Gentrification, innovation and detoxification
Gentrification ‘Gentrification’ has become one of the more divisive terms associated with property development. Some see this as urban renewal, others as social cleansing. A study published this week should be of interest to those promoting large regeneration schemes, either as developer or local authority, as well as policy makers. The paper by the University of Chicago considers the impact of gentrification on the original residents of low-income inner-city neighbourhoods across the US over a period of 15 years. It finds that gentrification effects only a modest increase in outward-migration, with leavers falling largely into ‘uneducated’ or elderly renting segments. The study found this to be a small percentage, relative to an unexpectedly high baseline mobility in those areas regardless of gentrification. Further, there was no evidence to suggest that those who left moved to observably worse neighbourhoods or experienced negative changes to employment, income or commuting distance. Meanwhile, those who stayed benefitted from declining poverty exposure and (for homeowners) increased house values. Children who stayed were more likely to go to college and were exposed to other factors which are correlated with economic opportunity. The authors cite the findings as evidence against the need for ‘urban NIBMYism’ and rent controls. They advocate densification of gentrified neighbourhoods to increase the pool of those benefitting (including original residents), and to keep supply in balance with demand. The study acknowledges the unobserved costs of moving, such as proximity to friends and networks and suggests very targeted policy interventions for the relatively small affected groups.
Living Employment Destinations As the way in which we live our lives and interpolate our working patterns continues to change, so do the drivers for lease acquisition by office tenants. Objectively assessed location-based factors were once the primary decision factor, but a recent shift places greater emphasis on more subjectively assessed amenity and ethereal factors. So, what is it that occupiers want? A study released this week by CO-RE and Make poses the question of how to create ‘living employment destinations’ and finds answers in the results of a survey of 100 significant occupiers in London. Beyond the hygiene factors such as cost and location, occupiers were asked what might swing their decision of which building to select. Interestingly, the ability of the building to reflect the organisation’s brand and values came top of the list (30% of respondents), ahead of, for instance, lease flexibility, sustainability, welfare and security. Access to external space also rose up the occupier agenda. It is perhaps a trite point, but to deliver a building that reflects an organisation’s brand and values requires an understanding of what those brand and values are. And these are different for each organisation, right? Well sort of. Whilst companies have different brand aesthetics, straplines and USPs, there is in fact remarkable commonality in brand values. ‘Innovation’ tends to come out top of most studies on the subject, with some measure of integrity or trust also high up. So now the trick is figuring out how to embed these in building design…
The Clean Vic No, not a PG-cert version of EastEnders; but instead a new foray for renowned publican J Sainsbury. For two days next week the supermarket operator will be making the surprising step of running a pop-up pub in central London. To add to the intrigue, the pub will only be selling non/low alcoholic beverages. What are we missing here? The supermarket operator has spotted a spike in demand for non-alcoholic beverages, which could be symptomatic of a bigger structural shift. Several recent product launches are responding to a 33% increase in internet search and a ~20% y-o-y increase in the size of the non-alco market. At the heart of this is a healthier approach to living, particularly among younger demographics, combined with an increase in religious diversity. 37% of 18 to 24-year-olds are ‘often influenced’ by health factors when buying drinks and 33% of young adults do not drink alcohol at all. Overall consumption has fallen by 16% since 2004. As the trend continues to unravel it remains to be seen how the heavily alcohol driven night-time economy will change. Whilst a straight swap of pubs for non-alcoholic bars is feasible (e.g. Redemption in Shoreditch / Notting Hill, and Brink Bar in Liverpool), this doesn’t feel how a new paradigm would logically be redesigned from scratch. Absent of a desire to achieve the inebriating impact of alcohol, the need to drink anything (hard or soft) disappears, and with it a social scene geared around sitting at tables doing so. This presents options for a range of new venues facilitating healthier night time social interactions that might look nothing like the pubs of the past century.
Selling use cases Selling a dress or a pair of jeans is a safer experience when carried out in person. Particularly, there are questions of fit that leave risk to purchasers, even if that risk is only that they would have to return the goods. This is true of many physical products. However, for intangible products this is not the case. Software is good example. You no longer have to go into a shop to buy a CD-ROM of Microsoft Windows; in fact, the modern model is that you don’t need to buy it at all. It is perhaps for these reasons that the tech companies have been pioneers in experiential showrooming concepts. When there’s nothing to put on the shelf, you are selling a use case for a product, rather than selling the product itself. Although a hardware-focused business, Samsung’s store in Manhattan’s Meatpacking District is a great example of this. It hosts art, fashion, and other things that Samsung don’t sell in bid to build up their brand. Concerts, augmented reality experiences, music concerts and simulations are also on offer to the public for free. Last week, Microsoft opened its own flagship showroom on Oxford Street (its first physical store in the UK). The store is ‘designed to build connections with the local community, customers and businesses, where the public can ‘come and play, learn, create and discover’. It will feature ‘an Answer Desk’ with service support for MS products no matter where they were purchased, a ‘Community Theatre’ including educational events, and various ways to interact with MS products and software. In contemplating the reinvention of our high streets, there comes a point when one needs to ask whether this new high street format is really a shop, or rather an extension of Microsoft’s marketing and aftersales services?
Steep prices The people of Wales hold some of the more interesting world records, including having hosted the largest three-legged race, created the world’s longest scarf, and travelled the furthest distance on a unicycle. This week they added to these accolades the award of the world’s steepest road. At 37.5% gradient, Ffordd Pen Llech in the Welsh town of Harlech pipped the prize from previous record holder, Baldwin Street in Dunedin, New Zealand. What is not clear is whether Ffordd Pen Llech became steeper, Baldwin Street flattened off, or if there are several other streets queuing up to be measured that might have a better claim. Studies have shown that properties in hilly locations command price premia. They have better views, plots for development tend to be more restricted and hence they have better privacy, public transport is more limited and therefore requires more wealthy car owners, and the abnormal costs of development create higher value hurdles. Despite this, you can pick up a steal of ‘a charming two bed cottage’ on the world’s steepest street for just £125,000. Just make sure that your handbrake has been tested recently.