‘Social’ property development challenges the current model

Published: 17th Feb 2016

Chris Hill -I’ve spent the last ten years as a co-operative property developer. Spot the building, see its potential social use (sometimes see the social need and spot the building), form the co-op, build the support, do a share issue, raise the rest of the finance, develop the building and the business with the members, then move on after three or four years, leaving the Community Benefit Society in control.

It’s a twist on the community asset development that has been championed by the Development Trust Association and Locality for many years. The difference is that rather than waiting for a community demand to emerge, a social developer or group plunges into the property market after spotting a good opportunity.

‘It may be a slow death, but the traditional

office block and its retail equivalent is on the way out’

Buildings are platforms to do stuff in. A well-run community building, uncommitted to brand, business models or national hierarchies, can bundle everything together – social, business, education – in an imaginative and networked organisation. A business that can meet our multiple needs in an age of blurring divisions between work and play is swimming with the tide. It may be a slow death, but the traditional office block and its retail equivalent is on the way out.

So these community properties have to be one of the contributions to improving our towns and cities. More of it needs to happen and, as community property developers, we need to be challenging the traditional model with its crushingly boring vision of ‘mixed use’ corporate fare.

There are huge barriers in the way with the movement in property prices and decimation of local authority capital programmes and land ownership, but some things have got better. The social finance market (loans, community shares etc) is better resourced and tuned in to such developments, and local authorities are much keener to work with social enterprises, recognising they cannot do it themselves.

One thing haunts me though. These hives of activity have to be financially viable. Grab as much grant as you can for start up investment, but don’t expect revenue subsidy. That means you look for profitable activity, which means paying close attention to those that have money. If you’re fully immersed in the free market, how then do you help out the people who suffer from it?

The developments I’ve been associated with have been great in regeneration and economic terms and have brought new social groups together but, in my gloomier moments, they can seem like middle class playpens.

There’s no easy answers. My approach would be to create a financially viable structure, which may well mean focusing on the cappuccino classes, but then develop activities that keep throwing out ladders for people to climb on board – apprenticeships, free training days, grant-funded projects, links with schools and the voluntary sector etc.

But judge a person by what they do, not what they say. How often do those priorities get pushed to the back during the struggle to keep a business financially afloat? I dream of one day attending a board meeting to discuss how we could most usefully use our profits. Until that day I need to learn how to make my economy more social.

Comments (4)

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Chris, you see the slow death of ‘The traditional office block and it’s retail equivalent’. So what do you anticipate will take their place? Are you partly implying that cars will not dominate so much in future? Please enlarge on your comment.

I like your ideas in the second to last paragraph. I appreciate that we are all just feeling our way forward.

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Chris Hill

Riki
The future of town centres is fascinating (and clearly differs between cities and small towns). Traditional developers are banking on shops always being needed as showcases prior to internet buying. True for certain goods, but the pressures to shrink property based retail are building all the time.

Even in the shopping paradise of Leeds, Hammersons, who own a swathe of the centre and are building the new John Lewis, realise there can’t be any more shops. For their Phase II they are looking at large scale leisure activities (e.g. kids play factories). Not sure it will work, but together with a steady conversion to residential use, I imagine leisure use beyond just alcohol and coffee will be the direction for the future.

Of course in the large towns and cities, it is property prices / rents that stop the independent sector experimenting. Maybe it’s in the places with loads of empty shops and falling rents that we will see the interesting things happen.

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I’m quite perplexed at how this ‘challenges’ any current view of how land and property deals are structured. You need viable uses – if you don’t want to distribute profits to shareholders and plough them into other activities then fine. But don’t say that this challenges the fundamentals of market capitalism.

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Chris Hill

Half agree with you (I didn’t write the headline). Nothing I’m involved with alters the gravitational laws of the property market BUT, I do think you underestimate how depressingly unimaginative the development process is (and the honourable exceptions know who they are).

Normal development process – buy the land / property – build / refurbish it – fill with blue chip rent paying tenants like Costa, Nandos and Sainsbury’s local – achieve the rental yield of 7% on investment and sell on to a pension fund at a 20% return. Job done.

The co-operative development model does avoid that. There’s no selling on. No ownership by distant financial companies, with the buildings managed by Savils and the like. The rents won’t be cheaper at first (they will be when the mortgage is paid), but it stays community owned and inspired. We’re not interested in simply renting property at the highest price possible, but doing stuff that makes that place better to live in.

Think that constitutes a challenge!

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