The Economic value of Quality Architecture and Urban Design
The relationship between something as abstract as design and something seemingly concrete like economics challenges the notion that they can be related and furthermore influence each other. Design is everywhere, even places where it goes unnoticed; from the bathrooms in the Emory Student Center (ESC) to the chairs in the Math and Sciences building, design touches every aspect of life. Architecture and urban design can be both large and small in scale, but nevertheless influence people’s lived experiences both terrene and intangible. With the understanding that design is everywhere, determining what equates to good design poses a more subjective question. How can architecture and urban design be determined as ‘quality’ and how can this ‘quality’ be analyzed from an economic lens?
Defining quality as a quantifiable variable proves problematic as it is universally ambiguous. Equally ambiguous is the measurement of ‘utility’ in economics that denotes some benefit from some event or possibility. In this economic context, quality can be interpreted similarly as utility. In an architectural context, quality is defined as the level of satisfaction brought to a given area’s inhabitants (Carmona et al., 2010). These disciplinary definitions are similar in that they focus on the provided utility to targeted and untargeted groups. Factors such as environmental sustainability, affordability, structural soundness, and longevity all provide obvious measures to determine the quality and economic impact of quality architecture and urban design, but the value of varying places and demographics should still be questioned. Plurality is essential to understanding quality in an economic context: the dissemination of the factors of quality is crucial to understand the influence of quality design on economic applications. Governing bodies exist to ensure that technical design and construction processes remain consistent and of a certain standard (i.e. quality). The demanding-performance model provides a quantifiable definition of quality based on engineering and architectural theory. While the model provides verifiable quality in terms of construction, it fails to measure social consequences that are equally as important. Detrimentally does this method exclude contexts imperative to understanding the influences of architecture and urban design on those who utilize the two, for relational and domainal capacities are needed to truly define quality. Quality and context are codependent variables where quality can be determined by physical and social settings while quality, or the lack thereof, can improve or worsen said setting. Preferences change and preferences of a population are ultimately what dictates quality architecture and urban design.
The stakeholders of architecture and urban design, are those who have investment in urban and architectural capital, that being a monetary, emotional, or cultural connection to a place or set of places. Quality affects stakeholders and thus this is the group that firstly must define architectural quality and must value new and past developments. From design to construction to inhabitancy, all individuals and groups involved in architecture and urban design all hold stake in ways unique to themselves, making it obligatory to ensure satisfaction in terms of quality for each group. How can the quality design of public spaces, transportation networks, and affordable housing increase economic activity in socially inclusive and environmentally sustainable ways?
Given the privatization of land use, planning, and design, many populations that are most impacted are marginalized from the design and implementation processes. Privatization contributes to the preferences of only one, often detached group, to determine what is a quality built environment. In addition to the differences of pre-existing motivations among types of stakeholders, time and the externalities that accompany it variably change these preferences and the relationships between stakeholders. Research conducted by Mathew Carmona et al. provides insight into the preferences and concerns of certain stake-holding demographics by compiling responses into broadly representational statements provided by each stakeholder type (Carmona et al., 2010). Collected responses appear contradictory, making it paradoxical to appease all stakeholders. As the table demonstrates, it would be impossible to satisfy Local communities’ desire for no development while simultaneously satisfying the Developers’ wants for profitable and marketable land upon which to build. The valuation of design must be endogenous and co-determinate. While this approach does not guarantee all stakeholder preferences are met, it does maximize the preferences that can be met.. These preferences are to be interpreted as each groups’ method for determining what gives design value or utility, and these methods are influenced by hierarchical power structures and context.
Research conducted by Kerry Vandell and Jonathan Lane attempted to empirically model architectural quality by predicting rent and vacancy outcomes based on tenant demand for design, visual utility, and non-design, functional utility, and factors in 102 class A office buildings in Boston and Cambridge. Architectural quality was determined by 20 architects observing multiple dimensions of design for each building. The functional vector is limited in scope of needed amenities while the design vector is unrestrained by the infinite preferences of stakeholders, such as developers and tenants. By establishing vectors for design and functionality, a base design was determined as a least costly, strictly functional design, with any increased amount of design adding cost beyond that of the absolute functional design. The study concluded that, although offices rated higher in terms of design were predicted to demand 22% higher rent prices, the increased cost of good design may not be more profitable on average. While design increases rent, the construction costs incurred by implementing good design outweigh the increased rents. However, the paper provides that good design may have the potential to offer high returns to developers. This paper, co-interpreted with that of Carmona et al., provides a complex insight into the applicability of good design. Seeing that “occupies” in Carmona’s table seek value for money and efficiency, while “developers” look for profitability, Vandell and Lane’s research would suggest that ‘good design’ is design that increases efficiency.
