The Urban Land Institute

Urban Land - November/December 2008 - Design Dividend

Return on Perception

By Dennis Jerke

Four key elements of urban design create value: architecture, green spaces, water settings, and transportation.

Boeing stunned the business world in March 2001, when it announced that the company would move its headquarters from Seattle. Highly rated for its livability, Seattle had been home to Boeing since the company’s establishment in 1910. Corporate leaders, however, realizing that the company was growing far beyond its commercial airplane business, sought to adopt the General Electric model of a lean headquarters separate from the company’s main operations. Boeing officials said the move was part of a strategy to change how the company is perceived in the corporate world. Six months later, Boeing began operations at its new headquarters in downtown Chicago.

Why Chicago? Denver and Dallas/Fort Worth—both maturing metropolises of considerable character—were also in the running. But Chicago has assets unmatched by those two western cities. Boeing officials praised Chicago’s air and road infrastructure, citing O’Hare Airport’s global connections and the region’s massive network of expressways. They did not need to mention Chicago’s lake waterfront; iconic architecture; green infrastructure; impressive skyline; and notable theaters, museums, and musical life. Nor its thriving, big-shouldered business economy, the world’s largest convention center, and the region’s diversified palette of neighborhoods and living styles. As the Economist noted in 2006: the city’s historic brawn is yielding to brains, art, learning, and fun. To Boeing managers, Chicago’s combination of bustling activity and brio—not to mention a hefty monetary lure—spelled positive energy and dynamic leadership. The city and region have a special identity—forged from its leaders’ longstanding aspirations for making Chicago a special place—that can add luster to Boeing’s reputation.

Chicago won the nod from Boeing in part because the region’s leaders have made a great city greater by investing in the four key elements of urban design that create value: architecture, green spaces, water settings, and transportation. The metropolis achieved a commanding position through design and by design—starting with the 1893 World’s Columbian Exposition that led to the City Beautiful movement, and continuing with architect Daniel Burnham’s 1909 Chicago regional plan and its creation of an expanse of waterfront parks; leadership that consciously nurtured uncommonly good architecture and a plenitude of cultural resources; the city’s willingness to try out new ideas for community development; and the region’s historic concern for creating and preserving green spaces.

By seizing opportunities to create outstanding assets, Chicago has attained an imposing presence in the nation’s consciousness. Boeing’s relocation of its corporate offices to downtown Chicago can be construed as a return on this perception.

Today, Chicago anchors a large megalopolitan area, one of ten such areas that are attracting most of the growth in the United States, transforming the nation’s economy and society. The largest of these conurbations is the Northeast Corridor—50 million people strong—extending from New England to northern Virginia, the focus of geographer Jean Gottman’s seminal 1961 book Megalopolis. Together, these megapolises, six of which are located east and four west of the Mississippi, represent two-thirds of the U.S. population. They are expected to continue growing, adding more than 85 million people and $33 trillion in construction spending over the next 40 years.

How will such areas, many of which are already choking on traffic congestion, cope with this expansive change? Will the growth that is predicted occur with only fitful attention paid to its effect on the quality of life for residents? Planners and political leaders talk about the need for fashioning regional strategies to address the development of intermodal transportation networks and open-space conservation efforts across multistate areas.

A significant theme increasingly being sounded in discussions of regional strategies is the importance of good design in shaping growth and change. The development community has learned a great deal about employing good design to improve the quality of the built environment and enrich people’s lives. Designers and building professionals have acquired considerable experience over the past three decades in exploring more inventive approaches to development—including mixed-income and mixed-use projects, main street shopping districts, transit-oriented development, and multibuilding, mixed-use town centers.

Developers increasingly recognize that good design is good business. They have learned to work with designers to address a broad range of public concerns, such as community livability, economic development, environmental conservation, and multimodal transportation. Instead of relying exclusively on architects, both public and private development entities have learned the value of assembling interdisciplinary teams of design professionals that include land planners, urban designers, and landscape architects, as well as architects, to create more holistic built environments that focus on the whole community or region and the interdependence of its parts. Moreover, the track record of successful projects that demonstrate how good design can add value to growing megalopolitan regions and ultimately capture more benefits from growth is impressive.

