Creative Places Create Value - The Impact of Creative Workspace on Local Residential Property
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Creative Places Create Value The Impact of Creative Workspace on Local Residential Property
About the Creative Land Trust
Commissioned by In Collaboration
Creative Land Trust is a charity launched in 2019, supported by the with
Mayor of London, Arts Council England, Bloomberg Philanthropies
and Outset Contemporary Art Fund. The charity was set up to tackle
a long-standing problem for London and other cities – the rapid loss
of affordable workspace for artists and makers, presenting a serious
threat to the wellbeing and prosperity of a city and country renowned
for creativity and culture. We’re making space for art.
About Creative Estuary
Creative Land Trust Creative Estuary Get Living
Creative Estuary has a vision to forge a new future founded on
Invicta House Clocktower Building, 1 East Park Walk
creative energy and innovation, along the length of the Thames
108-114 Golden Lane, University of Kent, East Village
Estuary. We’re going to do this by developing the places where
London Chatham Historic London
the creative industries can build a vibrant and prosperous future,
EC1Y 0TL Dockyard, Kent E20 1JH
enriching communities and strengthening the region. Creative
ME4 4TE
Estuary has been made possible through investment from the
Cultural Development Fund from the Department for Digital, Culture,
info@creativelandtrust.org info@creativeestuary.com hello@getliving.com
Media and Sport which is administered by Arts Council England. The
www.creativelandtrust.org www.creativeestuary.com www.getliving.com
project is led by the University of Kent on behalf of a consortium of
public sector and cultural organisations.
About Get Living Author Team
Get Living is the UK’s leading build-to-rent operator – offering simple,
straightforward living in brilliant urban neighbourhoods, where our
resident communities enable independent businesses to thrive.
Get Living support the creative sector in London, where they have
launched The Lab E20, a sustainable design centre produced by
Christopher Raeburn.
Get Living’s £2 billion portfolio comprises 3,000 homes for rent
across three neighbourhoods: East Village and Elephant Central in
London and New Maker Yards at Middlewood Locks, Manchester.
Further neighbourhoods are planned in Leeds, Lewisham and Hawkins\Brown dataloft Ramidus
Glasgow, with ambitions to grow the portfolio to 15,000 homes
within five years. 159 St John Street Athenia House Ramidus Consulting Ltd
London EC1V 4QJ 10–14 Andover Road 89 The Street
Published digitally 09/2021 Winchester Hampshire Barney NR21 0AD
SO23 7BS
Citation
mail@hawkinsbrown.com info@dataloft.co.uk Robharris@ramidus.co.uk
Creative Land Trust et al. (2021) The Impact of Creative Workspace www.HawkinsBrown.com www.dataloft.co.uk www.ramidus.co.uk
on Local Residential Property.
https://creativelandtrust.org/creative-places-create-value
+44 (0)20 7336 8030 +44 (0)1962 867712 +44 (0)1328 822 586
Front Cover:
RAW studios, Royal Albert Wharf
(© Delvendahl Martin Architects)
© Creative Land Trust 2021. Creative Land Trust welcomes the use, citing and dissemination of this report and its
contents without permission.
Disclaimer: This report is produced for general information only. While every effort has been made to ensure the
accuracy of this publication, the author team accepts no liability for any loss or damage of any nature arising from its use.
3
Contents
1 Executive Summary 3 Quantitative Analysis 5.3 Thames Estuary Case
Studies
3.1 London Case Studies: C1 - Margate
2 Introduction Property Performance C2 - Southend
3.2 Thames Estuary Case C3 - Basildon
2.1 The Brief Studies: Property C4 - Thurrock
2.2 Our Approach Performance C5 - Medway
2.3 Research Overview 3.3 Price Analysis: Exploring the
Relationship Between 6 Acknowledgements
Creative Workspace and
Residential Demand 7 Appendix
3.4 Risk Analysis
7.1 Literature List
4 Qualitative Analysis 7.2 Detailed Risk Analysis
4.1 Expert Insight, Developers:
Planning Consent Catalyst
and Long-Term Value
4.2 Expert Insight, Operators:
From Make-do-and-Mend to
Creating Cultural Assets
4.3 Expert Insight, Estate
Agents: Community View
and Impact on Buyer
Demand
5 Case Studies
5.1 London Clusters
A1 - Hackney Wick
A2 - Woolwich Dockyard
A3 - Tottenham
5.2 London Schemes
B1 - Galleria, Peckham
B2 - Bow Arts, Royal Albert
Docks
B3 - ASC Arthouse, Croydon
B4 - Second Floor Studios,
Wembley
Left
Affordable studios in
the Trampery on the
Gantry / Here East/
Hackney Wick
(© Rory Gardiner)
5
1 Executive Summary
Values in creative clusters The contribution of
creative industries to the
Successful places are attractive and
desirable, which stimulates demand
for residential property. The discus-
fore, an implied contribution to value.
Isolating and quantifying the specific
financial value that can be traced back
outperformed the London average wider economy is not in
dispute, as the relevant
sion of price growth is problematic,
especially when associated with
to the presence of creative workspace
is challenging. This kind of value is of-
by 4.4% per annum over 10 years.
literature reflects. We creative industries, because there is a ten accrued over the longer term, tied
history of displacement. For investors up with other contributing factors and
know that the presence of
and developers, successful develop- does not necessarily exceed the value
creative industries within ment and price growth are inextricably of an alternative use at the outset.
