What attracts innovators to a city?
Innovation has been key to building Denver's established healthcare and energy sectors; its quality of life brings in the people
Innovation is lauded as one of the single, most essential components of long-term economic growth. Before the pandemic, talent-rich secondary cities such as Charlotte and Austin were already attracting people and companies with their low cost of living and high quality of life. It’s data that’s affirmed in JLL’s recently updated Innovation Geographies report highlighting the influx of people, companies, and capital entering these non-gateway destinations.
Earmarked in the report for its rich talent pool, Denver is fast becoming one of the most established life science hubs in the U.S., with further potential for growth. High quality of life has ensured that people want to move to Denver, and it’s one of the quickest growing markets in the U.S. for workers in the innovation economy.
So, what can other cities learn from the state’s Frontier Effect?
Find out the answer to that question in this episode of Building Places, where JLL Researcher James Cook interviews Dan McGowan, JLL’s Denver Managing Director, and Carol Hodgson, the researcher behind the report.
James Cook: [00:00:00]: Some cities are really good at attracting innovators and innovative businesses and the talent that fuels forward-thinking industry. There's a strong link between innovation and real estate performance. And despite what you might think, not all innovative cities are global gateways.
You might be surprised at the smaller cities punching above their weight. this is building places where we look at the world of commercial real estate through the eyes of the experts that study it every day. My name is James Cook and I research real estate for JLL.
In the new JLL, innovative geographies report, we track the rise of smaller talent, rich cities. Cities like Denver, Colorado.
James Cook: [00:00:55]: So, Dan, are you originally from Denver?
Dan McGowan: [00:00:58]: I am originally from New Jersey.
James Cook: Tell me about why you decided move to.
Dan McGowan: [00:01:05]: I don't know as much as it was my decision and my wife's decision, but we were living in Alabama and we're trying to decide where we wanted to spend our lives. And so, we went through and evaluated a few different cities and areas. And Denver came up on top and we've been here almost 22 years now.
Dan McGowan: [00:01:24]: I'm Dan McGowan with Jones Lang LaSalle. I am the brokerage lead for Colorado, and I'm also an office tenant rep, a player coach
Dan McGowan: It’s actually been neat to see the city grow over the last 20 years. When I moved here and historically it's been a very energy driven type of community with telecommunications being a strong industry as well. This was at one point the cable capital of the world.
Dan McGowan: You had Jett, AT&T, and I think it was three of the four largest cable TV providers were headquartered in Denver at some point in the nineties. It was really neat to see the growth, the growth, not just physically and by numbers, but also by diversification of industries.
James Cook: So, beyond Denver, the innovative geographies reports studied cities, driving innovation all over the world. I wanted to learn more. So, I spoke with Carol Hodgkin, one of the reports, authors.
Carol Hodgson: [00:02:21]: my name's Carol Hodgson, I'm a senior director in the global research team.
James Cook: [00:02:25]: Carol, you recently completed this pretty ambitious study; how many cities was it?
Carol Hodgson: It was 109 cities in the end.
James Cook: Wow. And the goal here is to figure out what makes a city, an innovative city, right?
Carol Hodgson: [00:02:42]: There's two elements to it. One is measuring how innovative. We're not just talking big tech, but life sciences by the tech advanced manufacturing. So the whole innovative ecosystem, but also looking at the human side. Cities need people. And so ones that affect people in, they attract more people, more amenities, more businesses, more capital. And we've also looked at it from a real estate perspective and they tend to outperform so stronger rental. Stronger GDP growth over the long term. So structurally they're just better prepared for what's coming in the future.
James Cook: [00:03:15] What were you looking at to compare these cities?
Carol Hodgson: [00:03:18] We've collected data across things like foreign direct investment, the number of patents, the amount of money spent on R & D and venture capital that startup ecosystem as well. We brought all that together into one banking and then we looked at talent, things like demographics, how quantified your workforce Is how fast it's growing, how many people are employed in the innovative economy, the quality of the education system and those types of factors.
James Cook: Is there anything that surprised you
Carol Hodgson: There's probably a couple of elements. One we have now seen the innovation is much more global. all over. We've seen the U S still has that slight dominance, but taking place like Asia, we see ones like Seoul and Beijing moving up the ranks.
And also, now there's a really interesting category of cities. We're calling talent wrench, which tend to be -smaller, a bit more nimble, and they're really kind of punching above their weight now in terms of performance and attracting.
