Bennett J. Loudon

Staff writer

High Tech Rochester requests $5 million from the regional economic council for new downtown accelerator.

Accelerator could help form an innovation district, or a cluster of high-tech and other businesses.

Innovation districts have gained in popularity in larger U.S. cities since the Great Recession, according to the Brookings Institute.

For decades, businesses have migrated out of urban areas to suburban office parks, vast parking lots and other monolithic facilities. Often, as those jobs moved to the outskirts, so did the workers who bought homes closer to their workplaces and sent their children to schools in those areas.

But things are changing around the country with many larger cities creating innovation districts, areas where high-tech businesses and others companies are located near educational or medical institutions with nearby entertainment options with access to mass transit. The districts include mixed-use spaces that draw talented young professionals, and others, to urban areas for a renaissance of sorts.

For example, Cleveland's High-Tech Corridor is a three-mile, 1,600-acre site that touches nine neighborhoods. It includes eight business incubators with 123 high-tech companies.

In St. Louis, Mo., home to another innovation district, there are 1.5 million square feet of office and research space, housing, infrastructure and retail.

And Boston's innovation district was created on 1,000 acres of the South Boston waterfront. In three years, the district has added more than 5,000 new jobs and more than 200 new companies.

Rochester might be next in line for an innovation district in an area that includes the Sibley Building, the former Midtown Plaza site, a vacant Andrews Street building and a former Franklin Street bank — all in downtown.

"If you had to look at a location where we would want to move on something like this, clearly that would be the location where we would be interested in testing this model out," said Del Smith, Rochester's commissioner of neighborhood and business development.

The hub of the district could be a new 75,000-square-foot business accelerator proposed by High Tech Rochester, an incubator in Henrietta operated by the University of Rochester.

Jim Senall, president of High Tech Rochester, pitched the idea of the $20 million facility to the Finger Lakes Regional Economic Development Council on Wednesday, seeking $5 million in state funds for the project. He did not disclose the accelerator's exact.

"The whole intention of this accelerator project is really creating an innovation district in that area," said Senall.

Senall said the Accelerator could attract 100 new companies and 5,000 direct and indirect jobs.

Heidi Zimmer-Meyer, president of the Rochester Downtown Development Corp., said the accelerator would provide a major boost to the creation of an innovation district.

"Right now it's sort of happening in the marketplace anyway in bits and pieces, but having something that's more like an incubator, someplace that concentrates a lot of activity and brings in new kinds of entrepreneurs, that will make a big difference," she said.

Building blocks

Innovation districts are areas where entrepreneurs and supporting institutions, such as universities or medical centers, operate in close proximity, sharing ideas and resources. They include startup companies, researchers and financial supporters and are designed to lead to new jobs and business growth.

"This is really about each city, each metropolitan area, figuring out how do we want to move up the economic value chain? How do we want to become increasingly competitive both domestically and globally?" said Julie Wagner, a senior fellow at the Brookings Institution and a co-author of the 34-page report The Rise of Innovation Districts.

Think about a mix of spaces clustered within walking distance — or even a short bike ride — from homes. An area where offices and research labs are near coffee shops, restaurants and other entertainment options.

An innovation district is also an all-encompassing enclave of new businesses ideas, lifestyles and social interactions. Venture capitalists rub elbows with entrepreneurs by sharing ideas for new products or services. Some are built to a precise design, with government or private investment. In other cases, these districts grow organically through a fortunate set of circumstances, available space and willing participants.

"True innovation districts are seldom created or led by government institutions," Smith said. "It will take the collaborative efforts of our progressive academic institutions, combined with an empowered creative class, to create the type of innovation district one can envision for the area. What government can do is encourage and provide some basic resources to facilitate this collaboration."

The key for Rochester, Wagner said, is to determine how existing assets, public programs and private investment can be leveraged to develop such a district.

