The design dividend

When money is tight it’s easy to dismiss the importance of good design and focus instead on the lowest possible costs and build rates; the cheapest structures and cheapest materials. Ironically though, good design is even more valuable in difficult economic periods, because it is then that the difference between quality and mediocrity becomes even more apparent. In the year when we mark the 40^th anniversary of the Sydney Opera House, it’s worth reflecting on the economic value of design.

If you think back in Australia’s history, some of our most impressive buildings were public structures. Town Halls, Parliaments, and even train stations showed a commitment to design which continues to be valued today because these are usually the structures we are most concerned at protecting. Private institutions like banks, Churches and some schools also invested heavily in design, reflecting their view that these buildings and the businesses within them would be around for a long time.

In the post war period much of this changed, and that change is largely still in place. In the main, government buildings and public structures are now designed to fit increasingly skinny budgets. The Sydney Opera House, opened in 1973, suffered an ongoing storm of controversy over its budget for many years. The final tally was $102 million against an original budget estimate of $7m, and a ten year overrun in estimated program. The sort of public outrage this caused may have left an indelible mark on our psyche, but whatever the cause, government projects today are far more utilitarian in ambition. This often translates into structures which outwardly exhibit little apparent design effort.

On the surface, the reasons are easy enough to understand. Governments, under pressure to meet a growing list of social welfare and other priorities, simply do not have the funds for ‘lavish’ public buildings. Plus, the occupants of public buildings (mainly public servants) aren’t deemed worthy by the media or commentariat of anything more than purely functional space. This can also mean appearing to be penny wise in front of a critical taxpaying public by eschewing ambitious design.

But good design isn’t all about aesthetic features or flamboyant structures. And it is here that the value of good design perhaps needs better appreciation. Good design should also mean more efficient buildings: structures that use less energy, allow more natural light, are better ventilated. This leads directly to lower building operating costs, which reduces costs over time and which enhances asset value over time. Plus, we’ve all heard of ‘sick building syndrome’ and whether you believe it or not, there does seem to be evidence that well designed buildings foster happier occupants who take less sick leave and who are more productive. 

Good design has other economic benefits. It can mean that vacancies are lower even in competitive markets when supply is plentiful. Retail landlords know this well. A well designed retail centre will attract more customer support, which translates into more spending at the til, which translates into better occupancy. Retail centres are frequently redesigned for this very reason: they need to remain competitive.

There is also a social dividend from quality urban designs. As a community, we want to feel proud of our built environment. We may not want to see our taxes paying for too much of it, but we nevertheless are quick to express disappointment or outrage when ‘ugly’ public or private buildings appear on our landscape. Quality public spaces which have invested in good design are also some of the most popular destinations for locals and tourists alike. Think Southbank in Brisbane, or Federation Square and surrounds in Melbourne.  This builds a civic pride in public spaces that is hard to value, but places with little civic pride are easy to identify.

Good design also applies to our homes. Architect designed homes (particularly the good ones) hold their value over time, and tend to attract market premiums. Even when the original materials and fittings have dated through time, the structure and the way in which spaces are organised is usually evidence of good design. Materials and finishes can be updated when needed but getting the design right first is what provides the long term value.  

New developments also benefit from quality design. There are many good architects and developers who appreciate this, so it is hard to single any out. But if I had to choose, the Anthony John Group’s ‘Southpoint/Emporium’ project at Southbank in Brisbane is one example. This is evidently achieving a lot of early success in sales, due no doubt to the group’s past reputation for investing in quality design (the developer is himself an architect) and also no doubt due to the design effort that has gone into this development. The market can sense quality, and will pay a premium for it. Other product also on the market which has been more driven more by cost than design isn’t enjoying the same success or achieving the same premium in today’s market.

None of this should be interpreted as a call for public monies to be squandered on aesthetics of public buildings when basic economic services are competing for funds and deficits need to be repaid. It applies as much to private developments as public. But for public or private, maybe we need a rethinking of the value of quality design as something that provides measureable economic benefit and long term civic value.

The Sydney Opera House may have cost $102 million against an original budget of $7m but Deloitte recently estimated that it now contributes $775 million to the Australian economy each year with a cultural value of $4.6 billion. It has become synonymous with brand Australia itself. Imagine that sort of rate of return across our entire built environment?

For some case studies of the Design Dividend, have a look at www.designdividend.org.au  and some of the examples there, along with one rather famous supporter. I’m proud to say that I was involved with this campaign and hope it continues to promote the value of the design dividend.