"Cambridge’s continued business growth is good news, but with scale comes complexity, making continued investment evermore important to the city’s evolution."

The most recent data from Cambridge University’s Centre for Business Research shows year-on-year growth of more than 24,000 Cambridge based companies over the 12 months to April 2017. The latest figures demonstrate the increasing intensity of knowledge clusters across the city and on the edge of centre science parks.

These clusters have been both planned and also naturally evolved, offering existing and prospective businesses economies of scale. Small companies benefit from sector infrastructure, such as academic research, specialist business services or finance, as well as the collective expertise and talent the agglomeration offers.

These economies of scale bring with them productivity gains, a key characteristic of global clusters. Cambridge Ahead’s latest figures show a sharp increase in business growth over the last 12 months, with global turnover expanding 14.4% and global employment growth of 9.2%. The expansion of turnover ahead of jobs suggests productivity gains across the city’s clusters.

The productivity gains achieved from evolution and expansion of specialist clusters across Cambridge is seen in the city’s office market. Rents have grown close to 10% over the last two years,  driven by a shortage of Grade A office and lab space. 

This does, of course, question the viability of the location for cost-sensitive start-up companies. However, the city continues to attract a steady stream of new businesses of all scales. Requirements for office and lab space below 10k sq ft accounted for two-thirds of requirements in 2017 (Bidwells). The reason for this is provided by the latest TechNation report (May 2018) which notes Cambridge’s academic excellence and access to talent as key strengths for businesses in the tech sector.

Professor Porter’s research (Harvard Business School) on clusters illustrates the value of co-location in the example of California's Silicon Valley. Start-ups and smaller businesses continued to gather in the area despite the high cost of business space (and danger of earthquakes). While Cambridge may not have earthquakes to contend with, the cost of business space is relevant and not unimportant. There will be a threshold at which other global clusters, whether Silicon Valley, MIT/Harvard or indeed in emerging clusters in India perhaps, will hold comparative appeal.

The importance of long-term planning for the continued evolution of the Cambridge, or indeed a wider Oxbridge high growth cluster, is evident. In history, there are examples of industry clusters losing momentum and influence, oftentimes as a result of failure of regional innovation planning and infrastructure. With scale comes ever more complex issues. Investors, whether the university colleges or institutional funds, in combination with the city authorities and indeed national government as the gatekeeper of overseas talent recruitment, will be increasingly important to cluster evolution.

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