In this blog we dive into the notion of stakeholder interests and mutual dependencies. They are crucial drivers of successful urban transformation. Profoundly understanding and incorporating these into the core of your project will help you to smoothen the process and optimise results.
Perhaps even more than a collection of buildings and spaces, urban areas are a collection of perspectives, interests and dependencies. Especially in areas where the property is dispersed over many different owners and users, it is not possible to effectively organise its transformation from a centralised position.
Over the past decade I have seen many urban transformation projects that were aiming to set up collaboration between the real estate owners and the municipality. In a way these collaborations were based on the existing model of the public-private consortium, but then with a lot more owners involved. A model like this may work very well in an area that is more or less vacant, but when you are dealing with an area that is still in use, albeit partly, this model will probably not be sufficient.
Urban areas are often facing multiple parallel challenges, like vacancy, affordable housing, renovation, mobility, energy transition, biodiversity, social cohesion, et cetera. These challenges do not only influence each other, but also require the active engagement and support from different types of stakeholders. Some are mostly about owners, but others about for example local businesses or citizens. And these stakeholders all have their own dynamics of mutual dependencies.
When you are working on an urban transformation challenge like this, you have a lot less control over the exact outcomes and timelines than what you were probably used to in other projects. This may feel chaotic and frustrating, especially when you seem to progress much more slowly than for example colleagues on other, more linear projects. However, if you manage to turn this stakeholder complexity into structural multi-stakeholder collectivity and you feed the deeper layers of shared ownership in the area, you will unlock tremendous action, investment power and social energy. And this will show increasingly tangible and sustainable results over time.
In order to achieve this, it is crucial to profoundly understand the different stakeholders, their interests and their dependencies. Not only between them and the project or your project organisation, but also among each other. Besides, you need to be sensitive how these may shift and evolve over time as the area’s transformation progresses.
In our Amsterdam field lab, Amstel III office district, these stakeholder dependencies have proved powerful drivers and catalysts behind the area’s revitalisation and transformation. Besides, they were the cement in the local collective that became larger, more diverse and stronger over the years. When I first came to the area as an independent agent who wanted to kick-start the area’s transformation, I had no idea of the stakeholder complexity I was diving into. I did sense there were a lot of people and organisations who had something to win and to lose there, who somehow depended on the attractiveness and liveability of the area. The fact that the area was facing a 30% vacancy rate underlined the urgency.
The first conversations I had in 2010 were with the municipality. Due to the financial crisis they had to withdraw their top-down redevelopment plans for Amstel III and struggled to mobilise the many different owners. We discussed my ideas and they told me they were willing to join my initiative, especially if I managed to engage real estate owners in a positive way.
I then joined a meeting with the municipality and a selection of owners. Initially there seemed to be some conflicting interests between market and government. Between public and commercial. Between investing and facilitating. Between depreciating and transforming vacant buildings and maintaining book values. Many owners were aware that action was needed in order to prevent the area – and their property as a part of it – to deteriorate and lose value. However, the owners were also dependent on each other’s action. The 120 office buildings in Amstel III were owned by 80 different owners. One owner depreciating and transforming his or her building would increase the liveability and also increase the value of the neighbouring office buildings without those neighbours having to do anything. This realisation triggered the free rider problem and the prisoners’ dilemma* among owners. It became clear that they needed to collaborate, also because they needed a critical mass of revitalisation and transformation in order to really sustainably benefit from their value creation. Just a few buildings were not enough. The first owners told me they were willing to join my initiative if I managed to engage all other owners in a positive way.
When I continued my conversations with more owners, it became clear that we could not limit ourselves to focusing on transforming the 30% vacancy. After all, 70% of the area was in use. A few hundred companies were located in Amstel III and 26.000 people were working in these companies, spending a large part of their everyday life in the area. Owners wanted to keep their tenants happy, so they would not terminate their contracts. Many told me they were willing to join my initiative if I managed to engage their tenants in a positive way.
Then speaking with tenants made it clear that, although some initially saw conflicting interests with their landlords regarding possible rent increases, many prioritised both a representative environment to welcome their guests and a safe, healthy and liveable environment for their employees. Many told me they were willing to join my initiative if I managed to engage their employees in a positive way.
