Making the Case for Public Realm Investment
Jens Schlechter
The Importance of Public Realm
Public realm investments play an important role in connecting different parts of town centres, attracting visitors, increasing footfall, and encouraging local residents and workers to use sustainable modes of transport such as cycling and walking. Thus, improvements to public realm have the potential to create an environment in which people enjoy spending time and which helps a town centre to thrive.
The purpose of this blog article is to support Local Authorities in developing Business Cases for public realm investments. This article will also be accompanied by the guidance due to be published in early June by TFDP.
The challenges of demonstrating the social and economic value of public realm
Public realm itself doesn’t generate revenue, leading to a challenge when trying to demonstrate the investment is good Value for Money. It is also challenging to coordinate who pays for public realm improvements and who benefits from them. This leads to public realm improvements often being perceived as ‘beautification’ and as being expensive.
The Logic
To make the case for public realm investment, the first step is to develop a clear intervention logic – informed by a Theory of Change as outlined in the respective Town Investment Plan. This links back to the Strategic Case and starts with the core issue that the scheme will address, such as low footfall in the town centre. The intervention logic then sets out how the investment will address the issue, what the impacts are and how improvements can be quantified. In many cases, low footfall is caused by a variety of reasons, which make town centres unattractive, creating a vicious cycle of decline whereby commercial revenues dwindle and vacancy rates keep increasing. This often triggers an increase in anti-social behaviour resulting in the surrounding areas becoming less attractive too, further adding to the decline. For more details on developing the Theory of Change, please refer to the TFDP’s An Introduction to Theory of Change guidance.
The second step is to quantify the investment’s economic and social benefits. Public realm improvements are most commonly delivered as part of a wider scheme and alongside other interventions such as new mixed-use developments. In conjunction with such interventions, public realm improvements can contribute to reversing a town centre’s decline in two main, intertwined ways:
Firstly, by providing amenity space increasing a town centre’s attractiveness to visitors, thereby improving footfall and local spending, which supports retail and hospitality offerings in the area supporting local employment.
Secondly, by providing well-designed areas, which have the potential to reduce anti-social behaviour such as dumping and crime.
The benefits arising from these improvements can be quantified by estimating the site specific Land Value Uplift to properties delivered by the wider scheme. Moreover, public realm investments have the potential to deliver positive externalities (e.g., reduction in anti-social behaviour; increased employment opportunities) to residential properties in the surrounding area and, thus, have the potential to enhance the land values more widely and attract private investment. It is crucial to identify the radius/shape of the surrounding area impacted by the intervention. Quantifying both this Wider Land Value Uplift and the site specific Land Value Uplift ensures that all benefits arising from the improved public realm are captured – without double counting and in line with Green Book guidance. This approach results in a comprehensive view on the Value for Money delivered by the respective scheme and in many cases in healthy BCRs supporting the case for the intervention. For more details on how to estimate land value uplift, please refer to TFDP’s Economic Case: Best Practice Annex B – Development.
Other benefits – such as those arising from the reduction in anti-social behaviour – which are difficult to quantify or potentially double count the Wider Land Value Uplift can be assessed qualitatively and link back to the Strategic Case and the intervention logic to strengthen the overall Business Case.
Case Study
King’s Cross Central was a 27 hectares brownfield redevelopment project. High quality of the public realm and mixed-use developments were core features of the developer’s approach to the project. Research carried out by Savills in 2018 has found that early public realm investment – through increases in pedestrian linkages and providing leisure and cultural assets – was essential to the project’s success. The footfall enabled by the public realm improvements and related mixed-use developments, which had a 76% price premium compared to the wider market five years after completion, supported higher residential values in the surrounding area than in the local market and brought further momentum to the project, allowing it to subsequently attract key businesses such as Google and Facebook, ultimately providing legitimacy to the project. Moreover, through a Section 106 agreement, the Local Authority required developers to introduce a ‘Construction Training Centre’ and a ‘Skills and Recruitment Centre’ ensuring the local workforce access to the jobs created by the arrival of new firms.
Smaller scale public realm examples include Regent Street in London, which was a £25m investment decluttering and widening pavements, renewing street furniture and improving street lighting. It has led to annual retail rental growth surpassing market level and has turned the area into a renowned destination for high-quality office and retail space.
Summary of Key Take Outs
Public realm investments play a crucial role in improving town centres’ attractiveness impacting both adjacent sites and the surrounding area in multiple ways. Linked to a compelling theory of change, a combination of the site specific Land Value Uplift and the Wider Land Value Uplift generated in the surrounding area can be a suitable approach to making the case for public realm investments.