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Urban Design in the Real Estate Development Process

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To Joe and Pat Tiesdell (Steve’s parents); to Sylvia Adams, and in memory of Richard Adams (David’s parents)

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Urban Design in the Real Estate Development Process

Edited by

Steve TiesdellSenior Lecturer in Public PolicyDepartment of Urban Studies, University of Glasgow

David AdamsIan Mactaggart Chair of Property and Urban StudiesUniversity of Glasgow

A John Wiley & Sons, Ltd., Publication

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This edition first published 2011 © 2011 Blackwell Publishing Ltd.

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Library of Congress Cataloging-in-Publication Data

Urban design in the real estate development process / edited by Steve Tiesdell, David Adams. p. cm. Includes bibliographical references and index. ISBN 978-1-4051-9219-4 (hardcover : alk. paper) 1. City planning. 2. Real estate development. I. Tiesdell, Steven. II. Adams, David, 1954– HT165.5.U723 2011 307.1′16–dc22

2010047411

A catalogue record for this book is available from the British Library.

This book is published in the following electronic formats: ePDF [9781444341157]; Wiley Online Library [9781444341188]; ePub [9781444341164]; Mobi [9781444341171]

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All reasonable attempts have been made to contact the owners of copyrighted material used in this book. However, if you are the copyright owner of any source used in this book which is not credited, please notify the Publisher and this will be corrected in any subsequent reprints or new editions.

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The Royal Institution of Chartered Surveyors is the mark of property professionalism worldwide, promoting best practice, regulation and consumer protection for business and the community. It is the home of property related knowledge and is an impartial advisor to governments and global organisations. It is committed to the promotion of research in support of the efficient and effec-tive operation of land and property markets worldwide.

Real Estate IssuesSeries Managing EditorsStephen Brown Head of Research, Royal Institution of Chartered

SurveyorsJohn Henneberry Department of Town & Regional Planning, University

of SheffieldK.W. Chau Chair Professor, Department of Real Estate and

Construction, The University of Hong KongElaine Worzala Professor, Director of the Accelerated MSRE, Edward

St. John Department of Real Estate, Johns Hopkins University

Real Estate Issues is an international book series presenting the latest think-ing into how real estate markets operate. The books have a strong theoreti-cal basis – providing the underpinning for the development of new ideas.

The books are inclusive in nature, drawing both upon established techniques for real estate market analysis and on those from other academic disciplines as appropriate. The series embraces a comparative approach, allowing the-ory and practice to be put forward and tested for their applicability and rel-evance to the understanding of new situations. It does not seek to impose solutions, but rather provides a more effective means by which solutions can be found. It will not make any presumptions as to the importance of real estate markets but will uncover and present, through the clarity of the thinking, the real significance of the operation of real estate markets.

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Greenfields, Brownfields & Housing DevelopmentAdams & Watkins9780632063871

Planning, Public Policy & Property MarketsAdams, Watkins & White9781405124300

Housing & Welfare in Southern EuropeAllen, Barlow, Léal, Maloutas & Padovani9781405103077

Markets & Institutions in Real Estate & ConstructionBall9781405110990

Building Cycles: Growth & InstabilityBarras9781405130011

Neighbourhood Renewal & Housing Markets: Community Engagement in the US and UKBeider9781405134101

Mortgage Markets WorldwideBen-Shahar, Leung & Ong9781405132107

The Cost of Land Use Decisions: Applying Transaction Cost Economics to Planning & DevelopmentBuitelaar9781405151238

Urban Regeneration & Social Sustainability: Best Practice from European CitiesColantonio & Dixon9781405194198

Urban Regeneration in EuropeCouch, Fraser & Percy9780632058419

Urban Sprawl in Europe: Landscapes, Land-Use Change & PolicyCouch, Leontidou & Petschel-Held9781405139175

Real Estate & the New Economy: The Impact of Information and Communications TechnologyDixon, McAllister, Marston & Snow9781405117784

Economics & Land Use PlanningEvans9781405118613

Economics, Real Estate & the Supply of LandEvans9781405118620

Management of Privatised Housing: International Policies & PracticeGruis, Tsenkova & Nieboer9781405181884

Development & Developers: Perspectives on PropertyGuy & Henneberry9780632058426

The Right to Buy: Analysis & Evaluation of a Housing PolicyJones & Murie9781405131971

Housing Markets & Planning PolicyJones & Watkins9781405175203

Mass Appraisal Methods: An International Perspective for Property ValuersKauko & d’Amato9781405180979

Economics of the Mortgage Market: Perspectives on Household Decision MakingLeece9781405114615

Towers of Capital: Office Markets & International Financial ServicesLizieri9781405156721

Making Housing More Affordable: The Role of Intermediate TenuresMonk & Whitehead9781405147149

Global Trends in Real Estate FinanceNewell & Sieracki9781405151283

Housing Economics & Public PolicyO’Sullivan & Gibb9780632064618

International Real Estate: An Institutional ApproachSeabrooke, Kent & How9781405103084

British Housebuilders: History & AnalysisWellings9781405149181

Transforming Private LandlordsCrook & Kemp9781405184151

Urban Design in the Real Estate Development ProcessTiesdell & Adams9781405192194

Real Estate Finance in the New Economic World: Development of Deregulation and InternationalisationTiwari & White9781405158718

