Building the Innovation Economy City-Level Strategies for Planning, Placemaking, and Promotion Case study: Tel Aviv October 2016 Authors: Professor Greg Clark, Dr Tim Moonen, and Jonathan Couturier ii | Building the Innovation Economy | Case study: Tel Aviv About ULI The mission of the Urban Land Institute is to • Advancing land use policies and design ULI has been active in Europe since the early provide leadership in the responsible use of practices that respect the uniqueness of 1990s and today has over 2,900 members land and in creating and sustaining thriving both the built and natural environments. across 27 countries. The Institute has a communities worldwide. particularly strong presence in the major • Sharing knowledge through education, Europe real estate markets of the UK, Germany, ULI is committed to: applied research, publishing, and France, and the Netherlands, but is also active electronic media. in emerging markets such as Turkey and • Bringing together leaders from across the Poland. fields of real estate and land use policy to • Sustaining a diverse global network of local exchange best practices and serve practice and advisory efforts that address community needs. current and future challenges. • Fostering collaboration within and beyond The Urban Land Institute is a non-profit ULI’s membership through mentoring, research and education organisation supported dialogue, and problem solving. by its members. Founded in Chicago in 1936, the institute now has over 39,000 members in • Exploring issues of urbanisation, 82 countries worldwide, representing the entire conservation, regeneration, land use, capital spectrum of land use and real estate formation, and sustainable development. development disciplines, working in private enterprise and public service. Copyright ©2016 by the Urban Land Institute. ULI Europe, all rights reserved. No part of this report may be reproduced in any form or by any means, electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system, without written permission of the publisher. ULI has sought copyright permission for all images and tables. Front cover image: Tel Aviv Jaffa, CC by SA 2.0 Urban Land Institute 50 Liverpool Street Tel: +44 (0)20 7487 9570 London Email: [email protected] EC2M 7PY Web: www.europe.uli.org United Kingdom iii | Building the Innovation Economy | Case study: Tel Aviv Acknowledgements This case study has been developed through a literature review of available academic scholarship, public and private research reports, and media publications. This effort has been supported by interviews with public officials, start-up space managers, and academic experts. We offer our thanks to the following individuals for their insight and advice in the development of this case study: Gary Ghozlan, Chairman of the Industrial Zone, Herzliya Municipality Tair Kowalsky, SigmaLabs Accelerator Manager, Tel Aviv Gideon Schmerling, Director of Media & Communications of the Municipality of Tel Aviv-Yafo Benjamin Singer, Director, WeWork Israel Efrat Tolkowsky, CEO, Gazit-Globe Real Estate Institute, IDC Herzliya The authors wish to thank the following for their advice, ideas and input: Lisette Van Doorn, CEO, ULI Europe Dr Elizabeth Rapoport, Content Director, ULI Europe Authors Professor Greg Clark, Senior Fellow at ULI Europe Dr Tim Moonen, Director of Intelligence at The Business of Cities Ltd Jonathan Couturier, Research Fellow, The Business of Cities Ltd iv | Building the Innovation Economy | Case study: Tel Aviv Contents Executive summary 1 1. Tel Aviv’s innovation ecosystem 2 2. The role played by investors, corporate stakeholders, and the municipal 5 government in Tel Aviv’s innovation economy 3. Land use, real estate, and placemaking in Tel Aviv 8 4. The fostering of an innovation brand in Tel Aviv 9 5. Conclusion 10 Notes 11 1 | Building the Innovation Economy | Case study: Tel Aviv Executive summary Many cities around the world are seeking an Tel Aviv has developed one of the most The central municipality of Tel Aviv has invested enhanced presence of the emerging innovation advanced innovation ecosystems in the in all-round quality of place over the past 25 economy in order to grow a new base of jobs, world, building on its history of immigration years, especially along the waterfront and in adjust to industrial change, or to leverage and entrepreneurship and leveraging its other areas to re-activate the public realm. In technology to address sustainability, resilience, specialised IT knowledge. The synergies between recent years it has actively courted technology and social cohesion. In the current cycle, cities large tech companies, American venture capital, firms and encouraged innovation activity to are focusing investment and