'Innovation Districts' May Be Cornerstones Of New Urban Economy

Robert Siegel talks with Brookings Institution vice president Bruce Katz, founding director of the Brookings Metropolitan Policy Program, about his new book, The Metropolitan Revolution: How Cities and Metros Are Fixing Our Broken Politics and Fragile Economy. Katz and his co-author Jennifer Bradley argue that "innovation districts," combining office space, residential buildings, and mixed-use retail, will be epicenters of the new urban economy.

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I'm Robert Siegel and we turn now to the NPR Cities Project.

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SIEGEL: We've been reporting over the last few weeks on urban innovation: How cities are striving to solve all manner of problems using technology. Well, today we're talking about innovation and the urban economy.

In a new book, Bruce Katz and Jennifer Bradley, of the Brookings Institution's Metropolitan Policy Program, argue that federal and state governments have become so gridlocked and dysfunctional, that it's up to cities and metros to solve the nation's economic problems. To quote, "Metro leaders have met the solution and it is them." The book is called "The Metropolitan Revolution."

And Bruce Katz is here in the studio. Welcome to the program.

BRUCE KATZ: Well, thanks for having me.

SIEGEL: What is it that's happening at the local level that can't happen in Washington, D.C. or in state capitals?

KATZ: Well, cities and metropolitan areas drive our economy. And they understand that, for all intents and purposes, the federal government has left the building, right, it is absent. So what we're seeing around the country are networks of leaders - mayors, for sure, but also business and philanthropic, and university and civic leaders - they're stepping up and doing the hard work to grow jobs and make their economies more prosperous in the aftermath of the recession.

SIEGEL: OK, when you try to describe to people the Metropolitan Revolution, where do you point?

KATZ: You could start with New York City. Mayor Bloomberg, in the depths of the recession, convenes hundreds of businesses and civic leaders and says to them: We need a game changer. We've been the epicenter of the recession. We're too dependent on financial services. What they decide to do is attract world-class universities. They ultimately decided Cornell and Technion to Roosevelt Island, to set a platform for technology-driven growth over the next several decades. That's a game changer.

SIEGEL: You write in the book about Detroit. And you write, Detroit is an incredible living laboratory where the future of American cities is being demonstrated one project, one investment at a time. You admit this is counterintuitive.

KATZ: Absolutely.

SIEGEL: Don't the headlines about Detroit, which is it's on the brink of municipal bankruptcy, raise the question of whether the kind of civic activity and local capital that you describe can actually be big enough to help sustain a city that is dying, that's old institutions are gone.

KATZ: So Detroit really is tale of two cities. It's a very large city, 138 square miles...

SIEGEL: In aerial.

KATZ: Right, you can put Manhattan and Boston and other cities in there. It's declined from about two million to less than 700,000 in population. But in its core, about seven square miles - the downtown, the old Woodward corridor, the Midtown - you have incredible assets and advantages. You've got Henry Ford Health System, Wayne State University, the College for Creative Studies. You've got a new transit system going up the corridor, mostly paid for with local resources. And you have tech firms and creative firms coming into the downtown, populating some of the most iconic buildings in the United States.

The seven square miles can be, in our view, an innovation district over time; a real hotbed of business and entrepreneurial activity, but also residential and retail growth.

SIEGEL: You make an interesting distinction and an interesting point. You say back in the 19th century, there were obvious industrial zones where coal and steel might come together in the same area and factories right nearby. Then you cite the 20th century model of the suburban research park, the Research Triangle of North Carolina being the epitome of that. And you say that's passe. Today's industries actually flourish much more in a true urban environment.

KATZ: Yeah. Something is changing in the United States and, frankly, around the world that is profound. Every economic era has its own spatial geography of innovation. And when we built these science parks, like Research Triangle, the notion was that companies will go out to the exurbs essentially and go to isolated corporate campuses where they can invent and innovate, but keep your inventions secret and keep their workers separate from workers in other firms.

SIEGEL: So physical isolation...

KATZ: Physical isolation.

SIEGEL: ...actually was significant. It at least represented something central to the idea of the company.

KATZ: Absolutely. What is changing now is companies in many sectors of our economy - think life sciences, think the app economy - are practicing what we call open innovation, right. They want to be close to other companies and they want their workers to mingle, interact with workers in other firms.

The other thing that's happening is with the Millennials, right, they seem to be sending a signal to the market: We want to live in quality places; we want choices in how we get to work; we may actually want to live close to our place of employment. That's why cities and urban spaces and suburbs, as well, are being revalued. And we see that not just in Detroit, in the core, but around MIT in Cambridge, around Georgia Tech in Atlanta, around many parts of the country that have these really beautiful downtown and midtowns, with ample assets.

SIEGEL: But, on the other hand, on the other coast, Stanford is about as anti-urban an experience...

(LAUGHTER)

SIEGEL: ...as one could possibly - it's a campus where people refer to it, they call it the farm. People have not gone they are for the clamor and the proximity of the city. They've gone there to get away from all that.

KATZ: Well, I think actually Silicon Valley and the Bay Area is still a work in progress. What were seeing with new or creative firms - think Twitter, for example - they're locating in San Francisco. They're capturing the old urban landscape within the city. Ultimately, I think over the next 20 or 30 years, we'll see many of these suburban areas urbanized. There'll be more transit. There'll be more mixed use development, housing connected with commercial and office and retail space.

The country is physically changing in response to major economic innovative and demographic trends.

SIEGEL: A less glowing outlook for the forecast than yours, is that the trends you're describing are consistent with the growing inequality in American life; that those with education, those whose work is innovative and creative as opposed to repetitive and routine, they're doing fine. But it doesn't address the problem of work and prosperity for the majority of Americans.

KATZ: I think we have to re-imagine the American economy. We have a recent report out of Brookings called "The Hidden Stem Economy." We used to think about the stem economy - science, technology, engineering and math - as an economy only for people graduating from MIT and Stanford and Georgia Tech. Actually, it's a much larger portion of our economy. And a very substantial portion of the jobs could be filled with people coming out of high school or community colleges with technical skills.

We used to call this shop or vocational education. We walked away from it because we had the vision that somehow the U.S. would become a postindustrial economy. I think we're coming back to fundamentals and basics after this recession.

SIEGEL: Bruce Katz, thank you very much for talking with us.

KATZ: Thank you very much for having me.

SIEGEL: Bruce Katz is vice president of Metropolitan Policy Program at the Brookings Institution. He is co-author, along with Jennifer Bradley, of the "The Metropolitan Revolution."

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