communities has not only linked. When a place is successful, it
a social value but a wider translates into demand and value. For There are, of course, many compet-
Values in creative clusters in the economic value, too. The
flow on to residential
this reason, the relationship between
creative workspaces and value has
ing uses within a development. The
typical developer model will look to
Thames Estuary outperformed the
generally been avoided in the litera- the higher values achievable for that
values is generally ture, until now. space, if only to minimise risk. Thus,
understood but not for creative workspace to be present
area average by 3.3% per annum singled out and explicitly
recorded, and often it is
The ultimate purpose of this research
study is to help expand the provi-
sion of affordable workspace for
in a development, it must take the
place of an alternative use. In most
cases, the alternative use will have a
over 5 years. an uncomfortable truth. creatives by presenting developers
with evidence to show that creative
workspace can make an important
higher financial value, at least in the
short term, whether that is addition-
al residential or a different kind of
contribution to financial value in a commercial use. For developers to be
residential-led development. encouraged to make creative work-
space part of a scheme, evidence that
The task was to quantify the relation- shows how values can outperform
ship between the presence of creative over the longer term is useful.
workspace and positive change in
residential values, attributable to the Where policy intervenes, the equation,
presence of that creative space. It even at the outset, is often tipped
does so by translating the widely in favour of creative workspace.
acknowledged ‘soft value’, into a For instance, where the developer
‘hard value’ that can be accepted by is required to preserve or provide
investors and developers for use in employment space, the range of
evaluating development opportunities alternative uses is restricted, and the
and encourage them to re-examine case for creative workspace is greatly
the risk-return trade-off, of creative strengthened. This research demon-
workspace as a ground floor use. strates that professionally managed
creative workspace is often a more
An important finding is that many de- viable and financially attractive option
velopers are recognising, and indeed than other commercial uses because
lauding, the contribution of creative it offers long-term secure income,
workspace to the community, vitali- which is particularly appealing in
ty and the wider economy. There is uncertain times.
widespread understanding that these
things all have an impact on the long- Moreover, if the character of an area
term success of a place and there- is strongly associated with creative
6 7
1 Executive Summary 1 Executive Summary
The case studies showed the suc- to the life and vitality that creative space and showing a willingness and
cess of the inclusion of creative work- space can bring. These benefits can financial ability to commit to the long-
space within a new build scheme was be enhanced with active curation, term. Active engagement from the
dependent on factors including the expert management and community outset is valuable to both parties.
scale of the creative workspace, the engagement. Creative workspace is
operator, visibility and community en- considered ‘a good neighbour’ for Feedback from estate agents (as a
gagement. Bow Arts at Royal Albert residents, compared to some other means to explore residents’ views)
Wharf is a prime example of the value commercial uses. The long-term confirmed that a particular sort of
creative space can add. commitment from workspace oper- buyer actively favours a creative com-
ators is attractive to investors (and munity, which certainly underpins de-
Of course, within large-scale regener- thereby impacts yield). mand in the locality. Other residents,
ation, there are other positive con- whilst not explicitly recognising the
tributions from a range of amenities The risk analysis in this research value of creative workspace appreci-
and well-recognised brands; creative demonstrates that creative workspace ated the amenities that bring life and
workspace is only one ingredient. as a ground floor use in a residential vitality to their local community. This
However, with a growing number of development does not introduce local ‘buzz’ is even more important
examples, it is clear that developers any additional risk and can increase since the pandemic, as many people
are increasingly willing to value its investment value because where spend more time locally.
inclusion. there is a good covenant and secure
long-term income (or a long leasehold The role of engagement was em-
Developers corroborated the view sale). phasised in all our interviews. It takes
that each site had to be evaluated in passion, engagement, expert curation
its own right but that, in certain cir- The way in which operators have and a change in mindset from devel-
cumstances, the inclusion of creative evolved their approach is also critical opers for the value of creative work-
workspace had acknowledgeable to this dialogue. Creative workspace space to be maximised. Where these
benefits, even more so where there operators actively seek early involve- factors align, there is evidence of the
was a need to protect employment ment in new build schemes, wanting value add to be accrued.
space. The visible benefits relate to be involved in the design of the
Left
Existing artist studio
in Hackney Wick
(115 Wallis Road)
(© Cell Studios /
industries, demand for residential is It recorded outperformance in price terms). Marielle Amelie )
bolstered by people who want to live growth for the residential property in An association is not necessarily a
in a creative enclave and the market the locality, taking outperformance causal link. The next step was to Right
favours creative space. over and above the area benchmark challenge and corroborate the head- New residential
as an indication of value created by line value add metric. The research development with
creative workspace at
Consequently, it must be possible, the presence of creative workspace. examined some of these creative
84 Wallis Road/
in the right circumstances, to iden- This gave us the value-add metric. clusters in more detail and where Hackney Wick
tify a metric that demonstrates to a In London, the value-add metric is possible, looked at examples of (© Cell Studios)
prospective developer that making 4.4% per annum (measured over 10 creative workspace within a new build
space available for creative work- years) and in the Thames Estuary, it is scheme. Likewise, interviews with
space in a predominantly residential 3.3% per annum (as a more emer- stakeholders and experts explored
development is a commercially sound gent market, this was measured over what else might be contributing to
decision. 5 years). This outperformance is not price outperformance in these places
smooth or consistent over time or and the likelihood of this outper-
To this end, this research analysed place, and there are many factors at formance being replicated in any
trends in sale and rental values for play, nevertheless, for these clusters, development that included creative
residential property in parts of London there was an association with the workspace.
and the Thames Estuary where there presence of creative workspace and
are clusters of creative workspace. outperformance (in residential price
8 9
Key Findings
This research found a positive association between creative Long-term commitment is critical on all sides: Creative workspace is a
workspace and residential property values. good neighbour.
4.4%
per annum outperformance during a 10-year window in Creative workspace brings
London. For the developer, it brings income security, vitality to a community
reduced void risk and improved yield. without being disruptive,
3.3% per annum during a 5-year window in the Thames Estuary especially when it is present
at scale.
The outperformance is similar to the effect associated with regeneration,
green or blue space, popular schools, or certain grocery stores.
For the operator, it brings security for their
The association is more robust where there is a cluster of creative occupier community.
workspaces.
Successful creative clusters become place brands in their own right. For
instance, Margate and Hackney Wick have become international brands in For residents, it means a stable,
their own right.
sustainable neighbourhood.
A single creative workspace operator can bring life to an area before housing
is offered for sale, e.g. Bow Arts Trust at Royal Albert Wharf.
