Explained: What are innovation districts and who do they help? 

Leaders across the globe are establishing clusters of companies, governments, universities and startups, with the goal of boosting economies for entire cities or towns. 

These “innovation districts” have been around for close to three-quarters of a century, but the name only recently became popular as they’ve proliferated around the US and world. Because they formalize collaboration to develop new technologies and jobs, they’re seen as key infrastructure for helping startups to grow.

The concept has been proving its efficiency, attracting local investments and spurring local tax revenue, according to David Tarter, a former mayor of Great Falls who now serves as executive director of the Center for Real Estate Entrepreneurship at Costello College of Business at George Mason University. Working together can give a region a competitive advantage, he said. 

“There’s synergies to be had by working together with folks, that everyone brings something different to the table,” Tarter told Technical.ly. “Working collaboratively, it benefits everyone.”

Keep scrolling to learn more about what makes up an innovation district, their history and what sets them apart. 

➡️ Jump to a section:
• So what exactly is an innovation district?
• When did they become a thing?
• How many are there?
• What do they do?
• Who decides if they should happen?
• Is there a physical center?
• What’s needed for it to work?
• What jobs are created?
• How are they different from a research park or business improvement district (BID)?
• Where can I see them in practice?

So what exactly is an innovation district?

An innovation district is a geographic area where there are organized partnerships between established companies, universities, governments, startups and business support organizations to foster economic development. They’re intended to help regions create jobs and help companies commercialize technology. 

When did they become a thing?

Though not as carefully planned as they are today, innovation districts have been around for decades. Kendall Square in Boston started growing its district in the 1960s with a new NASA research center. It closed soon after, but not before inspiring Big Pharma companies and venture capital firms to open offices in the area, right near MIT. 

In the US, backdrops for innovation were then typically set in suburbia, with the need for a car and long commutes. Silicon Valley is the textbook example.

Following the Great Recession in 2008, innovation districts started gaining more traction as a possible route to boost economic growth, according to Brookings. Leaders in the US may have also been inspired by innovation districts in Europe, per that analysis, like the 22@District in Barcelona, which launched in 2000. 

In the 2010s, major tech companies like Google started to establish offices in cities to access more talent and be closer to universities, paired with more collaborative offices with gyms and open floor plans.  

How many are there?

There were about 150 innovation districts in the world as of 2024, according to the Global Institute on Innovation Districts. 

Because planned innovation districts are a relatively new concept, it’s difficult to know exactly how many there are, said Lauren Yayboke, a partner at McKinsey & Company. 

What do they do? 

Anchor institutions in innovation districts, like established companies and universities, often coordinate programming including accelerators, hackathons, investor events and soft landing programs in an aim to boost startup activity, attract companies to establish offices in a region and accelerate tech developments.

Through the connectivity, the districts encourage sharing office space and facilities, which reduces overhead costs and risk, per Brookings. Because of the emphasis on walkability and public transportation, they can also be a way to improve a region’s sustainability. 

It can also be a boon for broader local economies. With the kind of activity innovation districts spark, municipal governments can depend on a more diverse tax base that includes property taxes from offices and new housing, plus increased retail activity including dining out and shopping at local businesses, per George Mason University’s Tarter. The added tax revenues can then translate into investment in schools, housing and other infrastructure, per Brookings. 

As this growth happens, it’s important to implement guardrails that keep housing affordable to avoid pricing people out of their existing homes, per a McKinsey report. 

Who decides if an innovation district should exist?

Those anchor institutions, from the public and private sectors. There’s no one entity that can make the decision, since it takes both government and business to make them happen.  

Is there a physical center?

Some innovation districts coordinate centrally located office space, like the Penn West Equity and Innovation District in DC. Others span across jurisdictions and neighborhoods, like National IQ in Alexandria and Arlington. 

The idea is that proximity encourages organic collaboration, and that can manifest in different ways — through grouping in a few blocks for having a robust public transit system. 

What’s needed for it to work?

Most are in walkable areas with access to retail, public transportation and proximity to housing, with the idea of boosting more collaboration and lessen the burden of long commutes, a Brookings study outlines. 

Connectivity within the district is key. That means public transportation, biking infrastructure and walkability, per Brookings. In National IQ’s jurisdiction, an additional Metro station opened in 2023 as the region expanded through the opening of Virginia Tech’s campus and other launches. 

What jobs are created? 

Employment falls into three pillars, Yayboke from McKinsey said. 

• Direct jobs: a software developer at a startup headquartered within the innovation district 
• Indirect jobs: a materials provider for a company that’s in the district, which may relocate to be closer to its customer 
• Induced jobs: a bartender at a new restaurant that opened thanks to increased foot traffic

In a study of 18 US innovation districts, STEM-related jobs are projected to grow by 40% by 2035, per the commercial real estate management company JLL. 

Entrepreneurs are a big part of expanding employment opportunities. Two-thirds of all new jobs came from small businesses in the 2010s, per research by ADP. 

How are they different from a research park or business improvement district (BID)?

Innovation districts and research parks both have the goal to promote technological development and commercialization, but a research park is often isolated to academic communities and usually does not focus on connectivity via public transportation or walkability. 

Business improvement districts are commercial areas where business owners pay a tax for maintaining the neighborhood and supplementing city services, like through trash removal and improvements like decorative lighting. Most of these programs are mainly for brick-and-mortar small businesses and restaurants.  

But quality-of-life improvements, like maintained public parks and public open spaces, are necessary to attract workers and founders, per a report by McKinsey. 

Where can I see them in practice?

Innovation districts can cater to a region’s industry strengths. National IQ in Northern Virginia focuses on national competitiveness with its proximity to the Pentagon, for example. It’s made up of national security and government-focused partners like Northrop Grumman and SAIC, along with other entities like Virginia Tech and Arlington Economic Development. 

And a handful have been established in the DMV. National IQ launched at the beginning of 2026, and George Mason University announced a manufacturing and advanced tech innovation district in 2025 with a $2.6 million investment from the commonwealth.  

Penn West specializes in connecting companies to global investors and companies given the city’s many international development organizations and like National IQ, closeness to the federal government. 

In 2024, it partnered with other local organizations and the DC government to launch a global soft landing program. Penn West also partners with the entrepreneurial-support organization Founder Institute to host accelerators for international startups. 

Pittsburgh’s Innovation District focuses on robotics as a vertical, with its legacy in manufacturing. 

Science is a popular vertical for innovation districts. uCity Square in Philadelphia leans into that region’s key industry in life sciences. Cortex in St. Louis, founded in 2002, houses 425 companies — several specializing in life sciences and biotechnology. Mission Bay in San Francisco focuses on health, too.