James Cook: [00:04:15] Some of the cities that are high on this list are also cities where it's expensive to live. So how does affordability play into this?
Carol Hodgson: [00:04:24] Yeah, it's a really good question. When we look at it, it's an interesting factor. So as you've said that the really top performers, they tend to be the more expensive markets to be in from both an office perspective and the cost of living perspective as well. We've looked at our results against a net effective office rate to see which cities are more affordable. And you do see some that actually still affordable given how good they are in terms of innovation and town. In the us, we have ones like Raleigh, Denver, Phoenix, and even Austin is still relatively affordable given how good it's mixed those of innovation and talent...
James Cook: [00:05:00]: When I talked with Dan in Denver, he said a big part of the city's attraction is higher education.
Dan McGowan: [00:05:05]: We have a well-educated state, and population, extremely desirable place to be. We've seen an increase of 15% of our population over the last 10 years. A lot of that is just in migration of folks.
James Cook: [00:05:17] Tell me a little bit more about that education component. What's the university system and presence like in the region.
Dan McGowan: [00:05:25]: The university of Colorado's largest system that we have. The main campus of Boulder. Has it just from an engineering and technical aspect they've been involved in almost, every, the shuttle launch.
And then now it's expanded to healthcare and bioengineering, you also with the Colorado State University program, which has from an accident point and from. evaluation. It's one of the top three vet schools in the entire country.
And then you you've had the growth of university of Denver from the political relation standpoint college in Colorado Springs, and then obviously the air force academy.
Carol Hodgson: [00:06:00]: So, if you look at some of the big global gateways that we know do really well, your London's they'll have four or five really big well-known universities that attracts people, and those students often stay afterwards, also attracts industry.
You've got a lot partnership between. universities private industry, and that helps foster that innovation economy. And so on a smaller level, when you get down to some of these smaller talent, which cities we're talking about, you can help to foster some of that, where you get some attraction from the bigger companies coming into to work with those really well known universities that are doing well in.
James Cook: [00:06:37]: So, if a city wants to, you know, improve its attraction of talent, a big part of that is probably investing in a university. If there isn't already one.
Carol Hodgson: [00:06:46] Yeah. And I think building up that university as well, and the, the links between industry and the universities of when potent, you see that in a lot of countries and cities around the world, how that helps.
And so I think that's one of the ways you can foster that kind of innovation at a local level, working with the universities and industries together.
Dan McGowan: [00:07:04]: Boulder is, known as, like this, incubator of talent and that came from IBM. IBM had a big presence out here in the fifties and sixties. And then Level Three was out here. There's the storage tech, like all the data-driven in that people have enjoyed living in Colorado.
Dan McGowan: So they've kind of spun out. So startup, early job creation is number two in the country. We've seen a decrease in, entrepreneurship, but, but that's because of, Denver is becoming a little bit more established, but from a job creation standpoint, it's pretty significant in tops in the country.
Dan McGowan: And a lot has to do with just the mentality of Boulder, where CU is an incubator and then they kind of grow from there and it used to be. And I'm going to grossly underestimate the stature, but it used to be, you create a company in Boulder. You'd work your way down toward Denver, maybe end up in downtown Denver and then you'd sell your company. They'd shut you all down. They take the data, they take the technology, and then they would put it into Silicon Valley or New York or in Chicago.
Dan McGowan: What we've seen, and it's really exploded over the last 10 years, is that you still have the entrepreneurial spirit where you're grown accompany your, you are moving down the corridor only because Boulder is very tight from a commercial real estate standpoint. You're coming to Denver because it's one of the few MSA's where the downtown is centrally located, which is great from a recruiting and labor standpoint, but then companies are staying and then you're seeing big growth. I mean, we were a finalist for a certain e-commerce company, we're always in the evaluation for training centers and a lot has to do geographically where we're located in the country, but also on the workforce. and so that's what's neat. Denver is maturing and growing in a way where people want to, creating deeper roots than what we've had in the past.
James Cook: [00:09:00]: From Denver to stock home to Beijing, there's more innovative cities all around the world. You can read about them on our website, go to jll.com and search for innovation geographies. And if you liked this podcast, do me a favor go into the app that you're listening to right now and give us a rating. Even better, give us a little review. Give us a sentence about what you like about the show.
Of course, you need to be subscribed to building places in that same app to get a new episode. Every time we publish, or you can find us on the firstname.lastname@example.org.
This episode of building places was produced by Bianca Montes. Our theme music was written and performed by Joel Karachi.