Creative workspace
Operators need scale, Creative clusters
as a ground floor
The covenant of many longevity and early can be kick-started
commercial use does
workspace operators is involvement. by regeneration or
not add material risk
potent, and the artists evolve organically.
and can add value.
themselves tend to
There is significant be stable and reliable
£
£
unsatisfied demand for occupiers.
Creative activities
creative workspace, £ The new model of creative usually at least
contribute to successful
more than one workspace operators 10,000 sq ft
thousand named £ committing to purpose-built placemaking.
applicants. long-term secure leases has and ideally London’s Creative
real value. Enterprise Zones will act as
20-25,000 sq ft. a catalyst.
Creative workspace
The perception of satisfies planning Cultural landmarks
artist and creative obligations to protect help create place
workspace as employment space identity.
casual, chaotic
e.g. Galleria development, e.g. Turner Contemporary
and transient is in Margate, and the strong
studio space by ACME, and
misleading. halo impact of the Queen
ASC Arthouse in Croydon
Elizabeth Olympic Park.
Grafton Quarter.
10 11
2 Introduction
What the developer sees is artists
hanging out in what appears to be
chaotic studio space; they don’t see that
it is actually a very well-organised,
well-structured business model which
is hugely effective at delivering high-
quality environments and workplaces
Selina Mason (Lendlease)
2.1 The Brief
2.2 Our Approach
2.3 Research Overview
Left
Matchmakers Wharf
Homerton
(© Morley von
Sternberg)
13
2 Introduction 2 Introduction
2.1 The Brief 2.2 Our Approach
1. Our brief was to undertake 2. The primary objective of 4. The brief asked that any Our approach incorporated both Analysis of house price data: The qualitative research included
research to investigate and this study was to prove evidence from quantitative quantitative and qualitative research, Firstly, the research examined house expert interviews and a short
quantify the value added by the positive relationship analysis should be backed drawing too on existing published price data in a range of time periods questionnaire survey to canvas views
creative workspace in new between the presence of by qualitative dialogue and work. The approach varied slightly and creative workspace locations, on the relationship between creative
residential developments. creative studio workspace expert opinion. To this end, between the London and Thames to look for price change or price workspace and demand for and/or
To date, there is no widely and demand for residential the research asks: what is it Estuary locations, dependent on differentials associated with the value of, residential property. These
accepted model for property. It accepts the that stops more developers data availability and maturity of the presence of creative workspace. The interviews included:
demonstrating projected premise that an increase from incorporating creative market. Our distinction between resultant matrix formed a framework
investment returns resulting in residential value is a key space? Are there hurdles Thames Estuary (Kent and Essex) to assess and compare performance – Residential developers: to
from the inclusion of artists’ indicator of demand. to investment? What do and Greater London was helpful for and help quantify the value added by explore the range of attitudes
and makers’ workspace in residents think? What are the purpose of this study to reflect the presence of creative workspace. towards creative workspace in a
particular, or of the impact the lessons to learn from differences in character. However, in new build residential scheme, the
3. It is anticipated that the results
on liveability, desirability and operators? reality it is a continuous geography, Case studies of clusters and role that planning takes and how
of the work will be used with
nearby economic activity, and and neighbouring places may have schemes: value can be recognised.
landowners, developers and
therefore a property’s value. much in common. The Thames Across London and the Thames
investors to demonstrate the – Estate agents: to explore
Estuary Production Corridor reflects Estuary, case studies were selected
opportunity to optimise not community attitudes and
this and spans both geographies. for a closer examination of residential
only the social and cultural understand drivers of buyer / rental
demand. These were either creative
value that creative workspace demand.
Literature review and clusters (localities with multiple
can bring but also the – Creative workspace operators:
international case studies: creative workspaces) or standalone
financial value of residential/ exploring the evolution of operator
A literature review explored published schemes where creative workspace
commercial projects. business models, lessons in
research on creative workspace had been included in a residential
and its impact on property values, scheme. management and how curation
including examples of creative clusters relates to community engagement,
overseas. Risk analysis: something that stems directly from
A development appraisal, based on the fact that many operators are
The quantitative element of this a hypothetical residential scheme, charities.
research had three components: formed the basis of a risk assessment – Local authorities: to ensure
by modelling three different scenarios the research picked up on the
for ground floor use. important local dynamics of the
creative community, especially for
less mature markets.
14 15
2 Introduction 2 Introduction
2.3 Research Overview including international case studies 2.3 Research Overview including international case studies
A valuable but vulnerable asset These are very low rents, reflecting But also: small businesses were being forced explicitly aim to supply affordable According to Creative United:
Until around 2014, artist workspac- the secondary locations that artists Between 2014 and 2017, 52 new sites out and that this was exacerbated by space, or provision occurs through “Such innovations and approaches
es tended to be addressed only in tend to inhabit. But the research adds: providing artists’ workspace opened pressure to release employment land charitable or not-for-profit endeavours need support to ensure maximisation
the context of affordable workspace Studios in our study show very high - a net gain of 13 sites. Mayoral regen- for housing. (p10). That is to say, artists workspace of the economic, social and cultural
generally, rather than in relation to the and continuous occupancy rates, in- eration funding has supported 4 of and makerspaces generally are not benefits of creative workspace de-
specific needs of artists. The situation dicating consistent levels of demand. these sites. (ibid) The advantage of Open Workspace is seen as commercial enterprises. But: velopment for local and regional
was such that Future of London (2017) An estimated 3,500 artists are on seen as well suited to small and grow- economies”. (p10)
observed that: waiting lists. Furthermore, each year Despite the new supply: ing organisation, could offer business Such creative spaces and commu-
Artist spaces tend to fit more easily 35,000 students graduate from Art & Workspaces are becoming more support services facilitates peer- nities have also been shown to have According to Creative United, feed-
into mixed-use schemes and there Design Colleges in London. (p8) expensive. In 2014, 56 per cent of to-peer interaction. They can also a wider economic and social value, back from commercial developers
are examples throughout London. sites charged an average of £11+ per support economic growth – especially helping to regenerate areas by stim- suggests that for them to consider
However, while supply and demand Future of London (2017) found a simi- square foot. In 2017, this had risen in bringing redundant space back into ulating local business growth and responding seriously to the issues
for industrial space is monitored, lar pattern: to 79 per cent of sites (…) . Sites show use, even though measuring the exact attracting inward investment and facing creative workspaces it would
data on artists’ spaces isn’t tracked Industrial, maker space and studio very high and continuous occupancy contribution is challenging. infrastructure development, without require financial incentives, economic
by local or central government. There operators we spoke to had long wait- rates. There appears to have been no (in the main) disenfranchising local impact evidence and accompanying
is a substantial knowledge gap about ing lists, indicating strong unmet decline in demand from artists for The role of affordable workspace incumbent communities. (Creative policies from key decision-makers
the supply and demand for artists’ demand. (p5) workspace since 2014. (p6) generally, and artist workspaces in United 2016, p1) and legislative/executive bodies such
workspace. (p17) particular, in placemaking is also as national and local government.
