CLUSTERING AND
LOCATION CHOICE:
The Creative Economy as a Tool for Strategic Planning
SCOTT ABBOTT
MASTER THESIS
URBAN & REGIONAL PLANNING
UNIVERSITY OF AMSTERDAM
Student #: 12210374
Prepared For: Prof. Tuna Tasan-Kok Submitted: June 11, 2019
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Abstract
Historically, the audiovisual industry (film, television programs, media support business) in the Netherlands was focused in the cities of Amsterdam and Hilversum. However, in 2007, the redevelopment of Schiecentrale, a former powerhouse located southwest of Rotterdam’s city center was completed. This location was planned to become the center of the audiovisual industry in Rotterdam: the municipality wanted to cluster audiovisual firms. In conjunction with active marketing by the Rotterdam City Development Corporation (RCDC), the aspiration was to create a leading media hub. The purpose of this thesis is to determine how policy intervention attracted such industries and how public and private actors manage this creativity. This thesis combines literature on economic geography with literature on cultural industries and clustering. The impact and influence of policy interventions on various agglomeration externalities is also investigated and analyzed. The thesis proceeds by analyzing several basic forces behind
geographic clustering, including the positive externalities experienced by co-locating with similar firms (localization); benefits from inter-industry relationships (Jacobs’ externalities); and gains attributed to city living (Urbanization). Creative individuals, and their desire to locate in areas with diversity, cultural attractions and tolerance function somewhat differently than creative firms. Firms want to maximize profit at the lowest cost, while people are motivated by quality of life. From my analysis it appears creative firms put more onus on localization and urbanization externalities when determining location; an affinity to locate in areas with specialized workers and large talent pools is certainly a consideration for firms. Creative industries employ members of the ‘creative class’, who generally reside in large, diverse cities.
Key Words: Creative Cluster/Schiecentrale/Agglomeration Externalities/Audiovisual/Porter’s
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Acknowledgments
This thesis would not have been possible without the support of Prof. Tuna Tasan-Kok throughout the research process. Thank you for opening my eyes to the world of Economic Geography.
Also, a special thanks to Dr. Arie Romein and Dr. Jan Jacob Trip from TU Delft for sharing their invaluable knowledge of creative clusters in Rotterdam and for sending elusive policy documents. I would also like to express my gratitude to all the respondents from the Schiecentrale audiovisual cluster. Thank you for your candor and conviviality.
I declare that this thesis has been completed with the academic and professional references in the bibliography or appendices.
Scott Abbott
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Contents
Tables & Figures ………. 4
1 Introduction ……….………..….………. 5 Research Question ……….…..………... 6 Methodology Operationalization ……….………. 7 Conceptual Framework ………..………….…… 11 Ethics ………. 12 2 Theoretical Framework ………..……….. 12
Porters Diamond Model ………..……….. 14
Marshallian (Localization) ……… 16 Urbanization ……… 16 Jacobs’ ……….……….. 17 Spinoff Dynamics ……….……… 17 Cluster Policy ………. 18 Creative Clusters ……….. 19 Creative Space ……….……… 19 3 Context: Schiecentrale ………..……… 20 4 Analysis ……….……… 21 Policy Analysis ……… 22 Localization Externalities ……….. 27 Physical Space ………..………. 29 Views on Municipality ………. 29 Urbanization Externality ……… 30 Jacobs’ Externalities ……… 32 Spinoff Dynamics ………. 32 5 Conclusion ………..……….………. 33 Limitations ………..……….. 34 Policy Relevance ………. 35 Future Research ………..……….. 36 References ………. 37 Notes ………..……….……….. 40 Appendices ……… 41
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Tables & Figures
Cover image: Arial view of Rotterdam. Source: Mei Architects & Planners
Table 1. Interview List ……… 8
Table 2. Data Matrix ………..………..…… 10
Table 3. Categories of workers in creative industries ………..…… 13
Table 4. Local trends and policy issues in Rotterdam by key element of the creative city.………... 26
Figure 1. Location of Schiecentrale within Rotterdam ……….………...… 7
Figure 2. Overview of conceptual framework ……….…….……. 11
Figure 3. Porter’s Diamond Model ……….… 15
Figure 4. Detail of Lloydkwartier showing location of Schiecentrale ……….…….… 21
Figure 5. Photographs of Schiecentrale Audiovisual Cluster ………..….. 21
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“I still think geography is the most under researched area. All these beliefs that have come about, I don’t think they are well founded, so I think there are great
opportunities there.”
—interview with Steve Klepper recorded by Serguey Braguinsky on May 20, 2013
Introduction
The literature on clusters is considerable. However, there is little research on how agglomeration externalities effect the location choice of creative firms and the role in which top-down policy interventions play in fostering creative industries. This thesis will argue that because creative clusters fluctuate between radical and novel innovation and employ workers from the ‘creative class’, they behave differently than traditional industrial zones. “Local authorities can encourage creative industries and ensure their presence through planning policies and projects (Aubrey et al., 2014).” Empirical cluster studies on urban regions are scarce. It is my belief that more in-depth research is needed to determine what conditions make firms choose locations; in this instance Rotterdam, and if the qualities Rotterdam possesses can be exploited to create a viable
audiovisual sector. I intend to focus on the causal relationship between policy interventions and location choice. By integrating Florida and Landry’s observation of the tendency of creatives to live in cities with a discussion on the dynamics of cultural industries, and industrial
agglomeration theories, I explain why creative firms choose to cluster (Cooke et al., 2013). Agglomeration externalities are the “benefits a firm derives from being located close to other economic actors (Neffke et al., 2011).” De Vaan et al. (2013) claims that spatial clustering occurs because of localization externalities that originate from the co-location of similar companies. However, there are several types of agglomeration externalities that can impact a firm’s location choice: Marshall (localization), Jacobs’ and Urbanization.
My research on the locational preferences of audiovisual industries in Rotterdam will start with an exhaustive literature review on the topics of urban policy, creative industries, economic geography and cluster theory. Specifically, I intend to reflect on current theories that attempt to explain why cultural industries tend to cluster. This thesis adds to the discourse of creative industries through applying concepts from economic geography.
Historically, industrial location theory – Fordism, posited that factories located in clusters to gain economic benefits through economies of scale. With post-Fordism came sub-contraction and companies were networked; and located in the same region. However, with the introduction of internet and open communication technology, firm locations were dispersed, and clusters lost their importance (A. Romein, personal communication, May 16, 2019).
However, creative industries are different than traditional industrial sectors that spread production throughout the world. Creative industries seem to have certain patterns that go against this historical trajectory. De Vaan et al., (2013) states that, “project-based industries have very specific features that render them different from the manufacturing logic on which much theorizing in economic geography has been based.” Generally, creative industries are predisposed to locate in urban regions (Van den Berg et al., 2017). The reasoning behind this is that actions that spur innovation are generally linked with city resources like quality of life, urban
6 infrastructure, cultural amenities and local production (Ibid). Thus, creative firms, who employ members of the creative class must consider ‘soft’ factors when determining location. The location of creative industries appears to rely on several externalities that co-exist to create an ideal work environment.