Defining “good design” is difficult. For many people, good design is in the eye of the beholder. But good design is about much more than pure form. Good design requires a thoughtful response to characteristics of the site and its surroundings, market demands, available technologies, and many other factors, many of which are not directly sensed by beholders. Architect Marc Salette, a partner with Frank Gehry at Los Angeles–based Gehry Partners LLP, writing about design values, concluded that good design derives from a “creative process encompassing a broad range of activities, elements, and attributes.” In his view, the core qualities of good design, loosely based on principles laid down by Vitruvius in the first century BC and countless reconceptualizations since, generally are functionality and durability, contextual compatibility, and enduring respect and value.

Good design, continues Salette, “cannot be reduced to a simple set of codes and practices, nor can it be easily measured.” Furthermore, it often breaks established rules. In their 2007 treatise on the benefits of good design for transportation environments, Moving Design: Spaces of Transportation, Ann Forsyth, Justin Jacobson, and Katie Thering point out the “truism that different people value aspects of design differently,” noting that such differences arise from socially important variables such as income, location, education, and heritage. In addition, they observe, design professionals often have perceptions of good design markedly at variance from those of users and the public at large. They suggest that “‘one size fits all’ solutions to design problems certainly don’t fit all, as the tastes and needs of varied users are rarely the same and sometimes are in direct conflict.” Better, say the authors, is thinking of good design “as a process of assessing, selecting, and implementing a wide number of individual design interventions.”

Salette suggests that criteria determined by the U.K. Commission for Architecture and the Built Environment (CABE) to assist in evaluating public projects offer guidance for evaluating design proposals. A paraphrased version of Salette’s summary of the CABE criteria—which are intended either for the evaluation of single buildings or the evaluation of multibuilding developments—follows.

Criteria for guiding evaluations of single buildings:

favorable appearance for users, customers, and the wider public;
positive contribution to the neighborhood environment and sensitivity to transportation patterns;
ease of construction;
use of standard, sustainable materials and components;
reduced energy use and costs of cleaning and repair; and
promotion of efficient and flexible use of space, ease of access and movement within the building, comfort for users, and effective provision of services.

Criteria for guiding evaluations of multibuilding places or developments:

responsiveness to and reinforcement of locally distinctive development patterns;
continuity of street frontages and enclosure of space by clearly defined private and public areas;
attractive, safe, uncluttered public spaces and routes for able and disabled people alike;
connections between places that emphasize ease of movement for people rather than for vehicular traffic;
integration of land use and transit;
recognizable routes, intersections, and landmarks to assist people in finding their way around;
adaptability to changing social, technological, and economic conditions; and
provision for a diverse mix of projects and uses that work together to create viable places.

While the CABE criteria appear to cover all the bases for the creation of good design, they still leave open decisions about specific design styles and details. In other words, the criteria accommodate inspired thinking about a holistic approach to design. This allowance for a holistic approach represents an opportunity for a number of influential design movements—notably sustainable development, smart growth, new urbanism, and green building—that hope to steer urban development in preferred directions.

For much of the 20th century, community development was guided by plans and regulations adopted by local governments. Local planning and regulation typically afforded plenty of options for where, how, and what to build. Where and what to build were largely decided by developers seeking to meet the evolving demands of the marketplace.

Dissatisfied with the quality-of-life and environmental consequences of the disorderly jumble of sprawling development in postindustrial cities and suburbs, proponents of sustainable development, smart growth, new urbanism, green building, and other community development concepts have rallied around fresh perspectives for creating a more satisfying built and livable environment. Their ideas have attracted sizable constituencies and gained considerable momentum over the last decade.

By exerting an influence on today’s architects, landscape architects, and planners, these community development movements are helping shape the design of buildings, neighborhoods, communities, and regions. These advocates for good design are reasserting the traditional role of physical design in achieving high-quality living and working environments and creating more livable cities and suburbs.

Sustainable Development/Smart Growth

The allied concepts of sustainable development and smart growth are based on broad principles or policies related to the form, character, and function of community development. They arise from concerns about the sustainability of natural resources and the global environment in the face of explosive population growth and significant declines in biodiversity and air and water quality in many parts of the world.

