As the next decade unfolds, researchers at the Brookings Institute in Washington, DC, predict that profound economic, demographic and cultural shifts will take hold that will give rise to what the think tank dubs 'innovative cities'. Akin to the Silicon Valley model of the 1960s, the city version – the silicon city – is already spawning entrepreneurship, small companies and investment that is anchored to research institutions and large companies.

Bruce Katz, vice-president and director of Brookings’ Metropolitan Policy Programme, bases his thesis on the silicon city on observations that the Silicon Valley model, while still a strong force but some 50 years on, offers limited opportunities since it is based on detached suburban locations of “spatially isolated corporate campuses” that are accessible only by car.

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One example he uses to illustrate this point is Google, whose Googleplex corporate campus is located in Silicon Valley’s idyllic town of Mountain View. Because the cost of living is high in Mountain View, many Google workers live in San Francisco’s lower cost Mission District neighbourhood. Consequently, the company has been providing a bus service to these workers to its campus 70 kilometres away.

In February, Google announced plans to acquire a 3250-square-metre (sq m) building in the trendy Mission District where it plans to house the start-ups the company is acquiring. It is also opening offices in another fashionable district of San Francisco, South Park, where its investment firm, Google Ventures, will be based.

“Innovative companies and talented workers are revaluing the physical assets and attributes of cities,” says Mr Katz. “As a result, a new spatial geography of innovation is emerging, and, in 2014, it will reach a critical mass worthy of recognition and replication.”

A walk in the park

More than corporate expansion or relocation, however, Mr Katz defines this trend as one that involves the rebuilding of urban locations to create networks of companies and workers who can live within walking distance of work as well as restaurants, shops and entertainment. “We see this as a radical departure from traditional economic development,” says Julie Wagner, a non-resident senior fellow at the Brookings' Metropolitan Policy Programme, from her office in Zurich, Switzerland.

According to Ms Wagner, innovative districts help cities move up the value chain of global competitiveness. “They create spaces where people, unknown to each other, literally crash into each other and make connections that they otherwise would not have made,” she says. “It’s a new way of looking at urban design.”

'The Metropolitan Revolution', a study co-authored by Mr Katz and Jennifer Bradley, a fellow at the Brookings Metropolitan Policy Programme, emphasises the power of anchor institutions, such as the Massachusetts Institute of Technology (MIT) in Cambridge, Massachusetts, can have on changing a location’s landscape.

“In the mid-20th century, MIT was surrounded by acres of abandoned industrial properties and buildings,” they write. But in the 1960s, the institution became involved in transforming the area into a high-tech region that quickly attracted real estate developers and private money. The flagship of Cambridge’s conversion became the retro-fitting of a former soap factory in the city into Technology Square – one of Cambridge’s first large-scale real estate developments and a hot-bed of biotechnology.

“Fast-forward 30 years and the MIT bio engines continue to hum,” they write. “University Park now houses more than 140,000 sq m of scientific research facilities across 10 buildings, and is home to major bioscience firms.”

Global phenomenon

Brookings researchers contend that cities and metropolitan areas with the right mix of development will become silicon cities, and innovative districts are already taking hold around the world. In the US, they are found in cities such as Boston, St Louis, Seattle, San Francisco, even Detroit – albeit in their early stages. Globally, examples are found in Barcelona (Spain), Berlin (Germany), Montreal (Canada), Seoul (South Korea) and Eindhoven (the Netherlands).

“MIT played an important role in creating Seoul Digital Media City [DMC], although it offers such a different space with a different starting point,” says Ms Wagner. Launched by the Seoul Metropolitan Government in 2002, DMC is a 569-square-kilometre state-of-the-art digital media entertainment cluster in north-west Seoul.

Berlin is often referred to as 'Silicon Alley'. What makes that city work, says Ms Wagner, is the number of highly creative people the city has attracted, particularly in the field of app development. A key factor to Berlin’s attraction is its low cost of living. “This reduces risk and allows entrepreneurs to keep churning out work,” she says. “Berlin is also considered artsy and fashionable without being edgy. This attracts a lot of talent across Europe.”

Brookings researchers continue to observe what is happening in Berlin to see whether or not its model becomes more formalised. “The city is very different from Barcelona, which was a highly intentional city-led effort,” says Ms Wagner.

Barcelona City Council was responsible for a highly ambitious project to transform a former industrial area in the central business district of the city into an innovative district dubbed 22@Barcelona. “What sets this project apart is how 22@Barcelona marketed and branded itself. After close examination of Barcelona’s model, Brookings’ researchers realised how US cities such as St Louis, Seattle, San Francisco and even Detroit could emulate Barcelona’s model," says Ms Wagner.

Key to most of these locations is the fact they are not starting from scratch, but already have high-density landscapes. “It’s about being intentional about how you want to move your economy forward,” says Ms Wagner. “Barcelona is a rare example and one that was very expensive. In many areas, it’s more about connecting players in key areas.”

Reviving Detroit

Probably one of the most dramatic examples of the possibilities of the new model comes from Detroit. Mr Katz and Ms Bradley write: “In the face of population loss, fiscal collapse, racial division, political dysfunction and near-anarchic conditions, a vanguard of corporate, university and civic leaders are taking charge and building the city back from its origins along the Detroit River and around its anchor institutions.”

Unlike Barcelona, Detroit has no unified masterplan. Leaders across the city’s public, private, non-profit and philanthropic sectors, however, have drawn up a blueprint for the city’s resurgence. As a result, Mr Katz and Ms Bradley see a world-class innovation district there slowly emerging through its collaborative network, despite Detroit’s well-publicised landscape of boarded-up shops, empty lots and burned-out buildings.

One advantage is that the entry costs to set up shop in Detroit are cheap. Housing is cheap, land is cheap, labour is hungry, and Michigan's governor, Rick Snyder, has reconfigured the state's business tax structure to be more pro-business. In fact, Forbes magazine reported executives as saying Detroit is the “most affordable city in the US”. But what makes Detroit increasingly attractive is the fact midtown Detroit is home to four major anchor institutions: Henry Ford Hospital, the Detroit Medical Centre, Wayne State University and the College for Creative Studies.

“Detroit is rediscovering the fundamentals of sound economies,” write Mr Katz and Ms Bradley. “Housing doesn’t create jobs; jobs create housing. And as housing goes, so goes retail. All this activity – corporate relocation, anchor expansion, entrepreneurial growth, housing, and retail – predates the next infusion of energy and capital.”

With the right mix, urban environments – even those with huge issues such as Detroit – are spawning a new energy that Brookings Institute researchers believe will push Silicon Valley-like locations aside and give rise to silicon cities.