SPR Webinar: The Value of Mixed Use
26 April 2023
In this webinar, the moderator Cleo Folkes of Property Overview asked whether large mixed use schemes are good value from the viewpoint of the investor and wider society, or whether their complexity can mean that they are often not worth the bother.
The overwhelming view of the speakers – all of whom have been involved with this kind of project – was that they are resoundingly worthwhile.
Polly Plunket-Checkemian of Aletheia, a veteran at managing and improving a variety of mixed use estates, proposed that such schemes can be effective for value protection as well as value creation, given that they can often prove flexible over time. The best mixed use projects are more than the sum of their parts, and she cited the examples of Stratford City and Kings Cross as bearing this out. Key to their success has been planning an estate management model at the outset which can foster ongoing adoption of their facilities by the community. This is something that can only evolve organically and requires a governance model with flexibility built in.
In her presentation. Elizabeth Wright of Muse Developments suggested that an important element of mixed use value creation lies in the potential for placemaking, which in many cases means bringing together a wide range of partners from both the private and the public sectors. This is critical not just for the initial funding of a scheme but also its ongoing evolution, with local authorities often playing a key role in making more affordable projects (for tenants) financially viable. Like all the speakers, Wright also emphasised the fundamental importance of building in both environmental and social sustainability across the construction and subsequent management of the scheme.
The importance of taking a rounded perspective on a development was also emphasised by Elad Eisenstein of Aecom in his opening presentation; he quoted Aristotle’s comment that ‘a good city exists for a good life.’ To fulfil this objective, he proposed that mixed use schemes need to pay particular attention to the ground floor of their buildings, which is where economic and social interaction mostly takes place. He also advocated a ‘slow city’ model as typified by Amsterdam, where people move mainly by bicycle or on foot, as ideal for reinforcing these connections. At the same time proximity to regional transport nodes, as with Stratford and Kings Cross, can provide a further boost. With Stratford, the value of the ground floor extends more widely to include the public spaces. Although created for the purpose of hosting events, the Olympic Park is now much more integrated with the needs of the local community.
Although they were overwhelmingly positive about the potential of large mixed use schemes for creating value, there can be significant hurdles to overcome to make it happen. Plunket-Checkemian noted that different uses might not always be natural bedfellows, particularly in terms of meeting the needs of residential and visitor populations, while finding the financial resources to manage common amenities could also be challenging in the long run. Wright proposed that assembling land required for big schemes can be a major hurdle, as is building a partnership with a strong long-term vision. Once this has been achieved, there is then the challenge of keeping everyone focused on that vision as the project evolves – which can be deflected by political shifts, for example.
Yet complexity can itself bring advantages. Plunket-Checkemian suggested that having a choice of exit points can help derisk cash flows for individual investors. It can also provide greater resilience than single use in a difficult business climate and allow for the flexibility to react to emerging economic trends.
Tim Horsey