Situation

As leading property investment managers, Hermes recognises that it can have a significant influence on the future success of the places and spaces where it chooses to allocate capital. Over the last six years, Hermes has undertaken eight large urban regeneration developments across the UK, spanning a combined 19 million square feet and £13 billion of capital value.

To gain an objective view of the social and economic impacts of its meaningful placemaking approach, Hermes engaged Hatch, independent economic consultants, to carry out benchmarking studies at three flagship developments: King’s Cross in London, NOMA in Manchester and Wellington Place in Leeds.

These sites differ significantly in size and overall spend and represent diverse socio-economic regions of the UK, with a wide variance of market prices, rents, risk premia and environmental challenges. The benchmarking studies aimed to standardise social and economic outcomes to enable comparative analysis of different projects.

Actions

Hatch explored a range of measures, including employment opportunities, skills development and community engagement. The research revealed some interesting findings.

Analysis of average wage measures highlighted that people employed by occupiers at King’s Cross, NOMA and Wellington Place earn around 14% – or over £4,000 – more than average annual salaries in the given local region. This ‘earnings bonus’ functions as a rough proxy for the additionality delivered by Hermes through its occupier selection, engagement and meaningful placemaking approach.

The research also offered insight into the additionality of the social outcomes Hermes contributes to as an investor in a particular community. King’s Cross, NOMA and Wellington Place are surrounded by communities featuring a range of cultures, age profiles and histories.

The benchmarking studies improved understanding of the social value generated by different community engagement approaches. After controlling for size and spend, two sites delivered similar intensity impacts through their artistic, cultural and wellbeing events, but in different ways. One site featured irregular but highly attended events, while another hosted frequent community events with fewer attendees. The contrast in engagement styles reflected the local cultural contexts and relative development stages of the two projects. Understanding these subtleties and recognising the value generated by diverse approaches supports Hermes in tailoring projects to local needs.

The studies also identified how Hermes’ placemaking process can spark positive change at different development phases – including design, construction and occupation. During construction, all three sites generated significant value in developing skills for the future. Some 1,230 apprentices and NVQs were involved in the construction of King’s Cross, NOMA and Wellington Place, generating £2.6m societal benefit.

Building on the success of the benchmarking studies, Hermes is now looking to carry out studies at additional locations, including Milton Park in Oxfordshire and Skypark in Glasgow. The team is also exploring opportunities on smaller scale developments, such as Marshall’s Mill in Leeds.

Financials

One of Hermes Investment Management’s key priorities is developing effective methodologies to measure the positive impact of real estate investments. Each potential case study is thus presented to each respective Board under this objective, costed, and then pursued accordingly.

Benefits

The addition of quantitative social and economic indicators to Hermes’ long-established environmental metrics:

• Reinforces the power of Hermes’ meaningful placemaking approach and informs decision-making.
• Supports Hermes’ Responsible Property Investment (RPI) strategy and occupiers’ sustainability goals.
• Meets investors’ sustainable-return requirements, quantifying social and economic contributions.
• Contributes to discussions with a range of stakeholders.

The benchmarking studies have revealed that Hermes’ meaningful placemaking approach often delivers results greater than the sum of its parts, including:

• Generating economic value in regions of the UK historically associated with post-industrial underinvestment.
• Creating job opportunities and training, growing clusters of high-skilled workers that can attract further capital investment and talent to an area, and providing entry-level roles that contribute to inclusive and diverse places.
• Restoring a sense of civic pride and belonging, bringing the ‘meaningful city’ concept to life.
• Conserving local heritage and ensuring it exists in harmony with modern structures.
• Introducing accessible urban spaces that function as a community and cultural mosaic. For instance, the new public square at NOMA hosts diverse events including outdoor fitness sessions, music and arts festivals and pop-up markets. It is also home to The Pilcrow, a pub built by 500 volunteers who made everything from stools to beer pump handles, encouraging local people to feel part of the NOMA community. In addition, there is a new space for creative practices to experiment, collaborate and grow, The Old Bank Residency.

Total Social & Economic Value Created: King’s Cross, NOMA and Wellington Place, available below: