A random thought has been rolling around in my mind lately: The notion of business clusters and how some clusters seem to be in luckier regions than others. By clusters, I am talking about geographic concentrations of businesses, suppliers and associated institutions (all interconnected) in a particular field-Think Silicon Valley for tech, Rust Belt for manufacturing, and Texas for oil.
When the dot.com bubble hit Silicon Valley in Northern California, for example, the region underwent a huge transformation, and cities all over the US sought to become the next Silicon Valley by building network-enabled office space to attract internet entrepreneurs. Some even used tax money to fund technology conference centers, figuring that the cost in taxpayer funds was well worth the hoped-for return in jobs.
I am curious how the top companies that make up these so-called business clusters get together and decide where their cluster will be located. If I were them, I would pick the place I want to live and go there, but I am sure they are a bit more strategic. They probably choose based on the real estate values in that particular geographic region; demographics; and issues like whether or not the talent that will be working there already lives in that particular region or would want to. And, of course, the tax breaks and other incentives that cities offer.
Obviously some clusters form because of geography. The wine industry, for example, clustering where the climate is right for grapes.
One lucky cluster, in my opinion, is the concentration of life sciences companies in sunny San Diego. According to a recent report by Jones Lang LaSalle, “The drive for discovery and innovation is causing life sciences companies to rethink the way they make location decisions, creating a new focus on balancing the real estate costs of established life sciences clusters with the companies' increased efficiency in generating innovation.”
JLL, says that “A life sciences cluster typically develops as a result of a specific global region's educated work force, plentiful venture capital and economic development incentives, industry-friendly political structures, strict patent protection laws and strong ties to top universities and other supporting infrastructures and organizations.”
Ultimately, it is about the effectiveness of the discovery and innovation produced that draws additional investment. Clusters like high-tech, biotech and biomedical are on every city's wish list. Everybody wants the clean and high-paying jobs they bring, as opposed to all of those old-fashioned grimy jobs that have been shipped overseas. And the Great Recession has shown that some of these modern industries, like biotech and biomed, continue to do well even when the economy is in dire straits—yet another reason for cities to pursue them.
But not every city can offer the climate, the work force and the land or buildings required to house these clusters, so I have some questions for the city governments who want to be the location of the next big cluster: How are you marketing and promoting yourself? Do you think it is realistic to pursue industries like high-tech and biotech when some other regions already have such a head-start in attracting those companies?
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