Office Markets & Public PolicyDunse, Jones & White9781405199766

Books in the series

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Contents

Preface xiAcknowledgements xiiiContributors xiv

1 Real Estate Development, Urban Design and the Tools Approach to Public Policy 1

Steve Tiesdell and David Adams

Introduction 1 Real estate development 3 Opportunity space theory 7 The tools approach to public policy 11 Shaping instruments 15 Regulatory instruments 19 Stimulus instruments 24 Capacity-building instruments 25 Developers’ decision environments 29

2 Masterplanning and Infrastructure in New Communities in Europe 34

Nicholas Falk

Introduction 34 Differences between the UK and Europe 37 Challenges for sustainable development 38 European success stories 43 Joined-up planning in the Randstad 48 Conclusion: lessons for the UK 51

3 Design Coding: Mediating the Tyrannies of Practice 54 Matthew Carmona

Introduction 54 The three tyrannies 55 From development standards to design codes 60 The research findings 64 Conclusion 71

4 Proactive Engagement in Urban Design – The Case of Chelmsford 74

Tony Hall

Introduction 74 Making the turnaround 75

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viii Contents

The need for negotiation 79 Two examples 79 Reflections on the developers’ response 85 Conclusion 90

5 Plot Logic: Character-Building Through Creative Parcelisation 92 Tim Love and Christina Crawford

Introduction 92 Setting the rules 93 Parcelling and subdivision strategies 94 The primacy of the urban realm 96 The pitfalls of flexibility 98 Economic viability of low-scale, densely distributed buildings 101 Alternative models 102 Conclusion 112

6 The Business of Codes: Urban Design Regulation in an Entrepreneurial Society 114

Nicholas J. Marantz and Eran Ben-Joseph

Introduction 114 Zoning America 115 Developing America 121 Designing the American future 128 Conclusion 134

7 Good Design in the Redevelopment of Brownfield Sites 137 Paul Syms and Andrew Clarke

Introduction 137 Redeveloping and reusing brownfield sites: the policy

and regulatory context 139 Stimulus instruments in practice 143 Conclusion 157

8 Competitions as a Component of Design-Led Development (Place) Procurement 159

Steven Tolson

Introduction 159 The place promoter 161 The deliverer and competition participant 162 The (end) place matters most 167 The competition 167 Conclusion 180

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Contents ix

9 Design Review – An Effective Means of Raising Design Quality? 182

John Punter

Introduction 182 Origins, emergence and critiques of design review

internationally 183 The typology of design review in England, Scotland

and Wales 185 National design review: the genesis of CABE’s procedures

and processes 186 How design review can increase the opportunity space

for design 190 The effectiveness of design review 193 Conclusions: design review and the quality

of development control 196

10 ‘Business as Usual?’ – Exploring the Design Response of UK Speculative Housebuilders to the Brownfield Development Challenge 199

David Adams and Sarah Payne

Introduction 199 The design debate around speculative housing development 201 The conventional approach to design and construction

in speculative housebuilding 206 Responding to the challenge of brownfield development 210 Conclusion 215

11 Physical-Financial Modelling as an Aid to Developers’ Decision-Making 219

John Henneberry, Eckart Lange, Sarah Moore, Ed Morgan and Ning Zhao

Introduction 219 Design quality and development viability 219 Visualisation and financial appraisal 225 Conclusion 233

12 Design Champions – Fostering a Place-Making Culture and Capacity 236

Steve Tiesdell

Introduction 236 The UK local government context 238 The design champion as change agent 239

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x Contents

Edinburgh’s design champion initiative 244 Conclusion 252

13 Value Creation Through Urban Design 258 Gary Hack and Lynne B. Sagalyn

Introduction 258 Design and development projects 260 Strategies for enhancing value 270 Coupling urban design and development 278

14 Connecting Urban Design to Real Estate Development 282 Steve Tiesdell and David Adams

Introduction 282 Urban design and development economics 283 Opportunity space and developer–designer relations 286 Policy choices and policy design 291 Towards a research agenda 297

References 299Index 316

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Preface

We are not creatures of circumstance, we are the creators of circumstance.

Benjamin Disraeli (1827)(Vivian Grey – volume II, book VI, chapter 7)

Given the development of urban design over the past 50 years and especially the past two decades, there is, at least to some degree, significant consensus about the qualities of ‘good’ urban design and of ‘better’ places. Good places are, for example, those where people want to live, work, rest, play and invest. A number of urban design policy documents also set out general qualities of good urban design – though what these mean for any specific time and place needs to be negotiated and agreed at the local level by key stakeholders and key interest groups. The contemporary challenge for policy and practice, however, is to ensure the delivery of better places. Thus, while the Urban Design Compendium (Llewelyn-Davies 2000) concentrated on what was con-sidered good urban design in a UK context, some seven years later a second volume (Roger Evans Associates 2007) focused on delivering quality places.

Bringing together urban design, real estate development and the tools approach in public policy, this book explores the relationship between state and market with respect to design and development processes and outcomes. The overarching research question is:

● How successful are particular public policy instruments in framing (and reframing) the relationship between designers and developers to the advan-tage of urban design (place) quality?

Subsidiary questions are:

● What public policy instruments are available to facilitate better quality urban development and better places?

● How do particular policy instruments impact on the decision environ-ments or opportunity space of developers and designers?

● In what other ways do particular policy instruments impact on design quality?

