What is a cluster?
1/ Purpose-built parks
UK examples of purpose-built science parks would be Oxford Science Park and Granta Park, Cambridge. Potsdam Science Park in Germany and Leiden Bio Science Park in the Netherlands are examples from the continent. While not applicable to all, purpose-built parks tend to be held under single ownership. This allows curation of tenants and active asset management to drive real estate performance. There are many examples of parks developed on greenfield or brownfield sites, which are typically low-rise in landscaped environments with a range of on-site amenities and services. Purpose-built science or innovation parks can also be found in urban settings. In these cases, where land supply tends to be limited, mid-size tower blocks allow scale and critical mass of tenants and can be designed in a way to facilitate collaboration. With on-site amenities and access to the wider urban cultural infrastructure an attractive and productive ecosystem results. Two good examples are the recently developed White City Place in West London, located adjacent to the new Imperial College White City Campus, and Amsterdam Science Park located in the eastern part of Amsterdam. Trinity College Dublin has revealed ambitious plans for a €1 billion (£860 million) Grand Canal Innovation District (GCID), its proposed Innovation Hub near the city centre.2/ Clusters that develop and evolve
At an urban scale, London King’s Cross Knowledge Quarter (KQ) is a unique example of an urban cluster within a global city. KQ covers 260 ha (642 acres) around King’s Cross, Bloomsbury and Euston Road and describes itself as “home to the world’s greatest knowledge cluster”. It is anchored by the Francis Crick Institute, a partnership between six of the world’s leading biomedical organisations – the Medical Research Council, Cancer Research UK, the Wellcome Trust, University College London, Imperial College London, and King’s College London. The KQ captures a broad mix of science, tech, art, history and culture, and the combined effect has been to create a vibrant and thriving ecosystem which is so critical in attracting and retaining talent. In addition to the number of academic institutions in the area, the regeneration around King’s Cross station and Pancras Square will host a number of high-profile global tech and media companies, such as Google, Facebook and Universal Music. Covering a much broader urban geography, Genopole life sciences cluster, south of Paris, covers an area of 2,800 ha (6,919 acres) and provides 109,000 sq m (1.17 million sq ft) of accommodation for a diverse range of occupiers. Academic and medical links to the University of Paris-Saclay, University of Evry-Val-d’Essonne (UEVE) and the South Il-de-France Medical Centre (Centre Hospitalier Sud Francillien, or CHSF) generate talent and start-ups. The cluster hosts over 100 member organisations and supports its own incubator and booster programmes with dedicated staff.3/ Single-city or multi-city clusters
A third category is the city or cities cluster. Paris, Dublin and London can be described as single city clusters. In each case, the cluster is polycentric. For example, in London you find well-established locations such as King’s Cross and White City Place; however, in addition, London has a number of new science and innovation hubs in the development pipeline that will add critical mass. Key locations include: Whitechapel (Royal London Hospital, NHS Property services), London Bridge Snowsfields Quarter (Guy’s and St. Thomas’, Foundation partnering with Oxford Properties and REEF), Royal Street (Guy’s and St Thomas’ Charity with Stanhope and The Baupost Group), Canary Wharf, where Canary Wharf Group and Kadans Science Partner are developing Europe’s largest commercial lab building over 22 floors. Some industry commentators refer to the Oxford–Cambridge-London life sciences parks as the Golden Triangle as they are located across three UK geographic regions. The Danish-Swedish life science cluster Medicon Valley describes itself as the crucible of Scandinavian life sciences. The bi- national cluster spans the island of Zealand in Eastern Denmark and the Skåne-region of Southern Sweden.The drivers of success
First, a caveat: success means different things to different people. For example, within the triple helix of academia, business and government, success could mean any of these:- The number of successful spinout companies or value of funds raised (universities)
- Return on investment or ability to attract and retain talent (business)
- Incremental economic growth or employment (government).
