ADDING VALUE
DELIVERING QUALITY AND ADDING VALUE 3
In developing large scale projects in areas of low demand, Crest Nicholson has recognised the necessity of creating a sense of place through strong design concepts from the earliest stage of development in order to raise confidence in the project and bring long-term value to both the developers and those people who are going to live there. At Port Marine, Crest Nicholson has converted a disused contaminated power station site into a mixed-use, mixed-tenure development, providing 3,420 homes, 69,680m2 of employment
and 60,390m2 of retail space when complete. A hierarchy of
streets, character areas, public, private and semi-private space, extensive hard and soft landscaping, public art works and varying building types have helped create a sense of location in an otherwise low-value site.
Stephen Stone, Chief Executive of Crest Nicholson explained that they as developers commonly invest 10-20% more in build costs than other developers, and that their build cost is
Estimating the value of good design
Port Marine, Portishead, Bristol
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The design of high-quality development with a balanced mix of properties at Port Marine, Portishead, Bristol has led to the creation of a prime development location in an otherwise low-value area.
commonly 50% of the sales price. Crest Nicholson offset costs by increasing density. Planners support increased density based on the quality proposed. They believe that they can generate a 15-20% increase in open market sales value because people want to buy into a good environment. This approach was found to work best on medium to large sites due to an increased opportunity to create location.
Crest Nicholson is committed to using external architects and producing bespoke schemes. Creating places brings value, both in terms of financial return and in building a positive reputation as a developer synonymous with quality.
‘It is important to get the right mix of properties within each phase to help speed of sales. Good design can sell property off plan. Rate of sale is as important as £ profit because the turnover is quicker – something that is often overlooked’, Stephen Stone sums it up.
3.1.2 Social and environmental benefits of good
urban design
Well-designed places deliver a wide range of social and environmental benefits. These are both positive externalities (such as low carbon emissions) which have a value to society, and whole-life cost savings to the consumer (such as reduced insurance as a result of lower crime).
The NWDA/RENEW Northwest1 study finds that well-
designed neighbourhoods which are well-managed and accommodate a mix of uses and tenures, 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
Such developments can deliver environmental savings more widely. The regulatory impact assessment for the Code for Sustainable Homes showed that the environmental and energy-saving benefits to consumers and society as a result of introducing the code were greater than the additional construction costs arising from its introduction.5
Mixed-use, higher-density, walkable neighbourhoods encourage local services and community interaction, making safer, healthier, more attractive places.
3.1.3 Value for money and Best Consideration
The way in which the public sector measures value when disposing of land differs from the approach taken by other landowners. The public sector aims to achieve value for money rather than simply the highest financial value for land. This enables it to look at the wider benefits that can be achieved by disposing of land in a way that will promote good urban design.
Central government departments and bodies are required to take account of the social, economic and environmental value for money of investments and disposals. Both the Treasury and the National Audit Office have noted that good design is ‘an essential ingredient in achieving value for money… a good building project must contribute to the environment in which it is located, deliver a range of wider social and economic benefits, and be adaptable to accommodate future uses’.6
The Treasury’s Green Book7 (which provides the framework
for appraising policies, programmes and projects for central government) sets out the principle that design quality can be a material non-financial consideration in evaluating the benefit of a project. It notes that value for money must be assessed over the whole lifetime of a project. This includes disposal (either sales proceeds or decommissioning costs), estimating the costs and benefits to society as a whole, not simply those directly relevant to the purchaser. Government Accounting is currently being rewritten and is expected to provide clearer guidance on assessing value for money within the context of the public sector as a whole rather than individual organisations.
Local authorities are required (under the Local Government Act 1972) to get best consideration for the land. However, following the introduction of their social, economic and environmental well-being power, local authorities are able to dispose of land at an undervalue of up to £2 million if wider well-being objectives are being delivered, without the Secretary of State’s consent.8
DELIVERING QUALITY AND ADDING VALUE 3.1
‘[At Brindley Place] we used a different architect for each of the three key buildings – Porphyrios, Stanton Williams and Sidell Gibson. This attracted three occupiers who fell in love with each building. One building was pre- let and although the other two were built speculatively, the conversations we had had with leading law and accountancy firms gave us the confidence to go ahead’ Roger Madelin, Joint Chief Executive of Argent Group plc explains.
He believes that raising the level of design puts discussions on a positive footing. ‘This has started conversations for us; quite often leading to lettings…Good development gives us something to be proud of, even if there is a gap in the letting. People feel it will help their business – “Wow, this is the kind of building we want to be in”. Raising efficiency of the business by 1% pays the rent.’