[+] It Takes a Village: Placemaking Proves its Worth

It would seem to be comparing apples—in this case, the Big Apple—with oranges. But the fruits of placemaking are being savoured by developers whether it’s in and around Brisbane’s Fish Lane and Melbourne’s emerging Northbank or New York’s Bryant Park and five-building Brookfield Place. The bottom line of place-led development is the creation or repositioning of spaces into vibrant places where people want to live, work and play. And the more desirable the places become, the more property values, rental rates and revenues increase and, correspondingly, vacancy rates decrease. “Placemaking is not about adding an extra cost,” says placemaker and property marketing specialist Andrew Hoyne. “It’s actually about mitigating risk. “Firstly, to ensure that you will have much more ability to engage local council to get an approval. Secondly, to get the community on board to see that what’s being delivered actually adds value to them, even if they don’t live or work there. And, thirdly, because you’ve actually got something more destinational or more desirable, you actually are able to sell or lease at a higher rate per square metre—therefore, increasing your financial return and decreasing your investment risk.” Given the prevailing economic pressures and feasibility challenges facing developers, Hoyne adds: “If anything, the notion of going about placemaking is actually becoming more important than ever. “The biggest challenges that developers face are holding costs, interest rates and push-back by local council authorities on either rezoning or DA. ▲ Transformative: Fish Lane in Brisbane. “Placemaking is a process that mitigates all that by actually engaging stakeholders who might traditionally be standing around with pitchforks and flaming torches to actually get them on board to see what it is that’s actually being delivered in a quality, well-considered development and why people should support it. “And it’s far easier when you actually create a destination with meaning, purpose and experiences to actually attract buyers and tenants, because they all see the value and there’s a reason to pay a premium.” Hoyne says although placemaking is not new, it has become “a much stronger part of the development narrative” in the past five years. Single most important thing “Now some of the biggest developers in the world talk about placemaking as the single most important thing they do within their organisation to affect the places that they are creating new buildings and developments in.” He cites Canadian property giant Brookfield’s place-led repositioning of the former World Financial Centre, the largest urban complex developed in New York City since the Rockefeller Center. Rebranded as Brookfield Place to shake off its long-established image as a “fortress for finance”, it was transformed thanks to a placemaking strategy that included indoor-outdoor activation through curated food and beverage offerings, niche retail, a public events and arts program, and even a sailing school and club. “Those placemaking initiatives enabled them to lease an extra 2 million square feet (185,800sq m) in under 18 months when they anticipated it was going to take them at least three to four years,” Hoyne says. “And their comment to me was that the multibillion-dollar asset would be worth 40 per cent less than it is now if they had not undertaken those placemaking initiatives.” ▲ Forty per cent value add: Brookfield Place in New York City. Likewise, he says it was through placemaking that midtown Manhattan’s one-time crime hotspot, Bryant Park, was reclaimed for the community. The resulting “halo effect” reinvigorated office demand within five blocks—with the owners of the Grace Building towering above the park claiming it had enabled them to increase rents and achieve a value uplift of $US390 million [$A570 million]. Closer to home, Hoyne says some of the biggest and smallest developers in Australia also have been reaping the rewards of placemaking strategies. He deems Frasers Property’s $2-billion mixed-use Central Park precinct in Sydney as one of many benchmark place-led developments in the country. “It’s a great example of really bringing mixed-use to life over a broad number of asset categories. “They’ve invested in not only the curation of the retail tenancies but also the activation … engaging all the different user groups from residents, commercial tenants, the surrounding community, university students. “There are so many audiences that they are conscious of engaging on an ongoing basis.” ▲ A render of Frasers Property’s $2-billion mixed-use Central Park in Sydney. In Brisbane, he says Aria Property Group’s Fish Lane placemaking initiative is “the go-to reference point”. “You know, a skanky, disused laneway full of bins and now it’s considered Brisbane’s sort of pre-eminent foodie destination with some of the city’s best restaurants, public art, landscaping, festivals and events. “And even when we were having a couple of difficult years pre-Covid and post-Covid, Aria’s apartments were still selling about 15 per cent higher as resales than anything else in the entire market. “So, while Fish Lane was a big investment for them, it has actually delivered them an exponential financial return because of their progressive approach.” The City of Melbourne recently unveiled new designs for its $300-million Greenline project, a transformational 4km pedestrian link along the Yarra River comprising five precincts with interconnected promenades, parks, open spaces, native plantings, cultural activations, environmental renewal and a terraced performance space. Force of resurrection It is part of an overall resurrection of the city’s long-neglected Northbank precinct, including a number of developments such as Mirvac’s dual tower project—a $1-billion-plus Fender Katsalidis-designed scheme with a 20-level, 45,000sq m office building and 32-storey, 472 apartment build-to-rent tower. “The entire precinct is a placemaking journey that’s happening at the moment and that’s the very thing that’s leveraging those developments,” Fender Katsalidis partner Craig Baudin says. “It’s part of the city that’s traditionally not been all that active and not on people’s radar as a place. That whole Northbank precinct is being repositioned … it’s really becoming a new neighbourhood and that’s what placemaking is all about.” ▲ Fender Katsalidis director Craig Baudin and a render of part of the Northbank precinct in Melbourne. Hoyne agrees and says projects such as the Greenline initiative are all about reinventing environments or assets that have no commercial value and “turning them from being places that people avoid and into destinations”. “You actually impact the personality of a neighbourhood and you change its perception and the way people either avoid it or aspire to it. And that has a direct impact on the values of the surrounding housing and the local high streets.” Going forward, Baudin believes placemaking will play a critical role in the reinvigoration of the post-pandemic landscape of the country’s CBDs. Vibrancy and energy “The focus has turned to what is it that makes our cities unique and what is it that will bring back that vibrancy and energy that has been diluted to an extent by the lack of return to the workplace. “At the moment, there’s this kind of chicken-and-egg process that’s happening. We need people to come back to work in our cities to get that vibrancy that will draw people back into our cities to work. “And I think developers are conscious of that and know that they’re not going to get their projects to work if they are just a purely commercial proposition about providing office space or apartments. “There needs to be an tangible lifestyle and public-realm placemaking aspect to it that draws people back to those locations.” Urbis managing partner James Tuma says placemaking strategies are already a crucial foundation on which many projects are built. ▲ New York City’s Bryant Park, (above and main image) touted as Midtown Manhattan’s town square, is reputedly one of the world’s busiest public spaces. “Developers are much more conscious of defining that clarity of purpose before they start really getting into anything else … they’re asking some really deep questions about what’s the purpose of this particular development or precinct or place. “That’s partially because they want to make sure that they’re doing a good job and they’re creating a relevant place,” he says. “But it’s also about having a strategy that brings an edge and competitive advantage in the marketplace. I think, increasingly, with all the economic constraints and a bunch of other things going on, that matters. “And so the stories about places you’re creating and the performance and experience in those places can be significant differentiators of how successful the development might be.” The story matters Brisbane-based architect and Buchan principal Phil Schoutrop says, “The story that comes with place is just as important as the place itself”. “It’s sort of like when I say the word ‘Gabba’. To some people it’s about bodyline and the cricket. To others it’s the Lions three premierships or it’s something else that happened there. It’s not the building. It’s the story that sits with the building or sits with the place. So the story is super important.” Hoyne adds: “If you’re not creating a place that people care about, you’re actually not going to create success financially. Because no one’s going to line up or pay a premium or celebrate the arrival of another cookie-cutter development. “People are over that. The sophistication of the market has amplified to such a scale that they expect development to meet the needs of community and provide tangible societal benefits. So when you’re creating magnetic destinations, it’s mandatory to ensure that your development has a competitive advantage, whether it’s a mixed-use precinct or something of a smaller scale.” ▲ A render of Mirvac’s Flinders West project in Melbourne’s Northbank precinct. Hoyne says he sees only opportunities and a greater need ahead for developers to focus on placemaking. “The big conversation around the property industry globally is focusing on ESG. Now, with placemaking we’ve all understood very well the issues around the environment and sustainability. “But the ‘S’ is for social and the biggest thing about placemaking is the social aspect. And yet it's the one ESG pillar that traditionally hasn't had enough emphasis and there's going to need to be more consideration around what we’re doing to invest in social outcomes and social engagement.” Tuma says the challenge in Australia will be in “mainitaining the rage” for placemaking and key to that will be the ‘G’—governance—part of the ESG equation. “It's kind of relatively easy, and I say that in inverted commas because I know it costs capital and money, to implement a place or a design outcome. “But to keep it alive, to have the governance structures and the maintenance regimes and body corporate arrangements and everything else in place to actually continue to fund some of the things that make places great, isn't something that's always done that well.” However, he says a greater emphasis on governance as part of the placemaking arsenal was occurring with the emergence of Australia's first business improvement district (BID)—in the New Sydney Warerfront Company—a concept where private funders come together to unlock the potential of urban precincts such as occurred with New York's Bryant Park. “What the place is and who funds it and how it functions is important but actually how it gets governed and how decisions are made around investment that's actually one of the bits of secret sauce. “And that hasn't been that well thought about in Australia but it's increasingly the case. Things like business improvement districts are an example of an appetite to do things a bit differently.” By 2050 it is forecast at least 70 per cent of the world’s population will be living in cities, up from about 56 per cent today, as the global megatrend of urbanisation continues. Schoutrop says with the densification of cities—and rising numbers of people living in apartments—placemaking will be increasingly vital for the creation of places for social recreation, interaction and activity that once happened in backyards. “You need to provide those places. Without them you’ve got no fabric, no glue that binds that community together.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] It Takes a Village: Placemaking Proves its Worth

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