‘Placemaking and Value’

This RICS report is an older favourite for a reason: it evidences that placemaking adds commercial value to large residential-led masterplanned developments – between 5% and 50% uplift, compared to the existing local area. Among its other key findings are:

• Although attention to placemaking achieved greater premiums in areas with existing higher embedded value, it was also effective in lower-value areas – suggesting there are opportunities to create aspirational developments in a range of markets
• The most successful placemaking schemes achieved the greatest uplift on relatively small homes – suggesting a buyer openness to compromising on private space in neighbourhoods with high-quality shared amenities / community infrastructure
• For developments with long delivery periods, retaining flexibility in the master plan allows for tailoring future phases to meet demand – maximizing sales and achieving optimum values
• Where commercial and community facilities are lacking, delivering these as early as possible sets a positive tone for the scheme – as we at MurrayTwohig always say, you live and die by your first phase

Get their report here.

A New Bottom Line: The Value and Impact of Placemaking

Creative placemaking interventions can meaningfully improve dwell time, personal connection to place, and reputation. Researchers at The Creative School at Toronto Metropolitan University, together with industry leaders, found that:

• Dwell time is improved by attention to placemaking: people are more likely to spend time in the environment (+50%). This can drive retail sales, productive use of space, and demand – which in turn drives value.
• The study’s strongest placemaking uplifts are in a person’s likelihood to recommend a place to their network (+77%), and share information about a place (+74%). This ‘organic publicity’ raises place profile and interest in an authentic, personal way – differing from paid advertising.
• Placemaking also improves a user’s emotional experience: increasing positive perceptions of cultural vibrancy, safety, friendliness and quality of life (+53%); positive feelings of welcome, beauty, comfort and stimulation (+63%); and self-congruity, which is personal connection with a place (+53%). From a value perspective, nurturing repeat and habitual visitorship, and tenants and owners who love their place, can sustain demand, while reducing turnover and vacancy.

Get their report here.

The Value of Placemaking

Savills found that early spending in infrastructure, local amenities and public spaces creates better, more successful places – and could raise land values by 25%. More specifically:

• Their model suggests that the sooner the investment in place, the sooner the uplift in values. Making the majority of investment at 40% build out corresponded with a 26% relative reduction in land values compared to investing up front – investing later decreases the potential for higher sales values.
• One of the model’s most influential factors on land value is the required rate of return on capital or discount rate, with patient capital delivering higher land values which justify the higher investment in place.
• There are important peak debt considerations (the model suggests an increase of 56%). This needs to be accommodated in order to enable up front investment and therefore a more immediate uplift in sales values.

Get their report here.

Placemaking: Value and the Public Realm

Good public realm interventions improve both human wellbeing and real estate values and support long-term value resilience. Research by CBRE and Gehl found:

• Changing perception of a place through a public space intervention can dramatically improve value, by attracting new tenants. For example, Seoul transformed a former highway overpass into Cheonggyecheon River Park; this has corresponded with a 33% increase in neighbouring non-residential values, and an increase in the district’s worker numbers.
• Significant public space interventions can create new destinations, overhauling and sustaining demand and value in surrounding areas. For example, homes adjacent to New York’s High Line Park have not only outpaced the wider neighbourhood in value, but they also continued to appreciate while Manhattan’s luxury-tier housing market saw a small depreciation.
• In new developments, the before-and-after effects of public space interventions can’t be measured in the same way as existing places, but the study presented anecdotal evidence suggesting that high-quality public space helps developments outperform the market in terms of vacancy and values – for example, citing the residential values and retail quality at London’s Kings Cross.

Get their report here.

There are so many elements to creating and managing a mixed-use place – and an ever-growing body of research that emphasizes the importance of care and investment in place to each facet. A few of our recent favourites, specific to different aspects of real estate development, include:

• That use mix, the public realm, and cultural and community amenities create more compelling workplaces (Making Place: The Recalibration of Work, Life and Place – Revisited 2022, IPUT Real Estate Dublin, here) – which could differentiate, accelerate and improve commercial leasing
• That homes with walkability to parks, shops and restaurants can command higher rents or sale prices,(2023 Community and Transportation Preferences Survey, National Association of Realtors, here) – emphasizing the importance of ‘neighbourhood’ in the residential market.
• That placemaking, economic development and community building creates social impact in real estate development (Responsible Real Estate: Social Value, JLL, here) – in a tenant and investment landscape that is increasingly accountable to, and therefore values, ESG performance

Interested in finding out more about the connection between placemaking and real estate value? Please get in touch.