It is this consistency in demand that It is manifestly evident that churn widely acknowledged, as is the cultur- Creative workspaces are a core infra- Small, incremental changes will not
We Made That (2014) made the first consolidates values, and paradoxically is an existential condition for artist al value they bring: structure for the vibrant and dynamic suffice.
widely recognised comprehensive leads to artists being pushed out as workspaces. This should not be too creative economy (ibid). They deliver
survey of artist workspace in London, general regeneration occurs. surprising, given their tendency to Powerful discourses and practices economic, social and cultural benefits A number of factors can limit the
on behalf of the Mayor of London: Affordable artists’ workspace is a be pioneers in areas on the cusp of have emerged in recent decades that that have especially supported regen- success of policy: the nature of legal
The survey has uncovered that the valuable, yet vulnerable asset in Lon- regeneration. link cultural investment and activ- eration activity – as artistic commu- agreements, the requirements of
supply of artists’ studio space in Lon- don…the sector is largely reliant on ity not simply to understanding the nities have occupied under-invested financiers, limited Council resources
don is higher than previously record- providers operating on a not-for-prof- Artist workspaces and regener- city but to changing it. (Crossick & sites and supported the redevelop- and reliance on delivery partners.
ed. We recorded 298 separate studio it or charitable basis in order to keep ation Kaszynska 2015. (p74) ment cycle. (Ferm, 2016)
buildings or sites, catering for over rents within reach…it is clear that Despite this pressure, affordable
11,500 artists across the capital… the market will not by itself address workspace has been widely regarded In particular the creation of creative These cycles leave many workspac- This is the key challenge faced in the
artists’ workspace is a diverse field sustained provision, thus jeopardis- as a key aid to regeneration and artist quarters is a distinctive dimension es and communities vulnerable – on provision of artist workspaces.
generally characterised by scarce re- ing this key component of London’s space; and by 2016, artist workspac- of the wider regeneration narrative, short-term leases, undesignated and
sources. Studio providers and artists cultural and social vibrancy. (We es were explicitly acknowledged as a privileging smaller-scale initiatives in exposed to the broader dynamics Funding space
have therefore developed a number of Made That, 2014, p8) distinct element of this market (IPPR, contrast to the dominant focus on big of the property development pro- Relatively little work has been done to
models to ensure that space remains 2016) under the umbrella term of infrastructure projects. (ibid) cess. Vulnerability driven by property investigate the issue of financial via-
affordable. (p7) In a 2018 data update, We Made That open workspaces. They were seen markets is especially acute in London, bility, with research sometimes taking
found: as resources, with flexible access and Research by Creative United, com- which dominates the provision of absence of viability for granted. Cre-
Artists are often indirect victims of 67 per cent of sites identified in 2014 an element of curation, but with great missioned by ACE and GLA to creative workspaces and studios. ative United (2016) seems to assume
their own success, and, having con- as at risk of closure within 5 years variation within these three parame- investigate the UK’s existing creative that, for creative space, commercial
tributed to positive placemaking in an had closed by November 2017. (p5) ters. workspace provision, describes the As old models of “find a space and viability is not a factor. Its recommen-
area, may find that they are no longer on-going challenges to sustainability occupy” become increasingly imprac- dations regarding finance are:
able to afford to remain there once The risk of closure remains high, The provision of affordable work- and identifies the emergence of new tical over the long term, new ap-
property values begin to rise. and 24 per cent (57) of current sites space, mainly for smaller and lower forms of provision and potential addi- proaches and solutions are emerging – Identify grant funds to refurbish
The average rent across the main stu- providing artists’ workspace are at margin firms, has been a key focus tional funding models. It also showed around such aspects as permanent property.
dio providers is £13.73 per sq ft per risk of closure within the next 5 years. of public policy for many years. In the that the provision of affordable artists occupation and ownership, regional
– Identify existing funds that may
annum, though a significant amount This because so few organisations early-2000s, there was a growing space is primarily met by charitable or hub – London presence, and mixed
support establishment.
of studio space (19%) is rented at £8 own the freehold to sites (around 13 concern in London that property val- not-for-profit organisations. More than partnerships.
per sq ft. (ibid) per cent). (ibid) ues were rising to such an extent that 82% of artists’ workspace providers
16 17
2 Introduction 2 Introduction
2.2 Research Overview 2.2 Research Overview
– Identify opportunities to develop Separating an analysis of artist work- sustainable creative workspaces. The over a 25,000 sq m warehouse. They
small pots of cash from alternative spaces from the wider analysis of LA design district is part of a mature invited artists to use the space, and it
finance such as crowdfunding. affordable workspaces is challenging. high-value residential market, and its quickly became a vibrant cultural cen-
(p23) Nevertheless, it has been established creative culture is part of an integrated tre and helped persuade the share-
It is assumed that mainstream funding that there is strong demand for artists marketing strategy to attract affluent holders that culture and creativity was
is not available. workspaces, but this demand is not buyers. the way to lead development.
financially able to pay market pro-
Beunderman et al. (2018) define a cess for what is, essentially, a variant In Nantes, the process is more or- Central to the project is the notion of
‘New London Mix’ in an attempt to of light industrial space. There is an ganic, almost happening by chance. Mixed City (pronounced ‘mixity’), an
offer a viable model. This mix is: implicit assumption in most analyses Creative workplaces and large-scale active mixing of uses and activities.
