Real Estate for Entrepreneurship

PI: Andrea Chegut ( Center for Real Estate, MIT) 
     Dennis Frenchman (CRE, DUSP)

Abstract

This project looks at the role of real estate products in supporting the growth and success of entrepreneurship. Our project’s contribution is identifying the real estate products that support entrepreneurial firm growth, 21st Century drivers of firm clustering and agglomeration and linking the perofrmance of startups - innovation driven enterprises - to their experiences in physical space. Entrepreneurial spaces like co-working space, accelerators, maker spaces and innovation districts are distinctly organized real estate spaces to support innovation through the economies of agglomeration. 

Economies of aggolmeration has found that firms benefit from locating near each other - stemming from decreased costs from economies of scale and access to clusters of human capital through network effects -much of the research focuses on relative proximity, and not the experience of firms in real estate space. The contribution of this research is the types of real estate that these firms experience as well as their contribution to creating agglomeration, positive firm performance and economic growth. To execute this research, we will need to aggregate significant amounts of data about fairly unknown real estate products like co-working, accelerator, maker spaces and innovation districts and link these spaces back to the firms experiences in them. In this way, this project will contribute five unique new datasets with over 100 manually collected fields on innovative real estate space that supports entrepreneurship. In this way, we can learn the components that have gone into creating clusters for entreprenurial growth that are being supported by new spaces like accelerators, co-working, maker spaces and innovation districts. Ultimately, this data collection process will lead to extensive GIS modeling linking firms to their physical spaces in time. Moreover, we aim to identify the outcomes of firms that experience entrepreneurial spaces relative to those that do not by curating an extensive database of space treatments. Consequently, this project will deliver the following on the linkages between real estate and the outcomes of entrepreneurship:

1. Real estate products, spaces and technology that support innovation and entrepreneurship for economic growth - so called ‘entrepreneurship space’.
2. Components of 21st Century agglomeration that identify clusters of innovation and entrepreneurship.
3. Identify correlations - firm performance outcomes - between ‘entrepreneurship space’ and the treated peformance of innovation driven enterprises.

Moreover, this research is international, with an additional focus on China, the fastest growing entreprenurship market in the world - home to 20 percent of the world’s unicorns ($1bln privately valued firms), the largest number of accelerators in the world and a rapidly growing innovation ecosystem to support innovation driven enterprises. However, there is limited public data in this realm, thus we aim to contribute a signficant data collection effort to understand the link between real estate product that support the growth and success of entrepreneurship in China:

4. Curate a dataset of ‘entrepreneurship’ spaces for China.
5. Link innovation driven enterprises to ‘entrepreneurship’ spaces in China.

Over the course of two years, and with the aid of full STL seed funding our objective is to understand the impact of real estate on entrepreneurship. The growth in innovation driven enterprises - so called ‘startups’ has lead to a diversification in the demand for real estate spaces that support entreprenurial activity over the last decade. This project aims to identify the real estate products, spaces and technology that support innovation and entrepreneurship for economic growth - so called ‘entrepreneurship space’. This transformation in space can help researchers link real estate products to the components of 21st Century agglomeration, to industry clusters of innovation and entrepreneurship. In turn, we want to understand differences in outcomes potentially generated by more entrepneurial serving space by measuring the correlations - firm performance outcomes - between ‘entrepreneurship space’ experiences and the peformance of innovation driven enterprises. In addition, we aim to build out a unique dataset of ‘entrepreneurship’ spaces for China and link innovation driven enterprises to their respective ‘entrepreneurship’ spaces in China.