Quantifying the drivers of success
We have identified the key drivers, but the real challenge is measuring the strength of each driver in any given location. For example, there is no single benchmark that encapsulates the depth of the talent pool in a city or county; however, it is possible to assemble a composite measure drawn from various sources. (The quality of research is one indicator here and cities with strong science- based universities like Berlin,Cambridge, Dublin, London, Munich, Oxford, Paris, Utrecht and Zurich should score well under this heading). The same applies to the second driver of success, openness to people and ideas – a single benchmark does not exist, but a composite measure comprising many indicators may be possible instead. (Tolerance of minorities is one indicator here). The third driver of success, the presence of local risk capital, can be assessed by tracking historic deal flow. Funding is the lifeblood of new and growing life sciences businesses and the sums of venture capital (VC) being raised in the biotech sector has reached record levels. Globally, €33.9 billion (£28.1 billion) was raised in 2021, an increase of 10 per cent over 2020. Successful capital raising brings forward spinouts, start-ups, scale-ups and driving expansion. This in turn drives strong occupier demand requirements for a range of appropriate real estate in specific locations where the talent pool and ecosystem overlap. The fourth and fifth factors, government support and the availability of alternative work, are generally quantifiable using publicly available statistics.The benefits of clustering
The effects that these clusters have on innovation and productivity growth are quite impressive, even on the individual level. According to American research, “in biology and chemistry, a move from the median cluster (Boise, Idaho) to the 75th percentile cluster (State College, Pennsylvania) is associated with a productivity gain of 8.4 per cent, holding constant the inventor and the firm.”Science parks and larger clusters have the same ultimate goal
While having similar occupiers and objectives to a science park, science-based clusters, with a multiple-ownership structure, will tend to grow organically at scale, rather than in a more curated fashion associated with single- ownership purpose-built science parks. They will likely cover a broad geography, sometimes crossing international borders and will contain a comprehensive mix of office, R&D, lab and manufacturing premises. Clusters, through their larger geographical spread, will have access to several universities, higher education establishments, and university teaching hospitals. However, the goals are the same – academic and business collaboration, nurturing the growth of spinouts, start-ups and SMEs, cross-pollination of ideas and research, innovation of new product, and acceleration to market. The importance of strong digital infrastructure and international connectivity should not be underestimated in the success of large clusters.Three types of clusters
It could be argued that clusters are one of three types. First, there are purpose-built science parks located within proximity of academic and medical facilities. Second, there are clusters that develop and evolve around academic or medical centres of excellence utilising a mix of new, existing, and repurposed buildings and redevelopment of obsolete commercial space. Third, there are what might be termed “city or cities clusters” where several science parks or other “areas of innovation” form part of a citywide or even regional cluster network.The drivers of cluster success
It is important to have a clear understanding of the factors that contribute to the success of a cluster. In terms of the drivers of success, life science clusters have much in common with clusters in other parts of the knowledge economy such as the tech sector. In fact, the main drivers of success in the tech industry and across the knowledge economy in general have been listed as: a deep talent pool; openness to people and ideas; and the presence of local risk capital. Clusters, science parks and innovation districts that score highly on these drivers are well positioned to succeed in the life sciences sector in the years ahead. We have identified the key drivers, but the real challenge is measuring the strength of each driver in. The main drivers of success are a deep talent pool, openness to people and ideas, and the presence of local risk capital. For example, there is no single benchmark that encapsulates the depth of the talent pool in a city or country; nevertheless, it is possible to assemble a composite measure drawn from various sources. The quality of research is one indicator of talent, and cities with strong science-based universities like Berlin, Cambridge, Copenhagen, Dublin, London, Munich, Oxford, Paris, and Zurich score well under this heading. Having a high number of life sciences firms already established in a location is another indication of a deep talent pool. The second driver of success, openness to people and ideas, also lacks a single benchmark. However, a composite measure comprising several indicators may be possible instead. Tolerance of minorities is one important indicator, because as The Economist notes: “Migrants are a disproportionately enterprising bunch. Around 60 per cent of America’s most valuable tech companies were started by immigrants or their children. European hubs such as Berlin, London and Paris, each of which is home to ten or more unicorns, have large immigrant populations.” The ability to attract talented people from abroad, sometimes called “brain gain”, is another important indicator. The third driver of success, the presence of local risk capital, can be assessed by tracking historic deal flow and by examining the local investors. How many life sciences companies have raised more than $10m? Are the local investors “seasoned” (that is, have they seen prior investments through to exit)? Successful capital raising brings forward spinouts, start-ups, scale-ups and driving expansion. This in turn drives strong occupier demand requirements for a range of appropriate real estate in specific locations where the talent pool and ecosystem overlap.The data
Using data from the World Economic Forum, Gallup (the American analytics and advisory company), the Leiden Ranking (which charts the academic performance of 500 major universities throughout the world), Crunchbase, and elsewhere allows us to gauge the performance of a cluster using a framework built around the three key drivers of success. To illustrate this framework, we apply it to the group of 21 European cities that feature in the report “European Start-up Hotspots: An Analysis based on VC-backed Companies”, published by the European Union. That report provides evidence on start-up activity in Europe and describes European VC activity over the previous two decades. The study notes that 28 per cent of all European VC-backed companies are based in this group of 21 cities, which is led by Paris, London and Berlin. The framework could, of course, be extended to include other cities. The table shows the results.
