Innovation and creativity are the basic engines of economic development in cities, regions and nations. But what makes some places more innovative than others? How do certain neighborhoods come to specialize in different types of creativity?
A new study published in the journal Regional Studies by my Martin Prosperity Institute (MPI) and University of Toronto colleague Greg Spencer takes a detailed look at the kinds of neighborhoods that are home to high-tech industries versus those that foster vibrant arts, cultural and music scenes. He focuses on Canada’s big three city-regions: Toronto, Vancouver and Montreal. Spencer defines high-tech or “science-based” industries as spanning computer, software, pharmaceuticals and medicine, as well as research and development, while “creative” industries include film and video, music, radio and television, and design, as well as independent artists, writers and performers. (This is narrower than my own occupationally-based definition of the creative class).
To get at this distinction, Spencer uses unique and detailed data from the commercial analytics firm Dun & Bradstreet on the locations of 1.4 million businesses in the years 2001, 2006 and 2011. The study asks: To what degree do these two main types of innovative activity prefer urban versus suburban neighborhoods?
The main finding of the study is that these two types of activities—science-based versus creative industries—are based in very different kinds of locations. The table to the left, from the study, summarizes these differences.
Basically, the science-based firms and industries are out in the suburbs, along highway interchanges, and in newer, low density suburban campuses. The creative industry locations are much more urban, dense, closer to the core of the city, walkable, mixed-use and often served by public transit.
The first set of diagrams below show the layouts of typical science and creative neighborhoods in each of the three city-regions. The creative neighborhoods have greater density, tighter and more compact street layouts, and denser clusters of firms. By contrast, the businesses in the high-tech neighborhoods are much more spread out.
The second set of diagrams show the land use patterns of the two types of neighborhoods. The creative neighborhoods have a mix of residential, commercial, and governmental uses, interspersed by parks. The high-tech neighborhoods are far more dominated by just industrial and commercial uses—typical of office and industrial parks.
Spencer notes that creative workers are more likely to live in or near the neighborhoods in which they work, while science and engineering workers live farther away and are more likely to commute by car. Interestingly, however, high-tech residential clusters tend to form as well, with scientists and engineers living in classic nerdistan configurations adjacent to these suburban office parks.
The third set of diagrams maps the locations of amenities like cafés, restaurants and bars. Again, the basic pattern repeats itself. The creative neighborhoods have a dense abundance of these eating and drinking establishments, while high-tech, science-based locations have few.
We know that cafés, restaurants, and bars help create the sorts of mixing places that creative workers seek out (and sometimes the third spaces from which they work). These establishments also “attract people from other neighborhoods and by doing so extend the time period during each day that the neighborhoods [are active],” Spencer points out. “This adds to the social vibrancy of the creative neighborhoods and possibilities for social interactions that are less available in the places that science industries tend to inhabit.” These coffee shops, music venues, and other “third spaces” play a role for creative workers that is similar to offices and conferences rooms for scientists and engineers.
Both kinds of neighborhoods have “anchors.” The anchors for high-tech districts are other large high-tech firms and research universities, especially engineering programs. The anchors for creative neighborhoods can include universities, but also specialized arts, music or design colleges, galleries, performance venues and theaters.
Spencer suggests these different neighborhood patterns are the product of a couple of basic structural differences between these two kinds of firms and industries. For one, high-tech firms are considerably larger than creative firms. Spencer cites Dun & Bradstreet data that indicate that the former are two and a half times bigger—with an average of 17 versus seven employees.
Two, partly as a consequence of this, creative workers depend more on social networks. Spencer cites data from the Canadian General Social Survey which shows that creative workers have the largest social networks of any group of worker. “On average these individuals report maintaining 60 relationships with family, friends, and acquaintances,” he writes, “while those working in science and technology occupations have on average only 46 connections.” He adds that “this disparity is almost entirely accounted for by the number of local (same region) acquaintances that each group maintains relationships with.” The smaller creative firms thus benefit from and require denser conditions in neighborhoods to function.
Rents are also higher for the smaller creative firms than the larger science based ones. “This suggests that traditional urban economic cost-based factors are not the main drivers of location decisions,” Spencer writes. “Rather there seems to be a willingness, particularly of creative firms, to pay more in order to be in close physical proximity to similar businesses.”
Despite their many differences, both types of neighborhoods cluster in the same cities or metro regions. As Spencer points out, 55 percent of Canada’s science-based industries and 57 percent of its creative industries are concentrated in the city-regions of Toronto, Vancouver and Montreal, which house just 35 percent of the country’s population. And, of course, the past several years have seen start-up companies take on a much greater urban orientation than the larger, more established tech companies that shape the results of this study. As I have written here previously, the urban districts of San Francisco now top Silicon Valley in start-ups and venture capital investment, while New York City and London have generated large high-tech start-up clusters as well.
The question becomes: How do city leaders who want to attract different kinds of businesses and people go about doing that? It turns out this is harder for creative industries than for their science-based counterparts. As Spencer writes, “Most of the creative neighborhoods highlighted in [the] paper were not produced intentionally but rather evolved into what they are due to their highly flexible and adaptable characteristics. This in the end may hold the secret to any successful marriage between urban design and economic development.” Indeed, the urbanity and organic texture of creative neighborhoods make them much harder to design and engineer from scratch.