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Real estate insight | UK 12 Feb 2018 Gentrification – is it inevitable in regeneration areas?

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It seems that regeneration cannot escape the gentrification debate.  But how we can ensure key regeneration sites in London do not fall victim to ostracising their existing communities, is a question largely left unanswered.  Places are not static – nor should we wish them to be. There is no doubt that rising housing costs as a result of regeneration can cause problems for existing residents, who can feel they are being priced out of their communities, but it is essential we remember that investment in development is a sign of belief in a neighbourhood. 

The real question is not whether investment should be welcomed or rejected, but rather how it should be managed for the betterment of all and geared towards existing communities. In the UK at least, regeneration tends to be accompanied by investment in the built environment – through section 106 agreements for instance – in community infrastructure such as education, transport, leisure, health facilities, other public services and the creation of great open spaces.  If house prices do not go up, neither do new homes – and nor do the new or improved schools and doctors’ surgeries and other facilities that encourage community cohesion, which local communities truly need. 

But this is not just about physical infrastructure.  Regeneration means socio-economic benefits including local job opportunities for local people.  The redevelopment of King’s Cross is a case in point. There, as a recent independent study demonstrated1, local communities have benefited immensely from job creation, not just during construction but also as a result of all the companies and institutions, from bars and restaurants to Google and the Crick Institute, that have been attracted to the regenerated area. 

Despite the benefits they can bring, developers are still criticised for being seen to provide the bare minimum in order to maximise their own profit when communities want them to be seeking to maximise investment for the benefit of all.  However, an increasing number of developers have shifted their focus from simply delivering a project to "place making", providing a mix of uses and creating sustainable development.

In east London at the Royal Albert Docks, for instance, developers are committed to improving business skills in the local community in order to equip people to take advantage of the opportunities that will result from the investment.  The Mayor of London’s new draft London Plan has a strong emphasis not just on affordable housing provision, but also on providing affordable workspace for small businesses and what is termed "good growth".  Developers are becoming increasingly comfortable with this concept.  Developers are seeing real "value" that creative uses bring to schemes even where there is no financial benefit to be made.

On the subject of small businesses though, we do have to take care. The recent GLA report ‘High Streets for All’ explores the social value created by local retail outlets from the perspective of Londoners. The report states that almost 40% of small businesses interviewed performed a social function which is especially important for vulnerable groups in their neighbourhoods.  The report also reiterated the importance of London’s high streets, the impact of urban change and large-scale retail regeneration in emerging areas. It found that as a result, some high streets and independent businesses are facing a range of challenges including closures – which threaten the strong social value they offer Londoners.  It could be argued that this is gentrification at its worst. 

There is an argument however that retail regeneration and existing independent businesses can live and indeed thrive side by side. Stratford is a living and breathing example of this – Westfield Stratford City sits comfortably next to Stratford Shopping Centre, which hosts daily markets and independent businesses which have flourished from the increased footfall to the area.  These two communities work in harmony and other corners of London need to take this area as an example to counteract the potential negative impact of gentrification in their localities. 

So, while gentrification must be handled – and communicated - sensitively, on balance regeneration has more to offer local communities than they may at first believe.  If you want to look at what the absence of developer appetite looks like, take a trip to any genuinely deprived community.  What you will find is a rundown area with high unemployment and crime rates.  Rising prosperity comes at a cost, but what is the alternative? 

From a legal perspective, whatever form a public/private partnership may take to bring forward a regeneration scheme, whether a contractual development agreement or joint venture, there will always be a balancing act between the wish lists of the contracting authority as land owner, the contracting authority as planning authority and the developer.  Ultimately financial viability will always be a deciding factor.  The public procurement process to appoint a developer is a long and costly one for all involved.  What we have seen is the failure of many regeneration partnerships due to contractual minimum requirements which ultimately result in unviable schemes.  Development therefore simply does not happen.  These partnerships cannot be varied at a later stage due to the risk of public procurement challenges and the prospect of starting a new procurement process at that point is no good for anyone.  This would simply cause more delay and increased cost.  What parties need to do is build in sufficient flex from the outset to allow projects to evolve as viable schemes whilst simultaneously protecting the community to ensure that the "place," which is ultimately created, is for the benefit of all.

The Mayor of London has recently announced that he will  implement a controversial policy to require resident ballots as a condition of GLA funding for estate regeneration schemes that involve the demolition of existing homes. This is taking engagement with residents to the next level by ensuring that they have a clear say over whether the scheme should proceed or not.  Although at this stage the ballot will be a GLA funding condition, is this the thin end of the wedge?  Will we get to a point where a mandatory ballot will automatically be required before any regeneration scheme moves forward?

The key ingredients to making regeneration an all-round success is early communication, consultation and collaboration among the existing community and stakeholders, understanding and listening to the existing community, a balanced approach to wish lists  and a tailored approach rather than 'one size fits all'.  Developers and contracting authorities must be pragmatic to ensure that financial viability is balanced with the aspirations of the local community.  Otherwise, development cannot happen and society will have more to worry about than keeping gentrification at bay.

 

1.  King's Cross regeneration: 10 years on, Adam Branson, propertyweek.com, 3 January 2018.

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