A toolkit to measure the value of place

Commercially valuing place continues to be a complex task, and the notion that a place can have a quantifiable value as a consequence of its identity has formed the basis of a number of my Shopping Centre News articles. In these articles, I have been challenging that new economic models will need to emerge to value, to value and add value to new-style bricks-and-mortar retail environments. In this article, I look to the London Underground and its associated transport networks for insights into how place can be calculably measured, and link this thinking to a toolkit for measuring retail environments. The proposition is that, through the monetisation of retail places, rather than stores, the delivery of place-based initiatives can not only be achieved, but contribute to the valuation process that makes projects possible.

Known as the Valuing Urban Realm Toolkit, Transport for London has created a new valuation tool that can calculate the monetary benefit of investing in high-quality urban realm. The Toolkit is the first of its kind, providing an appraisal tool that enables designers, planners, developers, governments and other proponents to prioritise investment, through the consistent evaluation of the economic benefits they provide against the costs of delivering them. Based on traditional cost-benefit analysis techniques, the Toolkit applies a recognised methodology to an unfamiliar case – the valuation of place.

The initiative has been driven by the Mayor of London, and a commitment to deliver higher-quality public domain across the Greater London Authority and the Transport for London network. It is based on the premise that a more pleasant, safe and welcoming environment generates increased patronage, which in turn can lead to the place as an attractor, the elevation of property values, and benefit to the community with respect to health and social benefits. For London, this has meant a three-stage process. In the first instance, Accent and Colin Buchanan, a conjoined transport, planning and economics consultancy, was engaged to research the willingness for the user to contribute to paying for the improvements to public realm. The findings concluded the preparedness for the user to pay. This user benefits approach has been key to securing public sector funding.

The second phase of work focused on the private sector. In this phase, research was carried out using ‘hedonic’ pricing to establish a value from real estate evaluations for commercial and residential uses, in proximity to the public realm improvements. The outcome showed the elevation of land-use values by collocation with high-quality place initiatives. This phase of work has direct application to the retail sector and has historically and inherently existed as part of the valuation of lease deals, if not ever explicitly described in these terms.

The big turning point is phase three of the London study. If a fundamental principle of economics is the importance of appraising all impacts, no matter that the outcomes may be difficult to predict or value, then it makes sense that investment models consider more sophisticated analysis that measures the wider social and economic impacts, as well as the direct ones. Enter the rise of placemaking. Placemaking is described most commonly as the practice of capitalising on a community’s or location’s assets, with the intention of creating public spaces that promote health, happiness and wellbeing. In the context of my previous Shopping Centre News article, which considered Porter’s theory of competitive advantage, this description is inadequate at communicating the value of place as an economic attractor. Placemaking is also most often considered both a process and a philosophy but, as a consequence, is notoriously difficult to define given both process and philosophy are associated with intent, rather than physical outcomes. One of the reasons for placemaking’s enigmatic nature is the complexity associated with quantifying what constitutes a good place.

It is for this reason that I have been promoting the idea that identity is more than place. This is the process of ensuring a place-based approach is supported and reinforced by culture, economics, market drivers, environment, governance, context, time … and money. A well-designed place does not ensure a successful or activated destination.

Placemaking must be the sum of many components. This includes high-quality design, but cannot be reliant upon it. In order for a place to transition to a destination it must be financially viable, contextually relevant, market-acceptable, contribute positively to the environment, harness current and future technologies, be acceptable to stakeholders, be of its time and be of high-quality design. This combination will achieve an identity for a place that is memorable, authentic and desirable in a competitive marketplace.

So how can we measure the apparently immeasurable?

Phase three of Transport for London’s Valuing Urban Realm Toolkit provides some clues. In this phase, traditional economic models have been augmented to establish a measuring device based on social, cultural and health benefits. The foundation for this study is the awareness that public transport patronage, as is the case for retail, is founded on walkability. The higher the walkability score, based on factors such as sightlines, safety, lighting, seating, and condition of the walking surface, the more likely the infrastructure will be used and, therefore, a calculable increase in footfall will follow. In a survey undertaken in central London, a new public domain for an unpopular street led to 99% of people preferring the new environment. More significantly, it also resulted in a 600% increase in footfall.

Given the nature of retail is inherently founded on pedestrian activity, translation of the application to retail environments is highly appropriate. The measures in the case of retail would appropriately consider views to activation, lighting and daylight, shelter and enclosure, day and night-time activation, legibility and wayfinding, materials and surfaces, permanent and temporary activities, technology overlay, economic performance and other qualities associated with the creation of a functional and destinational retail environment. Measuring the presence (or lack of presence) of these elements can provide a scale of public realm performance, with higher scores delivering a more attractive and destinational environment than those locations demonstrably lacking the qualities identified of a good place.

It is in this way that the retail environment can be measured for more than its leasability, turnover and vacancy rates.

It is for this reason that Hames Sharley, independent of the valuation tool being created by Transport for London, has simultaneously been developing a retail-based toolkit that can measure the performance of retail places, be they shopping centres, town centres, main streets, mixed-use or, in today’s lexicon, a combination of retail types. The Toolkit has been piloted with the South Australian Integrated Design Commission, who co-founded the original research, on a number of retail-based activity centres in Adelaide, including Norwood and Elizabeth. More recently, the Toolkit has been applied to a variety of projects in New South Wales, in order to engage with development boards, government bodies and stakeholder groups towards mutually agreeable outcomes. All parties want our cities, precincts and places to be activated, and retail is key to the success of these places. The Toolkit provides a means to understanding which investment needs to be made in a retail place so that it has a clear identity, provides an attractor for the community, and delivers sales targets.

The three key findings from Transport for London’s Valuing Urban Realm Toolkit, as summarised by the Urban Design department, demonstrate both the complexity and value of delivering high-quality public domain.

The key findings are:

• elements of the urban realm do not exist in isolation but are intertwined;
• health and wellbeing (and by extension happiness) are positively affected by space and community events; and
• social cohesion is positively affected by space and maintenance.

Today represents a step-change in retail place delivery. The possibilities for the future of retail places that are a focus of Hames Sharley’s Toolkit research include the integration of current and future technologies, tactical urbanism, quality of design and economic sustainability that combine to create a new model for valuing the retail place.

See Michelle Cramer‘s next article, ‘Urban retail success: Delivering place value for retail and cities’

See Michelle Cramer’s previous article, ‘The rise of the creative in place consumption’