● Are some types of policy instruments more effective than others in facili-tating higher quality development and better places?

The central research inquiry thus concerns the impact of urban design pol-icy instruments on developers’, and thence on designers’, decision-making

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xii Preface

and, in particular, their impact on those factors – reward, risk, uncertainty, time, etc – that would make them more likely, or less likely, to provide higher quality development and to contribute to producing better places. The underlying proposition is that better quality urban design comes about when private developers decide, or are either motivated or compelled, to produce it as an integral part of their business strategies. This raises the important issue of how public policy instruments can be deployed to encourage/compel this shift.

The research questions posed in this book do not have simple and straight-forward answers, and up to now relevant research has neither been consoli-dated nor discussed in terms of a policy instruments framework. In that context, this book seeks to advance the policy agenda in the hope that a clear focus on connecting high quality urban design to the practicalities of the real estate development process will reinforce momentum towards the creation of better places.

Steve Tiesdell and David AdamsUniversity of Glasgow

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Acknowledgements

As editors, we would like to thank all our fellow contributors to the book for their wholehearted participation in this venture, and for their patience, good humour and constructive responses to our numerous requests and editorial recommendations.

We would particularly wish to acknowledge the encouragement given to us by Madeleine Metcalfe and Cat Oakley at Wiley-Blackwell both in devel-oping the concept for the book and in helping us with all the practicalities of seeing it through to completion. We would also grateful to Maggie Reid at the University of Glasgow for her thorough and conscientious work in compiling the index.

We wish to thank Building Design for permission to reproduce textual material in Chapter 9 and the Carnyx Group for permission to do likewise in Chapter 12. Throughout the book, UK Parliamentary material is reproduced with the permission of the Controller of HMSO on behalf of Parliament. All other permissions to reproduce photographs, diagrams and other illustrative material are acknowledged where the relevant illustra-tions appear in the text.


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Contributors

David Adams holds the Ian Mactaggart Chair of Property and Urban Studies at the University of Glasgow. His main research interests are in state– market relations in land and property, with a particular interest in land, planning and regeneration policy. He has researched and published widely in these fields, most notably as author of Urban Planning and the Development Process (1994), co-author of Land for Industrial Development (1994) and Greenfields, Brownfields and Housing Development (2002) and as co-editor of Planning, Public Policy and Property Markets (2005).

Eran Ben-Joseph is the chair of the PhD programme in urban planning at the Massachusetts Institute of Technology. His research and teaching areas include urban and physical design, design standards and regula-tions, sustainable site planning technologies and urban retrofitting. He has published numerous articles, monographs and book chapters and authored or co-authored Streets and the Shaping of Towns and Cities (2003), Regulating Place (2004), The Code of the City (2005) and re:New Town (2010)

Matthew Carmona is Professor of Planning & Urban Design and Head of the Bartlett School of Planning, UCL. His research has focused on the policy context for delivering better quality built environments. His background is as an architect and a planner, and he has published widely in the areas of urban design, design policy and guidance, housing design and development, measuring quality and performance in planning, and on the management of public space.

Andrew Clarke is an associate director with Taylor Young Ltd. He is an urban designer and town planner and has been with the practice for ten years. In this time he has worked on, and led, projects producing many design guides for sites and areas, design frameworks and strategies and masterplanning projects. Andrew has experience in urban design training and research and is at the forefront of the urban design agenda. He is committed to delivering practical and deliverable design solutions which are contextually based and provide creative responses to client briefs and aspirations.

Christina Crawford is an architect and urban designer currently pursuing a PhD in architectural history and theory at Harvard University. She worked for several years at Utile, Inc., a planning and architecture firm based in Boston, and teaches architectural history and theory at Northeastern

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Contributors xv

University. Her professional work includes designs for discrete architectural projects, masterplans for local municipalities and open space design for a waterfront city in Dubai, UAE. Christina received her undergraduate degree in Architecture and East European Studies from Yale University and a Masters in Architecture from the Harvard Graduate School of Design.

Nicholas Falk, the founder director of URBED (Urban and Economic Development), is an economist, urbanist and strategic planner, with over 30 years’ experience of helping towns and cities plan and deliver urban regeneration and sustainable growth. Co-author of a range of publications, including Sustainable Urban Neighbourhood: Building the 21st century home with David Rudlin, he has undertaken pioneering research into lessons to be drawn from European experience in planning new communities. He is a Visiting Professor at the University of the West of England.

Gary Hack is Professor of Urban Design and Dean Emeritus in the School of Design, University of Pennsylvania. He practices urban design and is author (with others) of Local Planning (2009), Urban Design in the Global Perspective (2006), Global City Regions (2000) and Site Planning (1984), as well as many chapters and articles.

Tony Hall is a Professor within the Urban Research Program at Griffith University, Brisbane, Australia, where he is carrying out research on sustain-able urban form. Until 2004, he was Professor of Town Planning at Anglia Ruskin University, Chelmsford, and had notable publications in the field of design guidance. He was also an elected member of Chelmsford Borough Council and successfully led its planning policy at the political level for seven years leading to the award to the Council by the UK Govern ment of Beacon Status for the Quality of the Built Environment in 2003.

John Henneberry is Professor of Property Development Studies in the University of Sheffield, Department of Town and Regional Planning. His interests focus on the structure and behaviour of the property market and its relation to the wider economy and polity. He has researched and published widely in this field. John is a member of the editorial boards of the Journal of Property Research, the Journal of European Real Estate Research and Town Planning Review. He is an Editor of Regional Studies with responsi-bility for land, property, planning and regional development. John was recently appointed an Academician of the Social Sciences.

