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Social value is now playing a key role on how commercial tenants choose their next place of business, a new report showed.
While proximity to public transport, clients, cafes and restaurants are the standard selling points for office owners trying to draw new tenants, global real estate firm JLL noted commercial landlords are now increasingly seeking to provide another quality: social value.
This refers to the social, environmental and economic impacts that a property has on the community in and around it.
Tim O’Connor, head of office leasing at JLL Australia, referred to the trend as a return to a human-centric approach.
“Until recently, there’s been a separation between the public around a building and the people within it, but now there’s a real shift to embrace the community around your space as well as look after those working in it,” he stated.
Mr O’Connor cited a new report from the World Economic Forum, which showed locations with good social value can be the key to unlocking urban regeneration.
“The increasing prominence of social value considerations in corporate thinking is changing the viability equation for urban regeneration projects,” the report read.
Rather than just focusing on the “output” of a completed building, the report noted business leaders are now interested in driving the social value “outcomes” a successful project can help deliver.
JLL noted current efforts include investments in social and affordable housing for disadvantaged communities, revitalising local services and creating spaces that foster community engagement.
Mr O’Connor highlighted efforts are also coming to the fore in new developments.
“For example, Glasgow’s Met Tower, which incorporates not just open-air public spaces but also an underground area designed for community initiatives like co-working or local markets,” he stated.
But despite the growing trend of recognising the importance of social value in real estate, Mr O’Connor said that incorporating it into the decision-making process remains a challenge.
In JLL’s Responsible Real Estate: Social Value report, 94 per cent of survey respondents agreed that the built environment has a role to play in creating a positive social impact in our communities.
However, findings also showed only 35 per cent of respondents said that social value is currently an embedded part of their real estate decision-making process.
“One challenge facing companies in instituting social value is that measuring it’s outcome is a little harder than looking at, say, the environmental impact of a space,” Mr O’Connor said.
And while there are 300 global schemes so far that aim to create a way to quantify social value in real estate, Mr O’Connor acknowledged there is currently “no gold standard” set.
He explained that the main challenge to creating standard guidelines lies in the difficulty of putting a financial number on many benefits of social value projects like improved wellbeing or greater sense of community.
To integrate the trend of social value in real estate, companies must focus on creating lasting social impact across all stages of the property life cycle, as recommended by JLL’s report.
This can involve selecting locations with access to green spaces, health facilities and amenities that promote wellbeing.
Additionally, the firm recommended tenants choosing buildings with ample natural light, airflow and accessibility features can contribute to this goal.
Lastly, it underlined landlords and tenants should also explore ways to actively engage with and connect to the local community.
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