Despite having supportive infrastructure and operating conditions, the “emerging innovators” still need to resolve a relatively low talent concentration that could impede growth and, in turn, deter both companies and capital investors, the JLL report says.

They are not only competing with established innovation hubs for talent, but also smaller cities with conducive environments for innovation.

“Before the pandemic, talent-rich secondary cities were already attracting people and companies with their affordability and high quality of life,” says Hodgson.

The pandemic further accelerated the trend in certain countries. Large companies in the U.S. such as Tesla have moved their headquarters to lower-cost, more business-friendly cities.

Likewise, in India, cities like Bangalore and Hyderabad experienced a reverse exodus of talent across different sectors to smaller Tier-II cities including Ahmedabad and Coimbatore during the pandemic, according to management and strategy consulting firm Zinnov.

While attracting talent may help emerging cities close the gap with established innovation hubs, striking a balance between talent concentration and innovation will be most critical, according to Hodgson.

“As cities emerge from a difficult couple of years, those with a critical mass of people, broad mix of industries and major universities are best positioned to continue to attract talent and companies,” she says.