Innovation Drives Place, and Place Drives Innovation: How Global Growth Clusters Are Dispersing

A multi-tier map of innovation cities is redrawing the relationship between talent, capital and the built environment, with consequences for investors, policymakers and corporate location strategy.

Executive Summary

Innovation is no longer synonymous with a small number of technology capitals. Research published by JLL in its Innovation Geographies 2026 insight describes a widening geography of innovation, organised into a multi-tier structure of globally significant cities, reinforcing secondary hubs, emerging talent magnets and specialised production centres. The San Francisco Bay Area retains the deepest concentration of capital and talent, complemented by eight anchor markets — Beijing, Boston, London, New York, Paris, Seoul, Singapore and Tokyo — each with distinct international specialisms. Together, these nine locations accounted for $12.8 trillion in output in 2025 and attracted close to $770 billion in venture capital funding and $78 billion in foreign direct investment over the preceding three years.

Growth, however, is increasingly registering elsewhere. Reinforcer cities, a group of 18 urban areas with nearly 91 million residents, recorded population inflows 3.8 times higher than the Bay Area and anchor cities. Welcomer markets posted a net migration rate of 5.2% over three years. Meanwhile, the supply of institutional-quality workspace has not kept pace: only 11% of global office space was built since 2020, falling to roughly 9% in the Bay Area and anchor cities. New-build central business district vacancy sits at 0.9% in Paris and 1.2% in London. The mismatch is reshaping rent structures, investment strategies and urban policy priorities across both mature and emerging markets.

Introduction

For much of the past two decades, the geography of innovation was relatively legible. A limited set of metropolitan areas captured the majority of venture funding, skilled migration and corporate expansion, and property markets in those cities responded accordingly. That model is being replaced by something more diffuse and more complex.

JLL's Innovation Geographies 2026 frames the change as a two-way relationship: innovation shapes places, and places increasingly shape where innovation can take root. The distinction matters for governments designing industrial and urban policy, for companies deciding where to establish research, engineering and commercial operations, and for institutional investors assessing where long-term demand for space will be concentrated.

Background

In the 2000s and through much of the 2010s, innovation was frequently treated as broadly equivalent to the technology industry. That framing has become incomplete. Innovation now encompasses talent, companies and institutions driving continuous reinvention across finance, insurance, healthcare, media, entertainment, manufacturing and education.

The pandemic accelerated a wave of migration towards more affordable, lifestyle-oriented cities, a trend that has cooled somewhat but has not reversed. The consequence is that the boundary between established and emerging innovation markets has blurred. Rather than driving broad corporate footprint expansion in a handful of favoured districts, innovation is now embedded in a slower, more granular process of urban refinement, as working and living patterns continue to evolve.

Main Analysis

A multi-tier system replaces a single hierarchy

The Bay Area remains the reference point for capital and talent depth, but it now sits within a wider structure. Eight anchor markets — Beijing, Boston, London, New York, Paris, Seoul, Singapore and Tokyo — operate at comparable scale in global terms, each with internationally recognised specialisations.

Below them, reinforcer markets have moved from secondary status to a more central position in the global ecosystem. The group comprises 18 cities with nearly 91 million residents and spans megacities such as Los Angeles and Shanghai, technology centres including Austin, Berlin, Seattle and Tel Aviv, advanced manufacturing hubs such as Munich and San Diego, lifestyle destinations including Amsterdam, Copenhagen, Helsinki, Stockholm and Zurich, university cities such as Cambridge and Raleigh, and business centres including Sydney, Toronto and Washington, DC. Their common characteristic is demographic momentum: net migration has run at 3.8 times the level recorded across the Bay Area and anchor cities.

Welcomers represent the fastest-growing concentration of talent, with a net migration rate of 5.2% over three years. These markets typically attract residents seeking lower housing costs, a distinct cultural profile or favourable tax treatment, and include Adelaide, Brisbane, Bordeaux, Calgary, Bristol, Nashville, Valencia, Orlando and Tampa. Their innovation credentials are less established, though specific clusters — Bristol in data analytics, for example — are gaining prominence.

