Search this website. You can use fund codes to locate specific funds

Impactful intent: the 2018 Hermes Real Estate RPI report

We act as stewards of the assets we manage, ensuring that our responsible property investment (RPI) principles are embedded in our real-estate investment strategies. There have been, however, relevant questions about the limitations of this approach in delivering measurable outcomes beyond performance to investors, the economy and society.

By investing for outperformance and aligning our strategies with the long-term needs of society as it changes, rather than managing pure-play impact-investment products, we seek to help deepen our practice of RPI. This involves using a purposeful framework to focus our real-estate operations on impact themes, and then committing to activities with measurable environmental, economic and societal impacts. Intentionality, a conscious aim to create positive impacts through investments, and transparency are key elements of this approach.

Seeking to create positive impacts through RPI, we focus on three aspects of real-estate investment that support the Sustainable Development Goals (SDGs):

  • Meaningful place-making that fosters civic pride
  • Healthy, engaged and productive occupiers and communities that drive desirable social and environmental outcomes for all stakeholders
  • Achieving a just transition to a low-carbon, circular economy in order to help prevent further adverse climate change and resource scarcity

Our detailed approach to impactful intent and a case study on NOMA place-making in Manchester are detailed in the Hermes Real Estate 2018 RPI report, "Impactful intent: creating positive outcomes through real estate investment".

Here we explain how the first theme manifests as part of our implementation of RPI. We will be covering the latter in case studies to be published in Q1 2019.

Meaningful place-making

Intrinsic to our ability to generate positive impacts through RPI is the concept of meaningful cities: urban environments where people want to work and live, in which they take great civic pride, and which they want to support through social, economic, leisure and community-based activities.

Hermes has purposefully taken on several place-making developments over the last six years, we recently acquiring five new large inner-city regeneration opportunities across the UK. Together these places span a combined 19m sq ft and £13bn of capital value. These new projects include Wellington Place in Leeds, NOMA in Manchester, Paradise Circus in Birmingham, Silverstone in West London, Skypark in Glasgow and our more recent acquisition of St Mary Le Port in Bristol. They complement the well-documented success story of King’s Cross in London, Milton Parks in Oxford and The Centre:MK retail centre. The integrity of each project is vital, and management under single ownership allows a patient, unified and long-term approach to place-making that is governed by a clear vision.

A meaningful city has excellent employment and skills-training opportunities, infrastructure and areas of public realm. It benefits individuals, communities, businesses, local and regional authorities, and its inherent focus on sustainability helps preserve natural capital. A meaningful city is capable of attracting global talent and capital, and it follows that intentional place-making contributes to the establishment and growth of these cities.

Through sustainable urban regeneration, our place-making approach seeks to make buildings and spaces parts of the community in ways that they previously were not. We respect heritage and tradition, and undertake developments sensitively to create places that resonate with people and help create cohesive neighbourhoods. For example, office-building courtyards are redeveloped as parts of connected public realm, and facilities like cafes on the ground floors of buildings are opened to the general public and thereby become amenities.

 

Collaboration with all stakeholders is vital to create a broadly felt sense of belonging to a ‘place’ – it typically requires considering how the heritage of a particular location can be embraced, local culture enriched, educational facilities improved or expanded, community concerns addressed and the right mix of accessible housing – social, private and rented accommodation – achieved – coupled with great public realm and enhanced infrastructure.

Securing a diverse mix of occupiers in buildings – from law firms and technology companies to fashion designers – contributes to a vibrant sense of place, contrasting with earlier inner-city developments comprising glass-and-steel buildings that were typically closed each weekend. We engage with tenants to foster greater health and well-being in communities and workplaces, providing an environment that is conducive to strong occupier demand.

Our place-making strategies are further underpinned by adopting measurable sustainability targets, including carbon reduction, reduced energy and water consumption, flood-risk management and increased recycling. Indeed, while climate change will undoubtedly disrupt global and local economies, a well-managed transition to a low-carbon economy could reduce or prevent the human and economic costs. It can also improve growth, create additional high-quality jobs and help reduce inequality. Place-making, with stakeholder engagement and sustainability at its core, supports the global effort to deliver these ambitious outcomes.

This approach contributes to our aim of delivering holistic returns for our beneficiaries. From a purely financial perspective, meaningful place-making helps to increase the value of properties, retain tenants and reduce vacancy periods, lower operating costs and ultimately generate higher income for our clients. Seen more broadly, it creates tangible social and environmental benefits for society in the form of healthier, happier and more prosperous communities that benefit from job creation, skills development and attractive amenities and public realm. Such outcomes beyond performance are evident in our NOMA development in Manchester and Wellington Place in Leeds, and they will provide a template for our future regeneration schemes in Glasgow and Bristol too.

 

 

Related Articles

Being good is good business
Rising recessionary risks shifts focus to fiscal fallback options
Returning to Hong Kong - an engager's perspective