A similar study carried out by Douglas Hough and Charles Kratz explores a similar hedonic price equation for office space but in Chicago (Hough & Kratz, 1982). Their research explores this measure through similar dimensions of both building and location amenities in addition to a design dimension where design is considered an amenity. Similarly, Hough and Kratz found that tenants are willing to pay higher rents for buildings with better architectural quality. Unique to Kratz and Hough’s study however was the consideration of the age of each building. This differentiation revealed that tenants were only inclined to pay higher rents when a building was ‘new’, while there was little demonstrated demand for buildings that were of quality architectural design but ‘old’.
The findings of these studies yield policy and develop relevant results; if old buildings are in low demand, then those who wish for their preservation must establish methods to avoid what Kratz and Hough call a “market failure”. As for land developers, they can consider design quality as more functionally efficient than visual in respect to attracting office tenants. Important questions can also be raised by this research. If this definition of good design is true, then why are all buildings not indistinguishable and built with parallel interior layouts? Do these findings imply that unique and creative design languages are valueless? And, If the historic buildings have little monetary value, then does preservation have any economic benefit?
A common structure through which the above studies can be interpreted is the stadium. Stadiums are present in most major urban centers and facilitate opportunities for economic and social interaction. Past stadia construction holds continuous with the data from Carmona et al. where local communities, especially those geographically closest to stadium development, have strong preferences against such development. A study conducted by Gabriel Ahlfedt and Wolfgang Maennig analyzed the role of stadium design in promoting economic growth and social welfare (Ahlfeldt & Maennig, 2010). Maennig and Ahlfedt suggest that iconicism is a phenomena that increases the value of design that is beyond a baseline of functional, finding that although residents find stadium development taxing, with time these locations become spatial sources of pride (Ahlfeldt & Maennig, 2010). It is unconventional design that creates this iconicism and resulting sense of geographic identity. Furthermore, iconicism generates modest tourism influxes through structures that reach a certain level of notoriety. Stadium construction can catalyze urban revitalization, such as that seen by the 1992 Barcelona Olympics that resulted in the redevelopment of underutilized industrial zoned coastline. Comparatively, stadium construction in Durban’s King Park resulted in both economic development and iconic design, thus marrying the utilities of functionality and design. In the case of Durban, the stadium was designed as a new center for economic activity for which future developments could be concentrically installed. Barcelona’s Olympic development design was embedded into pre-existing settings. These two approaches were found to be equally ideal by Maennig and Ahlfedt, yet the economic value of stadium design, beyond iconicism, was found to be dependent on an array of non-design factors. Distance from stadia was found to be a significant determinant of land value changes in terms of rent prices as apparent by the graph. Conclusively, Maennig and Ahlfedt find that unconventional design given certain contextual variables can promote economic growth and urban revitalization, suggesting that ‘good design’ is design that is atypical and region identifying.
The quality of architectural and urban design is challenging to define, as apparent by those mentioned who have attempted to do so. Yet, even more challenging, is satisfying each stakeholder’s own definition of good design and determining how said groups individually determine value in an infinite amount of contexts. Collectively however, there does appear to be both a quantitative and temporal value to good design, but this value is dependent on dimensions beyond a building that is visually appealing. Policy designers must evaluate the relevance of design in their respective domains by considering the preferences of stakeholders, determine the value of old and new building types, and consider the influence non-design factors have on the valuation of good design. Good design is markedly unconventional but regionally embedded; economically efficient yet socially dynamic; and contextually dependent yet broadly appealing.
Edited by Matthew Takavarasha
Works Cited
AHLFELDT, G. A. B. R. I. E. L., & MAENNIG, W. O. L. F. G. A. N. G. (2010). Stadium architecture and Urban Development from the perspective of urban economics. International Journal of Urban and Regional Research, 34(3), 629–646. https://doi.org/10.1111/j.1468-2427.2010.00908.x
Bentivegna, V. (2019). The quality of the architectural works: the relational aspects. Journal Valori e Valutazioni, (23), 23–29.
Carmona, M., De Magalhães, C., & Edwards, M. (2010). Stakeholder views on value and urban design. Journal of Urban Design, 7(2), 145–169. https://doi.org/10.1080/1357480022000012212
Hough, D. E., & Kratz, C. G. (1983). Can “good” architecture meet the market test? Journal of Urban Economics, 14(1), 40–54. https://doi.org/10.1016/0094-1190(83)90028-1
Vandell, K. D., & Lane, J. S. (1989). The Economics of Architecture and Urban Design: Some preliminary findings. Real Estate Economics, 17(2), 235–260. https://doi.org/10.1111/1540-6229.00489
