The White House and the U.S. Department of Commerce are seeking to develop a new generation of tech hubs through a new program that will invest a total of $500 million in grants in select regions that are poised to develop and expand industries around computer chips, clean energy and a range of other technologies. The application progress for the grants opened last week.
The regions are not bound by specific borders but rather focus on identifying sections of the country with the assets, resources, capacity, and potential to become globally competitive in critical technologies and industries. Applicants select a technology industry to focus on that can fit under a list of 10 key focus areas.
It is a chance, administration leaders say, to expand the tech capabilities seen in such cities as San Francisco, New York or Austin to other parts of the country.
“This is about taking these places on the edge of glory to being world leaders,” Commerce Secretary Gina Raimondo told The Associated Press.
Certainly it has been done before and often without leadership from the federal government. Consider the emergence of life science hubs in cities outside of Boston or San Diego, for example. Atlanta, Nashville and Dallas/Fort Worth fall in this category due to their size, institutions, talent and rapid growth, according to CBRE.
If successful, the White House initiative is bound to have a knock on effect on the local real estate markets.
Such tech hubs act as knowledge-based economic development programs driven by aggregating capital, talent, connections, and infrastructure in one place, David Greensfelder, Managing Principal, Greensfelder Commercial Real Estate, tells GlobeSt.com.
“These centers pull together the entire value chain that entrepreneurs need – capital, policy, talent, culture, and intellectual property creators like universities – rather than just providing hot seats like coworking facilities,” he says.
But it is not just a robust tech hub that will drive a region’s development. The creation of an amenity-rich live-work-play environment will also be key to success, he continued. “It’s easy to have two of these elements but having all three is an important differentiator to talent that is otherwise mobile and can go to and work from anywhere, thus, inspiring talent to co-locate.”
“The pitch to investors is that from a return perspective, it’s worth patience because there is a huge potential to increase the velocity of ideas moving to commercialized activities in addition to promoting inclusive opportunities,” he added.
But Can It Work?
Some community leaders who have effectively administered the creation of such hubs said the White House’s strategy is flawed.
Rasheq Zarif, co-founder and COO of ReWyre, tells GlobeSt.com that while the tech hub initiative is a promising opportunity, the path laid out by the U.S. Department of Commerce is imperfect.
Zarif has experienced first-hand the challenge of aligning multiple stakeholders around a common cause.
“The process takes months to develop and requires a sponsor to take the lead in driving the tech hub to the realization,” he said. He points to Alliance Texas Mobility Innovation Zone, north of Fort Worth, Texas, as an example of a successful tech development initiative.
“In less than four years, it has developed into a premier automated mobility development zone, attracting new businesses and economic growth to the region.”
Miami, on the other hand, provides the perfect example for the need for some kind of overarching guidance when trying to create a new tech hub, Megan Broccoli, founder, and CEO of Voi Logostics, a South Florida-based company that participated in an Endeavor Miami program that is similar to what the White House is funding.
“Miami declared itself to be a tech hub, and that turned into a lot of money pouring into fly-by-night companies, attracting enormous sums of investment capital, which came crashing down with the crypto and NFT bust.”
White House-supported programs will make sure STEM and clean energy businesses that are built to last can thrive in a city like Miami, which has not been able to keep top tech talent, Broccoli said.
“Florida is the sunshine state, and yet California and Texas continue to dominate as top headquarters of Renewable Energy Companies in the US,” she added.