promotion on new startup firms, and experienced mentors helped locate in industrial spaces in southern Tel Aviv. ‘innovation districts’, locations within the city Tel Aviv to become a major technology exporter. It has also supplied affordable municipal spaces where the innovation economy may develop to fledging businesses and linked them to city and expand, although not all cities have the Tel Aviv is distinctive compared with many programmes and resources. endowment, ecosystem or expertise to host European cities in that its most popular suburban them. locations from the first cycle of its innovation Tel Aviv municipality has sustained the city’s economy retain their desirability today. Chief positioning as an innovation capital for nearly As part of a collaboration between ULI and the among these is the coastal suburb of Herzliya, an three decades. Through initiatives such as City of Rotterdam, this case study of Munich upmarket residential location that has become a Non-Stop City, and more recently Tel Aviv was developed in order to review and explore the hotspot for innovative companies and venture Global and Startup City, the city has ways in which cities can foster an innovation capital over the last 30 years. Real estate communicated a strong sense of the city’s core ecosystem and build a long-term strategy to companies have played a catalytic role to build values and DNA that align with the innovation establish themselves as centres for innovation. critical mass and have successfully adapted to story. Tel Aviv’s success at telling the world its Tel Aviv was selected as a case study city, along the space needs of the market over time. story is matched by improvements in quality of with Munich and San Diego, because it has Herzliya’s municipal government has been an place, experience and business friendliness, all experienced a full cycle of innovation system active player in incentivising real estate of which builds demand for the different growth over the last 30 years and has built a entrepreneurs and tenants, zoning for innovation locations in the city and wider region. distinctive innovation brand. densification and later for mixed use, and investing in accelerators. Three overriding research questions informed this case study: Areas of successful leadership in Tel Aviv’s innovation economy and district development • What roles are played by city governments, landowners and investors in building an Strategy Tactics innovation economy, creating new innovation districts, and sustaining them over time? Develop a Strategy as Optimise Land Use and Placemaking a City of Innovation Support district development with flexibility, responding to market preferences • How does land use, placemaking and real Recognise and leverage the estate help support the innovation economy, regional innovation context Use infrastructure and land as platform for experimentation and how can it contribute to making a city Prioritise attention on Employ placemaking to achieve critical mass of real estate more liveable and attractive? citywide ecosystem and commercial activity, and authentic sense of place development and networking • How does branding, communication and Build the City’s Innovation Brand promotion of the city’s innovation focus help Grow and support existing innovation firms and activity Leverage city DNA and expertise in promoting innovation build identity and successfully attract Develop innovation brand as a broad identity and shared investors and businesses? Manage externalities that arise narrative Adapt through the cycles Invite others to feel and experience the innovation culture 2 | Building the Innovation Economy | Case study: Tel Aviv 1. Tel Aviv’s innovation ecosystem With a metropolitan population of three million • Intel’s arrival in Israel in 1974 led to its The spatial character of people, Tel Aviv is one of the most gradual emergence into the country’s largest Tel Aviv’s innovation economy innovation-led and globally connected cities in single tech employer across six development Tel Aviv is distinctive compared with many the Middle East. Israel’s business capital is rated centres and fabrication plants, several of European cities in that many of its most popular the fifth most dynamic startup ecosystem in the which were 50 to 80 km from Tel Aviv suburban locations from the first cycle of its world and the highest outside the United States, innovation economy retain their desirability and it is currently rated the 19th city for • The effective combination of venture capital today. commercial innovation in the major international firms, senior mentors, and startup companies index by 2thinknow Consulting. 1 set up by ex-Intel employees, was essential to Tel Aviv becoming a major