Startups need room to grow
Small firms are vital to Boston’s success, report says
TWELVE MILES wasn’t always a long haul. But for the types of companies that fill Cambridge’s Kendall Square and Boston’s Seaport, a dozen miles might as well be an eternity. Biogen Idec found this out in 2010, when the Cambridge biotech giant moved some of its workers from Kendall to a shiny corporate campus in Weston. The Weston digs were a quick car ride away from Biogen’s researchers in Kendall, but within a year, Biogen execs were laying plans to return to Kendall Square.
Tuesday marks the end of Biogen’s suburban odyssey — the opening of its newly built Cambridge headquarters. The opening shows just how drastically the geography of Massachusetts’s innovation economy has shifted. Companies once craved addresses in the tony office parks that line Route 128 in the western suburbs. Big firms are now paying premiums to set up shop in the city, because they see huge value in clustering with like-minded companies.
The suburban exodus means demand for commercial space around Kendall Square and the Seaport is greater than it’s ever been. The danger is that all this demand prices out the small companies that are driving the innovation economy’s urban movement in the first place.
Biogen couldn’t leave Cambridge behind because it belongs to an industry that thrives by keeping close to ideas and talent. Kendall Square’s biotech and pharmaceutical cluster keeps growing because large industry players feel the need to plant a flag in the neighborhood. “They’re collaborating with academics and smaller entrepreneurial companies, and proximity matters,” says Tom Andrews, the regional director for Alexandria Real Estate Equities.
Alexandria is one of Cambridge’s largest landlords. The company developed the larger of the buildings Biogen left Weston for. Large companies like Biogen are crowding into places like Kendall Square, looking to be close to the numerous small companies the neighborhood produces. These small startups are the glue that holds Kendall Square together.
A recent report from Harvard University’s Rappaport Institute for Greater Boston underscored the need for Kendall Square to protect and advance its startup culture. The report by Ed Glaeser (who is a Globe op-ed contributor) looked at more than three decades’ worth of job performance across the country, and found that the number of small firms in a given region predicted its economic success. Metro regions with the most startup activity saw the most job growth, while company towns bred weak growth. One of the main differences between a healthy city like Boston and a place like Detroit is creative churn.
Boston has a history of throwing tax breaks at large firms. But Glaeser’s report suggests that if Boston and Cambridge are serious about growing, they need to focus more on what’s causing companies like Biogen, Novartis, Pfizer, Google, Facebook, Amazon, and Zipcar to grow locally. The answer is in Greater Boston’s startup engine — MIT and Harvard, the Cambridge Innovation Center and MassChallenge. Kendall Square and the Seaport are only magnets as long as they continue growing the small firms that compel big firms to stay in town. And those small companies can only grow as long as they can find affordable office space — something that’s becoming increasingly difficult, as more big firms flock to greater Boston’s tech clusters.
Cambridge and Boston have both taken stabs at regulating cushions for startups. District Hall, a new Seaport restaurant and meeting space for local companies, exists because Boston officials compelled a private developer to build it. And when Cambridge permitted MIT’s massive redevelopment of its Kendall Square properties last year, it secured a 10-percent set-aside for startups and smaller companies in the 1 million square feet of commercial development permits the school received.
Development mandates aren’t enough, though. As they look to protect and encourage startups, Boston and Cambridge would be wise to give running room to the kind of startup hubs that Workbar has created.
The rapidly growing coworking firm hosts 500 companies working out of 21,000 square feet of shared offices in Boston and Cambridge. Dozens more have desks set up inside larger companies across the region. Members — a mix of startups, small firms, and employees of larger companies working remotely — rent space monthly. They’re able to launch their businesses in a low-cost, low-risk way. More importantly, they come together to form an engaged entrepreneurial community that strengthens the pipeline of new companies in the area. And it’s a strong pipeline of tiny companies that keeps the big ones in town.