Many clusters are intentionally created and managed using a top-down approach by policy makers and governments (Jong, 2012). This is a very common occurrence due to the economic gains a creative cluster can bring to a city. Jong (2012) states that their presence is "beneficial not just for their regeneration effects or their direct economic outputs, but also for their stimulation of a wider ecosystem or creative milieu.” Creative clusters can be managed by the government, private developers or a combination of both. “Cultural-led planning can be driven by creative production-oriented strategies as much as cultural consumption ones (Aubrey et al., 2014).” Liu (2015) states that, “the wide cultivation of creative industries in urban development scheme, inevitably, presents urban government the issue of how to arrange land space to accommodate creative industries in an efficient and adaptive way.”
Research Question
To what extent does policy intervention affect the location choice of audiovisual firms?
The impact and influence of policy interventions on agglomeration externalities was investigated and analyzed in this thesis. I examined whether planning policy influenced where firms located and how the presence of agglomeration externalities interacted with these policy instruments. In addition to this main research question, there were several sub-research questions I answered in the pursuit of this research.
Sub-questions:
• What factors influence a creative firm’s decision to locate to an area or cluster? • What was the initial motive of those companies to move there?
• Which agglomeration externalities were considered when choosing location? • To what extent did policy incentives support this move?
• What type of planning decisions lead to creative clusters, and what were the main political discussions behind it?
• Were there any other supportive mechanisms?
• What factors affect the development of (potential) growth clusters? • Do creative clusters function as networks, and if so, are they successful?
It is generally recognized that audiovisual production is a growth sector: the European Union recently reported that the audiovisual industry has a great potential for growth and job creation (European Commission, 2018). If we understand the locational preferences of firms, urban planners and policy makers can create strategic plans and policies. With this knowledge, we can determine if polices can be improved.
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Methodology Operationalization
In order to answer my research question, I conducted a qualitative case study that focused on Schiecentrale, an audiovisual cluster in Rotterdam. Schiecentrale is in the Lloydkwartier district of Rotterdam. See figure 1.
Figure 1: Location of Schiecentrale within Rotterdam: Source: Google Earth
I used two kinds of methods when gathering research. First, I completed a case study analysis based on semi-structured interviews. (Yin, 2008: 2) states that “the case study contributes
uniquely to our knowledge of individual, organizational, social, and political phenomena.” In this instance, the locational preferences of creative industries in Rotterdam. “The case study’s unique strength is its ability to deal with a full variety of evidence–documents, artifacts, interviews, and observations–beyond what might be available in the conventional historical study (Yin, 2008: 6.).” Thus, the case study can be viewed as an across-the-board research strategy.
Secondly, I completed a thorough policy analysis of planning documents created by the City of Rotterdam. See Notes. The documents contained broad themes which included:
• The rebranding of Rotterdam as knowledge-based • Regeneration of industrial zones
• Facilitating the growth of creative industries
• Using the creating economy as a tool for strategic planning • Generating buzz for cultural industries
• Creating growth in the audiovisual sector
The media cluster in Rotterdam is a critical case where the city is creating policy and actively re-branding itself as ‘knowledge based’ to entice creative industries to settle, in order to line its
8 coffers. The Schiecentrale case will give me an improved understanding of the conditions in which my research question can be properly answered.
I used a qualitative approach when researching my thesis topic. A great deal of research
concerning creative industries and creative clusters has used the qualitative research approach. For example, Fromhold-Eisebith & Eisebith (2005) used this approach when studying creative clusters and “conducted six semi-structured interviews with cluster coordinators, representatives of research/education and regional economic promotion organizations and seventeen semi-standardized personal interviews with cluster member firms”. Bryman (2012: 69) states that “qualitative research predominantly emphasizes an inductive approach to the relationship between theory and research, in which the emphasis is placed on the generation of theories (Bryman, 2012).”
According to Yin (2008: 18), “the unit of analysis is related to what the actual ‘case’ is.” In this research project, the units of analysis are; Rotterdam policy documents; audiovisual firms located in Schiecentrale; and academic experts.
The research question has been operationalized in this investigation through the analysis of policy documents produced by the City of Rotterdam. This is to understand the active role government played in creating clusters and enticing creative industries to locate in Schiecentrale. Qualitative data collection also included semi-structured interviews with:
1. 5 audiovisual firms located in Schiecentrale
2. Professor from TU Delft – Architecture and the Built Environment
3. Academic Researcher from TU Delft – Architecture and the Built Environment 4. Dudok Groep - current owner of Schiecentrale
The table below lists the respondents and their respective organizations.
Respondent Organization Representative Location
1 Video Production Manager Rotterdam 2 Video Production Manager Rotterdam 3 Animation Production Graphic Designer Rotterdam
4 Camera Rental Owner Rotterdam
5 Creative Digital Agency Manager Rotterdam 6 Developer Account Manager Dordrecht
7 TU Delft Academic Delft
8 TU Delft Academic Delft
Table 1. List of Interviewees, Source: Author (2019)
9 “A research method is simply a technique for collecting data. It can involve a specific instrument, such as a self-completion questionnaire or a structured interview schedule, or participant
observation whereby the researcher listens to and watches others (Bryman, 2012: 222)”. The interview is used extensively in qualitative research and is often used when researching creative clusters. I performed semi-structured interviews, as this practice allowed me to bring up topics that were relevant to my research questions while still allowing the interviewee to make their stance clear. The semi-structured interviews were carried out using a topic list. This topic list included the core concepts contained in my theoretical and conceptual frameworks. The topic list also helped keep my interviews focused and purposeful.
I asked open questions for all interviews. Bryman (2012: 247) states that the advantages of this type of questioning are: “respondents can answer in their own terms; they are not forced to answer in the same terms as those foisted on them by the response choices; and they allow unusual responses to be derived.; they are useful for exploring new areas or ones in which the researcher has limited knowledge.”
In order to obtain interviews with firms located in Schiecentrale, I first compiled a list of all companies located in the cluster and briefly researched their business. See Appendix C for a list of these firms. Emails were sent to all applicable companies and requests were made for
informational interviews. Once I determined viable candidates I followed up with further emails, telephone calls and site visits.
I was referred to the current owner of Schiecentrale by an Account Manager working in the Urban Development Department of the City of Rotterdam. After several emails, an interview was
conducted at Dudok Groep headquarters located in Dordrecht.