(…) the close co-location of light in- that artists’ workspaces are inevitably residential developments benefit from
dustrial, distribution and productive non-commercial. While efforts have each other. From the conversation SAMOA draws a distinction between
workspace with homes in a way that been made to develop models to with the development agency SA- ‘creative’, which is market oriented
works for occupiers and residents overcome this, they remain largely MOA in Nantes, we understand that, and ‘cultural’, which is more hybrid
(p2) - arguing that it can (…) increase untested and therefore unproven. although prices have been rising, new and may involve subsidy. SAMOA
the amount and range of employment residential schemes continue to inte- generates its revenue by selling Sydney Los Angeles
space - not just to achieve ‘no net loss’ International experience: grate creative workplaces at ground the right to build, seeking to exploit On the other side of the world, Syd- The West Hollywood Design Dis-
of employment space, as is currently from mixity to movieland level. This is seen as a vital contribu- the power of culture to bring about ney has seen multiple art-led regener- trict, originally the Avenues of Art
the stated aim of current policy, but The value of creative workspace is not tion to placemaking and part of an economic development. Great ations. South of Central Sydney, work & Design, is a cultural destination
to achieve ‘net gain’ across London – only recognised in the UK. Three di- overall economic strategy. use is made of temporary spac- redeveloping a former industrial area for high-caliber design, art, fashion,
and build better places. (p13) verse examples from France, Australia es – where temporary may mean at Green Square started in 2007 but dining, beauty and more, initially en-
and the United States illustrate this Île de Nantes ten years – to bring life to zones on progressed slowly. Then in 2012, compassing more than 200 business-
Their focus is on a much wider base diversity. Although we do not have The closure of the last shipyard the island, an example being Le the redevelopment of the old Syd- es. It was established as a Business
of occupiers than artists. Howev- access to exact figures to understand on Île de Nantes came as a trauma Karting – a former kart track trans- ney Hospital nurses’ quarters be- Improvement District as long ago as
er, this model envisages, inter alia, the impact of creative workspaces, all to the city and the 600,000 people formed into 40 small spaces for visual gan as restored community space. 1996 and, when renamed in 2013,
around 4,000 sq m of light industrial three case studies represent success- in its metropolitan area. The regen- entertainment media. Most iconic, supported more than 300 business-
space under 120 apartments. The ful creative clusters that have directly eration of the 5km by 1km island is however, is Les Machines de L’île, an The Joynton Avenue Creative Centre es.
authors argue that it is currently viable contributed to a thriving real estate led by SAMOA, a privately structured idiosyncratic collection of art installa- was launched in 2018 and houses
in West London and near the CAZ, market. but publicly-owned development tions with its elephant serving as an over 25 artists, creative practition- The West Hollywood Design District
and that a tipping point exists around agency. The regeneration is explicitly icon for the whole regeneration. ers, organisations and start-ups, as Streetscape Master Plan was adopt-
Tube Zone Three, where values that Sydney demonstrates that effective culture-led, with the proof of concept well as supporting creative education ed in summer 2013. It was developed
support this concept weaken, and management is vital to delivering shown when the initial team took There is also no fear of experiment- programs, jewellery making and cul- with the help of a consultant team
that viability worsens further east. ing via prototypes. Indeed, the tural events. Not far away, SQ1 offers and a community working group,
initial use of the warehouse to serve a: “creative platform for the visual arts composed of over a dozen business
A new briefing note prepared by artists was such an experiment, and contemporary culture, including owners and residents in the area.
Savills and the BCO reflects a new and success was not initially ex- 40 artist studios.”
attitude: pected. A more conventional, for During the adoption of the plan, City
Whereas previously artists were dis- the time, office-led scheme was Success has not been without Council requested that the identified
placed in the process of gentrification envisaged. This knowledge has had hiccups. In 2007, the historic former public gathering spaces be further
or regeneration, now many authori- multiplier benefits such that develop- Eveleigh Railway Workshops at Red- developed through a communi-
ties and developers are seeing artists ments that are not part of the scheme fern were transformed into a cultural ty design process. Phase 2 of the
as central to their regeneration pro- tend to mix in affordable space, since precinct with resident artists, claiming scheme aims to bring public realm
posals. (Savills/ BCO, July 2021) it seems to help homes sell more to be the most significant multi-arts improvements, including a new public
quickly. The project runs until 2037, centre in Australia. However, it had meeting space, to fruition by 2025.
Adding that while its research was but already half of the people who been operating on a month-by-month This is a more conventional route to
written about London and in the con- move to Nantes settle on the island. lease since 2017, and the COVID-19 urban renewal that illustrates the value
text of rising costs: pandemic led to it going into admin- of building on existing strengths.
Many of the measures in the new istration, owing Aus$2m in May 2020.
London Plan1 are relevant to other Top In July, a government-backed res-
cities struggling to maintain the di- The Joynton Avenue Left cue package was approved, but the
Creative Centre, The Alstom problems faced by Carriageworks do
versity of their economic ecosystems. Sydney. Warehouses / Nantes
illustrate the need for sound finances.
(© Michael Nicholson) (© Luc Boegly)
18 193 Quantitative Analysis
Our view is that creative engagement
has an enormous impact. It is difficult
to measure but we recognise the value as
massive and work alongside developers
and investors who recognise this, as
we do, with a different mindset and
approach.