Recognition that the economic and social future of the planet would require maintaining the integrity of natural systems led in the 1980s to international efforts to promote economic development that respects the functions of natural systems while advancing social equity. The Brundtland Commission, a United Nations entity, formulated a mission statement for sustainable development in its 1987 report that expresses the guiding spirit of sustainability: “development that integrates environmental, economic, and social concerns and can meet the needs of the present without compromising the ability of future generations to meet their own needs.” This mission statement has launched a multitude of activities and interests focused on overcoming issues such as international trade barriers, widespread poverty, overpopulation, and climate change.

While advocates for global sustainable development have focused on issues such as trade barriers, severe poverty, overpopulation, and global warming, sustainability concerns in the United States tend to focus on how current patterns of metropolitan development may be intensifying pressures on vulnerable resources—land, water, air, wildlife, nonrenewable energy supplies, and other environmental amenities—and also contributing to escalating social and economic inequities between developed and newly developing areas. Advocates of sustainable design push for more compact development that increases opportunities for access to jobs, affordable housing, and alternative modes of travel. They also promote designs for communities and buildings that reduce dependence on nonrenewable resources, prevent pollution in all its forms, and expand the use of recycled and renewable resources, such as solar energy.

Smart growth calls for the following:

compact, multiuse development that creates livable neighborhoods, conserves natural resources, protects the quality of the environment, and expands choices of mobility and residence;
the restoration and recycling of existing neighborhoods, including those with historic buildings, and obsolete commercial areas—especially underused industrial areas and outmoded or distressed retail centers—through infill development and adaptive use, thereby reducing the need for development in rural areas;
focusing infrastructure investment on improvement of existing systems and on efficient extensions that support development in areas adjoining already urbanized areas;
social and economic equity within metropolitan areas made up of interdependent collections of communities; and
decision-making procedures that engage the entire community and respond to all interests within it.

Smart growth principles have found support from many different interests—conservationists and homebuilders, public officials and business groups, and the general public. The principles of smart growth and sustainable development clearly overlap, although sustainable development generally pertains to global, all-encompassing integration of environmental, development, and equity concerns while smart growth focuses mostly on community-scale forms of development.

New Urbanism

The design concepts of new urbanism aim at transforming conventional styles of sprawling suburban development and promoting infill and redevelopment in already urbanized areas. New urbanism advocates compact, pedestrian- and transit-oriented development with well-defined public realms of streets, civic spaces, parks, and natural corridors. Like the earlier neotraditional designs of architects/urban planners Andrés Duany and Elizabeth Plater-Zyberk, new urbanist design principles for traditional patterns of development include relatively high densities in town centers; a range of land uses within a five-minute walk of centers; increased use of transit, walking, and biking; and a high quality of architecture and urban design. Although new urbanists prescribe these principles primarily to guide neighborhood design, they also propose to apply them at village, town, and urban scales. Over the years, advocates such as architect Peter Calthorpe have expanded the goals of new urbanism to incorporate concepts of smart growth and sustainable development.

New urbanist designs for buildings typically borrow extensively from the vernacular architecture of the late 19th and early 20th centuries. Generally, new urbanists would prefer block and building designs to be guided by smart codes—also termed form-based zoning—that prescribe specific standards for planning and designing neighborhoods, development sites, and buildings. The standards favor small lots, narrow streets, and civic spaces, but they also establish relationships between types of buildings and requirements for architectural features such as porches, fences, and roof styles.

Green Building

Environmental activists, design professionals, and planners, acutely aware of conservation needs and benefits, are also promoting specific techniques for incorporating green attributes in development. Green building generally refers to sustainable site and building designs that conserve rather than consume resources, support and restore rather than destroy natural systems, and mitigate rather than worsen development impacts on the environment. For example, green building designs reduce energy requirements for heating and cooling by using high-performance window glazing, incorporating passive and active solar heating, planting roof gardens, taking sun and shade into account in siting buildings, and making use of natural light. Many designers work to meet Leadership in Energy and Environmental Design (LEED) standards established by the U.S. Green Building Council.

