Urban van Aar (Royal HaskoningDHV) & Jacques van Dinteren (Zjak Consult)
Studying major urban developments worldwide, we find that successful projects have a clear and convincing concept in common. A concept strong enough to guide the planning and building process and attractive enough to tempt the market to invest. The question is how to generate such a concept. A second question concerns the role of market studies in this concept generation.
Our studies show that some major projects suffer from delays and lack of sales and even bankruptcy due to the lack of a concept for the envisaged urban development plan. Mistakes we found included:
- absence of any concept, based on the idea that real estate will always sell;
- lack of ambition: too much reliance on strategies from the past (“it worked before”);
- no idea about the preferences of the demand side, no awareness of the competition;
- a too rigid mono functional concept resulting in a ‘Blue Print’ plan;
- a concept consisting of marketing slogans, which are expected to tempt investors;
- failing relations (economic, social, transportation) with the surrounding built environment.
We also found a range of projects with satisfactory sales results but which disrupt the urban environment by creating congestion, environmental problems, vacancies and other issues. All these projects can be assessed as ‘not successful’, i.e. they are not profitable for the city in the long term.
Short term, self-centred approach
It struck us that both developers and governments tend to rely on previous projects, not realising that the market is already saturated or has changed. They continue using the same concept over and over again. “Surprisingly often and for their own reasons, companies put other interests ahead of customers’ interests. (…..) These narrower interests can be characterized as the ‘production concept’, the ‘product concept’, the ‘selling concept’, or simply a ‘short-term, self-centred approach’” (Mike E. Miles et al., Real estate development, 2003). Or put in another way: “Any customer can have a car painted any color that he wants, so long as it is black” (Henry Ford).
Another common approach is to opt too quickly for the most obvious opportunity. An initiator has a promising proposal for a new project (creating jobs and international exposure) and the government wants to support him by offering an available piece of land. The project will then be planned in the same spot ignoring the restrictions of the site and the preferences of investors, future companies and inhabitants, as well as ignoring the existing or future competition. This is an example of a very common error in urban master planning: skipping the stage of concept development and neglecting the required study of future developments: demography, economy, transportation, environment, etc. These planning projects ‘jump’ from site surveys to designs and forget to build a proper set of ideas for the place of the project within the city.
A ‘market oriented concept’ or a ‘marketing concept’
Often, marketing tools and slogans are used to motivate an urban development. Think of ‘Eco City‘, ‘Beach City’, ‘Sports City’ and other similar concepts. If these titles for urban development are used to market a good plan, the project might succeed. But if these marketing slogans are just window dressing, many will fail because a sound foundation is missing. This is the difference between a ‘market oriented concept’ and ‘marketing concept’. A sound foundation takes into account and integrates market demand and requirements, transportation, utilities, quality standards, etc. Based on such research, the concept should be resilient enough to cope with the ever changing market and preferences of the public and business world.
Our conclusion is that the planning concept – the set of leading ideas for a development – is the essential and key element in the urban planning process. It forms the link between the regional context, the site’s potential, the market and the socio-economic trends on the one hand and the urban design, how it fits into the city and how it will improve urban life on the other.
Market orientation is indispensable
Let’s go back to our central questions: how to generate the concept for a major urban project and what is the role of market survey herein? The key position of the concept in the planning process is illustrated in the diagram below.
Without compromising other aspects like the environment, policy and feasibility, one can state that market research is an indispensable part of the concept development. Socio-economic situations and trends are studied in order to generate an overview of motivated expectations – such as limitations and chances – for the specific location. The best examples of these market studies produce an in-depth regional and sometimes even (inter)national socio-economic analysis and forecast which will be translated into a demand forecast and programmes which will form the basis for the concept and the master plan. Cooperation between the market specialists, the client and the master planners is important as this interaction helps focus the socio economic studies and identify chances and opportunities at an early stage. Urban planners must be involved in these early stages: market specialists often use the ideas and experience of master planners to find the decisive details, such as the local market for new ideas which have proven successful elsewhere. On the other hand: market specialist still play a role in later stages of the development process to control how the plan will meet market developments and requirements.
Furthermore, one must remember that when it comes to square metres and rate of sales, the market perspective is limited to between five and ten years. However, the market research is much broader and also focuses strongly on establishing the strategic lines of development for the long term. These strategic guidelines in particular have to be translated into the concept. Obviously, if a specific development takes many years, market research must be repeated on a regular basis, say every five years.
Creating a concept based on the research performed is a circular rather than a linear process. Contrary to what many people think, a good concept does not fall from the sky. It is a constant interaction between the potential of the location, regional links, technical possibilities, new opportunities and market developments. It is the heart of the planning process and everyone involved contributes.
An important factor in the concept development is the level of ambition defined by the developer or the government. This ambition reveals the willingness to take certain risks (generally within certain financial limits) in order to achieve a higher goal, such as strengthening the image of the city, resilience, sustainability, etc. Sustainability is definitely an ambition that cannot be ignored.
The method briefly described here is (obviously) not limited to new urban developments or real estate projects. Especially in Western countries, changing demographic and economic conditions require transformations of existing urban areas. Taking into account the importance of sustainability and resilience, such product innovations are essential. Due to the complexity of inner city restructuring processes, the importance of good interaction between market research and concept development cannot be underestimated.
Take your time
In short, a good concept is indispensable in urban development (but also in smaller scale real estate projects). Given that interest, it is amazing that the government and real estate developers often economise on these first steps in the development process, even though a strong urban concept and underlying studies are crucial to the ultimate success of a project. It cannot be denied that creating a good foundation for an urban (re)development plan is more time consuming. However, if one takes into account the lifetime of such a development and its envisaged long term success, there’s no other choice.