A recent study has tried to quantify the social impact an office development can have on a local area, the theory being if you can measure it you can maximise it
It is nothing new that developers will look to incorporate the latest environmental technologies into new buildings. However, the real estate industry is starting to look beyond the green credentials of a building and beginning to think about the total social impact an asset could have.
Savvy investors are increasingly aware of the long-term economic gain of creating socially-useful developments that contribute to local economies and help transform our UK landscape. Many investors are calling this “impact investing”. This is about how our real estate developments can support the local economy and community around an asset over the long-term.
Regenerating derelict urban areas to improve a community, on a larger scale is about bringing jobs, housing and amenities back into the centre of cities, maximising land density, increasing economic productivity, as well as health, wellbeing and access to education, reducing crime, and better utilising our existing infrastructure. At a single asset level, it could be about how many disabled people you employ, how much communal space you add, or how many school visits you make.
The study revealed that we could be capturing £15bn-20bn a year of currently lost social benefit
One recent study by The British Council for Offices (BCO) in partnership with ourselves, Legal & General, and The Social Value Portal, revealed that the real estate industry is not creating as much social impact with its real estate investments as it could be. The study revealed that we could be capturing £15bn-20bn a year of currently lost social benefit. The study uses new office developments as a starting point to measure social value.
As part of the project, we have started measuring the social value generated from our new office building at 245 Hammersmith Road in London. Since this is a new development, we have ability to influence the full lifecycle of the asset and therefore maximise its social impact - engaging from the start with the development team, the designers, the managing agents and maintenance teams on how this new asset will operate in the future.
It is also easier to look at how you can incorporate social value into a new building project as you are engaging with the local authority for the first time and there are already Section 106 agreements in the planning process which look to community aspects of the development. Very often local authorities find it hard to follow through with the projects linked to the Section 106. If developers already have very good relationships with local authorities and work in partnership, then this point is a natural place for the process to begin.
The main concept is that by putting a monetary “value” on your social benefit, you then have both a method to measure it during the life-cycle of an asset and a way to target improvements, to maximise the benefit.
The UK government already has a database of what it deems to be costs to society and it applies these to its direct procurement processes. Therefore, by putting a cost on these benefits during a construction project, this study is providing a clear way that such benefits can be measured and influenced within the local authority planning process.
Looking at new office developments is just a starting point but the hope is to establish one methodology to measure social value across all asset classes in the UK.
If we can get this right as an industry then our real estate activities could have a huge impact on transforming our UK landscape for the better whilst remaining commercially viable.
Debbie Hobbs, head of sustainability, LGIM Real Assets