Green building also incorporates development layouts and site plans that minimize environmental impacts and take advantage of the natural character of development sites. Green site planning techniques for retaining natural systems and weaving them into the built environment promote ecologically healthy natural settings for human settlements.

Return on Perception

The influential constituencies for new holistic design approaches for shaping growth have contributed to an increased attention to design at all scales of development—regions, communities, neighborhoods, and individual buildings. The increased attention to design focuses on quality of life; environmental, sustainable, and social/cultural sensitivity; and visual value. The new design constituencies, believing in the power of urban design to create better communities, also focus on regional strategies that promote the development of attractive, interconnected, environmentally friendly communities as the building blocks of successful metropolitan economies and societies.

Each of today’s different responses to shaping growth has the potential to add value to the built environment through the return on perception. How does one measure the added value—the extra dividend—that can be derived from good design? Design generates value in the form of both direct and indirect, or tangible and intangible, benefits for those responsible for the investment and for the public at large. Some benefits to investors, such as an accelerated pace of home sales or more rapid appreciation of real estate assets, can be readily measured, whereas more intangible benefits, such as enhanced reputation or greater visibility in the community, are much harder to quantify. Likewise, increased net public revenue is a quantifiable benefit to the public from well-designed development, but the contribution of good design to the public’s sense of community identity and civic pride are difficult to determine using standard valuation techniques.

The financial community tends to focus almost exclusively on such economic measures as the return on investment (ROI). Return on perception (ROP)—which we define as the additional value from applying good design practices to urban development over and above the financial return on investment—recognizes both the quantifiable and qualitative benefits that flow from good design.

The introduction of ROP to the process allows decision makers to integrate the indirect benefits with the direct benefit—financial return—in a single analysis and evaluate the impacts and benefits of different choices. Thus, ROP offers a comprehensive method for evaluating both the direct and indirect benefits of good design from the perspective of an investment decision.

Manhattan’s Carnegie Hall, for example, stands for world-class music. Any orchestra that plays there is considered one of the best—even if it is not. The venue provides an aura of greatness, as described February 5, 2006, by New York Times music critic Daniel J. Wakin: “The posters outside Carnegie Hall . . . trumpeted appearances by the magnificent Berlin Philharmonic and its star-powered music director, Simon Rattle. But inside the storied hall, humbler pie was being served: the Houston Symphony orchestra and its unaffected Austrian conductor, Hans Graf.”

Carnegie had paid and promoted the Berlin orchestra, as it does the many other world-famous orchestras that regularly play there. But the Houston Symphony had itself paid for the privilege of performing at one of the world’s greatest music halls. Concertgoers may not realize the considerable cost differential between renting and being invited to play. Besides the steep rental fees for each performance, the Houston Symphony had to pay for the stagehands and cover marketing costs. It was hardly a moneymaking proposition, but there was clearly a payoff: playing at Carnegie “is like a vitamin pill for an orchestra,” said the conductor. It boosts the morale of the musicians, generates media attention, and frequently increases attendance and fundraising back home. Why is every orchestra juiced to play at Carnegie Hall? Because Carnegie is Carnegie. For the Houston Symphony, the return on perception—the boost to image and morale—justifies the cost.

Such is the power of perception. Perception shapes our thoughts on just about everything, providing multiple perspectives on the way we think about and respond to the world—first by becoming aware of an object or event, then by focusing our attention on it, and finally by “recognizing” the qualities of the object or event. John Eberhard, an architect and founding member of the Academy of Neuroscience and Architecture in San Diego, says this third “recognition” stage, which depends on having been previously aware of such an object or on the memory of a similar experience, is crucial to forming a memorable perception or image of the object or event.

What do memory and perception have to do with design? A great deal, according to Eberhard, who tells of an architect’s presentation of a design for a contemporary church building to a client who since childhood had been exposed only to traditional churches—and finds the design faulty because it does not look like a church. The client is not necessarily insensitive to good design, says Eberhard, but simply has no basis in his experience to perceive or appreciate the contemporary design. In other words, perception, which depends on the unique experiences of the individual perceiver, is a highly subjective process.

