Innovation and talent concentration as economic engines

The analysis combines factors that favour innovation and talent, such as the presence of first-class universities, investments in research and patent applications.

The San Francisco Bay Area remains at the forefront of global innovation by a significant margin, outperforming most other regions in terms of venture capital, R&D investment, productivity and breadth of talent. Beijing, Boston, Tokyo, London, Seoul, Singapore, Shanghai, New York and Paris complete the group of the world's leading centres in terms of both innovation output and talent concentration.

Key takeaways of JLL’s study „Innovation Geographies”

1. Migration to affordable locations: In recent years, talent shortages, rising property prices and regulatory pressures have catalyzed expansion into lower-cost markets, aided by more flexible working patterns and technology. Secondary cities are therefore increasingly competitive with the world's largest innovation hubs.

   
   

2. The hierarchy of innovation hubs is shifting.

   
   

3. Cities that have developed specializations in emerging technologies (e.g. generative artificial intelligence, environmentally friendly buildings, hydrogen, electronic mobility / electric vehicle batteries, so-called "challenger banks", drug development) have a competitive advantage today and in the future.

   
   

4. Geopolitical tensions and trade barriers mean that local research and development hubs will play an increasingly important role.

   
   

5. Partnerships between the public and private sectors will be crucial to the success of urban development projects, as much of the built environment is at risk of becoming obsolete and unable to meet the newer occupier and investor requirements, as well as stricter efficiency and sustainability standards. The speed at which urbanisation is progressing is also increasing the pressure on the public sector.

Implications for real estate markets

Innovation remains a decisive economic factor and driver of property demand, and is not least part of the solution to social challenges such as global warming and demographic change.

The assessment of innovation and talent development in cities is a key aspect in identifying future growth markets. Indicators of innovation capacity and talent will therefore become increasingly important for investment decisions. Both users and investors will base their locations and portfolios on the geographical distribution of qualified talent and hotspots for innovation-driven growth.

The cost of office space and talent is still often higher in cities with a high level of innovation and a promising labour market. However, to ensure (high) returns on investment in the long term, tenants and owners should pay greater attention to price sensitivity.

The increasing connections and interactions between technology companies, knowledge-intensive industries and research organisations play an important role. They influence the demand for commercial property and the design of our cities, thereby also significantly shaping the future of the property landscape.

The third edition of JLL's „Innovation Geographies” analyses developments in 108 cities worldwide. More than 720 million people live in these cities and around 37 million are employed in the high-tech sector. Two indices were created for each city: innovation output (patent generation, foreign direct investment, venture capital funding, start-ups and R&D spending) and talent concentration (educational attainment, high-tech employment, university publications, university presence, working-age population growth, net migration and GDP per capita).

Click on the link to the entire „Innovation Geographies” study by JLL.