A separate category covers production-intensive locations. Engineer markets are defined by sustained investment in advanced hardware, as in Taipei, Phoenix and Shenzhen; software, as in Bengaluru; industrial engineering, as in Stuttgart, Detroit and Hangzhou; and energy, as in Houston. Motor markets display similar patterns at smaller scale, including autonomous vehicle activity in Birmingham in the United Kingdom and global capability centres in Hyderabad, Delhi and Chennai.

Connector cities — Chicago, Dallas, Frankfurt, Hong Kong and Madrid among them — bridge output and talent, combining large skilled workforces, multinational headquarters and extensive international connectivity. Vanguard markets represent the next tier, a disparate group including Ahmedabad, Indianapolis, Las Vegas, Mexico City, Porto and Sao Paulo, positioned to benefit from spillover effects and affordability pressures.

Place quality becomes the deciding factor

As innovation spreads across more cities at greater scale, place-based attributes have become central to attracting both talent and corporate occupiers. Location decisions are increasingly granular, assessed not only at city or workplace level but at the level of the built environment. Micro-locations that combine a strong sense of place, amenity provision and accessibility stand out, particularly in slower-growth established markets with structural vacancy and limited net corporate expansion.

The relationship between innovation and place is visible in emerging precincts. Tech Square in Midtown Atlanta functions as an educational and research anchor for computing technology within a densifying urban core. Jurong Lake District in Singapore and San Tin in Hong Kong illustrate urban extensions oriented towards advanced manufacturing and research and development, with greater emphasis on sustainability, mixed use, open space and design than earlier generations of development. In Berlin, Siemensstadt Square is converting a 76-hectare former industrial site into a mixed-use neighbourhood focused on artificial intelligence and digital mobility. In South Korea, the Seoul suburb of Yongin is being developed around a semiconductor cluster spanning 4.2 square kilometres with more than $8.4 billion in investment.

Workspace supply lags demand

One of the most consequential structural gaps identified in the research concerns the availability of institutional-quality workspace. Only 11% of global office space has been completed since 2020, and the share falls to approximately 9% across the Bay Area and anchor cities. Academic, connector and welcomer markets also report single-digit shares of space built over the same period.

The principal exception is foreign direct investment-driven construction in India and China. In Hyderabad, Bengaluru, Guangzhou, Pune and Shanghai, more than 30% of core supply was delivered after 2020. Demand-led building has helped Indian markets maintain comparatively low vacancy: office vacancy in Bengaluru fell to 10.5% after peaking at 13.9% in 2024.

Occupancy patterns diverge by category. Motor and engineer markets recorded net occupancy increases of 13.2% and 4.0% respectively relative to pre-pandemic levels, while several mature categories remain on aggregate 1.0% to 2.0% below previous highs. The resulting competition for a limited stock of desirable space has pushed prime rents above $1,280 per square metre on average in anchor cities, with reinforcers reaching up to $837 per square metre. In vanguard cities, top-end rents average approximately $324 per square metre.

International Impact

The dispersion of innovation carries direct consequences for the global economy and for cross-border business strategy. Companies that once concentrated operations in a small number of hubs now face a wider set of viable locations, each with different cost structures, talent pools, connectivity and regulatory environments. That complexity increases the value of rigorous location analysis and long-term lease planning.

For international trade and investment, the trend reinforces the importance of foreign direct investment as a channel through which production capacity, research capability and skilled employment are distributed. The concentration of construction activity in Indian and Chinese markets illustrates how investment flows can translate into physical capacity relatively quickly, while more mature markets confront constraints rooted in planning, land availability and construction capacity.

Technology competition is also affected. Semiconductor manufacturing, artificial intelligence infrastructure and advanced hardware production require co-location of specialised institutions, capital pools and improved connectivity. The emergence of dedicated districts in Germany, South Korea, Singapore and Hong Kong reflects an effort by governments to align industrial policy with urban development. Energy security, grid capacity and climate policy increasingly intersect with these decisions, since data-intensive industries impose substantial demands on power and water infrastructure.

At the level of global governance, the shift raises questions about how regional cooperation and multilateral institutions support infrastructure financing, skills mobility and regulatory coordination across borders. Cities competing for mobile talent must also weigh housing affordability, migration policy and public service capacity, issues that now sit at the centre of urban economic strategy.