I took to the streets during lunch breaks and rush hours and approached various people who walked to the station. Many had never even thought about influencing their everyday environment and I sensed it would take much more time and effort to raise awareness and interest there. A few who did have some ideas mentioned that they expected the municipality would not allow them.
I guess you get the idea by now. I must admit it frustrated me back then. Being trained as an architect, I had very concrete spatial interventions in mind that I wanted to realise together with the municipality, the owners and perhaps a few specific sponsors. Then these interventions would ideally lead to other, bigger projects and so I envisioned Amstel III’s transformation would unfold. Instead, nothing visible happened. However, I had created the first outlines of what could become a strong local collective. These mutual dependencies and the first reluctant signs of enthusiasm and engagement convinced me to focus much more on all these different people and organisations and then over time develop ideas for concrete interventions together with them.
For the first few years this is how the collective grew and how the first actions were realised in the area. Some were realised through our collective and some pursued by small groups or individual stakeholders. Some were upgrades in office buildings or public space and others small-scale transformations to for example hotels, but together they caused the first visible positive impact in the area. And then in 2015 the economic situation changed, and new investors and developers came to the area to acquire real estate. These new stakeholders brought much bigger and bolder mixed-use plans with them, redeveloping and densifying Amstel III. Suddenly, transforming office buildings was no longer an undesirable scenario to solve vacancy. It was now a commercial opportunity.
This new scope and scale required a new set of guidelines and regulations and a future vision for the area, realising overall spatial quality and coherence and good connections between the different projects and public space. If the municipality had owned the real estate in Amstel III, she would have been able to safeguard all of this through a detailed tender procedure. Now however, she could formulate the conditions under which a permit for redevelopment was granted but could not force developers to actually redevelop. The municipality had to somehow negotiate these conditions with the different new developers and the existing owners, who may or may not develop new plans for their buildings in the future. We co-created a shared future vision with all these stakeholders that brought together all different initiatives and allowed for future initiatives as well, giving a bit more certainty to the first redevelopment initiatives about where the area is heading. This process also unveiled the potential for very practical collaboration between existing office owners and new housing developers, whose different peaks in occupation allowed for exchanging for example parking spots or energy.
It again became clear how the different developers were dependent on each other. At that point, none of them had enough position to transform Amstel III on their own. So, first during the planning and vision phase they had to work together to ensure their projects would fit together into a coherent and high-quality neighbourhood. However, they were not only dependent on each other’s’ plans but also on each other’s execution of plans. Imagine that the first developer completes an apartment block while the others are still in planning phase. That practically means there is one apartment block amidst a lot of vacant office buildings. Now imagine something unexpected happens, causing the other projects to get delayed or even cancelled. That would be a big problem both for the developer and for the people living there. Therefore, the different developers need intensive collaboration and communication to make sure their planning is somewhat aligned and enough projects are realised within a limited timeframe to create a critical mass together.
Moreover, it proved crucial for these first developers to closely work together with the existing local community, the adjacent residential neighbourhoods and the various (temporary) placemaking initiatives that were already active in the area. In doing so, they would ensure an immediate consistent basis of liveability and attractiveness for their own residents while waiting for other projects to be completed. At the same time, their engagement boosted these local initiatives. Not only in their temporary form, but it also established new collaborations for example to open local cafes in the new buildings.
As you may have noticed throughout this article, the successful physical transformation of an area is strongly influenced by and intertwined with growing diverse social networks, local economies, personal agency, private and civic investment power and overall organisational resilience. It may take quite some years before the physical transformation really becomes manifest, but when it does you will realise how much more you have been building all that time and how much that is needed for all future challenges and transitions that are still awaiting the area.
Saskia Beer, 16 December 2020
* The free rider problem is the burden on a shared resource that is created by its use or overuse by people who aren’t paying their fair share for it or aren’t paying anything at all. The prisoner’s dilemma is a paradox in decision analysis in which two individuals acting in their own self-interests do not produce the optimal outcome. The typical prisoner’s dilemma is set up in such a way that both parties choose to protect themselves at the expense of the other participant. (source and further reading: Investopedia)