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Valuing creative placemaking in real estate development

This week, I was on an Urban Land Institute panel discussion on "The Business Case for Creative Placemaking." It was part of a series of fireside chats to highlight ULI's recent report Creative Placemaking: Sparking Development with Arts and Culture.


The session leader and other panelists -- Juanita Hardy of ULI, Kimberly Driggins of Washington Housing Conservancy, Vicki Davis of Urban Atlantic, and Steve Lindley of Cushman & Wakefield, all talked about the clear benefits property owners and developers get from incorporating community-based arts and cultural spaces and programming in their developments. These include:

*Generating higher occupancy rates

*Increased outside support for arts around their properties (which enhances the equity of the properties)

*Better relationships with governments and the public.


I talked about how developers can work better with artists, culture bearers, and community members to manage their risks. (I'll plan to talk about this again in a future webinar.)


As with a lot of panel discussions, we didn't have time to take all the questions. But there is one I'd like to speak to here. It goes something like this: "How do you project the amount of return you can get from your investment in creative placemaking?"


I get why the question was asked. Developers, like architects, planners and other people in land use industries, may dream of building great places that are universally enjoyed and celebrated. But they often have to live within spreadsheets where too often the most important question is how quickly the bottom line numbers can turn positive. And many work with investors who may be encouraging developers to cut costs to increase their return faster.


So here's my answer:


I think that it's practically impossible to predict your return on investment in creative placemaking. Arts and cultural activities are not like a single consumer product that has a predictable saturation point. In fact, having more arts and cultural activities may induce greater demand for these products. As with so many factors in real estate development, builders are dealing with government and market forces that are beyond their control (but not beyond their influence).


Let's talk about product saturation in a market. There are only so many t-shirts people will buy in a trade area. Major retailers like Target and Wal-Mart have crunched the numbers for years and in most years, have a pretty good guess. (Spoiler alert: Nobody really knows for sure. As we know from 2020, the conditions you use to ground your analysis can change quickly and unexpectedly. If someone were so smart they could accurately predict the future, do you really think they'd be worrying about Q4 t-shirt sales?)


"Art" and "cultural activities" are words we use to categorize an infinite array of products and services. Maybe there's only so many people who will go to see a classical Greek tragedy on stage. But then there's more people who would go see a hip-hop musical with interpretive dance based on that same Greek story.


And if there is an overall saturation point for arts and cultural activities, the places that have the most of it (such as -- in the United States -- Santa Fe, NM and Asheville, NC) haven't found it yet.


In fact, as places like Santa Fe, Asheville and hundreds of others have shown, public investment in creative placemaking generates more interest in their communities from people who enjoy arts and cultural activities. Before the pandemic, leaders I talked to in many of these communities weren't worried about high vacancy rates -- they were more concerned about rising property values and meeting needs for affordable spaces.


It's not just anecdotal evidence. Realtor.com , Metris Arts Consulting (which does extensive research for governments and businesses, and Cushman & Wakefield have reported on or conducted studies showing how the presence of artistic activity increases property values.


If you're thinking it's just a matter of getting some artist to slap some pretty paint on a wall, or paying a bunch of musicians to play for a while, well... You could do that, just like you could do the same red brick sidewalks or other design elements everybody else is doing. Instead of a wide-eyed 'wow', you'll probably get a collective 'meh'.


Your project will stand out more, and get more support, if you engage local artists and culture bearers to develop experiences that are both more distinct and more connected to the surrounding place.


The people I talked to who were worried about high vacancy rates were more often the ones who hadn't convinced their government and civic leaders to invest in creative placemaking.


So, while I don't know if a straight-line relationship exists between what you invest in your property and the increase in your return, I'm confident that investing in arts, creative spaces and cultural events, as well as encouraging governments to support more creative placemaking, can help you get to your goals faster. You'll support a double bottom-line of doing well, and doing good.


Image: The Gateway Totem in front of new development in Morristown, NJ. The Gateway Totem was a collaboratively designed project that honors the various ethnic and cultural communities in the historic Speedwell neighborhood. Artist: Gabriele Hiltl-Cohen.


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