Ken Dytor (Urban Catalyst)
3.1 London Case Studies: Property Performance
3.2 Thames Estuary Case Studies: Property Performance
3.3 Price Analysis: Exploring the Relationship Between
Creative Workspace and Residential Demand
3.4 Risk Analysis
Left
RAW studios at Royal
Albert Wharf
(© Delvendahl Martin
Architects)
21Performance data: TOTTENHAM
London Case Studies 28.3% (2.8%)
Maturing cluster:
2008-2018
Performance data:
Property Performance Summary Benefiting from
44%
81% (8.1%)
a creative spill-
over effect from 2.8% Mature cluster:
Globally recognised
Hackney Wick.
creative cluster.
Growing in scale and
SECOND FLOOR Emerging: Changes in this market
importance.
STUDIOS, Second Floor HACKNEY WICK really gathered a pace
WEMBLEY Studios is one 2009-2019 from 2012 and following total price
element in the London Olympics.
this enormous outperformance
regeneration
scheme. of London’s key
8% creative clusters
Emerging:
Bow Arts has
been very
over 10 years
Maturing: successful in
4.4%
At its inception (2005) bringing this
The Galleria was a new residential
ground-breaking creative area to life.
workspace development BOW ARTS,
in partnership with ROYAL ALBERT DOCK
housebuilder Barratt.
Since the opening of The per annum price
Galleria, a cluster of other
creative workspace has
outperformance
Performance data:
grown up around it.
3% (0.3%) of London’s key
GALLERIA,
0.3% Mature cluster:
creative clusters
Significant scale of
PECKHAM creative workspace but
WOOLWICH limited residential in the
Source: Dataloft, Land Registry
DOCKYARD immediate vicinity. A
2008-2018
potential opportunity area.
Headline analyses of London’s purpose-built workspace within
key creative clusters showed a residential scheme. For most of
an associated average the creative workspace within a
outperformance of 4.4% over a 10- scheme, it is too early to assess
Creative year window. the impact on the surrounding
Enterprise Zone residential and readily comparable
Emerging: This outperformance finds data is yet to emerge.
Croydon has evidence for a link between the
Best window of 10-year
outperformance total
seen significant clusters of creative workspace and The London case studies used a
regeneration. ASC residential demand, expressed as definition of creative workspace,
Studios at the Grafton house price growth. based upon the GLA Cultural
Best window of 10-year Quarter is one of the Infrastructure map. As the map
x%
outperformance annual first purpose-built The research then focused on case highlights, many of these case
equivalent
studios here. studies to explore this association studies fall within or near Creative
Case Study (schemes) - no in more detail. The case studies Enterprise Zones.
comparable data were both clusters of creative
ASC STUDIOS, space and stand-alone large
CROYDON
NB values are benchmarked against London
property price performance.Thames Estuary Production Corridor Case Studies
16.6%
Property Performance Summary Analyses of these Thames Estuary
locations showed on-average
price outperformance in these
creative clusters relative to the
wider market. This outperformance
total price was 3.3% per annum, derived from
Emerging: total outperformance of 17% over
Creative sector is
Emerging:
Has a growing
outperformance the 5 years. All these clusters are
emerging at this
location. Proximity
network of creative of Thames Estuary’s explored in more detail in the case
studies.
businesses with
to London is a clear
advantage. Initiatives
industry experience, key creative clusters For the Thames Estuary, as a more
working within
to raise cultural
profile: BasildON.
the town based in over 5 years emergent creative location, there
physical workspace is a looser definition of creative
workspace including a wider range
BASILDON or working from home
of creative uses and often smaller
2014-2019 and serving clients
3.3%
remotely. scale premises. The location
selection was led by Creative
Estuary’s knowledge of the key
SOUTHEND
creative clusters across the area.
2.9% 2015-2020
1.0% per annum price
14.6%
outperformance of
THURROCK
2013-2018
4.9% Thames Estuary’s
key creative
clusters
5.0% Source: Dataloft, Land Registry
MARGATE
2013-2018
24.3%
Maturing: MEDWAY
This location has been very
successful at attracting
2010-2015
6.7%
powerful brands like
the Royal Opera House.
The arrival of creative 1.2%
space has accompanied
residential regeneration, 33.5%
the latter a likely key driver 6.0 % Mature:
of price outperformance to Emerging: Margate, regarded
date. Medway’s creative as a cultural hub and
journey has gathered global ‘brand’ in its
pace recently. The flow own right. Clear step
on to residential demand change in residential
is likely to build with its pricing in 2017.
creative ambitions laid
Best window of 5-year
outperformance total out in Medway’s Cultural
x% Strategy. Earlier price
outperformance likely
Best window of 5-year driven by other factors.
x%
outperformance annual
equivalent
NB values are benchmarked against Thames
Estuary (Kent and Essex) property price
performance.3 Quantitative Analysis 3 Quantitative Analysis
3.3 Price Analysis: Exploring the Relationship Between Creative 3.3 Price Analysis: Exploring the Relationship Between Creative
Workspace and Residential Demand Workspace and Residential Demand
Price outperformance of London’s creative clusters
It has long been acknowledged that Research approach: London There are of course, other reasons for
Cluster size
creative space can bring life and For London, the GLA Cultural this strong house price performance. Postcode (GLA cultural
Outperformance Strongest
vibrancy to an area. Historically, Infrastructure map provided a base Nevertheless it seems likely that the versus London: total performance: 10 Area
sector infrastructure
(annual equivalent) years to:
this has been organic. Creatives of knowledge from which to identify creative value in these communities map)
seeking affordable workspaces postcode sectors (e.g. E9 5) with helped to strengthen residential
Tower Hamlets
found them in old industrial land on the greatest number of creative demand. These locations appealed
the city fringe, like Hackney Wick workspaces. It showed seven to potential buyers and many will be
or Woolwich Dockyard in London, postcode sectors that had more than familiar as creative hubs. Hackney E14 0 8 52.1%* (10.4%) 2019 London City Island
or in areas with the lifestyle appeal seven creative workspaces. These Wick, of course, is the standout
of heritage, natural landscape, and had sufficient critical mass to test the example alongside other Hackney
lower land values, like Margate in the relationship. postcodes (E3 2) and (E8 2). Hackney
Thames Estuary. Hackney Wick / Fish Island
The presence of creative workspace is London City Island is a key example E3 2 12 22.0% (2.2%) 2015
/ Bow
Clusters of creative space over time constantly changing across London, of where there is a bigger story
gained critical mass and recognition. sometimes existing in temporary at play than just the beneficial Dalston Junction/
E8 2 10 65.1% (6.5%) 2014
Successful places attracted demand and meanwhile space. Focusing on influence of creatives. This area has Shacklewell
for housing, and in a market these larger clusters gave confidence seen significant investment and
economy with constrained supply, that, whilst the location of studios regeneration, with well over 1,500 new E8 3 10 59.6% (6.0%) 2015 London Fields / Dalston
demand almost inevitably translates is ever evolving, these areas have homes sold in this postcode over the
Hackney Wick (Case
into rising property values, unless an established association and are last few years (the window of analysis E9 5 10 81.1% (8.1%) 2019
Study)
there is some intervention to prevent likely to accommodate a longer- was adjusted for this market).