Two creative cluster researchers working at TU Delft were introduced to me by my thesis advisor. I had expressed interest in interviewing them after reading their co-authored book chapter,
Theory and practice of the creative city thesis: experiences from Amsterdam and Rotterdam,
Interviews were conducted in their respective offices located at TU Delft.
Industry professionals interviewed were experienced with management level positions. The Interviewees all had knowledge on why their firm chose to locate in Schiecentrale. I primarily asked companies located in Schiecentrale ‘why’ questions: Why are you here? What are the benefits for you?
After each semi-structured interview took place, I transcribed them in order to retain all relevant information. Data was extrapolated from these transcriptions by coding. Data was broken down into various broad themes found in my theoretical framework and then later focused into specific sub-themes. In order to analyze my data, I used thematic analysis. “A strategy for assisting a thematic analysis of qualitative data is provided by Framework, an approach that has been developed at the National Centre for Social Research in the UK. Framework is described as a ‘matrix-based method for ordering and synthesizing data’ (Ritchie et al. 2003: 219)”.
Once I transcribed my interviews I searched for the occurrence of certain words, phrases and themes. Bryman (2012) suggests that certain words suggest certain discourse. Fortunately, similar general themes were found in all interviews conducted at Schiecentrale. For example, words such
10 as cost, standard of living, and innovation could be grouped in themes explored in my theoretical framework. That is, the different type of agglomeration externalities that act as pull factors for creative industries. Thematic analysis is used as a way of identifying and analyzing themes in qualitative data.
Saturation was reached as no new themes were addressed in the interviews with creative industries.
An example of a data matrix from the thematic analysis is in table 2.
Respondent Initial Code (Core Theme)
Sub-Theme Critique
1 Localization Labor Market Pooling ‘There are experts in
the city. Be it from close design to schools specialized workers’
2 Urbanization Housing ‘Rotterdam is
dynamic, and rent is cheap’
3 Spinoff Dynamics Heritage ‘We are a new
start-up with no parent company’
Table 2. Data Matrix, Source: Author (2019)
Repetitions of themes were encountered throughout my interviews. Localization and Urbanization externalities were encountered mostly.
Before the interviews, I already had a historical narrative in my mind that enabled me to complete a path dependent analysis on why these companies clustered in Schiecentrale. I was interested to know what institutional factors were at play, new regulations that existed at the state level, and if top-down initiatives were used.
A thorough policy analysis was conducted of Rotterdam’s various plans in order to understand the current policies in place regarding creative industries and the branding of Rotterdam as a
knowledge-based city. Rotterdam facilitated the growth of creative clusters by focusing on building a reputation where creativity is nurtured.
Planners from the city Rotterdam were not interviewed due to the limits of the research process and the fact that policy documents existed that outlined the vision of policy makers. Although several employees from the municipality were contacted, none felt confident enough to discuss Schiecentrale at length.
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Conceptual Framework
Figure 2. Conceptual Framework, Source: Author (2019)
A causal relationship exists wherein specific policy interventions lead creative (audiovisual) industries to choose one location over another. The purpose of this thesis is to determine to what extent this occurs. In economic geography, location choice is thought to depend on various agglomeration externalities, that act as pull factors. These agglomeration externalities include Marshallian, Jacobs, and Urbanization externalities. Conversely, spinoff dynamic theory claims that clusters emerge despite agglomeration economies and are dependent on firm heritage. Porter’s model is generally refenced in policy literature and is used to explain the benefits arising from clustering. It may be thought of as neo-Marshallian although it doesn’t showcase scales. Although policy intervention takes precedent when audiovisual firms choose location, the
agglomeration externalities presented in my conceptual model were cited as ancillary pull factors in decision making. These agglomeration economies are essential for firms to prosper. Without their presence, firms would not benefit from location.
The conceptual model described above will be supported by Porters diamond model. His model shows the mechanism of how business clusters materialize by describing the relationship between input conditions and demand; which in turn affects a firm’s strategy.
This framework will be used to determine the pull factors companies consider when choosing locations.
12 Local Context: Does the city of Rotterdam encourage creative investment? Is there a strategy design for aligning creative industries? Is there a strong top-down development policy that encourages creative clusters? To what extent are these policies connected with the rebranding of Rotterdam as a knowledge-based city? Is there competition among locally based rivals? What are the tax conditions?
Demand Conditions: Is there a local demand for audiovisual enterprise in Rotterdam? Are Dutch/global film productions willing to work in Rotterdam. Is demand created through the anonymity of open spaces?
Factor Input Conditions: Does the proper physical and administrative infrastructure exist to attract specific firms? Does Rotterdam contain the proper natural, human and capital resources? Related and Supporting Industries: Does Rotterdam contain locally based suppliers and related competitive industries?
Ethics
This thesis was written using the ‘Dissertation Ethical Approval Guidelines’ set by the University of Amsterdam. All participants entered research freely and signed consent forms stating they understood what they were agreeing to. Consent forms gave as much information as possible about the potential research. See Appendix B. For consistency, I decided to make each interview anonymous and confidential. I was given written consent by several interviewees to use real names and job title but decided to remove these from my thesis for consistency and I anonymized everyone. All data was also stored in a secure matter.
Theoretical Framework
According to Landry (2007), dealing with the shift from manufacturing to creative and
knowledge-based industries “requires a re-assessment of the way cities operate in response to the emergence of neoliberalism and the emphasis on government downsizing and challenges to arts funding.” The location of creative clusters is increasingly being scrutinized by urban planners, policy makers and economists (Storper & Venables, 2004; Florida, 2002b). The enthusiasm is because economies of cities are becoming more diverse, with less importance being placed on tradition economic engines. Western cities are moving from a “production economy towards a knowledge economy” and more importance is being placed on innovation (Lavanga, 2006). In cities, the clustering of creative enterprises is taking place on a greater scale than it has in the past. Private and government involvement in the creation of these spaces is increasing due to benefits accrued through regeneration effects and subsequent increasing economic yields. Creative clusters can also stimulate innovation, which is essential in the new knowledge-based economy. Lavanga (2004) states that this increased investment in cultural planning is regarded by the municipality as a “tool to enhance and improve communities by creating economic returns.” Florida (2002) believes that the location preferences of creative individuals is mainly decided by ‘soft’ factors. Soft factors include city environment, cultural facilities and tolerance & openness. However, it is the purpose of this thesis to show that location preference is more complex, as it is
13 influenced by other factors such as leadership, policy interventions, infrastructure and cost of living.
“The concept of cultural planning becomes essential within such a framework, aiming at
overcoming the traditionally sectoral approach focused on the development of separate cultural sectors or forms (Lavanga, 2004).” Thus, the public sector is more inclined to listen to residents and community groups and place more weight on public private partnerships (Lavanga, 2006). The idea is to improve communities while still increasing economic returns through a broadening economic base. In particular, the municipality focuses on a few sectors that are regarded as potential generators of economic and employment growth. One of these sectors is the audiovisual industry; others are tourism, medical technology and the recycling industry (Van den Berg et al., 2017).
