One of the first arguments which can be evidenced is that more than half of the world’s population now live in urban areas and with the continuation of urbanisation and the challenges of dealing with climate change, urban developments can be significantly shaped over the coming decades to help with the risk and opportunities of climate change and an increasing global diverse and inclusive population which has grown from 2.5 billion in 1950 to 8 billion today.
In addition, over 3 million people worldwide migrate to different cities weekly, which has led to the burgeoning mega-cities. Cities are not only growing in population but are also becoming increasingly diverse and ethnically heterogeneous. This poses huge challenges’ as cities need to manage the multifarious integration of the city newcomers into society and urban life, as well as to ensure sustainable social cohesion.
These problems can be effectively addressed if communities and cities become more sustainable. This challenge applies to many, if not all, major global cities including European regions, cities and towns. To give a sense of impact the ‘Structuurvisie Randstad 2040’ (Conceptual framework and guiding principles for the Vision of the spatial structure) says that it needs to build 10 to 20 times the size of Amersfoort (63.84 km2) to accommodate the growing population.
Furthermore, the reason sustainable urban development is high on the political agenda is due to the variety of challenges it imposes on policy-makers. Climate change, energy, waste, bio-diversity, eco-systems, criminality, ageing population, cutting-edge technology and the demands of communities to name but a few. Also, concerning economic and social value, the urban area plays a significant role. Function, public space and quality buildings will lead to overall benefits for the surroundings. Solely focusing on ‘green buildings’ is insufficient to guarantee the sustainability of the built environment.
So with cities growing to become bigger than ever, sustainable urban development is considered one of the critical issues for the 21st century (United Nations, 2002). By the year 2030, it is expected that 60 percent of the global population will live in cities. This means that cities and their residents will hold an increasing role to play in the transition to a more sustainable world. Cities only occupy 3 percent of the total earth’s landmass, but the cities consume 75 percent of the global energy and are responsible for 80 percent of global greenhouse gases. Although, cities can be sustainable and by pursuing ‘truly sustainable’ urban developments cities have a good potential to affect the global level of sustainability.
Now put in the perspective of sustainable urban developments, sustainable urban developments can have direct and indirect effects on the value of the buildings. Unlike with the building scale, it is not just solely about the hardware, but also about the software; the facilities and services in the surroundings, the long-term perspective, the mix of different functions, the aesthetic quality, social security and much more. Because of this holistic approach on the urban level and the integration of the entire surroundings, many benefits can be found in sustainable urban development.
As our world continues to urbanise, cities and communities face a unique set of challenges. One key challenge is how to plan mixed-use developments in urban areas that are both sustainable and beneficial for the people who inhabit them. Mixed-use development branding brings together multiple uses, such as; residential spaces, retail space, office space, entertainment venues, and public facilities, into one cohesive package within an urban setting.
Mixed-use developments have numerous benefits for communities, developers, governments, businesses and other stakeholders. Utilising space more efficiently while increasing foot traffic through people living, working, shopping, performing recreational activities and visiting local businesses as a result of proximity to all amenities.
Generally, mixed-use development schemes can be classified under four possibilities:
- Regeneration of a derelict inner-city site
- Greenfield urban extension developments
- Improvement and extension of present single-structured developments
- Preservation and upgrade of an existing mixed-use development
Increasing the flexibility of a mixed-use urban neighbourhood will result in a healthier sustainable self-sufficient development, such as reducing the dependency on motor vehicle use thus contributing to cleaner air quality and improved well-being, while reducing road infrastructure requirements ensuring everything is within walking or cycling distance, ‘pedestrian-friendly’, to the urban development amenities.
Other benefits include satisfying consumer trends, housing needs, retailers and their advantage of gaining a built-in local customer base competing in the face of e-commerce growth, the obvious economic growth generated by the diverse range of offerings and services making for attractive investment and a vibrant community to name but a few.
But, as with any investment, mixed-use urban developments carry their risks, especially one which is as complex and intricate with many moving parts, an increase in stakeholder involvement meeting their objectives adding complication to the decision-making process. Risks from planning, zoning and regulatory issues, the developer’s expertise in the multi-use asset class over expertise in the single-use asset class (standalone office space), market trends and market sector uncertainty (residential), social cohesion, ESG & Sustainability issues ensuring resilience and adaptability has been built into the design principles to withstand and recover from the impacts of climate change.
Arranging finance can also be burdensome and holds its risks including increased upfront costs, and institutional investors’ appetite to diversify their portfolio and step out of their comfort zone from single asset class investment to multi-asset class. These types of developments frequently require long financing periods, high equity, and large capital sums and usually face demand for risk premiums from lenders. All of this is in addition to agreeing on land ownership structures or very deep pockets to acquire the large parcel of inner city land.
Municipalities have shifted from an active to a facilitating role, usually because of a lack of municipality funding, creating more room for private-led developments to take place. Private-led urban developments have come forward as a potential strategy to develop mixed-use urban sustainable areas.
Overall, sustainable mixed-use urban developments offer a holistic approach to urban planning and address environmental, social, and economic concerns providing a blueprint for creating liveable, resilient and inclusive cities for present and future generations.
contributed by Tom Gibney, SME ESG Director and co-owner, G8 Consulting