it. The thorny relationship between term creative community. Also, Haringey
development, demand and values is the presence of multiple creative It was harder to pin down
at the core of this research. When a workspaces is likely to indicate a outperformance over a 10-year
N15 4 8 28.3% (2.8%) 2018 Tottenham (Case Study)
place undergoes material change for wider creative community. window for the Woolwich cluster,
the better, it is generally expressed as Woolwich’s numbers were more
in local property values, which go The dates at which any step change volatile, and there were short periods Greenwich
through a period of outperformance in values might occur varies from of residential outperformance
Woolwich Dockyard (Case
or a ‘step change’. This part of locality to locality, depending on (Woolwich is examined in more detail SE18 5 7 3% (0.3%) 2018
Study)
the analysis seeks to quantify this individual conditions. For that reason, in the case studies).
outperformance. house price data was analysed Total
44.4% (4.4%)
over varying 10-year time frames, to To test the robustness of this level of Average
This relationship is not hard to identify the best performance window outperformance, we adjusted first the
verify, but there are, of course, a where a step change in values was timescale of the analysis and then the Source: Dataloft, Land Registry, GLA Cultural Infrastructure Map. Note all pricing based on per sq ft.
multitude of factors that influence evident. number of creative workspaces in a * Adjusted to 5-year outperformance, reflecting the timing of a significant new build pipeline and limited residential
transactions before that.
house prices. The starting point cluster. Both extra avenues of analysis
here was to analyse house price Research results: London provided similar results. majority of outperformance can occur workspaces (including any with an
data in various locations recognised The evidence suggests there is a over a shorter time frame. Where identified five creative spaces or more)
as clusters of creative workspace, financial value to the benefit creative It is a typical characteristic of possible, it is helpful to focus on areas on the GLA infrastructure map yielded
analysing over various time frames, industries bring to these areas, residential performance that areas do that have had a consistent and longer- similar results. This wider definition of
seeking to identify the level of expressed in house price data. not tend to outperform consistently term change to the dynamic of the creative clusters encompassed places
outperformance in house price data Over a 10-year time frame, this over the long term, as the per annum market, hence the 10-year horizon. such as Peckham and Brixton.
relative to the wider market. amounts to 4.4% per annum price price growth implies. Instead, as
outperformance above the wider areas undergo change, like creative Furthermore, expanding this house
London residential market, a total of workspace gaining critical mass, price matrix to include postcodes with
44% over 10 years. there tends to be a step change a slightly lower number of creative
in residential values. As such, the
26 273 Quantitative Analysis 3 Quantitative Analysis
3.3 Price Analysis: Exploring the Relationship Between Creative 3.3 Price Analysis: Exploring the Relationship Between Creative
Workspace and Residential Demand Workspace and Residential Demand
Section 5
Subheading: Research approach Thames Estuary
Ratio of London to UK & Outer South East house prices
Rental market analysis: London Research approach: Thames creative industries, cultural heritage Ratio of London to UK & Outer South East house prices
London
Due to house price
stronger growth
London in recent
house years has
price growth beenofmultiples
the ratio London toofouter
that evident in rest
South East and of
UKUK
house
Where there is a flow-on to higher Estuary: and world-class art educational and Southeast
prices has widened significantly.
residential demand, it will affect A very similar approach was adopted institutions. The scale of creative
rental values as well as sales for the Thames Estuary. For this workspaces is typically larger, 2.4
pricing. Looking at the same analysis, the location selection too. The Thames Estuary creative
2.2
postcode sectors, there has been was led by Creative Estuary’s clusters are in an earlier phase of
outperformance in rental growth knowledge of the key creative clusters the creative lifecycle; nonetheless, 2.0
terms, too. Rental growth typically (underpinned by work on the TEPC there is a quantifiable association
1.8
moves in more muted cycles than Case for Investment), and their term between creative workspace and
sales pricing, tending to change in line creative workspace was more loosely residential outperformance in all of 1.6
with earnings. defined (often smaller in scale and these locations, albeit more marginal
with a wider range of creative uses in some.
1.4
In our creative cluster study locations, taken as evidence). Given the less 1.2
there is evidence of rental growth mature nature of some of these Notably, the results of the Thames
outperforming the London average by creative clusters, the window of house Estuary price analysis are reported 1.0
1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022
2.6% per annum over a 5-year period price data analysis was reduced to separately to London to acknowledge
(again analysing the window of best five years. these differences. In many ways, Ratio of London to UK house prices
performance in each location). London provides a roadmap for what Ratio of London house prices to outer South East
Research results: Thames is possible in a more mature market.
Estuary: Margate is the best example for the
Like London, this analysis showed Thames Estuary, of a step change in
that, on average, there was price house price performance. It is furthest
outperformance in these clusters from London and has established its
relative to the wider market own identity as a creative place.
