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Public Policy and Urban Transience: Provoking New Urban Development through Contemporary Models of Property Based Finance in England

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This chapter explores how contemporary public policies in England could provoke new urban development in certain sectors of the commercial built environment and exacerbate inertia and dereliction in others. The lens for this enquiry is the new focus on decentralised urban finance in England, specifically the Business Rate Retention Scheme (BRRS). Findings suggest that in premium locations, relatively permanent features of the commercial built environment could be taken down and replaced (or converted into new use) with greater regularity in order to increase the property tax yield. Thus, in one sense at least, apparently ‘permanent’ buildings become more transient. That is, the building life cycle is shortened by the impact of the BRRS. In these locations, the level of occupation will be relatively consistent as new construction satisfies contemporary demand. In stranded and redundant locations, physical transience is unlikely due to constrained quantities of development land and sub-optimal economic conditions. The speed with which ‘permanent’ buildings and uses change is unlikely to alter. However, the persistence of dereliction and vacancy of such land and buildings may result in an increase in transient or temporary uses.
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Chapter 13
Public Policy and Urban Transience: Provoking New Urban
Development through Contemporary Models of Property Based
Finance in England
Kevin Muldoon-Smith and Paul Greenhalgh
Department of Architecture and Built Environment, Northumbria University, Ellison Place,
Newcastle upon Tyne, NE1 8ST.
e: Kevin.muldoon-smith@northumbria.ac.uk; m: 07739321643
Abstract
This chapter explores how contemporary public policies in England could provoke new urban
development in certain sectors of the commercial built environment and exacerbate inertia
and dereliction in others. The lens for this enquiry is the new focus on decentralised urban
finance in England, specifically the Business Rate Retention Scheme (BRRS). Findings
suggest that in premium locations, relatively permanent features of the commercial built
environment could be taken down and replaced (or converted into new use) with greater
regularity in order to increase the property tax yield. So that, in one sense at least,
apparently ‘permanent’ buildings become more transient. That is, the building life cycle is
shortened by the impact of the BRRS. In these locations, the level of occupation will be
relatively consistent as new construction satisfies contemporary demand. In stranded and
redundant locations physical transience is unlikely due to constrained quantities of
development land and sub-optimal economic conditions. The speed with which ‘permanent’
buildings / uses change is unlikely to alter, however, the persistence of dereliction and
vacancy of such land / buildings may result in an increase in transient or temporary uses.
Keywords
Public policy, business rate retention, transience, premium locations, stranded locations,
redundant locations.
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Introduction: public policy and urban transience
This chapter explores the influence of contemporary public policy in England upon the
contemporary concern of transience and permanence in the built environment. It does this
by investigating how new models of urban finance, specifically the recently introduced
Business Rate Retention Scheme (BRRS), could provoke new urban development in certain
sectors of the commercial built environment and exacerbate inertia and dereliction in others.
Transience in the physical urban environment is taken to mean the state or fact of lasting for
only a short time. In which case, its meaning is relative to the definition of ‘short’ and,
consequently may alter, depending on the entity to which it relates. Thus a building life of 20
years may be short compared with an average building life of 30-50 years; and a use that
exists for 2 weeks or 2 months may be short compared with one of 2 years or longer.
The recent turn towards issues of transience and permanence can be associated with
increased levels of vacant land and premises in the post-industrial city (Buckholder, 2012),
an engagement with DIY, guerrilla and tactical urbanism (Deslandes, 2013), an emphasis on
temporary and informal uses (Columb, 2012; Bishop and Williams; 2013; Oswalt et al, 2013)
and the pragmatic steps involved in transferring a temporary activity into a mainstream
process (Andres, 2013; Crosby and Henneberry, 2015). However, this chapter focuses on a
particular aspect of the political economy, of the interplay between economic conditions and
the institutions of law, custom, and government that influences and drives transience in the
urban built environment (Wissoker et al, 2014). In doing so the chapter responds, in part, to
a problem outlined by Lehtovuori (2012) and Henneberry (2016), that a lack of
comprehension in relation to the influence of political economy on the built environment, "…
may shadow from view the radical and transformative socio-spatial potential of urban
interventions reducing architecture and urban design to ‘local’ or ‘objectual’
embellishment without any broader social role” (Lehtovuori, 2012, page 74).
