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26 June 2019
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BUILDINGS CAN ADD ‘SIGNIFICANT VALUE TO SOCIETY’ 

Queen Elizabeth University hospital, Glasgow
Queen Elizabeth University hospital, Glasgow

24 October 2016 | Herpreet Kaur Grewal


Commercial property development could potentially add up to £20 billion of worth within the area it is located, says research by the British Council of Offices (BCO).

 

Its research, conducted in partnership with Legal & General Investment Management Real Assets and the Social Value Portal, highlights how a lack of understanding is leading to significant losses in positive social impact and that, as a result, local authorities and communities are missing out on “a multibillion-pound opportunity”.


It states that social value is defined as the delivery of goods, services, works and utilities in a way that generates benefits to society and the economy while minimising damage to the environment. One of the challenges to unlocking this ‘lost’ opportunity is that social value is only indirectly considered in the planning process through Section 106 of the Town and Country Planning Act 1990 (as amended) (S106). 


But, S106 agreements, designed to mitigate the detrimental effects of a development on the local community, are principally focused on cash contributions, and as such they do not recognise or ‘value’ any positive benefits that a development team could bring to its local area.

 

Under S106, financial contributions aim to mitigate the detrimental effects of a development on the local community. But the BCO’s report states that the social value of a development is likely to be significantly larger than its potential S106 contributions and that a continued focus on cash contributions is leading all parties to miss the bigger opportunity.

 

For example, with the development of 245 Hammersmith Road by LGIM Real Assets, a detailed analysis was made of the building with the opportunity for SVA equating to almost £40/ft2 a year, equating to almost £80 million over nine years. By comparison, the total S106 contribution was £1 million.  The Queen Elizabeth University hospital in south Glasgow is another example of where social value gains were made, the report states. 


Debbie Hobbs, head of sustainability at LGIM Real Assets, said: “In the current context of diminishing local government grants, striving to unlock greater social value from development is a very important consideration. Collaboration is key to realising this unique opportunity, and can be a prosperous route to making public sector budgets go further and for those involved in development to make a greater contribution to the environments in which they operate.”


BCO’s research found that social value could be delivered through improved procurement practices during manufacture and construction stages, by ensuring that building managers focus on local sourcing and through ‘buy local,’ including an obligation for occupiers to have their own community employment and engagement programmes.