So here’s the plan

Large-scale mixed-use development has seen rapid growth over the last few years, and an ever broader range of skills, experience and knowledge are having to be applied to create viable masterplans. Complex, large-scale masterplan schemes often require a “structured framework” approach that is flexible enough to adapt to changing demands and market conditions over its long-term development. Delivering a masterplan that balances commercial viability and long-term sustainability requires collaboration between all stakeholders. A cohesive and deliverable masterplan will need to address issues of commercial viability and satisfy financial backers. Maximising the opportunities of phasing and development densities while limiting forward funding, non-revenue generating operations and avoidable infrastructure work will all provide the basis of a viable and deliverable solution.

1 Location

If a site is located where sufficient infrastructure already exists or where it can be easily enhanced, existing services can be upgraded economically. Furthermore, initiatives to provide sustainable public transport connections are becoming ever more prevalent. Train station enhancements or building new stations, additional bus routes and even tram links are all considerations on masterplanned schemes. This issue is crucial if capacity demand on local infrastructure is likely to be exceeded by the development.

Formulating a robust yet economic resolution to the site constraints of any masterplanned site will be fundamental. It is now commonplace to encounter land remediation and flood plain issues. In many instances the issue that threatened the viability of the scheme has become the hallmark that defines the space.

Geographically, the proximity of the site to cities or large towns can reduce the development burden of major infrastructure while simultaneously enabling the efficient use of resources during development and occupation. Local and regional market conditions will impact on all facets of the masterplan and must be taken into account when considering the plan’s phasing, development strategy and logistical framework.

The capacity of local infrastructure and resources will need to be thoroughly assessed to establish any risks to the delivery strategy. Development in certain areas may place an excessive drain on local resources.

2 Stakeholder management

Masterplanning is subject to many influences from stakeholders, who may come from vastly differing backgrounds and have vastly differing agendas.

Identifying the respective interest and influence of stakeholders is critical to keeping control of the masterplan. Stakeholder influence is often felt most keenly in the early stages of the project, when the project is most flexible and receptive to change.

To ensure a proper balance of interests, it is imperative to address the full range of issues and establish understanding of and agreement to the strategy from the outset.

3 Land use and diversity

Land use that meets commercial viability criteria as well as the requirements of the short-term and long-term release of phases, will be fundamental to realising the full potential of a development.

Integrating different spaces in a balanced way will allow a real community space to be created, which is integral to the long-term attraction of occupiers and users.

Achieving a mix of differing use types to suit the release of each individual phase is essential. Each initial phase needs to operate independently until subsequent phases are integrated. However, the phases make up an entire development that also has to operate as one. Dominance by one primary use type can create a lack of vibrancy in a space when that primary use is not operational. This is evident where cinemas, restaurants and bars dominate. A lack of day-time activity can lead to a subdued atmosphere and subsequently, the development may not be as well received by day-time occupiers or users. In this instance retail and commercial office uses working together provide a space with a constant draw to occupiers and users.

4 Density

Density can be affected by many factors. A commercially viable scheme will require a density that is in line with the site specifics of the proposed land for development, including adjacent land use and any heritage criteria, use types, local topography, size of the development site and local demand and supply drivers. Masterplanned schemes that require extensive infrastructure, land remediation or extensive site preparation or enabling works will generally require a higher plot density to help offset these costs and provide a viable commercial model.

This is one of the many reasons why plot densities can typically vary between 60,000 ft²/acre for an edge of town/city location to 135,000 ft²/acre for a city-based scheme. The blend of use types and the provision of substantial proportions of affordable and key worker housing will significantly affect the need for a higher plot density, due to their generally lower income streams when compared to market housing types. Section 106 and 278 obligations will increase the developer's financial outlay but without a directly related tangible income stream.

Achieving a blend of development for a mixed-use scheme that complies with the development framework while also generating a healthy income stream for financial backers is a challenge. Other typical issues to consider may include: awareness of triggers for infrastructure upgrade; car parking ratios; local plan requirements and restrictions.

Densities across the site can vary or be varied to suit the release of the development in phases. Appropriateness of development densities within the site itself and in conjunction with surrounding land uses needs to be considered in line with viability.

It has been demonstrated on recent masterplanned schemes that it is possible to achieve a high development density while allowing a significant area to be devoted to public realm.