Transience is a natural characteristic of the real estate development process. Buildings are
produced in response to socio-economic circumstances to meet extant demand. As that
demand evolves through economic re-structuring, technical innovation, social change and so
on, existing buildings and uses become obsolete and new buildings and uses are required to
replace them a ‘natural’ building development cycle (Barras, 2009). Transience within this
conceptual framework might be considered to occur at two levels relating to the temporality
of ‘permanent’ buildings / uses and, when their redevelopment is stalled, of the passing uses
that are made of derelict / vacant land and buildings in the interim. The chapter makes the
claim that new models of decentralised public finance policy could accelerate the building
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development cycle, provoking ‘long term transience’, as local government attempts to use
the proceeds from taxes on new property to fund public services.
Conceptual framework
Broadly speaking, urban development is taken to mean the social, cultural, economic and
physical development of cities, alongside the parallel drivers and causes of this process.
Although Adams (2012) argues that the definitive account of the property developer is yet to
be written, the processes of urban development can be broadly broken down into:
The activity of (re)development, building management, obsolescence,
vacancy/dereliction and redevelopment;
The parallel processes of occupier behaviour within the market;
The impact of location and its position within the wider economy and institutional
environment on the building development cycle (subject to relative demand and
structures of local rent); and, in the context of this book;
How temporary, interim and meanwhile uses fit into these systems.
Several conceptual models of the development process exist (see for instance Goodchild
and Munton, 1985; Ball, 1986; Guy and Henneberry, 2000). However, the model introduced
here is closest to Healey's institutional model (1992). She separated the process into the
development project; the social networks involved in the project; the actors' motivations; and
the local societal circumstances.
If we examine this broad framework in more detail in the commercial property market, we
can see that transience can relate to the relative permanence of physical buildings before
they are altered or redeveloped in response to physical obsolescence or external stimuli
such as new occupier requirements and technological change (Drane, 2013; Muldoon-Smith
and Greenhalgh, 2016a). Transience can also be illustrated by the parallel use and
movement of business between physical premises as they make new location decisions. For
instance, 'filtering' describes the movement of businesses between properties as they filter
up the property ladder into better quality premises or down the property ladder into lower
quality premises.
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Furthermore, 'take up' or 'absorption' describes the rate at which businesses occupy
property within a specific time period. In addition, displacement is often related in the classic
gentrification literature to the push factors of new, wealthier businesses which increase local
property prices and consequently price-out the original business community (see Smith,
1979; Marcuse, 1986; Lees et al 2010). In commercial property markets displacement can
also be related to the mis-match between the buildings that firms occupy and their actual
needs (see Fothergill et al, 1987; Harris, 2002; Greenhalgh and King, 2013). In this instance,
the pull factors of new premises and attractive socio-economic conditions elsewhere can
provide an incentive to move from existing locations (Greenhalgh and King, 2013). Viewed in
this way, commercial real estate is not a rigid construction set in stone, rather, it is a
"transient manifestation of human activity" (Barras, 2009, page 2).
Moreover, in certain locations urban development also responds faster to occupier need,
due to buoyant socio-economic conditions which assist commercial viability. In others, that
response may be slower, due to adverse economic conditions. This is because commercial
real estate markets and their locations are not uniform; instead they have their own
distinctive traits, rhythms and cycles of change (Bryson 1997; Barras 2009). Finally,
transience can also relate to the temporary use of commercial stock, as meanwhile and
interim uses move into vacant premises in order to exploit advantageous rental conditions or
to minimise the holding costs associated with vacancy and dereliction on behalf of the
landlord. This occurs because of the frequent interval between one building use and the next
(Henneberry 2016 et al). It is in these circumstances that temporary and meanwhile use
strategies - such as pop-up business centres, pepper corn rents and easy-in/easy-out
conveyance procedures (Graham, 2012; Ziehl et al, 2012) - tend to be deployed to deal with
periods of economic inactivity (Oswalt and Rieniets, 2006; Bishop and Williams, 2012).
