« Cities should have a clear vision of sustainable design financial benefits. »
Developments based on sustainable design principles can raise real estate values by 10-15%
(English Partnerships and Housing Corporation, 2007).
The benefits of sustainable communities go far beyond mere financial worth.
Neighbourhood with a mix of uses and tenure, and generous access to open space, are more likely to display:
Increased civic pride.
Improved social cohesion.
Reduced fear of crime.
Reduced levels of crime.
Relatively higher levels of physical and mental health.
A more efficient land footprint.
Reduced dependence on the car.
Reduced waste.
Improved sense of well-being and belonging.
Vitality.
(NWDA/Renew Northwest, 2007)
Sustainable planning reduces costs, increases profits and diminishes risks. The most significant opportunities are to:
Save costs by lowering impacts and speeding approval.
Heighten project revenues.
Capture land value increases.
Benefit the local economy.
Reduce risk with early engagement of stakeholders.
Build a reputation by promoting environmental efficiency.
Improve funding with better governance.
Cities can capture value out of the Density, Accessibility and Place Quality Dividends:
THE DENSITY DIVIDEND:
Sustainable design creates value through utilizing land efficiently, and planning and distributing uses and building types to create a sense of place.
THE ACCESSIBILITY DIVIDEND:
New interventions such as the creation of streets add value to the neighbourhood
THE PLACE QUALITY DIVIDEND:
Amenity spaces such as squares, parklands and waterfronts can significantly heighten the economic value of neighbouring properties and of the wider area
Market and consumer demand for sustainable neighbourhoods are robust.
76% of US millennials saying walkability was an important community characteristic (ULI, 2013)
Pedestrian-oriented places with access to public transportation garner higher rents and retail sales
(ChangeLab solutions, 2013).Cycle infrastructure can have a payoff, with homes near bike paths commanding a 10% price premium (Lindsey et al., 2013).
Walkable retail enlivens streets and improves their value (ULI, 2013).
MINIMIZING RISKS AND COSTS
Stakeholders’ involvement reduces risks
Engaging inhabitants on key sustainability issues and choices can take place in many ways, encompassing open dialogue on environmental and social impacts, public reporting, and ultimately through including them in decision-making procedures
Consultation leads to shared learning between the developers and the residents.
Stakeholder engagement increases community understanding and acceptance of neighbourhood improvement.
Failure to have such acceptance can raise operational risks and costs.
The Cost Reductions and Financial Returns of Sustainable Neighbourhoods
Creating sustainable neighbourhoods needs long-term funding and commitment.
Early collaboration with local authorities and key stakeholders will enable developers to understand obligations and to reduce the time needed to obtain planning authorization that can significantly increase costs.
Design codes can give assurance that projects that fulfil their requirements will get approval for planning quicker and that adjacent parcels will meet consistent standards
« Sustainable neighbourhoods demonstrate cost savings from environmental improvements. »
Leveraging the neighbourhood’s key assets for creating value
The key assets of any neighbourhood for creating value can be quantified using 3 types of values:
Node Value: measures the connections of the neighbourhood within the network of transportation of the wider metropolitan area and its centrality within this network
Place Value describes the quality of the urban fabric and its integration with nature, the mix of uses and the vibrancy of urban life, the accessibility at walking distance of amenities, schools and healthcare
Market Potential Value describes the attractiveness of the neighbourhood for future development.
This framework (the 3V framework) allows policy makers to assess development potential of neighbourhoods in a proactive and dynamic way and take the appropriate actions to create value. Not only are the values of each neighbourhoods unevenly distributed across metropolitan areas; the different types of values for each neighbourhood may also differ greatly.
The most promising areas of development are the ones where increased connectivity through public investment comes in places where there is room for further development.
The actionable strategies depend on the relative strengths of values in each neighbourhood. Key strategies to increase value of a neighbourhood development are thus based on increasing the values mentioned above.