Density Should Never Be Underestimated

The benefits of density for traditional industries are well known. Whether for finance on Wall Street or music in Nashville, a concentrated pool of talent and resources efficiently leverages infrastructure investments and maximizes returns.

But what about the “new economy”?  Aren’t these businesses fomenting the digital revolution and rendering traditional and centralizing business practices obsolete?

Yes and no. No matter how counterintuitive it may seem, tech firms and other emerging creative companies can gain huge rewards by sticking together. The neighborhoods they choose to “cluster” in will benefit, too.

One of the key recommendations from a recent research report on New York’s City growing tech “ecosystem,” which was commissioned by the Association for a Better New York, Citi, Google and the New York Tech Meetup, and drafted by HR&A Advisors, is to create and expand hubs that will centralize goods and services critical to tech firms.

The report challenges the real estate industry to provide low-cost, flexible spaces for startups and business incubation, including critical step-up space to support new companies as they grow. Landlords must also get creative about meeting the needs of a new generation of tenants. From state-of-the-art wiring to bike rooms, the office building needs to evolve.

Furthermore, the report calls on government and telecom providers to invest meaningfully in infrastructure to facilitate and enhance the productivity of tech firms and workers across New York City.  Whether it’s building out fiber networks or providing free public Wi-Fi, a successfully dense city must also be a connected city.

Lower Manhattan is a textbook example of such a connected, dense hub. This rapidly changing one square mile has an unparalleled transit network and a concentration of an ever more diverse mix of businesses and digital leaders who all trade in innovation, where new ideas and new ways of doing things are constantly tested, refined and improved through exchange, collaboration and creativity.

New York City’s tech “ecosystem” is a pillar of the city’s economy, generating more than half a million jobs, more than $50 billion in annual compensation, almost $125 billion in annual output and $5.6 billion in tax revenues, according to the HR&A study. And it shows no signs of slowing down. New York State Comptroller Tom DiNapoli announced in April that tech jobs are, in fact, growing four times faster than the rest of New York City’s economy.

Tech clusters can fortify and expand this kind of momentum. How they do this is intimately tied to where they are. If you are a forward-thinking tech company, where would you set up shop?

You would go where there is infrastructure tailored to your needs and where there is a robust transit network, top-notch broadband access, abundant Wi-Fi and low-cost, flexible work spaces. You would go where you can find a wide, but readily accessible, array of talent. You would go where amenities your workforce demands are abundant—restaurants, shopping, coffee shops, parks, places to walk and hang out. And you would go where these things are all in close proximity. Like Lower Manhattan.

No matter how diffuse and decentralized the digital landscape becomes, a company’s physical environment can never be discounted.  For tech or any other industry, the center of gravity still holds. Density cannot be denied.

Bill Rudin is the chairman of the Association for a Better New York. Jessica Lappin is the president of the Alliance for Downtown New York.