"Is there a strong university with research and development? Is there a cluster of firms focused also on research and development?" she said "You already have a solid foundation. The key then is to figure out how to get across that everyone isn't working individually. How are these discrete individual economic entities going to start working together, more synergistically?"

The area

There are no official borders of Rochester's district, although it roughly could include the St. Paul Quarter, Midtown and St. Joseph's Park areas of downtown. These areas are key since portions are under development and include buildings that present potential opportunities for new high-tech businesses.

The Sibley Building on East Main Street is undergoing a $200 million renovation to add apartments, offices, restaurants, retail and more. Meanwhile, the former Midtown Plaza area is undergoing an extensive redevelopment that includes a similar mix of spaces.

Three other sites in the area are expected to draw new business to the area with special tax incentives under the state's START-UP NY program.

RIT's Center for Urban Entrepreneurship on Franklin Street, which has already been approved for START-UP NY, will provide incubator space and other business development programs. Also, Connecticut-based data recovery and cloud backup company Datto Inc., will establish an office with 70 employees at the center.

Two properties owned by The College at Brockport also are expected to also receive START-UP NY designations to help lure more businesses to downtown. One is a vacant 39,000-square-foot building at 305 Andrews St.; the other is the college's MetroCenter on St. Paul Street.

"You now have all the elements that could potentially create an innovation district that we're talking about," said Smith.

Rise of districts

The Center for Urban Entrepreneurship and High Tech Rochester projects indicate a commitment to downtown by the area's two largest universities, the sort of investment needed to anchor an innovation district, Smith said.

"There's a geographic element to this that says, 'The closer they are together, the more they're going to be able to potentially collaborate, and the more they'll be able to attract both young people and companies and entrepreneurs to come to that area,' " Smith said. "We can't dismiss how important UR and RIT and our universities are for us."

Innovation districts have grown in popularity since the Great Recession, according to the Brooking's report. Previously most businesses were developed on isolated suburban campuses. More recently, however, new hotbeds for innovation have emerged in urban areas of Boston, Austin, Texas, Pittsburgh and Atlanta. Part of the move back into cities has been led by high-tech firms that simply don't need as much space.

"The older model was: You did your innovation, research and development out in research parks in the suburb, isolated from one another," Senall said. "The new model is to bring all that together in urban areas and interact with others and you have much more of an ecosystem in one place."

Senall said there is plenty of office space in downtown to grow. According to a market report from real estate service company CBRE, the city of Rochester had about 7.4 million square feet of office space at the end of 2013, with a vacancy rate of about 19 percent. More is under development in downtown too.

In the end, the ability to attract new businesses and tenants downtown will determine whether an innovation district can be successfully established in Rochester.

"The idea sharing and the connectivity of both entrepreneurs, startups, and those that support those companies, places that you can do prototyping all in one place — that's what some of these other cities have, and that's what our vision is for Rochester," Senall said.

BLOUDON@DemocratandChronicle.com

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What's an innovation district?

A compact cluster of established businesses, startups, incubators, research and other institutions accessible by mass transit, near a mix of office, housing and retail spaces.

Other innovation districts

• Boston's innovation district was created on 1,000 acres of the South Boston waterfront that now features space for meetup groups, startup companies, co-working space, art art exhibition space, and restaurants. In three years, the district has added more than 5,000 new jobs at more than 200 new companies.

• Detroit's innovation district is roughly a four-square-mile area with two major medical centers, a university and five satellite university facilities. The district includes only about 3 percent of the city's land, but accounts for 55 percent of the city's jobs.

• Cleveland's High-Tech Corridor is a three-mile, 1,600-acre site that touches nine neighborhoods. It's a prime location for biomedical, healthcare and technology companies looking to be close to the Cleveland Clinic and University Hospitals, eight business incubators, four academic centers, and more than 123 high-tech companies.

• The 200-acre CORTEX innovation district project is part of a $2 billion plan that has created 2,850 direct jobs. The district includes 1.5 million square feet of office and research space, housing, infrastructure, and retail in the Cortex area of St. Louis.