Space to create

Creative environments
Our civilisation has never been developing as rapidly as it is now. New technologies, business models and professions are all emerging at a giddy speed – and, according to sociologists, new social classes are also appearing. How can property developers Capitalise on these trends?

Last year saw the largest transaction on the Polish real estate market to date. South African investor Redefine Properties purchased a 75 pct stake in Echo Polska Properties (part of Echo Investment) for EUR 1.18 bln. EPP’s portfolio included 18 assets: office buildings and shopping centres. However, it is important to note that in the same year one of Echo Investment’s tenants in Q22, internet retailer Allegro, was sold for almost three times that amount – USD 3.25 bln. This transaction was not about buildings, as it was in Echo’s case, since Allegro could not boast a substantial portfolio of properties in attractive locations. It was about a platform created by programmers and existing in The Cloud – and therefore something rather less tangible than brick and concrete structures.

That technology has significantly changed the world is an obvious fact. Companies such as Facebook, Google and Amazon have become almost unfathomably huge, thanks to business models unheard of twenty years ago. According to economists and sociologists, this emphasises the transformation from industrial to knowledge-based economies. Industrial production is no longer one of the main sources of national income, having been replaced by information development and processing.

First, creativity

But what is driving all these changes? In his bestselling book, ‘The Rise of the Creative Class’, American economist Richard Florida advances the thesis that it is a separate social class, which he labels the ‘creative class’, that is mostly responsible for the success of a number of burgeoning cities. According to the author, this class now constitutes app. 30 pct of the US labour market (along with the working class who amount to 25 pct of it and the 43 pct employed in services). More than half of this class are creative professionals in fields such as hi-tech, financial services, legal jobs, health protection and business management. Florida considers scientists, engineers, artists, actors, designers, architects, poets, novelists and “opinion-formers” – literary authors, publishers, cultural and media commentators, and think-tank analysts – as the most active elements of the social group. However, he emphasises that the creative class has been growing in number for at least four decades across the world and that the trend is set to continue. A survey carried out in eight highly-developed European countries (Denmark, Finland, Sweden the Netherlands, Germany, Norway, Switzerland and the UK), for example, reveals that the average percentage of people employed in the creative sector in these countries is 38 pct.

Second, the group

According to sociologists, it is no accident that artists and IT specialists do not generally live in the Siberian taiga or on the prairies of Arizona, but they live in cities, allowing them to thrive in a mutually inspiring environment where creativity rapidly circulates and feeds on itself. The creative sector, including the modern tech, film and the various artistic environments, has a propensity to concentrate spatially. And this is not limited to just the most prominent examples – such as Silicon Valley for hi-tech, or Hollywood for the film industry – but the rule also applies in smaller urban centres. Even though the exchange of information can take place online these days and physical proximity should be less important, in practice the opposite is taking place and companies are opting for these creative environments. “Modern industries no longer have to be geographically concentrated; but people, particularly educated people with creative predispositions, tend to want to gather en masse in order to take advantage of the comfort and amenities of cities,” explains Andrzej Majer, a sociologist who specialises in cities at the University of Łódź. The creative professions are all inter-linked and the benefits from their activity have a wider influence on the regional economy.

Third, the culture

Creating the right space and conditions for talented people to thrive in is also of key importance from the point of view of the city. “Cities that are able to encourage the creative class to live in them and stay for longer tend to be the successful ones, whereas those that fail to do this stagnate,” claims Andrzej Majer.

The relationship between culture and the economy has also narrowed somewhat, since culture is one of the factors that contribute most to the attractiveness of cities. This is reflected in the so-called ‘Guggenheim effect’, after the museum that was opened in Bilbao in 1997. The Frank Gehry designed building cost app. EUR 133 mln to construct. The museum made EUR 148 mln in the first year it was open, and in 2007 the figure had grown to EUR 247 mln. Andrzej Majer believes that it was this stylish project that acted as the catalyst for drawing in the creative class. It is estimated that within the first year of the museum’s operations, 3,800 new jobs were created in the Bilbao area, mostly in completely new professions, while the unemployment rate decreased from 28 pct at the beginning of the 1990s to app. 6–7 pct. “A change in the social structure of the entire region took place, which was reflected in an increased concentration of the creative class and the growth in people’s incomes,” explains Andrzej Majer.

Developer creates environment

Could such transformations be of any significance for developers? Yes, they could, claims Wojciech Gepner, the PR manager responsible for Echo Investment’s ‘Space for Leaders’ programme. The Kielce-based developer set up the scheme with the aim of creating the best conditions for the creative classes. This is its “contribution to the global phenomenon,” I was told by the company’s representative. “Starting with workplaces, i.e. the offices where the talent is employed, to retail space, which forms part of this individual’s ecosystem, to apartments, which are also very significant, we can help to create the ideal environment for the creative class. We do this by setting good examples, using fine architecture and technological solutions. This is how we understand our contribution to this philosophy,” explains Wojciech Gepner. He also adds that understanding the needs of this class makes Echo take particular care over the cultural aspects as well as the locations of its projects. “We don’t want our offices to be situated somewhere out-of-the-way; we want to provide a good selection of cafés, restaurants and services, and for cultural events to take place, so the tenant can take advantage of all this variety, since this is one of the factors that stimulate creativity,” he says. He also adds that Echo’s slogan ‘Space for Leaders’ refers to these sociological processes. “This is not just an empty advertising slogan, something detached from reality. It is based on actually occurring social phenomena, and so what we are doing is our response to actual needs,” argues Wojciech Gepner.

The toast of the town again

The fashion for escaping from the hubbub of the city to the suburbs is gradually becoming passé. Or at least this is what sociologists claim. According to UN forecasts, the urbanisation rate is set to grow considerably over the next few decades, reaching 59.7 pct in 2030 and 69.9 pct in 2050. It is the growth of the knowledge-based economy and the development of services that are mostly driving this urban boom. Following the deindustrialisation of cities and the depopulation of their centres due to people escaping to the suburbs, cities have been given a new lease of life, as reflected in gradually returning populations and the revival of the service sector. For more and more people, they are an arresting option in terms of where to live and have become a serious rival for suburbia,” writes Andrzej Majer in ‘Revival of Cities’. Cities have become trendy once again and are generally perceived as hubs of economic activity these days. “Their unquestionable assets are being recognised and approved of once again, such as their rich job markets, the availability of specialist services and the presence of companies offering individuals career development potential as well as cooperation in the form of ‘face-to-face’ contracts,” writes Andrzej Majer. In this respect, the sociologists would seem to be the bearers of good tidings for developers. If global trends are to be trusted, the latter will have their hands full over the next few decades.

This article is based on the ‘Revival of Cities’ by Prof. Andrzej Majer.

Echo Investment is the content partner for the Creative Environments section of this magazine.