The Massachusetts Institute of Technology’s plans for remaking Kendall Square in Cambridge are stuffed full of huge numbers and huge ambition. The 10-year, $1 billion plan covers 26 acres, and would allow the school to construct nearly 1.4 million square feet of commercial, retail, and residential space. The plans speak of remaking the face of Kendall Square and creating a new gateway into both the school and the city. But more than anything, they present a microcosm of the Boston economy — a place where nonprofits spew profit-making potential, where cash-poor start-ups dictate the decisions made by multinational giants, and where housing is the last thing anyone thinks of.
Boston punches above its weight because its economy is built around huge institutions that don’t ride business cycles. The region’s universities and hospitals feed off proximity to one another, and, just as importantly, they’re not the kinds of operations that get poached by North Carolina or Texas in bottom-seeking tax deals. MIT is the most important institution in a region full of highly important institutions: It’s a hub of advanced research, a training ground for entrepreneurs, and a source of talent that forces important companies to set up shop nearby, or risk losing out on new hires.
The nation’s economy revolves around the kinds of knowledge-intensive products — pharmaceuticals, biotech, computer technology — that Boston’s institutions trade in. This is not the kind of thing that can be planned for. MIT didn’t plot to destroy Brockton’s shoe factories so it could dominate a post-industrial landscape. The school steered into the skid. As science has become more central to the economy, and Kendall Square has grown from a low-rent district of warehouses to one of the country’s hottest property markets, MIT has grown to become a key commercial investor in its own neighborhood.
MIT’s next wave of Kendall Square construction is aimed at both giving tech companies room to grow near the university, and at using this commercial development to strengthen Kendall Square for students, employers, and residents. The bulk of the new construction MIT envisions is aimed at blue-chip firms, but this development finances improvements for the broader Kendall Square community. Street-level retail development will deepen the local retail renaissance Kendall is currently enjoying. And a strong set-aside provision for affordable innovation office space helps ensure that the small-scale companies that created Kendall’s current boom have a place in its future.
MIT’s approvals for 1 million square feet of new commercial space come with a commitment to set aside roughly 100,000 square feet in affordable office space for small-scale innovation companies. This set-aside acknowledges the dynamics that drew giants like Google, Microsoft, and Novartis to town in the first place. Kendall Square is a neighborhood of large companies hunting for small companies to buy. If the big firms snap up all the office space or price the start-ups out of town, the whole neighborhood’s business plan collapses, and MIT’s along with it. Smaller tech firms are being squeezed out of both Kendall and South Boston by rising office rents and plummeting vacancies. Unlike South Boston, Kendall is built around an institution capable of blunting the market’s excesses.
MIT assumed responsibility for creating a large block of office space because doing so benefitted both the larger Kendall Square economy and also the entrepreneurs the school is training. Start-up office space is only half the intervention the neighborhood needs, though.
The biggest dust-up over MIT’s three-year rezoning process wasn’t over height or parking, the two issues that normally scuttle development proposals around Boston. It was over housing. The school responded to criticism from its East Cambridge neighbors by doubling the amount of housing it plans to build commercially, but its job on housing remains only half done. MIT is only now launching an assessment of its housing program for its graduate and post-doctoral students, 5,000 of whom currently live off campus. The school’s graduate students put huge amounts of upward pressure on neighborhood housing prices.
MIT and East Cambridge are not unique in this respect. The Boston region has long been bedeviled by its inability to build enough housing for its residents, and Northeastern University economist Barry Bluestone has been beating the drum about graduate student enrollment pushing rents higher for years. Along with innovation office space, student housing presents MIT with an opportunity to push back against the broader market while creating an amenity for itself. Until it takes that opportunity, the school’s job in Kendall is only partially finished.
Paul McMorrow is an associate editor at Commonwealth Magazine. His column appears regularly in the Globe.