5 Place making

Each masterplanned scheme should seek to create a defining brand, possibly through a landmark building or use type. For example, Silvertown Quays in the London Docklands has a landmark aquarium, at the core of the waterfront development. A scheme that fosters a work, life, relaxation and social environment will retain those who live in it and attract others to it. This critical mass will create the impetus for continued and sustainable development of commercial and retail activities in the masterplanned area giving it its own identity. The creation of both day and nightime activities enables all members of society to engage socially. Couple these with interactive spaces, playgrounds, sports facilities and good transport links and a new sustainable community can be formed. Residents find that a safe environment is fundamental to a sense of wellbeing. Combine this with areas of public realm that are durable, maintenance light, contain a mix of differing materials, are functional and appropriate to the surroundings, and the framework for the creation of a quality place has been set.

6 Flexibility

Flexibility is the ability to adapt to changes – changes in market conditions and in legislation. These changes and their impact on neighbouring occupiers can all be fundamental to how a large-scale mixed-use scheme is built-out or phased. Establishing a flexible development framework, particularly on schemes with a development programme of more than five years, will require the ability to adapt to market trends and demands. An increase in demand for a particular use type should be balanced against any potential short-term disadvantages on the scheme. A change in market trends and conditions may make a shift from commercial to residential use appropriate within a particular development zone or phase of a mixed-used masterplan. Balancing the portfolio of use types against the master delivery programme is fundamental at this point and requires a full assessment of the future impact of subsequent phases.

7 Sustainability

Schemes providing millions of square feet of mixed-use development may be able to adopt a wide-reaching sustainable approach that is not possible with individual building projects. Centralised heating plant using bio-mass boilers is an example. Potential long-term sustainability initiatives could be far-reaching and diverse. They include: wind turbines; grey water recycling; photovoltaics; solar panels.

Wide-reaching sustainable approaches that incorporate all stages of the development process include: the use of efficient construction materials, recycling of waste, ecological consideration of the local environment and the maintenance of air quality. It is crucial, however, to accompany this with education to create a culture of demand reduction, efficiency and renewable energy generation.

8 Forward funding

It is critical to minimise forward funding. Financing costs represent a sizeable proportion of a development appraisal, so delivering returns from income-generating opportunities as early as possible in the development process and deferring expenditure to later phases for common items such as new sub-stations can significantly reduce this burden. The size, frequency and delivery of plots to the market to generate income must be tempered by the ability of the local market to absorb the supply of a particular building use type without adversely affecting demand or income. The delivery of commercial and residential developments alongside the infrastructure works can provide the opportunity of introducing an ESCO (energy supply company) to reduce some of the initial capital cost. The public realm is often perceived as one of the most defining qualities of any masterplanned scheme. Its delivery in a manner that is appropriate and considerate to the phasing, occupation and use of the site is critical to end-users and other stakeholders.

9 Phasing

A significant driver behind phasing proposals is the requirement to balance the cashflow with the investment profile. The release of income-generating development to counteract the costs of infrastructure works from the outset of the scheme can be crucial to its viability. However, the desire to maximise this initial return must be balanced by the demand for new development. To counteract this, it is possible to create a supply that did not previously exist in a certain area.

The enhancement of the local infrastructure and communication networks to ease access, coupled with an attractive anchor tenant can create enhanced demand. The need to meet specific development milestones will often act as a trigger for the build-out of other elements of the development. Incorporation of substantial elements of infrastructure works, whether they are enhancements or entirely new works, will often govern the capability of the proposed development to function adequately.

10 Commercial viability

A masterplan scheme is unlikely to receive the required level of financial backing if it is not commercially viable and if it does not project an acceptable risk/reward balance for the development consortium supporting it. A use mix that includes a high proportion of residential units requiring, typically, 30-40% affordable housing, though providing much needed accommodation, places a significant strain on financial viability. However, affordable blocks sold early off plan to a registered social landlord can offer cashflow benefits. A careful balance of density and creating a vibrant, well-planned environment and community is often top of the agenda among stakeholders throughout the masterplanning process and up to the submission of an outline planning application.

Increasing densities to boost land values can often be at the expense of creating good quality public realm and open spaces. The quality of the public realm on any mixed-use development can be the primary factor of place making and have a greater influence than the buildings themselves. Together with infrastructure costs and utility enhancements, public realm can be a key focus at the outset of a masterplanning process as it is not directly revenue generating. Typical on-site costs for a large-scale mixed-use masterplan covering 50-100 acres in a town or city centre location fall into the ranges indicated in the chart above (expressed as a cost per acre and cost per ft² of building area).