“Historically, creative clusters have ‘spontaneously’ or ‘organically’ emerged from urban cultural dynamics (O’Connor & Gu, 2011).” This notion has drastically changed over the past decade as city governments try and employ various policy techniques to force creative clustering. Knowledge-based cities with a burgeoning creative class are considered optimal in achieving prosperity. The ideas put forth by Richard Florida and Charles Landry have garnered political support for these new ideas and led to a top-down approach to creative clusters that is gaining traction throughout the world. From Florida’s perspective, cities that contain highly educated people in creative jobs will increase the economic prosperity of the city. See table 1.
Occupations consist of
• Radio and TV • Architecture
• Computer games, software and electronic publishing
• Arts and Antique Markets • Designer Fashion
• Video, Film, Music and Photography • Music and the Visual Performing Arts • Publishing
• Advertising
Table 3. Categories of workers in creative industries, Source: Murphy et al. (2009)
Agglomeration externalities have been researched extensively by economic geographers to explain the clustering benefits of industrial districts. Clusters are spatial agglomerations of firms that enjoy economies (positive externalities) from being in the same place (Cooke et al., 2010). However, these techniques have rarely been used when investigating the location preference of creative industries (Cohendet et al., 2010). Generally, agglomeration externalities do not consider the specific structure of creative industries and the creative class.
A property-led creative industry cluster is recognized as one way in which to accelerate the creation of a cultural industry (Zheng et al. 2013). The concept is to maximize profits at the lowest cost (Liu, 2015). This approach has been criticized as a form of cultural consumption, containing
14 inadequate on-site synergy, lacking creativity and for escalating gentrification effects (Zheng et al. 2013).
In economic geography, spatial concentration creates agglomeration economies that help
businesses perform positively. The benefits incurred from clustering must exceed costs otherwise firms would be reluctant to cluster.
Porter’s Diamond Model
The Porter model suggests that clustering is more than just agglomeration economies and is dependent on four drivers. Although Porter assumed business clusters, his theory is often used as a guideline for creative clusters (Russo et al., 2005). Porter (1990) describes four conditions as essential in that development: “firm strategy, structure and rivalry; factor input conditions; demand conditions; and related and supporting industries (Van den Berg et al., 2017).” Porters definition of a cluster mirrors that of agglomeration externalities mentioned by economists. He claims that the “intensity of interaction” within his model increases if companies are spatially close to one another (Martin et al., 2003). It holds true that companies that are geographically localized produce higher earnings, more jobs and higher tax payments (Wannberg et al., 2010). Porter assumes that the competitiveness of firms is related to the performance of other firms. See figure 3.
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Figure 1. Diamond Model, Source: Porter, 2000.
Firms may choose to cluster in specific areas if conditions mentioned in the model are met and, in this sense, the ‘competitive diamond’ is the catalyst for cluster creation. Porter (1990: 157) states the, “The process of clustering, and the intense interchange among industries in the cluster, also works best where the industries involved are geographically concentrated.”
The greater the interaction among businesses in the cluster and between the four model factors, the higher productivity gained by the firm; all the elements feed back into one another positively. Porter believes, locational competitive advantages exist in agglomerations:
“In a global economy – which boasts rapid transportation, high speed communications and accessible markets – one would expect location to diminish in importance. But the opposite is true. The enduring competitive advantages in a global economy are often heavily localized, arising from concentrations of highly specialized skills and knowledge, institutions, rivalry, related businesses, and sophisticated customers (Porter, 1998: 90)”
Porter has advocated that clusters should be used as a policy tool. He has been consulted throughout the world for expertise regarding the competitive advantage firms ascertain when grouped together (Martin et al., 2003). Promotion of clusters as way to stimulate the economy of a region has gained traction. This has become more important as the concept is increasingly
16 associated with ‘knowledge-based cities’, or what Martin et al. (2003) labelled, the ‘New
Economy.’
Marshallian (Localization) Externalities
The theory of Localization externalities was formulated by Alfred Marshall in 1920. It signifies the spatial clustering of similar industries, and “localization economies denote the positive
externalities these firms may enjoy from such co-location (Cooke et al., 2013).” Intra-industry relationships among firms have several benefits:
• Efficient communication
• Labor market pooling and spillover effects from the sharing of knowledge • Geographical closeness to customers and suppliers
• Promoting innovation throughout the value chain and spurring growth • Contacts between geographically proximate actors
• Incremental innovation • Product flexibility and variety
• Knowledge spillovers through skill transfers • Low transaction costs and short delivery times
As soon as new entrants emerge, localization externalities are thought to further stimulate the entry of new firms, leading to cluster growth. This externality is based on input-output
relationships, where skilled labor is hired, and in-turn increase innovation capabilities.
Entrepreneurship increases in areas with specialized clusters. “New firms are attracted to clusters by the pool of skilled and specially trained personnel, access to risk capital, favorable demand conditions, reduced transaction costs, and motivational factors, such as prestige and priorities (Wannberg et al., 2010).”
Urbanization Externalities
These externalities are the positive benefits firms gain by locating in large cities. The many externalities arising from urban location are typically referred to as urbanization economies (Cooke et al., 2013). These benefits include:
• Tolerance to openness • Access to large markets
• Strong R&D centers and business services • Cultural and leisure amenities
• Highly educated employees and a burgeoning creative class • Coordination between unrelated knowledge bases
• Transportation hubs • Attraction of global talent • A ‘buzz’ or ‘cool’ factor
• Highly educated employees and a burgeoning creative class • Flow of knowledge between industries
17 In contrast to localization economies, where being close to similar firms takes precedent,
urbanization economies are reliant on place specific factors that are without exception, urban. For some businesses, such urbanization economies are preferred and more than make up for the costs of urban congestion (for example, high land prices and high wages). These economies arise from the regional diversity in cities, of industry, of labor, and of institutions and infrastructures (Cooke et al., 2013).
Jacobs’ Externalities
Jacobs Externalities are benefits generated by local inter-industry spillover effects of firms in different industries. It is thought that the existence of location and industrial diversity aids the growth of businesses. Opportunities from local diversification occurs because knowledge is combined across different industries. “Industrial diversity also results in more stable demand conditions and allows firms to choose from a wide range of local input substitutes, which reduces their exposure to price fluctuations in inputs (Devereux et al., 2007)."
Jacobs’ externalities or inter-industry spillovers are crucial for the survival of new industries. This is because the quality of products is more important for young industries than price, and thus the cost of living in a city becomes less important. Boschma (2015) states that conversely, “when products mature and become standardized, firms engage in price competition, and factor costs become more of a concern.”
