Downtown Palo Alto, located in the heart of Silicon Valley and adjacent to Stanford University, is home to an unassuming two-story building at 165 University Avenue that was once home to Google, PayPal, and Logitech when they were small companies.  Music-recognition service company Shazam recently had their Silicon Valley headquarters in this building.

Media, such as the San Jose Mercury News and The Guardian (UK), have referred to the building as “lucky”, but that word ignores the elements that make this place economically successful.  165 University Avenue is located near a world-class research university, prospective employees, venture capitalists, and similar companies.  The building has housed small firms with creative, passionate, and educated people, likely subsisting on limited sleep and a lot of caffeine.  These people learn from each other, work through problems together, and compete with each other.  The building owner has nurtured tenants by carefully reviewing companies that want to rent and investing in many of them.

Similar circumstances have been replayed in different times and places: Jonas Salk’s team’s discovery of the polio vaccine in the basement of the Pittsburgh Municipal Hospital for Contagious Diseases, the artists, musicians, and writers inhabiting New York City’s Chelsea Hotel, and the 35 years of Saturday Night Live cast members working on the eighth and ninth floors of 30 Rockefeller Center.  Each situation illustrates the importance of what urban economist Edward Glaeser calls, in this book Triumph of the City, the “virtues of great pre- and post-industrial cities: competition, connection, and human capital”.

Planning touches each one of these three virtues.  Competition is made possible through gathering individuals and small firms with similar goals.  Zoning, investment in infrastructure, and expedited development review can support the clustering of certain businesses.  Since the City of Palo Alto has not approved large office spaces in Downtown Palo Alto in the past, growing companies eventually move on to other locations and make room for new tech businesses.  Human capital is supported by formal and informal education.  Planners are critical to ensuring that schools have adequate sites and reasonable class sizes, and that teachers, college faculty, and students have affordable housing.

Connection, though, is where planners and urban designers have the strongest role, specifically in developing pedestrian-friendly environments with places to meet.  The benefit of a pedestrian-friendly downtown to economic development is that interaction between people is not limited to one building, but anywhere within walking distance.  Facebook’s first office space and Pinterest’s headquarters were located along University Avenue.  Downtown hotels provide spaces tailored for tech industry visitors to meet and work.  Cafes also serve as meeting and work places for those in the industry.

University Avenue at Ramona Street, Palo Alto (Finlay McWalter, Wikimedia Commons)

New York’s Madison Avenue (advertising), San Francisco’s Financial District, Chicago’s Magnificent Mile (retail), and New Orleans’ French Quarter (dining and nightlife) may serve as more famous examples of urban industry clusters, but these clusters also occur in smaller cities, such as art in Downtown Laguna Beach (CA), antiques in Downtown Snohomish (WA), and tech in Downtown Palo Alto.  The virtues of competition, connection, and human capital are present in each one of these places.

Thanks to Aaron Aknin of the City of Palo Alto with his assistance for this entry.  His blog with Tony Rozzi is called Run City Run.