5. How to finance an innovation district?

Experiences from other countries show that innovation districts are often established in a series of profitable construction and development projects which are connected through a larger and multifunctional concept. This way both public and private, national and local actors get to participate in new ways of financing the innovation district.

Multifunctional buildings allow research and teaching to share premises and common functions with start-up communities, businesses, restaurants and other services. Such buildings are an important part of a dynamic innovation district. The establishment of such multifunctional buildings opens up for alternative financing models. Today, we have many examples of multifunctional buildings in Norway. Among these are Oslo Science Park and Oslo Cancer Cluster, which are two key players in Oslo Science City.

Multifunctional buildings are attractive since knowledge-intensive companies want to be co-located with internationally leading research environments to be able to access outstanding research. Knowledge institutions, for their part, appreciate proximity to innovative businesses to share laboratories and other research infrastructure, and to get access to market insight and financial resources. The start-up ecosystems need access to both research results and market opportunities, searching for help with distribution and scaling.

Historically, the preferred funding model for buildings for research and educational purposes in Norway is a grant over the government budget for single purpose buildings with a university or a research institute as owner. In multifunctional buildings, there will be many different players who potentially could take a role as developer and owner of the building. Both nationally and internationally, we see real estate investors that specialize in developing and owning buildings that are designed to host knowledge institutions. This way, a university or a research institute can limit its financial exposure by entering an ordinary time-limited lease agreement where the rental price will be correlated with the length of the lease.

Actors with particularly important expertise and who are willing to enter into long-term leases should expect particularly favorable lease terms, as they exert a strong attraction on others who will benefit from locating themselves in the same building. In this way, multifunctional buildings contribute to a faster realization of necessary research infrastructure and expansion of outstanding research communities, in accordance with the overall objectives for the national knowledge policy

This feasibility study outlines solutions that imply a significant increase in land areas used for knowledge development. Many of these projects have already secured financing.