After almost a decade of letting a strong Kendall Square “kind of run itself,” an uncertain future of federal funding cuts, global competition and fleeing entrepreneurs calls for collaboration with Cambridge City Hall, said tech leaders, university administrators and city officials at a June 9 roundtable.
Rent relief, tax incentives, deregulation and faster permitting, and being more fun and creating room for experimentation were among the proposals at the meeting of the Economic Development & University Relations Committee, chaired by city councillor Cathie Zusy.
“In many ways in the last decade that ecosystem has been healthy, it’s been strong, and we have just let it kind of run itself,” city manager Yi-An Huang said of Kendall Square. The square mile of lab- and office-filled towers has been an economic engine – including 16 co-working and incubator spaces with 918 companies and more than 6,950 employees last year starting with the Cambridge Innovation Center, which is expanding into New York and around the world.
The result of all this, said roundtable participant Ankit Gupta:
“Cambridge produces a very large fraction of the best founders in the world – by some measure almost all of them, and I think at something like half of the venture-sized companies that matter of the last decade, at least one founder went to college here in Cambridge, mostly at Harvard and MIT.”
Now, though, there is around 1 million empty square feet in Kendall Square, just minutes from MIT, and “millions of vacant square feet in Cambridge,” said Pardis Saffari, the city’s director of economic opportunity and development.
A lot of infrastructure behind city services “is built off of the economic activity that’s happening in Kendall Square and the commercial growth that’s happened in the city,” Huang said. “In the last two years, what we’ve seen is that growth is being threatened.”
Considering around half the city’s revenue comes from property taxes, city officials worry that if these trends continue, funding for such things as affordable housing, universal prekindergarten, rent assistance and projects such as new schools would decline.
Downturn at Harvard and MIT
As Massachusetts gets more National Institutes of Health funding per capita than any other state, it has been hit the hardest by cuts by the Trump Administration. The effects have affected schools such as Harvard and MIT, delaying research and enrollment.
“It’s talking about a full structural change, not only of the amount of money that’s going to be granted from the federal government, but how they’re going to do it, and how they’re looking at it – much more political than before,” said Tom Lucey, of Harvard’s Office of Government and Community Relations. “There are a lot of dark clouds,” he said.
The Massachusetts Institute of Technology has already enrolled 500 fewer graduate students this year due to a lack of available grants, and that is expected to hinder future company formation and research.
Annalisa Bhatia, the associate director for the Office of Government and Community Relations, said MIT is “concerned about the cuts to research, and what are going to be the cascading effects that come from that.”
Lucey saw the same outcomes for Harvard. “You might not see it now, but the pace of the spinoffs that we’re going to have with the technology to take the next step off our campus will be impacted if things stay the same,” he said.
Startups struggle
Startups in Kendall Square are also struggling, as places such as MassRobotics and Greentown Labs have chosen Boston and Somerville over Cambridge. Tim Rowe, chief executive of the Cambridge Innovation Center and co-founder of the Kendall Square Association, explained that although startups can be initially successful in co-working spaces such as the CIC, they struggle once they need to expand.
Startups face increasing difficulty securing loans and are more likely to be rejected by landlords who assume they won’t be able to pay their rent for years to come.
“If a startup offered you $100 a square foot, you wouldn’t give it to the startup. You’d still give it to Google for $70,” Rowe said.
That causes developers to wait and leave space empty – and there are times developers want to fill the space and feel they cannot because it would look like a loss to investors. “It might sound weird,” Rowe said, “but a developer might actually appreciate if you made a rule that gets them to put some of that space to work.” He volunteered to help craft language.
The city actually has a really great history of collaboration with Kendall Square, Rowe said, noting the innovation space zoning that requires developers to set aside a percentage of newly built space for startups. The experts at the roundtable suggested it was time to start adjusting and building on that zoning.
Entrepreneurs leaving
While some startups are beginning to leave Cambridge, students are choosing to leave Massachusetts entirely. Gupta, a general partner at Y Combinator, a startup accelerator, wonders how to keep them here.
“We should think really hard about why most 22-year-olds do not want to stay versus want to be in San Francisco or New York, and it is not just about economic opportunity,” he said.
Although Cambridge produces among the “best founders in the world,” Gupta said, if students continue to move away and take their ideas with them, there will be fewer startups and discoveries. This could create a biotech-focused “industry town,” a lack of diversification that makes an area prone to industry-specific downturns.
Ideas from industry
Gupta encouraged the city to consider not just special economic zones for the kinds of innovation it wanted to encourage, but the entire vibe of the city. “It feels like you’re living in a quaint English town and not like a modern technology center? Why don’t we have Waymos here? Why don’t we have delivery robots? Why can I get a Zipline to deliver my groceries via drone in Texas, and I can’t here?” he said. “Why is there not happy hour here?”
“We have to do the types of things that Austin’s willing to do, sometimes, which might scare us,” Gupta said.
Jason Kelly, of Ginkgo Bioworks, said the city could benefit by being the first to set the rules for newly innovative tech use, just as it was for recombinant DNA research 50 years ago. “Everyone else copied the rules later, but importantly, in that window of time, Biogen moved here, ultimately set their headquarters here instead of in Europe,” Kelly said. “All these companies started to move here because of regulatory surety. It didn’t matter what the rules were, just that there were rules.”
Cambridge should be celebrating its tech as well as welcoming it, Kelly said, and playing up its family-friendly urban environment. “Tell me another city that’s better to raise kids in than Cambridge, Somerville, Boston,” he said.
“A wake-up call”
City councillors were aboard with much of this. Marc McGovern appreciated that the message to 22-year-olds seemed to be that “you want me to spend a ridiculous amount of money on rent in a city that I’m hearing maybe doesn’t want me to be here, or rolls up the sidewalks at 7 o’clock at night.” Vice mayor Burhan Azeem wondered if it was time to allow more prominent corporate signs in Kendall Square, something fought years ago by residents who didn’t want the city to feel like Las Vegas.
“It’s the right time for us to be having this conversation and thinking about a broader economic development strategy that the city of Cambridge would be engaged in,” Huang said. “What’s the role of the city to play in this community? I think it has been a wake-up call.”
No next meeting date was set, but Huang said the conversations would continue through the year and into 2027.
“Cambridge has long been a center for innovation, pioneering mRNA vaccines, the Internet, the Polaroid camera and synthetic penicillin. We want to keep it that way,” Zusy said.
About The Author