Author Malcolm Gladwell, in his 2005 book Blink: The Power of Thinking without Thinking, writes about the influence of perception on the intuitive, snap decisions we make all the time with seemingly minimal information. These intuitive moments of recognition fail miserably, says Gladwell, when there is insufficient prior experience or familiarity with an object. When we travel to a new city, for example, our impressions are most likely formed by the first image we see on arrival and the last before heading home. Our initial glimpse of a city as we fly into the airport may form a lasting impression. For this reason, cities historically have paid special attention to the design of their entryways. The grand civic designs of the early railroad stations attest to the important role of these buildings as the main portals to their cities. Now, airports serve as the welcoming “handshake” for cities.

Yet first images are not necessarily lasting images. Viewing a building on the skyline, visitors might admire its impressive color, texture, and form. On coming nearer, however, the design details might be seen as repetitious or mundane, or the materials cheap and flimsy. The opposite occurs as well: a confusing clutter of buildings and busy streets on subsequent visits may emerge as a wonderfully invigorating blend of design impressions and activities. Because people frequently experience busy streets and centers of activity by moving through them, the lasting image gained through repeated visits is the most important perception.

When designers create a building or a public space or a great street, they are concerned about how it is perceived from multiple perspectives. What design features on a building are important to someone who catches a quick glimpse of it from a highway? How does a public plaza viewed from the 40th floor compare to the plaza viewed from the street? How is a building or public space perceived by people seeing it for the first time compared with how it is perceived by people who use it every day? Are particular design features more apparent during the day or at night? And how is a building or space perceived by its various user audiences? The design of retail centers, for example, must serve the needs of not only store tenants and shoppers, but also nonshoppers—people who visit the center to eat, catch a movie, or just hang out.

Design is frequently used to project a particular corporate brand—an identifying image. McDonald’s golden arches may immediately spring to mind. Architect Philip Johnson was a master at using design to establish a corporate brand, as shown in his controversial 1984 Chippendale rooftop design for what was then AT&T’s new headquarters tower (now the Sony building), which formed a giant telephone on the Manhattan skyline.

Apple CEO Steve Jobs began a campaign more than a decade ago to carefully design new Apple retail stores to strengthen the company’s brand and call attention to its focus on innovation. Drawing on a prototypical kit of parts, designers used simple, familiar materials with razor-sharp precision to surprise and delight customers. Apple has opened more than 150 stores around the world, including eight high-profile stores in London, Chicago, Tokyo, and New York City. “Everything comes together under one design vision. Anyway you cut the apple, design is driving it,” observes Paul Thompson, director of New York City’s Cooper-Hewitt National Design Museum.

Although branding expresses one aspect of image making, the creation of a distinct visual identity is a holistic, multilayered process that reaches beyond surface qualities. Certain businesses and institutions feature green solutions in their buildings—such as light shelves, low-flush toilets, or floor coverings made of recyclable materials—in hope of benefiting from the perception that they are responsible stewards of the environment.

Good design will generate a return on perception. The establishment of a strong visual identity that creates a perceptible and memorable image is just one of the many dividends that good landscape design, urban design, and architecture can contribute. Good design can also generate a sense of place, civic pride, and belonging, along with many other qualitative and quantitative benefits that serve the larger public interest and add value to the built environment.

Good design generates significant financial benefits that directly increase the bottom line. For example, the relationship between rising property values and green spaces has been well documented. Some studies find as much as a 15 to 20 percent increase in the economic value of property adjacent to parks and open space. New York City’s Central Park and Philadelphia’s Rittenhouse Square are classic examples of parks and open space that have greatly enhanced the value of nearby properties.

The ultimate goal in economic development today is to be a hot city—one that is known to every recruiter, business analyst, and news reporter as a great place to live and work. An attractive, well-designed physical environment is critical to enhancing quality of life and attracting the talented, skilled knowledge workers who are essential drivers of economic development.

Dennis Jerke is the managing principal for urban design and planning at Fort Worth, Texas–based Jacobs Carter Burgess. (His article is excerpted and adapted from Urban Design and the Bottom Line, published in early December by the Urban Land Institute.)