Keeping Kendall Sq. open for start ups

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April 10, 2013, 8:02 pm
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(NECN: Peter Howe, Cambridge, Mass.) On the edge of the Massachusetts Institute of Technology, home to hundreds of successfully launched start up companies over the years, "Kendall Square" has become known globally as a synonym for innovation.
 
And hoping to tap into that culture and spirit of innovation, in recent years giant companies like Microsoft, Google, Amazon and soon Facebook -- and a building boom of biotechnology and life sciences companies -- have flocked to Kendall Square, devouring office space and driving up rents to the point many are worried they could, perversely, strangle and drive out what makes Kendall Square so extraordinary.
 
"Absolutely, it's a real threat: As big companies move in, they price out small companies," says Trevor Stricker, who's just launched his third start up, a mobile gaming business called Disco Pixel, after selling his last business in San Francisco and seeking out new opportunities and talent at this end of Cambridge.

Stricker's company is based in what looks and feels like the very picture of innovation: Intrepid Labs, a fourth-floor start up space off Third Street where very small companies -- often just one entrepreneur -- rent desks, WiFi and access to common space and amenities for $500 per person per month. He's among 26 companies and 105 people now working out of the red-brick former factory space.
 
All around Intrepid, however, are giant towers under construction for much bigger companies willing to pay for top-dollar office and lab space.

"The ironic thing is the thing that made the big companies attracted to this area is the environment that the small companies created," Stricker said. "These large companies are attracted here because it's a frenetic, interesting space, and once they all flock here, they could chase us away. They could make it impossible for us to continue here."
 
But now Cambridge is taking first in the country action, with the City Council moving a new zoning code requiring that 5 percent of space in new Kendall Square towers must be reserved for small-company start up space, including spaces much like Intrepid Labs. MIT has adopted the code -- committing to another 5 percent of space for second-stage startups that have gone to, say, 10 or 20 employees -- and the city is moving to add the 5 percent start up-space requirement in five more districts around Kendall Square as new projects come in for city approval. Typically no one company could take more than 2,000 square feet of space within an overall zone of startup space. To allay concerns among developers about being forced to turn what could be high-priced office or lab space into lower-priced start up/incubator space, only 50 percent of the start up space they build would be counted against the maximum amount of space city zoning would let them build -- so that, in effect, developers are allowed to build up to 2.5 percent larger buildings than zoning now allows, with the requirement 5 percent of the building's total space has to go to start ups.
 
"Kendall Square is the most innovative square mile on planet Earth, and the challenge we face is that it is being loved to death," says Assistant City Manager Brian Murphy, who oversees economic development for the city.
 
Leland Cheung, a venture capitalist turned city councilor, has spearheaded the zoning changes, saying they're all about "how do we make sure we have the right mix, the right balance, between small start up companies and the larger companies that they want to grow into? ... Success can also be a curse. We've attracted companies like Microsoft, Google, Amazon, Facebook, and these are companies that are not just taking up small footprints, they're taking up entire buildings."
 
"We want to make sure," Cheung said, "that as we go forward and we continue to attract large, innovative companies that we're setting aside a space for the entrepreneurs that have made Kendall Square what it is today."
 
The 5 percent plan sounds to Chris Kasdorf, the manager and "mayor" of Intrepid Labs, like "it's going to be great for the city. It's going to be great for start ups. It's going to keep them and enable them to stay here."
 
With videographer Scott Wholley

Tags: massachusetts, Peter Howe, Cambridge, Kendall Square, start up companies
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