Eckart Lange is Professor and Head of the Department of Landscape at the University of Sheffield. His research focuses on how landscape and environ-mental planning can influence anthropogenic landscape change, and how

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xvi Contributors

landscape visualisation and modelling can be used to explore human reac-tion to these changes. He holds a PhD and Habilitation from ETH Zurich, a Master in Design Studies from Harvard University and a Dipl.-Ing. in Landscape Planning from TU Berlin. He is a member of the scientific com-mittee of the European Environment Agency, as the scientific advisor in the area of Spatial Planning and Management of Natural Resources.

Tim Love is the founding principal of Utile, an architecture and urban design firm located in Boston. He is also a tenured associate professor at the Northeastern University School of Architecture where he teaches housing, urban design and architectural theory. In the spring of 2009, Tim coordi-nated and taught the required urban design studio at Yale University; and from 1997 until 2003, he gave weekly lectures on design tactics to first-year students at the Harvard Graduate School of Design. Tim is also a frequent contributor to the Harvard Design Magazine and a Contributing Editor of Places/Design Observer. He writes about urban design and market-driven building types, among other issues, for both publications.

Nicholas J. Marantz is a PhD student in MIT’s Department of Urban Studies & Planning. He holds a JD from Harvard Law School and a Master in Urban Planning from the Harvard Graduate School of Design. He is an MIT Presidential Fellow and a National Science Foundation Graduate Research Fellow. His research analyses the regulation of the built environment and, more generally, the political economy of local decision-making.

Sarah Moore is a researcher on the Urban River Corridors and Sustainable Living Agendas (URSULA) project at the University of Sheffield. Funded by EPSRC, URSULA is a four-year, interdisciplinary project with the working hypothesis that there are significant social, economic and environmental gains to be made with innovative, integrated interventions within river cor-ridors. Originally a biologist, Sarah now undertakes research in two main areas of urban regeneration: the impact of design – in terms of building func-tion and development layout – on the financial viability of development schemes, and storm water disconnection to improve water quality, quantity and amenity values of urban areas.

Ed Morgan is a computer scientist with special interest in landscape visualisation. He is a part-time researcher on the EPSRC-funded Urban River Corridors and Sustainable Living Agendas (URSULA) project at the University of Sheffield, exploring the use of real-time 3D visualisation software to produce virtual models of future design scenarios in various riverside areas of Sheffield. This involves utilisation of various software (including Simmetry 3d), which he has developed and continues to develop commercially.

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Sarah Payne is a Research Associate in the Centre for Urban Policy Studies at the University of Manchester. Her PhD, undertaken at the University of Glasgow, assessed the impact of the brownfield development policy agenda on the structure and workings of the UK speculative housebuilding indus-try. After her doctoral studies, Sarah completed two years’ work in the pri-vate sector as a land buyer for a major housing developer. Her current research interests include brownfield development, the residential develop-ment process and the UK speculative housebuilding industry.

John Punter is Professor of Urban Design in the School of City and Regional Planning at Cardiff University, and previously taught at Strathclyde, Reading and York (Toronto) universities. He is a chartered town planner and a mem-ber of the Urban Design Group. His books include Design Control in Bristol (1990), The Design Dimension of Planning (1997), Design Guidelines in American Cities (1999), The Vancouver Achievement (2003) Capital Cardiff 1975–2020 (2006) and Urban Design and the British Urban Renaissance (2009). He is a Director of the Design Commission for Wales and was Founder-Chair, now Co-Chair, of its Design Review Panel.

Lynne B. Sagalyn is Earle W. Kazis and Benjamin Schore Professor of Real Estate and Director of the Paul Milstein Center for Real Estate in the Columbia Business School. She is the author of Times Square Roulette (2001), Cases in Real Estate Finance and Investment Strategy (1999), and co-author of Downtown Inc. (1989) as well as several other books and many chapters and articles.

Paul Syms is a chartered planning and development surveyor, who has spent most of the last 35 years working as a consultant, advising on the redevelop-ment and reuse of brownfield land. Between 2004 and 2008 he was a director at English Partnerships, responsible for the National Brownfield Strategy for England. He is now an Honorary Professor at the University of Manchester and Chair of the RICS Education Trust, the surveying profession’s leading research grant awarding body. His publications include Contaminated Land: The practice and economics of redevelopment (1997), Previously Developed Land: Industrial activities and contamination (2004) and Land, Development & Design (2010, second edition).

Steve Tiesdell is Senior Lecturer in Public Policy at the Department of Urban Studies, University of Glasgow. He is an architect and town planner, with research interests in urban design, urban regeneration, public policy and state–market relations in land and property development. He is author (with others) of Public Places – Urban Spaces: The Dimensions of Urban Design (2010) and editor (with Matthew Carmona) of the Urban Design Reader (2006), as well as many chapters and articles.

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xviii Contributors

Steven Tolson is a chartered surveyor specialising in property valuation and development work for the public and private sectors. His postgraduate urban design studies developed a niche interest in the value and facilitation of good place-making. His work on masterplans includes such projects as Crown Street, PARC URC, Glasgow’s Homes for the Future and The Drum, Bo’ness. He is currently a Director of Ogilvie Group Developments, engaged in property regeneration. Steven lectures in urban design and development at a number of Scottish Universities and is a member of RICS Scotland Planning and Development Board, and chairs the RICS Scotland Regeneration Forum.

Ning Zhao obtained her first degree in Urban Planning in Zhejiang University in 2006. As one of the top two undergraduate students in the department, she was recommended directly as a PhD student of architecture at the university without further examination. In 2008, she was awarded a state scholarship to study in the University of Sheffield as a visiting researcher on the URSULA project, where she has worked with John Henneberry on physical- financial modelling. Ning’s research focuses on urban redevelop-ment and financial analysis of physical development. Four of her papers have been published in Chinese core periodicals.

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Urban Design in the Real Estate Development Process, First Edition. Edited by Steve Tiesdell and David Adams.© 2011 Blackwell Publishing Ltd. Published 2011 by Blackwell Publishing Ltd.

1Real Estate Development, Urban Design and the Tools Approach to Public Policy


Introduction

Urban design and place-making involves two key challenges – the first involves recognising what makes ‘good’ urban design and what constitutes ‘better’ places. The second involves delivering good urban design and creat-ing better places on the ground. The first challenge involves, inter alia, devel-oping and reflecting on normative theory about what constitutes a ‘good’ place. The second challenge typically requires close engagement with the real estate development process. This book deliberately focuses on the role and significance of design in the real estate development process, on the decision-making of key development actors and on the relationship between developers and designers. Its overarching object is to explore how higher quality development and better places can be achieved in practice through public policy (i.e. by state actions). It does not, however, interrogate the mean-ing of higher quality development, or of better places, which have both been addressed at length elsewhere. Instead, for the purpose of analysis, we intend to set aside these issues and focus clearly on delivery. We therefore make the assumption that, in any particular circumstance, ‘higher quality’ and ‘better’ can be defined and agreed and, in turn, made the object of public policy and design processes.1 If we know – or think we know – what better places are, it then becomes essential to understand how best to achieve them.

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2 Urban Design in the Real Estate Development Process

Urban design can be considered a process of enabling better places for people than would otherwise be created – this is becoming more commonly referred to as ‘place-making’. In this study, the primary concern is with urban design as public policy (Barnett 1974; 1982), reflecting its increasing prominence as a policy area in the UK and in many other countries. Although, in the narrowest sense, public policy on urban design might be equated to a planning or zoning system, we see it as a much wider activity, encompass-ing a fuller spectrum of state activities.

Urban design can be understood as a direct design and as an indirect design activity. George (1997) termed these design activities first-order and second-order design. In first-order design, the urban designer is a direct designer or ‘author’ of the built environment or a component of it – that is, the designer of a building, a public space, a floorscape, street furniture, an urban event or festival etc – in other words, a relatively discrete ‘project’ of some sort.2 In second-order design, urban designers design the decision environments within which other development actors – developers, funders, sundry design-ers, surveyors etc – necessarily operate.3 Decision environments are typi-cally designed by means of plans, strategies, frameworks etc, but also by deployment and modulation of incentives and disincentives, such as finan-cial subsidies, discounted land or infrastructure provision. Generally (though not exclusively) undertaken by the public sector, second-order design is sim-ilar to planning and to governance.

Second-order urban design occurs before the design of the development proposal/project, and is both proactive and place-shaping. It shapes the design and development processes by creating a frame for acts of first-order design. By setting design constraints and potentials, second-order design can thus give public policymakers significant influence on first-order design.4

As a second-order design activity, urban design can be considered similar to much contemporary governmental practice in which, as (Salamon 2002: 15) suggests, public managers must devise incentive systems that obtain coopera-tion from actors over whom they have only limited control. Those who see governments as hierarchies believe that power flows downwards and out-wards from the top or centre, and consider that policy decisions can be imple-mented through ‘command-and-control’. Increasingly, however, this is an outdated view of the relationship between policy and implementation. Instead, the contemporary focus is on the processes of governance, with net-work metaphors frequently employed to describe and explain the institutional structure and operation of governance systems. Seen as systems of interacting networks of state and non-state actors, power is diffuse, with all actors having some resources with which to bargain in pursuit of their own ends.

The concept of governance means that state actors must operate in new ways: rather than command-and-control, their primary operating mechanism becomes bargaining and negotiation: ‘Instead of issuing orders, public


Real Estate Development, Urban Design and the Tools Approach to Public Policy 3

managers must learn how to create incentives for the outcomes they desire from actors over whom they have only imperfect control.’ (Salamon 2002: 15, emphasis added). Arguing that network governance shifts the emphasis in policy delivery from (direct) management to (indirect) enablement, Salamon (2002: 16–17) highlights three enablement skills:

(1) Activation skills – those required to activate the networks of state and non-state actors in order to address public problems.

(2) Orchestration skills – analogous to those required of a symphony conductor in getting a group of skilled musicians to perform a given work in harmony and on cue so that the result is a piece of music rather than a cacophony.

(3) Modulation skills – those required to manipulate rewards and penalties to elicit cooperative behaviour from interdependent actors.

This is highly significant for urban designers working in or for the public sector, because it closely resembles the task they face and, in turn, the skills they need.

