20. 03 .2024

The green space index, or what’s the point of spending on lawns in an industrial park?

The protection of agricultural land and soil is of strategic importance. However, several elements of both the support and regulatory environment work against this strategic interest! As the recently deceased Charlie Munger said, "show me the incentive and I will show you the outcome." This is how I will proceed initially.

The current production and support system based on arable land focuses on maximizing product yield, adhering to rules and regulations. That is, maximum quantity with the prescribed minimum quality, all at the lowest possible costs. The protection of land area and its productivity does not appear in the incentive system, resulting in the continuous deterioration of land quality and reduction in its quantity.

Due to urbanization and industrialization, significant areas of land are being taken out of agricultural production. During the reclassification of land into industrial areas, architectural regulations often mandate the maintenance of 30-50% green space within the industrial area. As a result, to operate a factory, twice the area had to be removed compared to if the industrial area had been built with 90% efficiency. Since the economic interest of the factory operator is to meet the green space requirement at the lowest cost, we often find minimalist lawns being watered and mowed. But this is senseless and useless green space. Senseless because it does not replace the sacrificed land in any way. Useless because it is closed off from public access: private property, keep off the grass! The regulator's interest was to have green space (but its maintenance costs should not burden the municipal budget), and yet not.

In the course of urban residential developments, similar faulty incentives create suburban apartments and houses with minimal private gardens. These gardens cannot function as true green spaces. Due to their size, they cannot sustain real biodiversity with trees, shrubs, and flowers combined. It is foreseeable that 100 housing units/400 people can be accommodated on one level or on three levels. In the latter case, three times the green space is freed up. If the green space functions as a common area, its maintenance is cheaper (economy of scale) and real biodiversity can be established with trees, shrubs, birds, and bees. See our Somlói Road residential park development with the Zoboki architectural office:

The installation of solar panels on roofs can serve a similar purpose. It preserves the land for agricultural cultivation and utilizes the otherwise unused roofs of industrial, logistical, and residential buildings for solar panel installation. These buildings already have their electrical connections, so no new connections need to be established, and they have their own consumption, thus sparing the transmission capacities of the grid. In agricultural areas, PV panels should only be installed on buildings, storage facilities, barns, or above plantations, as this way the secondary function (power generation) does not require the removal of arable land, and the primary activity (plantation) remains. I see this as the correct approach in the long term.

Companies operating in industrial parks could surely enter into urban planning contracts, in exchange for a reduction in the general green space indicator, where they would commit to fencing and maintaining a city park or contributing to it similarly to the zoo adoption program. Reducing the green space indicator increases the value of the industrial area, which is beneficial for its owner, and allows further expansion within the same area without needing to remove additional land from agricultural production. Everyone benefits.

The value of brownfield residential developments can also be increased by placing the same amount of useful floor space in taller buildings, with the freed-up area used as undivided common parks and community areas, playgrounds. This would significantly raise the value of individual apartments and the quality of life for residents.

Urban planning has become a task of barely manageable complexity. Reconciling and aligning interests still operates on 19th-century methodology. The fetish of technological advancement and economic growth, the necessity of return on investment, and political cycles leave little time for maturing plans and reconciling interests.

Yet it is cheapest to err on paper, "measure twice before cutting." A single flawed urban structural decision can steer the development of an area in the wrong direction for decades. As a general rule, architectural or transportation priorities should not be applied, but the general increase in value of the broader environment affected by regulation should be stipulated as a community goal and only approved if this is fulfilled.

Public transport development can be value-enhancing even if the stop or route disturbs a few property owners, and the value of properties directly along the route and stops decreases due to increased traffic. But if not viewed as residential property, better transport and visibility already increase the value of these properties as office or retail space, and the value of properties in the next row further improves the balance. A park or an underground garage can also be value-enhancing along similar logic. If an investment is necessary for urban structural or public transport reasons, the immediate environment can be compensated through investments that generally increase property values. The city can be eternal like Rome, but functions and tasks within the city can change, requiring adaptation for the primary benefit of the public.

Micro-segmentation has appeared in real estate development due to economic cycles. A well-executed micro-architectural environment, like the MoM Park and its surroundings, exerts such an attraction on the tenant community that they repay it with extreme tenant loyalty. This is reflected in the fact that even in an environment where the average fixed-term lease is 3-5 years, the practice rarely measured in the real estate industry is achieved, where tenants remain in the same property for 10-15-20 years.

In our developed and managed MoMentum office building, for example, the average lease term is 2.9 years, but the tenant loyalty indicator is over 8 years, meaning tenants stay for 2-3 lease cycles because the office and its environment provide a quality of work and life that is priceless. Here too, the transition from quantity to quality is evident, investing in long-term customer relationships and quality service.

The above examples show that worthy intentions—creating green spaces, limiting residential intensity to improve quality of living—can also cause unintended harmful consequences. In the country's 170 industrial parks, there are at least 5,000 hectares of unusable green space. This is equivalent to 100 City Park-sized green spaces, providing an opportunity to create a park the size of Debrecen's Great Forest or City Park in every city with an industrial park. This could even appear as a governmental program. With 100 urban planning and adoption contracts, the Ministry of Construction and Investment Promotion Agency could create 100 City Park/Great Forest quality urban parks and ensure their maintenance for public benefit.

The above has been translated from Hungarian to English with the use of AI.