(benchmarked against all the Cluster Size
Outperformance
Strongest
local authorities making up the Like London City Island, Thurrock vs Thames Estuary
Place (Thames Estuary performance:
region: total (annual
Thames Estuary). On average, this demonstrates outperformance, but Encyclopedia) 5 years to:
equivalent)
outperformance was 3% per annum, the outperformance isn’t necessarily
derived from total outperformance of a creative story; here too, there has Southend 10 4.9% (1.0%) 2020
17% over the five-year period. been a significant pipeline of new
build housing in the surrounding Margate 13 33.5% (6.7%) 2018
The level of outperformance is postcodes, which has helped lift
lower than witnessed in London, pricing across the area. Thurrock Basildon 15 14.6% (2.9%) 2019
affected by a few fundamental market though, given its proximity to London, Thurrock 2 24.3% (4.9%) 2018
characteristics. For one, London as is particularly well placed to benefit
a whole has seen significantly higher from spillover demand from creatives Medway 16 6.0% (1.2%) 2015
levels of price growth over the last as well as catering for endogenous
decade than outside of London. demand. Total
16.6% (3.3%)
London’s stronger price growth has Average
led to the widest differential in ratio These creative clusters are examined
of prices between London and the in more detail in the case studies. Source: Dataloft, Land Registry, Thames Estuary Production Corridor Evidence
regions since reliable regional house Encyclopaedia.
Note: all pricing based on per sq ft.
price data began in the 1970s.
The dynamism of a global city
like London is distinguished by its
scale and long association with
28 293 Quantitative Analysis 3 Quantitative Analysis
3.4 Risk Analysis 3.4 Risk Analysis
The analysis described in this same in each scenario, while variables cashflow and residual appraisal, Difference Difference Difference Chance of Difference
section, tests what, if any, level of relating to the commercial/ground with a base model to show a Profit Residual
Hackney Wick vs NPV (DCF) vs vs residual vs
(cashflow) value
risk is introduced when creative floor uses are varied. It must be central tendency and a risk creative creative creative below 0 creative
workspace is included in a residential emphasised that: model exploring uncertainty
development scheme, in place of an around that base by altering Build for sale
alternative use. a. This is not a formal valuation the variables relating to the use Base model, creative £40,134,098 0 £31,920,279 0 £21,376,959 0
and should not be treated of the ground floor commercial
Risk model £41,762,841 0 £31,427,010 0 £21,088,896 0 1.53% 0
If there is a positive, albeit variable, as such. The aim is to use space. Full details of the
impact of the presence of creative method are included in the Base model, extra flats £40,192,322 0.15% £31,662,152 (0.81%) £21,608,055 1.08%
a notional model to explore
workspace on housing values, it plausible scenarios. Technical Appendix, but the Risk model £42,528,422 1.83% £32,432,105 3.20% £21,998,588 4.31% 1.20% 0.22
then raises the question of how its model is a 250 flat scheme
b. It is not in any way an attempt Base model, light industrial £38,398,080 (4.33%) £30,164,430 (5.50%) £20,109,148 (5.93%)
inclusion in a residential development with 2,000 sq m net of either
to model existing projects, Risk model £39,986,554 (4.25%) £29,667,472 (5.60%) £19,808,237 (6.07%) 2.06% 0.35
will impact on the overall project creative workspace, additional
which were developed at
performance. flats or speculative light Build for rent
different times and under
industrial space (which could
different property market and Base model, creative £32,345,124 0 £15,414,104 0 £14,537,064 0
To address this question, we consider be let to a creative or any other
economic circumstances. Risk model £50,200,640 0 £28,394,376 0 £26,452,881 0 0.00% 0
each case study area and test the business).
financial performance of a notional Base model, extra flats £32,006,118 (1.05%) £14,169,037 (8.08%) £14,400,119 (0.94%)
scheme at today’s prices and yields. c. Three methods of analysis are Risk model £52,077,804 3.74% £29,495,699 3.88% £27,976,331 5.76% 0.00% 0.00
The residential values are held the deployed: cashflow, discounted
Base model, light industrial £30,609,106 (5.37%) £13,658,256 (11.39%) £13,269,253 (8.72%)
Risk model £48,932,634 (2.53%) £26,877,213 (5.34%) £25,165,407 (4.87%) 0.00% 0.00
Hackney Wick – mature cluster The Risk model returns a profit of Scenario 3: with light industrial
Hackney Wick is arguably London’s £41.7m (NPV: £31.4m; Residual: on the ground floor.
most mature creative workspace £21.1m), and the similarity with the The Base model results for
cluster, and it sits within a larger Base model illustrates that the market speculative light industrial are 4-5%
creative hotspot that runs from here is mature and well understood, below the creative workspace option.
Homerton to Bow, nascent before with central assumptions capturing This reflects the additional risk of
and driven on after the Olympic Park risk well. letting voids and the absence of long-
regeneration. term income security, both of which
Scenario 2: with extra flats on the negatively impact the investment yield
Scenario 1: with creative ground floor applied to this element of the scheme.
workspace on the ground floor The Base model produces strikingly
The Base model shows a gross similar results, with a profit of £40.1m In Hackney Wick, the results of the
profit of £40.1m, an NPV of £31.9m (NPV: £31.7m; Residual: £21.6m), risk analysis reflect a mature market
and residual value of £21.3m. The within around 1% of scenario 1. with well understood values. While the
residual value returned is comfortably strong performance of building extra
above VOA estimates of residential The Risk model shows marginally flats is not surprising, it is noteworthy
development land values, and things better performance for a pure that this option was not as dominant
would have to go catastrophically residential scheme (profit: £42.5m; as might intuitively be expected.
wrong for the 1.5% chance of a NPV: £32.4m; Residual: £22m),
negative residual to be a meaningful which – perhaps unsurprisingly –
factor. illustrates the lower risk of residential
development.
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