Innovation districts have emerged as a key urban strategy, driving economic growth, entrepreneurship, and community upliftment in cities across the United States. A new report from the George W. Bush Institute-SMU Economic Growth Initiative, titled “Engines of Opportunity: How Eds and Meds Institutions Can Become More Powerful Drivers of Prosperity in America’s Cities” provides valuable insights on the impact and potential of these dynamic urban areas.

This article explores the success behind these innovation districts and why they matter to the future of American cities.

What Are Innovation Districts?

Innovation Districts can be described as a centralized geographical area where universities, research institutions, startups and established companies come together to foster collaboration, innovation, and economic growth. These vibrant “live-work-play” environments are compact, transit-friendly, and blend housing, recreational, and commercial spaces, creating ecosystems that attract talent, businesses, and investment.  

As innovation districts gain prominence, their presence in the United States is expanding rapidly. According to the Global Institute on Innovation Districts (GIID), there are now over 60 innovation districts nationwide, with new initiatives launched in over a dozen metropolitan areas since 2020.

Key Findings from the Report

The Bush Institute’s analysis, comparing 36 innovation districts with 385 metropolitan areas, highlights the significant role these districts play in shaping economic, social, and housing dynamics across the country.

1. Economic Outperformance

Innovation districts have outpaced metropolitan areas and their surrounding counties on multiple key metrics.

• Population Growth: Population in nearby neighborhoods is growing faster than average, indicating that more people are choosing to move into these areas.

• Educational Attainment: Educational levels among residents in nearby communities are increasing faster than surrounding areas, showing an influx of highly educated individuals.

• Job Creation: These districts help create attractive job opportunities, as reflected in relatively low and stable commuting times for nearby workers. 

• Income Growth: Income levels are growing faster than average, driven by both new higher-income residents and steady income growth for long-time residents.

Notably, these districts have exceeded their own metro areas and national averages for income growth among Black, Hispanic, Asian American, and White populations. 

2. Factors Driving Success

The success of some innovation districts as engines of economic growth can be attributed to several factors.

• Innovation District Age and Size: Older and larger innovation districts that have a significant base of employers and working population generate more wealth and opportunities for surrounding neighborhoods.

• Eds and Meds Institutions: Districts anchored by universities and medical institutions which generate above-average innovation outputs surpass other districts for creative-sector jobs and drive higher levels of educational attainment.

• Metro-Area Housing Policy: Innovation districts located in metropolitan areas with less restrictive housing policies generally perform better than those in more restrictive metros, which predicts a better growth in population, educational levels, and creative-sector jobs.

3. Social and Housing Impacts

Innovation districts are making progress in addressing housing challenges and promoting economic inclusion.

• Housing Supply Growth: These districts are significantly outpacing other areas in creating new housing supply, which is considered an essential element in placemaking. However, rents in neighborhoods surrounding these districts are rising faster than average as housing supply struggles to keep up with demand. 

• Addressing Displacement Concerns: The data reveals that these districts have a higher combined Black and Hispanic population share than metropolitan America as a whole, and have seen greater increases in combined shares since 2010. This challenges the idea that innovation districts drive displacement, suggesting instead that an increased housing supply in nearby neighborhoods can help reduce it. 

• Premium Office and Lab Spaces: By most metrics, office and lab spaces in innovation districts are performing well, though interest rate increases since early 2022 have reduced demand in the short term. Class A spaces command rents 10% to 50% higher than comparable properties in nearby areas. Despite the temporary market slowdowns caused by interest rate hikes and reduced venture capital activity, demand remains robust for innovation district space in key markets such as Philadelphia, Washington, and Raleigh-Durham.

4. Collaboration as a Cornerstone

A collaborative ecosystem is vital for the success of innovation districts, as it brings together a wide range of stakeholders, each offering unique expertise and resources. These include, educational and medical institutions, real estate developers, entrepreneurs, established companies, investors, philanthropists, community nonprofits, and local/state governments. 

City and state governments, working in partnership with other stakeholders, often play a critical role in supporting these innovation districts because the concentrated mix of research, development, and business activities allows the district to thrive. A prime example is Research Triangle Park (RTP), established in 1960 between Raleigh and Durham, North Carolina. This district has been instrumental in driving innovation and economic growth in the region, even becoming one of the most innovative and fastest growing cities in the United States. 

Summary of Key Takeaways

• Economic Leadership: Innovation districts are outperforming metropolitan areas on multiple metrics including population, income, educational, and job levels. 

• Factors for Success: The district’s age and size, presence of high-impact institutions, and flexible housing policies drive strong outcomes. 

• Social Contribution: Innovation districts are making progress in addressing housing challenges, reducing displacement, and attracting talent & investment.

• Collaboration: Establishing strong partnerships among stakeholders are essential for the district's success.

Innovation Districts: A Blueprint for the Future

Findings from the George W. Bush Institute-SMU Growth Initiative make it clear that innovation districts are reshaping American cities. By cultivating economic growth, attracting talent and investment, and improving community well-being, these districts serve as a model for modern urban development. Their success is driven by the presence of strong educational and medical institutions, flexible housing policies, and collaborative stakeholders. As these districts continue to expand, they generate job opportunities, strengthen local economies, and support inclusive growth, offering a balanced approach that advances both economic and community goals.

Advancing Opportunities Together

Realizing the full potential of innovation districts requires strategic planning and collaboration. At Pacific Partners, we work with cities and stakeholders to design and develop spaces where ideas, partnerships, and communities can grow. Through our expertise in innovation strategy, project consulting, and real estate development and investment, we help bring these districts to life and support long-term success. Connect with us to explore how we can help you achieve your goals.