Spinoff Dynamics
Spinoff Dynamics is a theory created by American economist Steven Klepper that questions whether agglomeration externalities drive industry clustering. His research contends that spinoff dynamics, and not localization externalities based on labor pooling and knowledge spillovers, cause cluster formation. Klepper’s theory is based on “organizational reproduction and inheritance through spinoff formation (Boschma, 2015).”
Klepper hypothesizes that industries materialize from similar ones, because startups take advantage of parent companies and import their knowhow and capabilities. “Spinoffs refer to firms founded by entrepreneurs who previously worked for an incumbent firm as an employee within the same industry. With the subsequent growth of an industry, the share of spinoffs increases at the expense of other types of entrants, where (De Vaan, et al., 2013).”
Spinoff dynamic theory states:
• “spinoffs depend on relationships with other local firms because the founder interacted with these specialized firms when still working for the parent
• key suppliers can also be local spinoffs from the principal industry
• spinoffs locate close to their parents to be able to establish economic and knowledge relationships (Boschma, 2015).”
The basic premise is that clusters can develop in lieu of Localization externalities. Stuart et al., (2003) found that agglomeration economies are not required to justify industry clusters, as “clustering increases not only entry rates but also exit rates.” This indicated that clusters persist because of existing firms that cause new entry of firms, and “which compensates for the high exit
18 rates of firms in clusters (Boschma et al., 2003)” Klepper built on this notion, and devised his theory of spinoff dynamics.
Most of the research conducted on this topic, including Klepper’s, does not look at creative industries or their distinctive qualities and instead focuses on the manufacturing sector (De Vaan et al. 2013). Creative industries are “more likely to be driven by positive localization externalities, because they rely more on local buzz and social networks that function as local repositories of knowledge (Grabher, 2004).”
Keppler’s spinoff model illustrates a path-dependent process in which successful early spinoffs, reinforced by positive feedback, determine the location of an industry (Boschma, 2015). He stated that as successful firms initiate other spinoffs, a cluster emerges. Klepper argued that positive economies experienced through clustering were due to firm heritage and not clustering itself (Boschma, 2015).
Cluster Policy
Policy on cluster formation is complicated because there is little empirical evidence which demonstrates that the economic prosperity of regions increases through clustering objectives (Martin et al., 2003). Florida (2005: 259), for instance, adds to the discourse that cities should “provide the physical and social space needed for creative and economic opportunities to take root” but does not elaborate much on how this can be done other than referring to Jane Jacobs’ (1961) ideas about diversity, liveliness and small scale. Landry (2008) is most comprehensive with his ‘toolkit for urban innovators’ about how policy makers should invent, develop and implement innovative practices.
In the ‘new’ post-Fordist economy, cities are keen to promote and market themselves as creative in order to increase their cultural ranking and enter the new knowledge economy (GLA, 2008). Simmie (2006: 184) states:
“The cluster idea has taken many academics by storm. It has become the accepted wisdom more quickly than any other major idea in the field in recent years…. at the expense of previous explanations and lacking in relevant empirical evidence.”
A lot of public funding, including European (EU) and national grants is directed to promoting creativity in economic clusters (Evans, 2009).
Creative cluster polices are developed to supposedly drive the creative economy by: • Tapping into the ‘new creative economy’
• Redevelopment of residual industrial zones • Innovation spillovers
• Tourism, events, branding ‘creative cities’ • Catalyst for regeneration plans.
Real estate driven development combined with increased economic pressure has led to weaker power arrangements and a stronger (neo-liberal) revenue agenda. Small scale cluster policies have resulted in a small number of successful creative clusters.
19 “In terms of recommendations on best practice, there is a consensus that cluster promotion policies are unlikely to succeed in creating clusters ab initio (Schmitz, 1999).” Planning policy should build on potential that already exists in a local economy or evolve in relation to clusters that developed organically (bottom-up). The literature on clusters gives no convincing answers (Martin et al., 2003).
Creative Cluster
Now that the approaches to the general clustering concept are understood, it is important to define what exactly a creative cluster is. The definition is broad, and no consensus exits. However, Wennberg et al., (2010) defines it as “geographic concentrations of interconnected creative
companies, specialized suppliers, service providers, firms in related industries and associated institutions.” Scott (2000: 38) reiterates this idea, stating that, “complexes of producers in the cultural economy are by definition made up of arrays of closely interdependent firms and individuals, and the intensity of their interactions tends to be especially great in large agglomerations.”
Creative clusters differ from industrial clusters in that the types of knowledge attained in the creative process are not strictly scientific or industrial (Asheim et al., 2005). They behave
differently than typical industrial ones due to their reliance on innovation and creative activities. Several factors must be discussed when linking creative clusters to the agglomeration theories proposed by economic geographers. The individuals who make up creative industries are
attracted by ‘soft’ factors such as cultural amenities. These elements need to be considered when evaluating the location choice of firms.
Creative Space
Material Space
The physical character of old industrial buildings impact creative clusters by providing a location in which to start business. Many of these buildings are city owned and operated and are used to facilitate cluster growth. Most importantly, rents are generally low, especially if strict policy protocols are followed. The redevelopment of these properties may also promote regeneration efforts in the vicinity. “A low rent is not only a low barrier of entry but also enhances risk taking and facilitates experimentation by the (very) small firms that are typical for creative industry clusters, hence contributing to innovativeness of the cluster (Romein et al., 2017).” Generally, these buildings have large open spaces which creative firms can use at their discretion (Ibid).
Symbolic Space
Workers in creative clusters may also show an affinity for old industrial structures as they are viewed as more authentic than modern glass towers. Members of the creative class are drawn to such qualities. This affection concerns “building typologies and architectural styles and elements old industrial buildings, their in-between public spaces, and the typical urban morphology, (Romein et al., 2017).”
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Social Space
Buzz is generated in a creative cluster because workers in a creative atmosphere generally form vibrant relationships that “create high levels of interaction conducive to production (Ibid).” Social networks can form which in turn lead to positive localization externalities, spurring innovation, cooperation and knowledge sharing. These networks are enhanced because of the general small size of creative firms. The atmosphere of excitement and activity increases if clusters are located near cultural amenities such as restaurants and lively bars.
While managers and owners may be motivated by profit, creative types relish soft factors. If firms want to attract members of the creative class, they need to consider locating in areas with
ambience and character.
Context: Schiecentrale
The case of Schiecentrale offers a rather top-down approach of the creative process. The original building was built in 1904 as a power station for the port of Rotterdam. The municipality heavily invested in the structure, and redeveloped the site as a media hub, complete with two film studios. The plan was to create an audiovisual cluster that could compete with Amsterdam. The site was used as a planning tool to regenerate the Lloydkwartier area, and spur creative
entrepreneurship. The redevelopment was in line with city policy to re-brand Rotterdam as a knowledge-based city.
