris-Saclay research facility. Successful sites bring researchers, or people with ideas, together with entrepreneurs to turn those ideas into businesses, and access to finance. They also have good connection links to other centres.

In 2011, the government awarded the British Bioscience Research Council £44m to invest in its Babraham Research Campus, on the outskirts of Cambridge. Dr Celia Caulcott, its executive director for innovation & skills, explains that the campus is designed to attract small bioscience companies through access to world-leading researchers and facilities.

“It’s about proximity to discovery,” she explained, during the Innovate UK conference in London earlier this month. “We have invested to make sure that great research facilities are available to small companies that couldn’t possibly afford access to those things on their own.”

The flexibility of accommodation on the site appears to have given it the “stickiness” that economists crave. Will Spooner, chief science officer at Eagle Genomics, says the company has occupied seven different offices in six years on the campus as it expanded from 3 to 22 people: as the company grew, the space it occupied could grow with it, without the upheaval of moving to a completely new site.

Innovation, of course, doesn’t stop at city borders. Two “growth areas of national importance” attached to London – the Thames Gateway and the London-Stansted- Cambridge- Peterborough areas – extend far beyond the M25. Both schemes bring together policy makers across institutional boundaries, in an attempt to create joined-up thinking on issues such as transport, housing, and skills.

Public policy “should not only be one answer centric,” says Michael Joroff, a senior lecturer at the MIT Dept. of Urban Studies and Planning. Or, to put it another way: “A lot of growth will happen where growth happens.”

 

 
 
 
 

To beat rising temperatures, Vienna launches a network of 'Cool Streets'

A Vienna resident cools off at one of the city's new Cool Streets installations. (Courtesy Christian Fürthner/Mobilitätsagentur Wien)

Over the past several months, Austria has recorded its highest unemployment rate since World War II, thanks to the economic aftermath of the Covid-19 pandemic. With no job or a suddenly smaller income – not to mention the continued threat of the virus – many Viennese will opt for a staycation this summer.  

At the same time, last year, Austria’s capital experienced 39 days with temperatures of over 30°C (86°F), one of its hottest summers in history according to the Central Institute for Meteorology and Geodynamics.

Climate experts expect a similarly sizzling 2020 season, and city officials are now doubling down on efforts to combat the heat by launching a “Cool Streets” initiative as well as a new, state-of-the-art cooling park.

“As the city councilwoman in charge of climate, it is my job to ensure local cooling,” Vienna’s deputy mayor Birgit Hebein proclaimed at the opening of one of 22 new “Cool Streets” on 22 June.

“In Austria, there are already more heat deaths than traffic fatalities,” she added.

Hebein was referring to the 766 people the Austrian Agency for Health and Food Security included in its 2018 heat-associated mortality statistics. The number was up by 31% compared to 2017, and in contrast to the 409 people who died in traffic collisions the same year.

The project includes 18 temporary Cool Streets located across the city, plus four roads that will be redesigned permanently and designated as “Cool Streets Plus”.

“The Plus version includes the planting of trees. Brighter surfaces, which reflect less heat, replace asphalt in addition to the installation of shadow or water elements,” said Kathrin Ivancsits, spokeswoman for the city-owned bureau Mobilitätsagentur, which is coordinating the project.


Vienna's seasonal Cool Streets provide shady places to rest and are closed to cars. (Petra Loho for CityMetric)

In addition to mobile shade dispensers and seating possibilities amid more greenery provided by potted plants, each street features a steel column offering drinking water and spray cooling. The temporary Cool Streets will also remain car-free until 20 September.

A sensor in the granite base releases drinking water and pushes it through 34 nozzles whenever the outside temperature reaches 25°C (77°F) . As soon as the ambient temperature drops to 23°C (73°F), the sensor, which operates from 10 a.m. to 8 p.m., turns off the water supply.

The sensors were included in part to allay concerns about legionella, a pathogenic bacteria that can reproduce in water.  

“When the spray stops, the system drains, and therefore no microbial contamination can develop,” said Dr. Hans-Peter Hutter, deputy head of the Department of Environmental Health at the Center for Public Health at Medical University Vienna, in a televised interview.

Hutter also assured the public that there is no increased risk of a Covid-19 infection from the spray as long as people adhere to the one-meter social distance requirement.


But Samer Bagaeen of the University of Kent's School of Architecture and Planning notes that air cooling systems, like the ones used in Germany at abattoirs, have been found recently to be a risk factor for Covid-19 outbreaks.

“The same could be said for spay devices,” he warned.

Vienna’s district councils selected the 22 Cool Street locations with the help of the city’s Urban Heat Vulnerability Index. The map shows where most people suffer from heat by evaluating temperature data, green and water-related infrastructure, and demographic data.

“Urban heat islands can occur when cities replace the natural land cover with dense concentrations of pavement, buildings, and other surfaces that absorb and retain heat,” as the US Environmental Protection Agency states.


A rendering of Vienna's planned park featuring a Coolspot, which is scheduled to open in August. Click to expand.
(Courtesy Carla Lo Landscape Architecture)

Vienna’s sixth district, Mariahilf, is such an area. The construction of the capital’s first “Cooling Park”, a €1 million project covering the 10,600 square-metre Esterházypark, is designed to provide relief. 

Green4Cities, a centre of excellence for green infrastructure in urban areas, designed the park’s main attraction, the “Coolspot”. The nearly 3.40-metre high steel trellis holds three rings equipped with spray nozzles. Textile shading slats, tensioned with steel cables, cover them.

The effects of evaporation and evapotranspiration create a cooler microclimate around the 30 square-metre seating area, alongside other spray spots selectively scattered across the park.

The high-pressure spray also deposits tiny droplets on plant and tree leaves, which stimulates them to sweat even more. All together, these collective measures help to cool their surroundings by up to six degrees.

The landscape architect Carla Lo and her team planned what she calls the “low-tech” park components. “Plants are an essential design element of the Cooling Park,” Lo says. “By unsealing the [soil], we can add new grass, herbaceous beds, and more climate-resistant trees to the existing cultivation”.

Light-coloured, natural stone punctuated by grass seams replaces the old concrete surfaces, and wooden benches meander throughout the park.

Living near the park and yearning for an urban escape close by, Lo says she’s motivated to ensure the park is completed by mid-August.

“If we don't do anything, Vienna will be another eight degrees Celsius hotter in 2050 than it already is,” Hebein said.

Vienna recently came in first in the World's 10 Greenest Cities Index by the consulting agency Resonance.

“There is no one size fits all on how cities respond to urban heat,” says the University of Kent’s Bagaeen, who points out that Vienna was one of the first European cities to set up an Urban Heat Islands Strategic Plan in 2015.

In the short term, prognoses on the city’s future development may be more difficult: Vienna votes this autumn.

Petra Loho is a journalist and photographer based in Austria.