All of these terms, whether they relate to physical buildings, occupier behaviour, location or
temporary and meanwhile use, are suggestive of urban transience. Yet, they operate in
different ways subject to the unique nature of local real estate markets and the prevalent
institutional context (Beauregard, 2005). This uniqueness influences the way that public
policy plays out at the local scale and defines its impact upon transience and permanence in
the urban built environment.
In the proceeding sections of this chapter, this broad conceptual framework will be used to
examine how local public finance policy in England may affect transience in the urban built
environment, sometimes intensifying and sometimes subduing transience, dereliction and
vacancy in that environment. First of all, the chapter briefly traces the evolution of local
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government finance in England before unpacking the Business Rate Retention Scheme
(BRRS). It then combines the conceptual framework with an analytic framework (first
introduced by Muldoon-Smith and Greenhalgh (2015)), based on a broad typology of
'premium', 'stranded' and 'redundant' locations in England, to examine the relationship
between new public policies based on fiscal decentralisation and the central concern of this
book: transience, vacancy and dereliction in the urban built environment.
Fiscal decentralisation and the urban built environment
The recent turn towards fiscal decentralisation in England can be associated with the
international trend towards decentralised government provision and subsidiarity (Rodriguez-
Pose and Gill, 2003), 'roll back' and 'roll out' neo-liberalism (Peck and Tickell, 2002; Peck,
2010) and urban financialisation and infrastructure provision (Pike and Pollard, 2010;
Christopherson et al, 2013). Moreover, in England, it can be viewed as a result of the need
to adapt to measures of austerity introduced since 2010 (MacKinnon, 2015) and as an
outcome of the argument for enhanced territorial powers required to support growth-based
market reforms (Clifford and Morphet, 2015; Goodwin et al, 2012; Cox, 2009; Brenner,
2003).
In international literature, local methods of urban finance have received much critical
attention. During the last 15 years, Weber (2000, 2010, 2015) has subjected the Tax
Increment Finance agenda in North America- and its association with global financialisation
and local textures of obsolescence in the urban built environment - to close scrutiny.
Aalbers(2012) and Gotham (2009, 2014) have also made notable contributions in relation to
the international mortgage securitisation market, the sub-prime mortgage fallout and disaster
relief funding. Yet, in comparison, there has been less academic analysis in England
(although Strickland, 2013; Halbert et al, 2014; Muldoon-Smith and Greenhalgh, 2015 have
begun to make inroads recently).
This lack of research can be partly explained by the traditional structure of local government
finance in the UK under which central government has administered public finance to local
authorities in England (although it has more recently devolved financial governance to the
administrations in Scotland, Wales and Northern Ireland). Until recently, the UK had one of
the most centralised government finance models in the world. Figure 13.1, based on
research conducted by the Organisation for Economic Co-operation and Development
(OECD, 2010) illustrates this situation. The OECD calculated that local authorities in the
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USA, Spain, France, Germany, and Japan all have greater control over local budgets than
does their counterpart in the UK.
Figure 13.1. An International Comparison of Local Fiscal Autonomy
Source: 3rd Report, 2015 (Session 4): New Powers for Scotland: An Interim Report on the
Smith Commission and the UK Government's Proposals. Reproduced with the permission of
Scottish Parliament under the terms of the Re-use of Public Sector Information Regulations.
According to the Department for Communities and Local Government (DCLG 2011)
traditional methods of financial redistribution (most notably the Formula Grant methodology
introduced by Margaret Thatcher's Government in 1989) denied local authorities control over
locally raised income. These methods deprived local authorities of the ability to raise income
and capped their spending powers which, in turn, reduced the financial certainty that is
needed to plan investment over the long term.
In response to this perceived lack of control, the partial localisation of business rates was
introduced in 2013. Furthermore, the full localisation of business rates was announced at the
Conservative Party Conference in 2015 and is due to come into effect by 2020. After 2020,
the local business rate, a tax levied on commercial property, will become one of the primary
methods of funding local government in England as the Revenue Support Grant (RSG) is
reduced and eventually phased out in favour of a local government finance model in which
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local expenditure is entirely funded by local resources. This means that the performance of
local commercial(office, retail and leisure property) and industrial real estate markets will
become a central concern not only for local authority financial planning and investment but
the wider business sector and the local electorate (Muldoon-Smith and Greenhalgh 2015;
2016b). The consultation document for the BRRS concluded that in the future,
'Developers will find local authorities have greater incentives to grant planning
permissions for appropriately-sited and well-planned non-residential
development in order to go for growth.'(DCLG, 2011, p 12)
The speed at which this new policy was introduced in 2013 and its imminent expansion in
2020, makes it imperative to understand its implications for the commercial built environment
in England. The current government discourse associated with fiscal decentralisation in
England suggests that it is an uncontested good for all locations. This chapter scrutinizes
this assumption through an underlying research question:
How do new models of urban finance, such as the BRRS, influence transience in the urban
built environment?
Figure 13.2 describes the seven stage process at the heart of the BRRS model in England.
Figure 13.2.The Business Rate Retention Model in England
Source: Authors' own
1. Setting the baseline
2. Setting tarriffs and top ups
3. The incentive effect
4. A levy recouping a share of
dispropionate benifit
5. Adjusting for revaluation
6. Resetting the system
7. pooling
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The first stage in the development of the business rate retention model in 2013/14 was to set
a baseline for each local authority. Then, in order to achieve a ‘fair’ starting point, Central
Government calculated a tariff or top-up amount for each local authority (stage 2). Those
authorities with business rates in excess of their baseline level of funding are asked to pay a
tariff to Central Government; those authorities with a business rates yield below their
baseline would receive a top up grant from Central Government (top-ups and tariffs are
adjusted in proceeding years against RPI). This results in a distinction between tariff and
top-up authorities that recognises that some local authorities will receive more business rate
income than they did under the previous Formula Grant system while others will receive
considerably less. In future years (stage 3), local authorities will keep a significant proportion
of any growth in business rates above the initial baseline. If business rates decrease or do
not grow as much in future years, they will see revenue fall. If some local authorities
experience disproportionate growth, such as those with high business rate tax bases, a levy
(stage 4) is imposed to recoup a share of this growth in order to redistribute it to those
authorities that see significant reductions in business rate income (this facility will be
abolished when full localisation come into effect in 2020).
The model is adjusted to take into account movements in the business rate yield resulting
from periodic national valuation assessments. Then, every 10 years (stage 6) the model is
evaluated and reset (the next reset is scheduled to take place in 2020) to ensure that local
authority resources meet the needs of service pressures sufficiently and that the gap
between growing and disadvantaged areas is not too great. The final stage, pooling (stage
7), gives local authorities the opportunity to pool their resources with neighbouring
authorities.
For the purpose of this chapter, attention is focused onstage 3, the incentive effect and stage
5, the adjustment for revaluation. The incentive effect means that local authorities in England
are encouraged to increase the size of their business rate base in order to create revenue to
pay for local service provision, economic development and urban regeneration. The original
BRRS, introduced in 2013, gave local authorities the potential to retain 50% of their business
rate income and up to 50% of any growth in business rate revenue, arising from the
construction of new employment (commercial and industrial) floorspace (the legislation was
announced and adopted in less than 6 months). The remainder was returned to central
government and redistributed in England in a similar way to the previous Formula Grant
method of funding. The Chancellor's recent announcement has increased the retention rate
from 50% to 100% and local authorities will be expected to stand entirely on their own two
feet after 2020. This means that all areas will now have access to 100% of their business
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rate proceeds, removing the previous era of redistribution and equalisation between locales.
Previously, only geographically defined locations, such as Enterprise Zones (EZ's) and
Accelerated Development Zones (ADZ's), had access to these benefits in order to kick-start
economic and urban renewal.
To summarise, there are traditionally two methods of extracting value from the commercial
built environment in order to generate 'growth' (new money) in urban finance. The first
involves building new properties in order to create 'new' business rates. The second involves
investment in the current property stock and its surrounding area in order to increase the
value of existing assets. However, the reality is that local authorities in England are only
really able to benefit from the former. This is because they already receive empty property
rates (notwithstanding the problem of empty property rate avoidance) on existing property,
while any relative value uplift on existing property is typically stripped out during the national
revaluation exercise (see Muldoon-Smith and Greenhalgh, 2015 for a more detailed
exposition of this process).
Analysing the operation of this new arrangement is important, because the synergy between
fiscal decentralisation and commercial real estate has the potential to alter the dynamics of
urban development and, in turn, of transience in the commercial built environment. The
proceeding section reflects upon this situation and the central research question, suggesting
that in certain locations the pace of (re)development could be increased by new models of
urban finance, while in others it could be retarded due to locational constraints, the inability
to generate value out of the existing built environment and weak economic conditions.
Financing urban transience
This section examines the relationship between BRRS and the central concerns of urban
transience, dereliction and vacancy. The analytical framework is based on a broad typology
of locations in England, namely:
'Premium locations,' those locations that have the space and economic conditions to
accommodate and stimulate new development under the BRRS;
'Stranded locations,' those wealthy areas without the space or inclination to develop new
commercial property. Inherent value in the existing commercial urban built environment is
stranded in these locations because it cannot be exploited under BRRS;
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And,
'Redundant locations' those locations with sub-optimal economic conditions that hinder new
commercial development under the BRRS.
The analytical framework is a broad hypothetical construct that was developed by Muldoon-
Smith and Greenhalgh (2015) to make sense of the impact of BRRS in England. The
formulation of the outline typology is based upon the potential ability of local authorities to
capitalise on their urban resources through the BRRS model of urban finance (Leyshon and
Thrift, 2007; Weber, 2010).
Premium locations
New models of urban finance have the greatest capacity to provoke new development in
premium locations because they have the ability to capitalise upon their buoyant property
markets. Such locations are relatively autonomous because they have the economic
characteristics to justify viable development. Recalling the work of Harvey Molotch (1976)
into the urban growth machine, in these locations growth coalitions, including the public
sector, developers, investors, financiers and their respective intermediaries, have the
potential to determine, shape and reshape commercial urban development in order to create
economic growth.
The implications of this situation for transience in the commercial built environment are
various: the physical built environment will (presumably) be in a permanent state of
transience as it is regularly reconstructed in order to maintain levels of business rate portfolio
growth. Furthermore, it has already been observed that it is not possible to capture any
relative increase in the value of existing property over time, necessitating the further
redevelopment of these premises in the medium to long-term. Take up, filtering, and
displacement will be at their most dynamic in these locations as occupiers have new
property alternatives to move into. The initial consequence of this activity is that periods of
vacancy and longer-term dereliction should be minimal as the incentive for new development
(and its viability) accommodates the evolving needs of occupiers. In large part this will
remove the opportunity for the types of meanwhile and interim use described by Bishop and
Williams (2012) and Deslandes (2013).
Positive perceptions of risk, security and growth in these locations create attractive
propositions for global property investors (although Henneberry and Roberts, 2008 have
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indicated that these perceptions are not necessarily founded upon empirical reality).
Consequently, such locations have the inherent ability to exploit and strategise their real
estate development, creating and securitizing growth (the taking of an illiquid urban asset
and reformulating it into a tradable commodity through financial engineering) and, in turn,
linking into international circuits of capital and financialisation. These locations are able to
exploit the mechanisms through which place based assets are increasingly transformed into
financial products in the global market place (Aalbers, 2008; Gotham, 2006, 2009; Newman,
2009). In England, these locations are typically few, a consequence of their relative size, and
include the central London boroughs, the 'core cities' of Birmingham, Bristol, Nottingham,
Sheffield, Manchester, Liverpool and Newcastle (and their cousins over the border:
Edinburgh and Glasgow) and increasingly the 'Metros' (which include Reading, Oxford and
Cambridge) described recently by the Local Growth Commission (2014).
However, without careful consideration, in the medium-to-long-term the trend toward
business rate expansion, underwritten by new floor space construction in premium locations
could lead to a period of overbuilding. This can occur when real estate developers, financial
markets and urban planners act in concert to develop new income generating structures in
order to expand the business rate tax base and create profit (Molotch, 1976; Weber, 2010)
without consideration for the local balance of employment land and floorspace. Similar
outcomes have previously occurred in Enterprise Zones in England (Greenhalgh et al, 2003)
and in relation to Tax Increment Financing initiatives in North America (Weber, 2010). In
both situations, increased property development took place without an associated increase
in the quantum of occupier demand. A process of filtering and displacement of existing
property occupiers, in a flight to new, higher quality buildings followed. This resulted in
increased levels of vacancy in older buildings.
This situation has implications for transience; any increase in vacancy, especially in older
secondary properties, has the potential to create higher levels of occupier filtering. This is
because the types of firms that generally occupy secondary properties are themselves more
susceptible to disturbance. Changes in employment trends and recessions
disproportionately affect this market, whereas new prime stock will generally hold up well, as
evidenced in the recent recession/economic downturn. In buoyant locations this opens up
opportunities for conversion into alternative uses, for instance, between office and
residential, signalling the instability of previously consistent segments of the commercial built
environment (Muldoon-Smith and Greenhalgh, 2016a). However, in those locations without
market viability, or a derived demand for alternative uses, the consequences are likely to be
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more permanent levels of vacancy and transient and interim occupation as landlords attempt
to avoid empty property rate tax and occupiers seek cheap property alternatives.
Stranded locations
New models of urban finance have less influence upon rates of development in stranded
locations. Such locations are the closest example of the formalised and permanent urban
built environments described by Whitehead (1987) and Bishop and Williams (2012) that
have transpired during the 20th Century. Although these locations can possess buoyant
business rate portfolios they may find it difficult to exploit the growth incentive in the BRRS.
This is because the current formulation of the BRRS, particularly the 'stripping out of value
up-lift hinders these locations from generating new income from their existing built
environment assets. In large part, this is because of the historic nature of the built
environment, restrictions on the availability of land upon which to build new properties, or
more simply, a general satisfaction with the current composition of commercial real estate in
such locations.
Local authorities like Westminster Council, the holder of one of the most valuable business
rate portfolios in England (£2bn, more than Birmingham, Manchester, Sheffield, Liverpool
and Bristol combined according to ODPM, 2004), argues that its hands are tied because it
cannot maximise the income from its property resources (a consequence of restricted
expansion space and the lack of appetite for redevelopment or conversion). Westminster
should not see any decline in tax relative to their baseline funding level (assuming the
accuracy of the baseline assessment). However, they will not be able to manage their
existing assets in order to generate any new growth because of the primacy given by the
BRRS to new floor space construction. Historic towns and cities with a plethora of high value
listed properties, such as Liverpool, Oxford, Cambridge, Durham, York and Bath could find
themselves in a similar situation.
This indicates that the effect of the BRRS upon transience is not just predicated on the ability
to build buildings, it is also path dependent, constrained by what has been built previously. In
these locations, take up and absorption, filtering and displacement take place with less
regularity. Although commercial building stock is often of high value, in contrast to premium
locations, stranded locations have a relatively stable, long-lived built environment. In these
locations, the nature of historical development and the effects of legislation and institutional
norms, such as conservation and land use planning, have solidified the commercial built
environment (Bishop and Williams, 2012; Whitehead, 1987).
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Redundant locations
It is difficult for new models of urban finance to influence commercial development in
redundant locations. Redundant locations are disadvantaged because of their weak property
markets. Such locations have either marginal or negative development values and cannot
generate high enough rental levels to cover the costs of new development. Concurrently,
these locations may also be shrinking because of economic change and demographic
adjustment. These locations also exhibit an inherited commercial built environment that, in
contrast to stranded locations, is characterised by relatively high levels of obsolete and
redundant land and buildings, a consequence of their previous economic functions.
Redundant locations often have older, secondary property markets, which exhibit depressed
rental levels and low levels of occupier demand. These locations are typified by smaller
towns - rather than big cities - in the North and the Midlands, such as those in the Potteries
and the Black Country (The Economist, 2013).
In these locations it is unlikely that new models of urban finance will provoke new
development. Instead, it is more likely that they will exacerbate already well-ingrained
incidences of dereliction and vacancy in the commercial built environment. Examples of this
situation are evident in North America, most notably in Detroit, where the municipal
government has been bankrupted partly by the erosion of the local business tax base.
However, the consequence of this situation is an increase in the supply of low cost
commercial space that permits 'acceptable' and 'unacceptable' forms of DIY Urbanism (see
DesLandes, 2013, for a critical appraisal of these heavily loaded classifications). Acceptable
forms of DIY urbanism may include cheap business start-ups or pop-up cinemas and
restaurants (Ziehl et al, 2012; Graham, 2012) that support new economic development
(Columb, 2012), while unacceptable uses may include underground music venues, graffiti
and vandalism. Detroit, in many ways the poster child for DIY urbanism, offers an insight into
the major themes of this chapter, public policy and transience, which may be related to
England in the future. This is because this location depicts the negative side effects of
government finance strategies that are reliant on local property taxes. However, the same
location also illustrates the temporary and informal DIY strategies that emerge in response to
this situation.
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Discussion and conclusion
Reflecting on the underlying research question, how do new models of urban finance
influence transience in the urban built environment?, our findings suggest that in certain
premium locations, what were relatively permanent features of the commercial built
environment (Bishop and Williams, 2012) could be taken down and replaced (or converted
into new use) in order to expand the local business rate tax base. In these locations the
physical process of urban development is dynamic, as real estate development, financial
markets and urban planners produce new income generating structures in order to maintain
economic growth. In other stranded and redundant locations, the speed of (re)develoment
could be slower because of the constrained nature and quantity of available development
land and less buoyant economic conditions.
The privileged treatment of new build development and repurposed floorspace in the BRRS
provides an incentive for premium locations to reinvent themselves by constructing new
buildings or converting existing buildings into new uses. Yet, this predilection could also
create the risk of unwarranted commercial real estate development without any relation to
manifest occupier demand. Under these conditions, new properties could be created, not
because there is any demonstrable need for them, but, rather, because they are an
expedient means of funding public services. The potential consequences of this situation are
twofold. Firstly, it could result in lower levels of occupancy and greater levels of vacancy as
existing occupiers leave older premises and move into a new property with greater
regularity. Secondly, and consequently, this could result in more transient occupation as
unstable and fledgling business move in.
Certainly, the BRRS has the capacity to stimulate two forms of transience in the commercial
built environment. Firstly, in premium locations the BRRS has the potential to accelerate the
development of additional commercial property. Secondly, we suggest that it is just as potent
in those locations where it does not have traction, those locations with weak economic
conditions. This is because inactivity creates the conditions for DIY urbanism, and
experimentation through informal and temporary use. However, the current formulation of
the BRRS only values the former and we contend that this is a missed opportunity. An
example of this is the discrimination against the existing commercial built environment that
results in a situation where the potential value of new business start-ups does not even feed
into the BRRS financial mechanism.
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The BRRS has a less immediate impact in stranded locations, particularly those locations
that are reliant on their existing commercial built environment. In these locations the BRRS is
a cause of urban inertia because value cannot be extracted from these existing local assets.
In the short-term the appeal of attractive historic buildings is likely to retain existing
occupiers. However, in the medium-to-long-term the likely consequence is increased rates of
depreciation and obsolescence because there is no growth incentive to invest in these
properties. The subsequent occupation of these buildings is then likely to be short-term and
temporary because of the characteristic of businesses associated with poorly performing
property. This indicates that increased transience in one part of the urban development
process (for instance the physical activity of redevelopment in premium locations) can
reduce the manifestation of transience in another part (for instance temporary occupation in
premium locations). Conversely, elsewhere, inertia in the urban development process (for
instance in the physical activity of redevelopment in stranded and redundant locations) can
increase the incidence of meanwhile and interim use.
Without doubt, this new method of financing local public services, the BRRS, opens up new
questions for urban development and potentially erodes the traditional dialogue and scrutiny
process that takes place between private developers, planners and the public interest. This
disruption suggests a new relationship between local government and the private market
(Adams and Tiesdell, 2010). Local authorities are now in an invidious position where they
must maintain an appropriate balance of employment land and premises, but at the same
time must work with developers to fund the future cost of public services.
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