Schiecentrale is a multifunctional collective building and partly a national monument. The complex is 35,000 m² and consists of seven building parts. See figure 4 and 5. It is currently a breeding ground for creative companies, including the audiovisual and hospitality industry, two professional film and TV studios and a hotel. In 2008 the building was expanded on with a few new construction projects. The design of this transformation, re-use and expansion was by Mei architects and planners.
The combination of office spaces, homes and living and working units brings more life to the area, which in recent years has become the center of the audiovisual industry of the city of Rotterdam. On December 21, 2018 the building was sold by the City of Rotterdam to private developer, Dudok Groep after a comprehensive, public sale process.
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Figure 4. Lloydkwartier showing location of Schiecentrale, Source: (Gemeente Rotterdam, 2005) Welstand Rotterdam September
Figure 5. Schiecentrale Audiovisual Cluster, Source: Author (2019)
Analysis
The purpose of the analysis is to discuss, present and interpret the results of the research. There was significant overlap in themes, but for the purpose of clarity and cohesiveness, I opted to highlight the most significant topics in addressing my research question, To what extent does
policy intervention affect the location choice of audiovisual firms? Policy intervention was the main
22 played no part in the decision-making process. On the contrary, the existence of localization and urbanization externalities acted as a causal agent that gave firms solace in the fact that positive economies existed in Rotterdam, and growth could be expected.
As the aim of this study is to link planning policy with economic geography theory, this analysis will use concepts from the theoretical framework to interpret examples from the case study.
Policy Analysis
The creative industries are used in strategic planning to facilitate marketing strategies in Rotterdam. Cultural amenities can be used as a tool for strategic planning.
‘Het Initiatef’ (The Initiative) was created in 1997 by a small group of audiovisual firms and freelancers in Rotterdam in response to the governments apathy towards their sector (Van den Berg et al., 2017: 236). In response, the municipal government actively pursued a policy stance to foster its growth. See figure 6 for a breakdown of the objectives of creative industry clustering policy.
Michael Porter’s diamond model is most often used with policy makers when trying to develop plans for agglomerations. Martin at al. (2003) states that Porter’s ‘cluster theory’ is the “standard concept in the field, and policy-makers the world over have seized upon his cluster model as a tool for promoting national, regional, and local competitiveness, innovation and growth.” Policy makers in Rotterdam have created specific policy to promote the city’s ‘cool’ factor and create buzz for creative industries.
In the proceeding chapter I analyze several policy documents created by the City of Rotterdam and determine which policy interventions were created to facilitate creative clusters.
The policy strategy of Rotterdam was to expand on its position as a manufacturing city to a knowledge-based city. The creative city had become a popular approach among planners and policy makers to generate investment opportunities and revitalize a city. Richard Florida’s book,
The Rise of the Creative Class was a catalyst for this approach. As Peck (2005: 740) stated:
“The book has proven to be a hugely seductive one for civic leaders around the world…Cities have paid handsomely to hear about the new credo of creativity, to learn how to attract and nurture creative workers.”
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Figure 6. Policy rationale, Source: (Evans, 2009)
The cultural plan for the City of Rotterdam 2005-2008 was concentrated on several priorities (Martinez-Fernandez, 2014:2088):
1. Strengthening the role of culture as a tool for social inclusion and special economic development
2. More attention to cultural heritage of the city
3. Strengthening the involvement of the educational sector 4. Investment in cultural infrastructure
5. New attention to enlarging the audience
6. Strengthening the position of individual artists in order to promote their independence and entrepreneurship
Rotterdam initiated several projects to increase its clout in the creative industries: in particular the audiovisual sector within the Schiecentrale complex located in the Lloydkwartier area of Rotterdam – an underutilized industrial area on the fringe of the downtown core.
Several policies were initiated to attract creative industries to the new complex. The Rotterdam City Development Corporation (RCDC) was created to attract audiovisual firms to Rotterdam, a city which historically has high unemployment and a one-sided economic structure (Van den Berg et al., 2017).
The RCDC at one time operated the Rotterdam Film Fund which was tasked with providing money to potential film productions. The hope was to make Rotterdam a film city and create
24 ‘buzz’ in the industry. Companies would receive loans to finance a production if they agreed to spend most of the money in the Rotterdam.
Respondent 1 from Schiecentrale expanded on this, stating, “Originally we received funding to produce a short film. Rotterdam was actively going after us to locate in the city. We were a small firm, and the added cash helped with financing. However, it’s hard to produce a film completely in Rotterdam. Expertise is in Amsterdam”
Another Schiecentrale Respondent concurred, saying “I’ll admit, there was a buzz about the sector. 10 years ago, I felt the city was actively pursuing us. We could get funding. It’s more difficult now.”
Due to the situation that existed in Rotterdam: education levels that lagged the rest of the Netherlands, high unemployment and unwanted business locations, the Economic Development Board of Rotterdam (EDBR) was created. Its mandate was to diversify the economy, with a special mission to promote creative industries. The EDBR produced, The Economische Visie (Economic Vision) 2005-2020 (Gemeente Rotterdam, 2004).
The Economic Vision 2005-2008 suggests that economic policy in Rotterdam should focus on three tenets (Gemeente Rotterdam, 2004):
1. The Enterprising City
2. The Knowledge and Innovative City 3. The Attractive City.
The second policy goal includes promoting creative industries and focuses on three types of agglomerations (Gemeente Rotterdam, 2005):
1. Port and port-related industrial cluster 2. Medical cluster
3. Creative Cluster
The creative cluster in Rotterdam is extremely small, especially when compared to Amsterdam. However, the government considers this sector vital to obtaining its goal of transforming
Rotterdam into a knowledge-based city and changing its image from a quintessential blue-collar manufacturing center. As previously discussed, creative industries are thought to attract the creative class, which Florida argues is essential for cities to prosper. Potential existed, as the sector (although small) grew 8% between 1996 and 2003 (Gemeente Rotterdam 2005; 2006).
The policy document Visie op de Creatieve Economie [Vision on the Creative Economy]
(Gemeente Rotterdam, 2007) recommends investing in four creative fields that are supposed to bring the greatest economic returns:
1. Architecture and urban design 2. Design and product innovation
3. Audiovisual production (including film and new media) 4. Music
25 The municipal government assumed that, “the knowledge base for these industries existed (Jan Jacob, personal communication, May 16, 2019).
Romein et al., (2015) states that, “Rotterdam policy documents propose a ,mixture of supportive measures and instruments to stimulate entrepreneurship, to establish commercial and social networks of entrepreneurs and to fill in lacunas in the value chain, consisting of education-design-production-marketing and distribution, in the four priority creative branches.” Perhaps Rotterdam’s greatest asset at attracting creative industries is its stock of affordable business space in heritage buildings. The municipality rents these spaces to creative
entrepreneurs at highly discounted rates in order to spur cluster development (Gemeente Rotterdam, 2006;2007) However, the extent of this policy is negligible, as it is only pertains to buildings owned by the municipality.
