Popular Density is Critical for Cities to Realise Advantage and Avoid Decline

New report from ULI and TH Real Estate highlights that well-executed densification enables cities to adapt to global imperatives and avoid falling behind competitors

MUNICH (5 October 2015) — Densification is the key to responding to population growth, economic changes, new lifestyle preferences, and the sustainability imperative in European cities, according to a new report by the Urban Land Institute (ULI) and TH Real Estate.

The Density Dividend: Solutions for Growing and Shrinking Cities, draws from the experience of six European cities at various stages of population change and makes clear that many cities—especially those in Europe—have little choice but to densify. If they do not, they risk becoming locked into models of development that are inflexible, unattractive, unsustainable, and ultimately uncompetitive. For cities in Europe, density is now the critical tool to realise advantage and to avoid decline.

The report will be launched publicly at a session at EXPO REAL on Monday 5 October and at ULI’s Fall Meeting in San Francisco on Tuesday 6 October.

The report is the second piece of work in ULI’s density initiative, which seeks to increase knowledge of density in the real estate industry and beyond; to address the social, economic, and environmental benefits of investing in density; and to promote density as a priority for public and private leaders.

This report examines current densification in six European cities and the impact of different urban tools and tactics on densification efforts. At the same time, it looks at how density can play a role in building strategies for future cycles.

“By embarking on this project, we wanted to use the principles for good density outlined in our first report, Density: Drivers, Dividends and Debates, to demonstrate how cities in distinctive cycles and with different characteristics were applying them to their city development strategies,” said ULI Europe CEO Lisette van Doorn. “We hope this report develops further lessons for the industry on how density can make cities attractive to people, occupiers, and investors, today and in the future.”

“TH Real Estate advocates a city-level approach to real estate investment, believing that the most successful real estate strategy is likely to be city-based, underpinned by long-term, structural trends,” said Alice Breheny, Global Co-Head of Research at TH Real Estate. “This report helps deepen our own understanding of investment viability within specific cities. Although trends and drivers may point to a specific city as having potential for growth, it’s important to assess whether that city will be able to accommodate that growth via the capacity of its built environment to densify and absorb capital effectively.”

Authored by Prof Greg Clark, ULI Europe Senior Fellow and Dr Tim Moonen, Director of Intelligence at The Business of Cities Ltd., the report highlights what does and doesn’t work in making densification successful and popular, whether in ‘strongly-growing’, ‘bounce-back’ or ‘consolidating’ cities.  It is informed by in-depth case studies of six cities: Birmingham, Dresden, Istanbul, London, Stockholm and Warsaw.

The case studies show that cities are moving at different speeds towards better and higher density. Some have 30 years or more of experience with compact city development and urban regeneration, and are on to their second or third cycle of dense re-development within the framework of ambitious city plans. Others are new to urban redevelopment or lack the tools to deliver density in an integrated way, relying instead on ad-hoc initiatives and innovation.

Progress on densification can only be achieved if a city focuses on three distinct elements comprising a new equation for density. When cities get these elements of the equation synchronised, sustained progress tends to happen towards better, higher density:

  • Get the fundamentals right
    In order to increase density successfully, a city first needs leaders to develop a story and vision for its future evolution that can galvanise attention and support from residents, workers and investors alike. It must create a robust growth plan that provides a guiding framework within which development can proceed. These are fundamentals without which progress on density can only be partial and fragmented.
  • Prioritise execution arrangements
    In order to operationalise the vision of a denser city, leaders then need tactics about where and how to densify. They need to achieve a critical mass of redevelopment and to promote a scale of urban adaptation that creates genuinely new dimensions to a city.  They also need durable systems of investment and enhanced legal, land-use, and asset management tools to shape development fully.
  • Build and maintain momentum
    In order to maintain momentum across political and economic cycles, cities also need to foster demand for new urban space and focus on the positive psychology of vibrant urban lifestyles and locations.

To read the full report, please visit http://europe.uli.org/report/the-density-dividend.

About the Urban Land Institute
The Urban Land Institute (www.uli.org) is a global non-profit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has more than 34,000 members representing all aspects of land use and development disciplines.

 About TH Real Estate
TH Real Estate is an established investment management company specialising in real estate equity and debt investing worldwide. As one of the largest real estate managers in the world, TH Real Estate has the scale, capital resources and knowledge to provide creative and effective real estate investment solutions for clients. With a focus on the retail, office, logistics, debt and residential sectors, TH Real Estate emphasises sustainable practices to protect assets and maximise their value.

The company is owned by TIAA-CREF, a US financial services and Fortune 100 company, with c. £557bn assets under management*. Launched in April 2014, TH Real Estate has a dedicated global presence with offices across America, Asia and Europe, representing c. £18.2bn* of real estate assets across c. 50 funds and mandates. Together with TIAA-CREF’s US real estate assets, the global real estate platform of c. £55.3bn* represents one of the largest real estate investment management enterprises in the world.

Its products are managed by specialist teams, which apply their own experience to the management and style of their portfolios. Each team is supported by an experienced senior management team and integrated investment platform, including finance, debt and currency management, performance analytics, client service, fund and transaction structuring, development, sustainability and research.

*All figures as at 30 June 2015



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