1. Modelling the Relationship between Development Design and Financial Viability John Henneberry 1 *, Eckart Lange 2, Sarah Moore 3, Ed Morgan 2 & Ning Zhao 1 Departments of Town and Regional Planning 1, Landscape 2 and Civil & Structural Engineering 3, University of Sheffield, Western Bank, Sheffield, S10 2TN, UK *Speaker: j.henneberry@sheffield.ac.uk; +44 (0)114 222 6911j.henneberry@sheffield.ac.uk European Real Estate Society Annual Conference Milan, 23-26 June 2010

2. (Lack of) engagement between development and design processes

3. A process whereby "each time the design is refined, viability is reassessed" (Adams, 1994, page 50) – but how? Development appraisal software Takes a single, fixed design as the starting point Sensitivity analysis of cost and value variables but not of design Design may be changed – but not very quickly or easily CAD software Design-driven No link with financial appraisal (although link to QS software may occur for cost estimates)

4. Approach: linking visualizations and physical/ financial modeling (URSULA project, funded by EPSRC, see www.ursula.ac.uk)www.ursula.ac.uk Rave studio VR stereoscopic, 3D viewing Simmetry3d Design and visualization software using gaming technology SketchUp Proprietary design and visualization software Excel Proprietary spreadsheet

5. Rave studio VR stereoscopic, 3D viewing Simmetry3d Design and visualization software using gaming technology SketchUp Proprietary design and visualization software Excel Proprietary spreadsheet

6. Rave studio VR stereoscopic, 3D viewing Simmetry3d Design and visualization software using gaming technology SketchUp Proprietary design and visualization software Excel Proprietary spreadsheet

7. Rave studio VR stereoscopic, 3D viewing Simmetry3d Design and visualization software using gaming technology SketchUp Proprietary design and visualization software Excel Proprietary spreadsheet

8. Rave studio VR stereoscopic, 3D viewing Simmetry3d Design and visualization software using gaming technology SketchUp Proprietary design and visualization software Excel Proprietary spreadsheet

9. Rave studio VR stereoscopic, 3D viewing Simmetry3d Design and visualization software using gaming technology SketchUp Proprietary design and visualization software Excel Proprietary spreadsheet

10. Major Design Change Wicker Riverside, Sheffield: ‘Park’

11. Design Quality and Development Viability "good urban design adds value by increasing the economic viability of development" (Carmona et al, 2001, page 8) "good urban design can add value to development through using land highly efficiently" (Roger Evans Associates, 2007, page 110); that is, by increasing the density of development.

12. The argument… The Optimum Development Density of a Site

13. Every element is open to question Positions and slopes of MC and MR curves – Increased density = higher prices (Eppli & Tu 1999) – Increased density = lower prices (Song & Knaap 2003; Waasmer & Bass 2006) – MR increases exponentially with height for a site with good external environment (Chau et al 2007) Point of inflection of MC curve – 6 storeys (Flanagan & Norman 1978) – 35 storeys (Picken & Ilozor 2003) Requires much more detailed research

14. Analysis of design and property values Breadth – strong evidence base Hedonic analyses Mainly of housing – more homogeneous and numerous than business property Influence of design and green space on house prices identified BUT treatment is basic and historic Depth – refined understanding Qualitative case studies Contextual sensitivity and empirical richness Accommodate complexity of subject and circumstances Consider many aspects of design and value BUT provide restricted evidence base Physical-financial modelling – a complementary approach …

15. Bottom-up Modelling: Apartment Block (constant prices)

16. Bottom-up Modelling: Apartment Block (price increases with height @ +2% per storey)

17. Bottom-up Modelling: Apartment Block (price decreases with height @ -2% per storey)