Although economies of scale are important to policy makers, it appears that visibility took precedent when creating Schiecentrale. If the audiovisual sector became more visible, then it could stimulate the entry of new firms.
Tasan-Kok (2010) states that “the neo-liberalization of social, economic and political processes pervades urban development and governance practices and pushes them in a market-oriented direction.” This is evident in Rotterdam, as the city has shifted to a governance model. The 2005-20 Economic Vision states that the municipality is unable to fix the city’s economy alone and needs cooperation from various stakeholders in business, real estate and culture.
Rotterdam’s policy initiatives, although developed to facilitate growth in creative industries, are very business orientated (Romein et al., 2012). However, these should be looked at as planning strategies and not simply economic ones.
Business Orientated Policies
‘Breeding Ground’ policy exists that, “promotes the reuse of old buildings that are unfinished and cheap (Romein et al., 2012)” that are to be used for housing creating industries. However, many of these buildings are in desirable locations that property developers covet. Schiecentrale was recently sold to a developer for 30 million Euros.
The ideas of Scott are relevant to the business orientated policies of creative industries. Scott (2000) discusses the “importance of buzz generated through face-to-face contacts in socially based networks of key persons” around these industries for their performance. This is unlikely for the audiovisual sector in Rotterdam, as its sheer size is so small and networks insignificant to contribute to the economic prosperity of Rotterdam. However, it may contribute to the city’s image. Local trends and policy issues in Rotterdam by key element of the creative city can be found in table 4.
People Orientated Policies
People orientated policies are not very developed in Rotterdam. Although briefly mentioned, they do not focus on attracting creative talent and members of the creative class; cultural policy rather than economic policy references it more in depth. For example, Florida (2005) places significance on inviting public space and vibrant street life. Rotterdam does not possess many of the qualities
26 that Florida claims attracts the creative class. However, other elements exist in Rotterdam that are important to creative industries. Van Ulzen (2007:10-11) states that:
“many architects and designers settle in Rotterdam because of its port city image, the ‘rhythm of the river’ and anonymity in its open spaces. This has created a notable paradox in that local policy makers want to get rid of the port city image – port activities have been moving out of the city anyway – while the kind of people they like settle to settle in the city are attracted by it. Many architects and designer have a studio or workshop in an old building in a peripheral port area and they have no need for meeting on another frequently.”
Social climate (resident population) • Strong focus on public safety puts
openness and tolerance under strain • Encourage young people as initiators
of creative activities
Buzz, atmosphere • Need to upgrade inner city; lacks
liveliness, third spaces
Employment • Need to counteract decline in (still
strong) manufacturing industries, transportation and construction • Reinforce producer services Built environment, living and residential
environment
• Modernist inner city generally considered unattractive
• Despite large scale construction still shortage of high-quality housing • Relatively low-price level reflects poor
image as a residential city • Redevelop former port area
Amenities • Upgrading of inner city for leisure,
shopping, living
• Subsidies focus on ‘old names’ • Promoting a festival city
• Somewhat ambiguous stimulation of pop music
Clusters, incubator spaces • Focus on strengthening creative
production, particularly since 2005 • Focus on architecture, design,
innovation, audiovisual production and music
• Provide affordable working space in old buildings, although on a limited scale
Policy and governance • Shift from government to governance
• Increasing cooperation, coordination and co- financing
Table 4. Local trends and policy issues in Rotterdam by key element of the creative city, Source: Romein et al., 2012
27 It appears that too much effort has been put into ad hoc polices that are formulated around creating a brand: Rotterdam is bustling and creative. As respondent 7 states “the policies are more like visions”
Investments in Schiecentrale could have been more effective if there had been a clear strategy and support from the private sector from the beginning. Respondents from Schiecentrale said there was no consultation. Supposed economic gains from clusters does not mean city governments should pay to create them (Van den Berg, et al., 2017).
Localization Externalities
The theme of localization was encountered in every interview conducted at Schiecentrale. Each firm was enticed by the idea of being surrounded with other creative industries. Knowledge spillovers, and its ability to facilitate innovation and growth were considered crucial to sustaining a viable business. In addition, the geographic closeness of customers and suppliers was
consistently mentioned as a benefit.
Respondent 4 mentioned that his customers were all located within the Rotterdam region. “I rent equipment to industry types and to the general public. The industry may be small, but I can make a living renting and selling to people in the city. I moved to this location because of them.”
Respondent 1 said, “Our business is small, but we are able to survive. There are enough actors in the city to find proper talent.”
A general theme with all respondents was that working in an environment with similar creative businesses had the potential to foster creativity. Being in a cluster allowed for quick and efficient communication between firms. Although most firms work independently from one another, a small social network exists where actors discuss ideas and potentials in the industry. Although the idea of increased innovation through the co-location of firms was a factor influencing their move, all respondents mentioned they generally don’t coordinate with one another on a working basis. Respondent 3 stated that, “Being around other audiovisual firms was a benefit. We are very tight knit group. We all know one another. Our companies are small and very specialized. If we have a bigger project, we hire freelancers who work in Rotterdam. We need these people to function. We have collaborated to some extent with other business in the building. Not a lot but it has
happened. Creating film is a huge collective venture.”
The idea that everyone knows everyone was discussed by all Schiecentrale respondents. However, Respondent 2 stated that:
“I don’t really think we’re that connected. I mean, our company generally doesn’t outsource to other firms. We produce niche films and can handle everything in-house.”
Cook et al. (2013) claims that the audiovisual industry has distinct relationships, within which production, graphic designers, camera, post production, lightning and sound firms and a range of skill-holders used for innovation projects (such as producing a marketing film for local business) carry out frequent projects, producing new media content. However, the cluster in Schiecentrale is small, and large projects are generally reserved for Amsterdam.
28 The most important local broadcaster, Rijnmond TV plays a small role in the audiovisual sector. Respondent 1 stated that this was unfortunate as the firm could be used to “attract young talent. With few exceptions, the Rotterdam audiovisual sector is mainly business-oriented: business-to-business communication and informative video productions are the basic products of the sector (Van den Berg et al., 2017).
When asked if being within a cluster promoted innovation, all firms said no. The consensus was that the industry was too small and specialized and knowledge spillover was insignificant. As previously stated, clusters that are created top-down, generally lack networks that benefit firms through localization economies. There is a lack of evidence showing that innovation is fostered in clusters. For example, a study of metalworking across the US, by Harrison (1996), “actually found no evidence that firms in local concentrations adopted new technologies more rapidly than their more geographically dispersed or isolated counterparts (Martin et al., 2003).”
Cook et al. (2013) characterizes the audiovisual sector as a collection of relatively small firms with high specialization who use freelancers to complete projects. He adds that, “the main advantage of organizing cultural innovation projects on the market, rather than inside one firm, is that the market is much more capable of bringing about variety.”
All respondents from the Schiecentrale media cluster reiterated that the audiovisual sector in Rotterdam is extremely small. Although statistics on the exact size of the sector are scarce, Van den Berg et al. (2017) claims that the sector accounts for less than 1 per cent of total employment in the Rijnmond region.
Respondent 3 stated, “All of us (audiovisual firms) are small. Generally, most of the firms, not including major studios have less than 10 employees. Our company is niche, and we generally produce video for the government and various businesses in Rotterdam. Some producers work for local TV stations, but I know they are few are far between.”
Respondent 4 said that camera rental was only sourced to local companies and “if specialized equipment is needed, companies have to rent from Amsterdam or Hilversum.”
Respondent 2 stated that there are no major film producers located in Rotterdam, and this severely impedes the growth of the industry. “Amsterdam is still the top brass when it comes to films. That is where the Dutch film industry is located. Films made in Rotterdam are intended for small audiences. Indie films.”
These interviews showcase that the audiovisual sector in Rotterdam is too small to support specialized services. Thus, we can ascertain that spinoff dynamics are relatively absent and spillover effects marginal. Consensus was that the Schiecentrale project was unsuccessful in creating a flourishing audiovisual cluster.
Respondent 7, an expert on Rotterdam’s creative clusters commented on the failure of Schiecentrale stating, “I know that it was a key area of the Rotterdam policy to support and
develop audiovisual industries and they put a lot of effort in it. I think they also put a lot of money into it. But it was always thought that as soon as we stop the money, the cluster will collapse or stagnate. It’s not sustainable without a constant influx of cash. Audiovisual is bigger and more
29 important in Amsterdam together with Hilversum. The sector is limited to 1 or 2 buildings in that complex. I don’t believe the cluster is a success. Only 2 studios.”
The top-down policy approach employed by Rotterdam, while magnanimous, did little to create a viable sector. The complex was clearly envisioned as a focal point to generate buzz and lure creative industries. Schiecentrale was a marketing tactic, or tool used by the municipality to satisfy Rotterdam’s rebranding initiative.
Physical Space
Several Schiecentrale firms asserted that the structure itself was a drawing factor.
Respondent 5 noted that, “It’s a heritage building, first and foremost. I like the idea that it has a history. Granted, it was completely redeveloped and is now encased in glass, but it still has a certain cachet. The Wi-Fi is fantastic as well. Seriously, internet is great.”
Respondent 1 echoed this response stating that the building was a motivation for moving. “It is modern, yet still located in a cool, former industrial zone.”
Jane Jacobs (1961) claimed that “new ideas require old buildings.” This quote is fitting for
industries where innovation and creativity take precedence. As was the case in Schiecentrale, the government redeveloped a decrepit, inexpensive building to house creative firms. Florida (2002b) and Landry (2008) mention that old industrial buildings are often redeveloped as incubators for creative enterprises. Creative people want interesting and authentic places that are unfinished so that they may cultivate their own space (Romein et al, 2012). Additionally, “these buildings are somehow third places that provide opportunities to merge work, leisure, social activities and sometimes residences (Ibid).”
All firms interviewed were satisfied with the size and abundance of office space. Respondent 1 mentioned that office “upgrades” were possible due to availability.
Views on the Municipality
Although the cluster was originally well managed by the city, several respondents noted that quality of services had drastically diminished several years leading up to its final sale to Dudok Groep.
Respondent 6, a high-level manager with with the firm who recently acquired Schiecentrale mentioned that:
“Because the Lloydpier where Schiecentrale is situated is quite an undeveloped area and also the government in the last 2 years, when they thought of selling the property they did not put money or effort into the building, and a lot of tenants went away and didn’t pay their rent anymore because the government wasn’t really caring for the building. So, we first want to let the tenants know that we are caring and starting to develop it more. There was also some leakage, that the government didn’t fix. They didn’t respond to the tenants, so we first want to remedy that and make the building good again. We are having a yearly event for all the tenants so we can
communicate, bonding together and the last year that wasn’t there anymore. In the main, middle area there is a garden and its occupied for all the tenants but it is not getting used, so there we
30 want to get more focus, and we want every tenant in the building to connect with each other and make it its own type of community. Because we care for the building and we want the tenant to care for it. We think that if you connect and let people speak and get there ideas out you get them also involved. “The procedure (finalizing sale) is taking quite a while and we had to communicate a lot with the government and get everything ready. They did not have all the forms and all the information about the building correctly, so we needed to search for a long period and eventually we bought it and we’re still getting all the documents together because they still have some lost somewhere. We didn’t realize what kind of tenants we were focusing on because the government did not have a complete list of all the tenants who were in there at the moment. So, we only knew from a short list they had. In the last 2 months we really focused on what kind of tenants are in there, but for now we do not have specific tenant that we would like to have in de Schiecentrale. We are not specifically focusing on one type of tenant who comes in and have the place, but you can see that other tenants are connecting with each other. If there is a space available, they tell others to look into the Schiecentrale. They can bond because there is a lot of communications and television, radio tenants in there and you also see that they connect together in the building. They are advising each other.”
When asked if there were conditions on the sale, Respondent 6 replied:
“No. we do not have to follow any guidelines. The only thing is we cannot sell it for the next 5 years. That is the only condition we had. The city just left it to us, what we want to do with the building. The city originally redeveloped the building. We increased the prices.”
It seems the city had decided to distance itself from the property several years before its sale. As previously mentioned, the cluster required constant funding in order to function properly. Although the original policy was aimed at creating a cluster by providing below market rent, the new owners are unsure how to proceed and if the site will remain a creative cluster.
Several respondents mentioned that there was little consultation with the audiovisual industry before development of the site. Respondent 3 stating, “Sure, it was great that they thought of us (audiovisual sector) and wanted to build this complex. But I wasn’t consulted, and nobody I know was consulted. Anyhow, the money has stopped coming in, but the rent is still reasonable.” All respondents were upset that the city decided to sell Schiecentrale. Selling for profit is not very good when dealing with creative types.
Urbanization
The cost of living in a major city is not crucial to creative industries because competition is based less on price and more on the quality of products (Romein et al., 2012). Moreover, apartments in Rotterdam are significantly cheaper than those in the rest of the Netherlands. Noteworthy is the 2007 initiative by the municipality to subsidize, for a period of three years, two-thirds of the rent of exspensive apartments for graduated ‘top students’ (Ibid).
Several educational institutions (TU Delft, Erasmus University, Piet Zwart Institute) are located within the Rotterdam region, and their presence was given as a reason by firms to locate in Schiecentrale. The presence of centers of research and education is often cited as a positive externality that pulls firms into a region. Research and educational centers attract top talent.
