A little more than a decade ago Holloway in London was one of the most deprived areas in the UK. Since then, more than 60 acres of the area have been regenerated, delivering more than 3,000 new homes (over half of which are affordable housing). More than £7 million has been invested in upgrading the local underground station to create more capacity and hundreds of permanent new jobs have been created, alongside the thousands of people employed on match days. At the heart of this major regeneration scheme sits Arsenal’s iconic Emirates Stadium.
While Arsenal’s previous home, Highbury, was one of the most recognizable stadia in the world, by the end of the last century it was acting as a break on the growth of one of football’s most iconic brands. While the drivers for the new stadium were undoubtedly economic – matchday takings for the club were £37 million when they left Highbury and had risen to £132 million by 2016 – the club worked closely with the local council to ensure that the opportunity for regeneration was seized.
A development agreement was entered into between the club and the council early in the process, facilitating the securing of the necessary planning permissions and, crucially, allowing the council to use its compulsory purchase powers to assemble the land needed to deliver such a large-scale project in a heavily populated urban area.
The real estate opportunities that can flow from ownership of a major sports club are apparent and can serve as part of the motivation for investment in a club. There are numerous examples of investment in English football clubs that have resulted in benefits for the club alongside the provision of new community facilities and which have also driven up property values. One example is the investment by Manchester City FC in Eastlands, a relatively deprived area of Manchester. Few would argue that Manchester City has not benefited from that investment, which has included a major upgrade to what is now the Etihad Stadium and the provision of a training academy, the land for which was in part assembled by the city council in partnership with the club’s owners. Again, a partnership between the club and the public sector has acted as a driver for investment and the wider regeneration of a 200-acre site around the stadium that is now called the Etihad Campus. The campus has received over £400 million of investment in major new facilities, including a BMX arena and Velopark Mountain Park trails that have turned this previously economically challenged area into a global destination. In turn, this development is stimulating further commercial and residential development nearby.
Football was not the only catalyst for the regeneration of the east side of Manchester. In 2002 Manchester hosted the Commonwealth Games and part of the attraction of its bid was the commitment to legacy. Using the games as a catalyst for investment and regeneration in order to build a sustainable legacy had a transformative effect on Manchester, delivering world-class sporting facilities that the council credits as being a significant driver in the increase in the number of visitors to the city rising from 18 million in 2002 to over 90 million today.
In the past, sporting events have often left behind white elephants. The Sydney Olympic Park, built to host the 2000 Sydney Olympics, stood empty for a long time before a sustainable future use could be found for it. But the intensive focus on legacy that began in Manchester has become a key metric of success for sporting events across the world.
Legacy was at the heart of London’s successful bid to host the 2012 Olympics, with the regeneration of one of the most deprived areas of London critical to the legacy benefits claimed in the bid. The real estate regeneration that was fundamental to the event was made clear by the decision to create two bodies, the Olympic Delivery Authority (ODA) and the Olympic Park Legacy Company (OPLC). While the ODA, as its name suggests, had responsibility for delivery the games, it was the London Mayor’s London Development Agency and the OPLC who were responsible for securing planning permission for the Olympic Park and for one of the largest compulsory land purchases ever undertaken in the UK.
Once the games were over the site was returned to the OPLC, which rebranded and became a mayoral development corporation. As a development corporation, responsibility for determining planning applications rests with it rather than local authorities, allowing it to continue to influence the development of the area even after it has disposed of land.
The focus on legacy resulted in the buildings being designed with their post-games use in mind; the Olympic Stadium is now the home of West Ham Football Club and the athletes’ village now provides almost 3,000 affordable homes, together with 27 acres of parkland, a school, bars, cafes and 30 shops.
Since 2012, the area has become one of the fastest growing in the UK. By 2017 it was estimated that some 110,000 jobs had been created in the area, with another 125,000 expected to be created in the next decade. Former no-go areas have been transformed into desirable locales and property values are unrecognizable from just a few years ago.
What all of these developments have in common is the key role of the public sector, without whose funding and use of compulsory purchase powers these regeneration schemes would not have been viable or deliverable. It is difficult to imagine such a significant public sector commitment without the connection to sport, making stadia development a perhaps unlikely but unquestionably critical catalyst for some of the most significant regeneration projects in the UK of recent years.
In the UK and elsewhere, the public sector is waking up to the significant increase in real estate values that can result within the vicinity of these major regeneration schemes and other public sector projects such as new transport infrastructure, prompting a debate about whether and how that uplift in value can be captured to offset the significant investment being made in projects by the taxpayer. So far, in the UK at least, the debate over whether and how to secure land value capture continues, but there is an increasing sense that its arrival is ultimately inevitable. How this impacts on the economics of real estate investment in and near such projects remains to be seen.