Meaningful placemaking is a cornerstone of Hermes’ real estate investment philosophy, attracting people to productive and positive urban spaces that were previously neglected. Working with independent economic researcher Hatch, Hermes has completed a series of benchmarking studies, quantifying the social value and economic benefits of meaningful placemaking, alongside long-established environmental metrics.
Delivering interesting insights
Reinforcing the power of placemaking
Enabling comparison between sites
Informing stakeholder discussions
As leading property investment managers, Hermes recognises that it can have a significant influence on the future success of the places and spaces where it chooses to allocate capital. Over the last six years, Hermes has undertaken eight large urban regeneration developments across the UK, spanning a combined 19 million square feet and £13 billion of capital value.
To gain an objective view of the social and economic impacts of its meaningful placemaking approach, Hermes engaged Hatch, independent economic consultants, to carry out benchmarking studies at three flagship developments: King’s Cross in London, NOMA in Manchester and Wellington Place in Leeds.
These sites differ significantly in size and overall spend and represent diverse socio-economic regions of the UK, with a wide variance of market prices, rents, risk premia and environmental challenges. The benchmarking studies aimed to standardise social and economic outcomes to enable comparative analysis of different projects.
Hatch explored a range of measures, including employment opportunities, skills development and community engagement. The research revealed some interesting findings.
Analysis of average wage measures highlighted that people employed by occupiers at King’s Cross, NOMA and Wellington Place earn around 14% – or over £4,000 – more than average annual salaries in the given local region. This ‘earnings bonus’ functions as a rough proxy for the additionality delivered by Hermes through its occupier selection, engagement and meaningful placemaking approach.
The research also offered insight into the additionality of the social outcomes Hermes contributes to as an investor in a particular community. King’s Cross, NOMA and Wellington Place are surrounded by communities featuring a range of cultures, age profiles and histories.
The benchmarking studies improved understanding of the social value generated by different community engagement approaches. After controlling for size and spend, two sites delivered similar intensity impacts through their artistic, cultural and wellbeing events, but in different ways. One site featured irregular but highly attended events, while another hosted frequent community events with fewer attendees. The contrast in engagement styles reflected the local cultural contexts and relative development stages of the two projects. Understanding these subtleties and recognising the value generated by diverse approaches supports Hermes in tailoring projects to local needs.
The studies also identified how Hermes’ placemaking process can spark positive change at different development phases – including design, construction and occupation. During construction, all three sites generated significant value in developing skills for the future. Some 1,230 apprentices and NVQs were involved in the construction of King’s Cross, NOMA and Wellington Place, generating £2.6m societal benefit.
Building on the success of the benchmarking studies, Hermes is now looking to carry out studies at additional locations, including Milton Park in Oxfordshire and Skypark in Glasgow. The team is also exploring opportunities on smaller scale developments, such as Marshall’s Mill in Leeds.
One of Hermes Investment Management’s key priorities is developing effective methodologies to measure the positive impact of real estate investments. Each potential case study is thus presented to each respective Board under this objective, costed, and then pursued accordingly.
The addition of quantitative social and economic indicators to Hermes’ long-established environmental metrics:
The benchmarking studies have revealed that Hermes’ meaningful placemaking approach often delivers results greater than the sum of its parts, including:
Total Social & Economic Value Created: King’s Cross, NOMA and Wellington Place, available below://php dpm ($content);?>
How to gather accurate and reliable socio-economic data?
Rather than relying on in-house perceptions, Hermes engaged independent economic researcher Hatch. Hermes developed a relationship with Hatch in 2017, working with Argent at King’s Cross. Hatch uses Government-recognised techniques to capture direct and indirect effects. Hermes gathers data on a range of indicators and writes social and environmental performance and data requirements into development packages, including apprenticeships, local procurement and responsible waste management.
How to share findings with stakeholders?
Hermes invested time to make the study findings come alive and present them in interesting and accessible formats. This included highlighting surprising insights, sharing stories and detailing social value and economic benefits to local businesses and communities. Hermes featured study findings in its 2018 RPI Report for investors and published individual reports on each site for local authorities, occupiers, communities and other local stakeholders. Each site has different social needs and cultural contexts and Hermes sought to reflect these in each report, whilst providing consistent socio-economic indicators. Hermes has also featured study findings in presentations, contributing to positive discussions with local authorities about future opportunities and raising investor awareness of the value generated by Hermes’ meaningful placemaking approach.
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Sharon Brown, Director - Real Estate Risk & Environmental Impact, Hermes Investment Management
“The future of cities is about place and the individual, not buildings. Cities must work for everyone and have a positive impact on society at large. Our placemaking approach seeks to make buildings part of the community in order to develop meaningful cities, where people want to work and live, and in which they take great civic pride.”