Strategic Perspectives

For policymakers, the findings suggest that place quality is a form of economic infrastructure. Land-use efficiency, transport connectivity, housing supply and the density of non-residential activity collectively determine whether a city can convert innovation activity into sustained growth. Urban regeneration and mixed-use development are increasingly framed as instruments of competitiveness rather than purely planning matters.

For corporate occupiers, the practical implication is that decision timelines are compressing in tight markets. With prime vacancy in single digits in several anchor cities, tenants face fewer options and greater competition for suitable space, while flexibility and quality of environment weigh more heavily in site selection than headline cost alone.

For investors, the divergence in rents — from above $1,280 per square metre in anchor markets to roughly $324 in vanguard cities — signals that pricing power is concentrated where supply is most constrained. The undersupply described in the research extends beyond primary office space to ancillary housing and institutional assets, suggesting that investment opportunities may lie in supporting infrastructure as much as in flagship developments.

For governments in emerging markets, the opportunity lies in sequencing. Cities that combine deliberate precinct planning, reliable infrastructure and institutional anchors may capture activity that would previously have gravitated to established hubs, but only where execution capacity and financing are available.

Future Outlook

Over the next three to ten years, the geography of innovation is likely to remain in flux. Artificial intelligence investment is expected to influence location decisions directly, both through demand for specialised facilities and through its effect on the productivity and spatial requirements of existing industries. The co-location of AI capability with deep capital markets and research institutions is likely to reinforce a limited number of clusters while creating new specialisations elsewhere.

Global economic conditions will shape the pace of change. Higher financing costs and uncertain growth prospects could slow speculative development, widening the gap between cities able to deliver premium space and those that cannot. International trade patterns and supply chain reconfiguration will continue to influence where manufacturing, engineering and research capacity is located, particularly in semiconductors, clean energy equipment and advanced materials.

The energy transition and climate policy add a further dimension. Districts designed around sustainability requirements, grid capacity and mixed-use principles may prove more resilient to future regulatory and environmental pressures than conventional business parks. Digital transformation will allow more distributed forms of work, but evidence from the research suggests that physical proximity to institutions and capital remains decisive for high-value innovation activity.

Global governance and international cooperation will matter at the margins rather than in the aggregate. Mechanisms that support infrastructure finance, skills recognition and cross-border data and research collaboration can accelerate the formation of new clusters, while fragmentation in trade and technology rules could slow it.

Conclusion

Innovation is broadening its geographic footprint, but not evenly. Capital and talent depth remain concentrated in a small group of established cities, while demographic and corporate momentum is shifting towards a larger set of reinforcer, welcomer and specialised production markets. The determining factor is increasingly place itself: the quality, connectivity and density of the built environment, and the capacity of cities to supply workspace, housing and infrastructure at a pace that matches demand.

For governments, companies and investors, the implication is that long-term competitiveness will depend less on headline positioning and more on execution — how effectively cities convert innovation activity into durable economic capacity, and how credibly they can accommodate the people and businesses that follow.

Key Takeaways

• Innovation has dispersed into a multi-tier system of cities rather than remaining concentrated in a single dominant hub.
• The Bay Area and eight anchor markets generated $12.8 trillion in output in 2025 and attracted nearly $770 billion in venture capital and $78 billion in FDI over three years.
• Reinforcer cities recorded net migration 3.8 times higher than the Bay Area and anchor cities; welcomer markets posted a 5.2% net migration rate over three years.
• Only 11% of global office space has been built since 2020, falling to about 9% in anchor markets, leaving prime vacancy at 0.9% in Paris and 1.2% in London.
• Prime rents average above $1,280 per square metre in anchor cities, up to $837 in reinforcers and about $324 in vanguard markets.
• India and China stand out for construction activity, with more than 30% of core supply in Hyderabad, Bengaluru, Guangzhou, Pune and Shanghai delivered since 2020.
• Place-based precincts focused on AI, semiconductors and mixed-use development are emerging in Berlin, Seoul, Singapore, Hong Kong and Atlanta.
• Long-term competitiveness will depend on how effectively cities align land use, infrastructure, housing and talent policy with innovation demand.

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Sources

• JLL, "Innovation drives place, and place drives innovation — Innovation Geographies 2026," 31 March 2026: https://www.jll.com/en-us/insights/innovation-geographies