Providing the context for the book, this chapter is in four main parts. The first explores the real estate development process. The second discusses opportunity space theory. The third introduces the tools approach in public policy, discusses urban design policy instruments and presents a new typology. The fourth part discusses developers’ decision environments, and then outlines the structure of the book.

Real estate development

The real estate development process is a production process that creates the built environment. Acting as a form of intervention, public policy is a means of managing – ‘steering’ – real estate development, in pursuit of policy-shaped, rather than merely market-led, outcomes. To operate effectively, such policies and policymakers must have knowledge of the real estate development process, the calculus of risk and reward that drives it, the interests of and constraints upon key development actors – developers, designers, landowners, investors etc – and, as explained later, the likely impact of policy instruments on key actors’ decision environments.

Real estate development is highly cyclical and volatile. The old adage of ‘loca-tion, location, location’ oversimplifies the factors that make a successful devel-opment: both the design quality of the product and the timing of delivery are now recognised as being equally important to development success as the right location (Adams & Tiesdell 2010). In recent years, the neat separation between public and private-sector development has also begun to break down: very few



development projects occur entirely within the private sector, unmediated by any form of public regulation and intervention, and development is increas-ingly a process of co-production between public and private sectors.

State–market relations in real estate can be approached from various dis-ciplinary perspectives. At a simple level, it is possible to identify the various tasks or events involved in the process of development and to pinpoint those occasions when state and market interact (Barrett et al. 1978). At a more advanced level, an agency-based form of analysis recognises the way in which important roles within the development process – landowner, devel-oper, designer, financier and regulator etc – are played out by a range of peo-ple and organisations, sometimes separately and sometimes in combination. Such forms of analysis also begin to highlight the power relations involved in development, and to explain how these actors come together in complex networks to constitute and reconstitute the structural context within which development takes place (Doak & Karadimitriou 2007).

As previous reviews of models of the development process have shown (Gore & Nicholson 1991; Healey 1991), state–market relations in real estate are not the exclusive possession of economics, but have been addressed across the social sciences, showing that the real estate development process is not simply an economic process but is also highly social (Guy & Henneberry 2000; 2002a). As Michael Ball’s ‘structures of building provision model’ emphasises, development is a function of social relations specific to time and place involving a variety of key actors – landowners, investors, finan-ciers, developers, builders, various professionals, politicians, consumers etc (Ball 1986; 1998). At the same time, the state – both local and national – is an important actor both in its own right and as a regulator of other actors. Ball stresses how these relations must be seen in terms of both their specific linkages – functional, historical, political, social and cultural – and their engagement with the broader structural elements of the political economy.

Actors become involved in development to the extent that it contributes to achieving their basic objectives. Table 1.1 examines the motives of the main actors in the development process in terms of five considerations – timescale, financial strategy, functionality, external appearance and relation to context. The nature of development means that these objectives are bundled, with each actor internally trading-off between objectives. The objectives are also traded-off between actors. The latter cannot be taken as an unproblematic process – actors have different strengths and powers, ‘quality’ may be interpreted differently and achieving ‘better’ design may not be an objective shared by all participants. Examination of Table 1.1, for example, indicates a mismatch between supply and demand sides. Supply-side actors typically have short-term, financial and economic motives and tend to see the development as a financial commodity. Demand-side actors typically have long-term and ‘design’ objectives and tend to see the development as an environment to be used.


Tab

le 1

.1

Mot

ivat

ion

of d

evel

opm

ent a

ctor

s.

Fact

ors

of

mo

tiva

tio

n

Co

stD

esig

n is

sues

Dev

elo

pm

ent

role

s

Tim

esca

le

Fin

anci

al s

trat

egy

F

un

ctio

nal

ity

E

xter

nal

ap

pea

ran

ce

Rel

atio

n t

o c

on

text

Su

pp

ly-s

ide

acto

rs –

thos

e w

ho ‘p

rodu

ce’ t

he d

evel

opm

ent o

r co

ntrib

ute

to it

s pr

oduc

tion

Lan

do

wn

erTr

ansi

ent

Pro

fit

max

imis

atio

nN

oN

oN

oD

evel

op

ers

Tran

sien

tP

rofi

t m

axim

isat

ion

Yes

But

onl

y as

a m

eans

to

finan

cial

end

Yes

But

onl

y as

a m

eans

to fi

nanc

ial

end

Yes

To e

xten

t tha

t the

re a

re

posi

tive

or n

egat

ive

exte

rnal

ities

Fu

nd

ers

(sho

rt-t

erm

de

velo

pmen

t fin

ance

)

Tran

sien

tP

rofi

t m

axim

isat

ion

No

No

No

Bu

ilder

Tran

sien

tP

rofi

t m

axim

isat

ion

No

Yes

No

Ad

vise

r I

e.g.

Man

agin

g A

gent

En

du

rin

gP

rofi

t m

axim

isat

ion

/se

ekin

gYe

sYe

sB

ut p

rimar

ily a

s a

mea

ns to

fin

anci

al e

nd

No

Ad

vise

r II

e.g.

