Reflections on a ULI round-table: social value and real estate
The advancement in the economic and environmental pillars of sustainability has been quite significant in recent years. When looking into how public and private organizations tackle sustainability, clear frameworks and targets are set to combat the challenges of climate change, land degradation, environmental pollution, etc. Environmental-related factors are usually tangible, measurable, and therefore easy to capture.
The social pillar, on the other hand, tends to be the messy one to grasp. In times of crisis, however, public and private institutions tend to take more definitive action in addressing this often-neglected pillar. The prolonging Covid-19 pandemic perfectly illustrates this. Homes have turned to offices, nurseries, and schools. Public spaces have turned into places that relieve stress and safe zones. And people have become more aware and critical of their surroundings, thus altering their needs and expectations of place and space. As a result, values change in line with changing perceptions.
Social value is swiftly moving up the ladder of priorities in the property industry. This was quite evident in Urban Land Institute’s (ULI) round-table discussion on social value in January 2021. In an effort to help solve the challenging “social” pillar, the ULI teamed up with external parties and experts to develop a better understanding of how to define and capture social value, and to provide best practice examples of where and how social value has been created. Practitioners and researchers in the fields of real estate and urban planning were invited to discuss and provide feedback on the ongoing efforts of ULI’s research team in capturing social value. I was excited to be one of them.
A brief presentation by the ULI social value research team displayed the fragmented landscape of defining and capturing social value within the property industry. According to them, creating social value means considering “the economic, social and environmental well-being of a community and society” (ULI presentation, 2021). A strong emphasis was made on the required focus on outcomes rather than simply outputs. Focusing on outcomes essentially means focusing on societal interests and measuring the impact of developments on the wellbeing of communities. Focusing on outputs, on the other hand, mainly revolves around the inclusion of parks, schools, or public space as a representation of social value.
Wellbeing, however, resembles social value in the sense that there lacks consensus on how to define it. For example, wellbeing is commonly viewed from the perspective of good living conditions, level of satisfaction, quality of living, resilience, and/or mental and physical state. Meanwhile, from a scholarly perspective, McGregor & Pouw (2017) for instance, identify well-being more holistically: as the combination of what a person has, their capacity to use it, and their level of satisfaction derived from what they have. Hence, if wellbeing is considered the combination of all the above-mentioned factors; then it can be argued that social value creation, is the capacity to facilitate wellbeing factors throughout the development process.
During the round-table discussion, defining social value turned out to be somewhat of a puzzle. Practitioners and researchers were asked to express how to approach social value. The outcome was a variety of interpretations and approaches, however, three key points stood out: i) the public sector leading public-private interaction ii) community involvement iii) and added value. I will explain these points in more detail.
First, capturing social value essentially requires that both public and private sectors work together to develop mutual short-term and long-term goals. This goal-setting activity requires that both parties communicate to understand each others’ objectives, while the public sector takes the lead in mobilizing social value. In the current setting, each party assumes that social value creation is the responsibility of the other, however, effective integration of social value needs to be a shared responsibility between both parties. The second point raised was the importance of involving the local community in decision-making processes. As “people” are central to social value creation, being aware of local communities' needs and the impact of current developments on their daily lives is essential. This ties into the last point of added value. Inclusive processes are necessary to realize to what extent (added) value is created and for whom, but also to ensure better outcomes for all parties.
Integrating social value needs to be seen as a process, not just an end product. As developments have a potential impact on altering the social fabric in urban areas, developments are also impacted by the social context they are embedded in. Developments are therefore dynamic, as are social values, both changing over the course of time. Social value creation, therefore, needs to be an ongoing process beyond the development phase. The ongoing engagement of ULI with social value, and their critical engagement with academics and practitioners on the topic, speaks to the emphasis and importance that is being placed on the topic within the property industry, and will likely alter industry standards in the years to come.