Des

igne

rTr

ansi

ent

Pro

fit

max

imis

atio

n/

seek

ing

Yes

Yes

But

indi

rect

ly, t

o th

e ex

tent

that

ex

tern

al a

ppea

ranc

e re

flect

s on

th

em a

nd th

eir

futu

re b

usin

ess

No

Dem

and

-sid

e ac

tors

– th

ose

who

‘con

sum

e’ th

e de

velo

pmen

t

Inve

sto

rs

(long

-ter

m in

vest

men

t fu

ndin

g)

En

du

rin

gP

rofi

t m

axim

isat

ion

Yes

But

prim

arily

as

a m

eans

to fi

nanc

ial e

nd

Yes

But

prim

arily

as

a m

eans

to

finan

cial

end

Yes

To e

xten

t tha

t the

re a

re

bene

fits

to m

akin

g po

sitiv

e co

nnec

tions

Occ

up

iers

En

du

rin

gC

ost

min

imis

atio

nYe

sYe

sB

ut o

nly

to th

e ex

tent

th

at e

xter

nal a

ppea

ranc

e sy

mbo

lises

/rep

rese

nts

them

an

d th

eir

busi

ness

Yes

To th

e ex

tent

that

ther

e ar

e be

nefit

s to

mak

ing

posi

tive

conn

ectio

ns

(con

tinue

d)


Tab

le 1

.1

(con

t’d).

Fact

ors

of

mo

tiva

tio

n

Co

stD

esig

n is

sues

Dev

elo

pm

ent

role

s

Tim

esca

le

Fin

anci

al s

trat

egy

F

un

ctio

nal

ity

E

xter

nal

ap

pea

ran

ce

Rel

atio

n t

o c

on

text

Ad

jace

nt

lan

do

wn

ers

En

du

rin

gP

rote

ct p

rop

erty

va

lues

No

Yes

To th

e ex

tent

that

new

de

velo

pmen

t has

pos

itive

or

neg

ativ

e ex

tern

aliti

es

Yes

To th

e ex

tent

that

new

de

velo

pmen

t has

po

sitiv

e or

neg

ativ

e ex

tern

aliti

esC

om

mu

nit

y (l

oca

l)E

nd

uri

ng

Neu

tral

Yes

To th

e ex

tent

that

bu

ildin

gs a

re u

sed

by g

ener

al p

ublic

Yes

To th

e ex

tent

that

it d

efin

es a

nd

form

s pa

rt o

f pub

lic r

ealm

Yes

Reg

ula

tory

act

ors

– th

ose

who

‘reg

ulat

e’ th

e de

velo

pmen

t

Pu

blic

sec

tor

En

du

rin

gN

eutr

al (

in p

rinci

ple)

Yes

Yes

To th

e ex

tent

that

it fo

rms

part

of

a gr

eate

r w

hole

Yes

To th

e ex

tent

that

it

form

s pa

rt o

f a g

reat

er

who

le

Sou

rce:

Ada

pted

from

Car

mon

a et

al.

2003

: 221

; Tie

sdel

l & A

dam

s 20

04.



The conflicting objectives of producer and consumer sides can lead to producer–consumer gaps. When traded-off between roles effectively played by a single actor (i.e. where a single actor is both ‘developer and funder’, or ‘funder, investor and occupier’), conflict over objectives is internalised, producing the most satisfactory outcome subject to budget constraints. When different actors’ objectives and motivations have to be reconciled externally (i.e. through market transactions), there is scope for significant mismatch or gaps between supply and demand. Development quality frequently falls through these producer– consumer gaps. Such gaps can be closed or narrowed in any of three main ways:

(1) Through regulation5 – developers ‘have-to’ provide better quality development.

(2) Through remunerative means – developers calculate that it is ‘worth-it’ (financially beneficial) to provide better-quality development.

(3) Through normative preferences – developers ‘want-to’ provide better quality development.

It is important to note that the first of these is coercive and the other two voluntary.

Closing producer–consumer gaps is a necessary but not sufficient condi-tion of ‘good’ design. Responding to investors’ and occupiers’ needs, devel-opers can exclude the general public’s needs. Segregated housing estates, gated communities and inward-focused developments, for example, provide what purchasers and occupiers purportedly want, but may contribute little to the wider public environment. The broader challenge is thus to encourage or compel developers to look across site boundaries, at their development’s impact on the wider context and, more generally, to contribute to making better places. Public intervention through judicious deployment of policy instruments might be a means of compelling or encouraging this.

Opportunity space theory

Drawing on Giddens’ structuration theory, Bentley (1999) argues that all devel-opment actors operate by rules and command ‘resources’ – finance, expertise, ideas, interpersonal skills etc – which other actors want and need. As Bentley argues, various webs of rules create ‘opportunity space’ – or scope for autono-mous action – within which actors necessarily operate. The rules are internal (i.e. those actors place on themselves) and external (i.e. those placed upon them). For private developers, the external rules relate to budget constraints, appropriate rewards, the amount of risk to be incurred and the need to make a saleable product. Such rules are not arbitrary, cannot simply be ignored and are enforced through sanctions, such as bankruptcy. All development actors thus act within constraints – their opportunity space is not limitless but bounded.



This is conceptualised in Figure 1.1a. Here, the developer’s opportunity space is substantially determined by three major external forces or contexts – the development site and its immediate context; the market context (e.g. the need to create a saleable product); and the regulatory context (e.g. the need

Regulation

(a)

Market

Site

Regulation Market

Site

Developer’sopportunity space

Designer’sopportunity space

(b)

Figure 1.1 (a) Developer’s opportunity space; (b) Developer’s and designer’s opportunity space.The developer’s opportunity space (room for manoeuvre) is constrained by three forces or contexts:

(1) Site context – the more problematic, difficult or constrained the site the smaller the developer’s opportunity space.

(2) Regulatory context – the more demanding the regulatory context the smaller the developer’s opportunity space.

(3) Market context – the more demanding or competitive the market context the smaller the developer’s opportunity space.

A larger opportunity space gives the developer more autonomy to carry out development in his/her own direct interests – a situation of producer sovereignty. If external forces eradicate the opportunity space, then development is not feasible or viable at that particular time. The designer’s opportunity space is contained within the developer’s opportunity space and is constrained by the same forces constraining the developer’s opportunity space, by how the developer filters those forces and by the other development actors’ agency.Source: Adapted from Tiesdell & Adams 2004.



for compliant development). The boundaries of the opportunity space are best conceived as fuzzy rather than hard-edged and ultimately depend on the respective negotiating abilities of the development actors and on the social dynamics between them. Furthermore, while relatively fixed at any particu-lar time, they are dynamic and open to transformation as policy and markets change. Hence, alongside opportunity space, we can identify changing ‘win-dows of opportunity’.

Within the developer’s opportunity space, other development actors – surveyors, designers, landscape designers, engineers etc – negotiate and com-pete for space. For current purposes, the critical relationship is that between the developer and the designer. This is conceptualised in Figure 1.1b. Here, the designer’s opportunity space is contained within the developer’s opportunity space and is constrained or determined by the same external forces, by how the developer filters those forces, and by other development actors.

The designer’s opportunity space will grow in size (relative to the develop-er’s opportunity space) where the developer needs the designer’s skills to cre-ate viable or more profitable development. For developers, the key issue is the freedom they are willing to give and the freedom they must give to designers. Factors that make the design task more difficult – those requiring more design expertise such as a more difficult or demanding site (including the challenge of putting a required quantum of floorspace on a site within a preset budget), more exacting public regulatory expectations or requirements, a greater need to respond to user or investor needs etc – mean that the developer must yield opportunity space to the designer because in such circumstances the devel-oper needs a skilled designer to unlock development potential. Thus for exam-ple, the designer’s opportunity space is generally larger on more-constrained brownfield sites than on less-constrained greenfield sites (Tiesdell & Adams 2004). The larger the designer’s opportunity space, the greater the scope for the designer to influence or determine development design. But this is only potential for better design, since a larger opportunity space for design does not necessarily result in better design since designers may (mis-)use it to impose their own ‘heroic’ view. Interpretations of better design will also vary.6

By negotiating with developers, designers try to enlarge their own opportu-nity space – both to create the opportunity for better design and, less nobly, to further their own self-interest. The negotiations are continuous, often sub-conscious and implicit. The development site, the developer’s brief (or pro-gramme) and the available budget (based on anticipated end values and available capital) set the initial agenda and broad parameters for design. These provide the starting point for discussion and negotiation about design. In some situations, designers may be permitted freedom to interpret the developer’s brief – and, indeed, may have been involved in drawing it up. This is, in effect, a crucial part of exploring the design problem. In others, the opportunity space for design may be severely constrained, with designers expected merely to provide ‘packaging’ or ‘styling’, perhaps because all the fundamental design



decisions have already been taken according to a preset formula. This hap-pens, for example, with ‘standard’ real estate products (see Leinberger 2005; 2008) since the designer’s task consists of merely arranging standard units.

An advantage in negotiation lies in knowing the limits of the other actors’ opportunity space. Bentley (1999: 39) thus argues that the more designers understand other actors’ opportunity space (e.g. their financial feasibility calculations), the more effectively they can target their own resources. Designers may thus be able to operate more effectively (at least, in terms of achieving their own objectives) by knowing how far developers can be pushed. Bentley then identifies three specific types of power that designers could deploy in negotiating with developers:

(1) Knowledge and expertise is a product of their learning, professional experience and, more generally, detailed and extensive awareness of precedents and technological possibilities. Here, the designer has exper-tise and knowledge that the client-developer wants and requires in order to undertake a successful development.

(2) By making proposals for physical designs, designers have the power of initiating and then developing design proposals.

(3) A designer’s reputation constitutes a form of reputation capital. A designer will be hired in part because this reputation is valuable to the developer. In theory, a designer can exploit this capital by (say) threaten-ing to resign. However, this ‘works’ only to the extent that the developer wants a building or project designed by that particular designer and is prepared to forestall their resignation. It is debatable how many design-ers have sufficient reputation capital to deploy in negotiation, so the real power may derive from the developer’s reluctance to incur the costs and inconvenience of appointing a new designer.

To explore the developer–designer relation further, Bentley (1999: 30–39) suggests four metaphors to characterise the designer–developer relation:

(1) Heroic-Form-Giver – This metaphor suggests that development form is generated primarily through the creative efforts of designers. Bentley dis-misses this as a ‘powerful myth’ that vastly overstates the role of design-ers. This is ‘the Fountainhead’ scenario (Rand 1993), where the designer is the creative genius to which other players look in an unquestioning way for the correct design solution.

(2) Master-and-Servant – This metaphor suggests that development form is determined by powerplays, where decisions are dictated by those with most power (reflecting McGlynn’s (1993) ‘Powergram’), whereby those with most power (the masters) can issue orders to those with less (the serv-ants). In practice, this results in developers making the fundamental deci-sions which designers then package. This view understates the autonomy of designers, which derives from their expertise and knowledge, and that of


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