1

Resilient Buildings and Resilient Property De-velopers: A case study of Three Property De-

velopment Companies

Ahoefa Chantal Hales

Department of Geography, Earth & Environmental Sciences,

The University of Birmingham

Sustainable development and resilience are highly contested concepts be-ing discussed at all levels from government to civic society. For property developers these translate into moving away from the traditional ways of building to developing an integrated approach which addresses the triple bottom lines concerns and strengthens resilience to socio-economic and environmental shocks. In the wake of the global financial crisis and the threat of another recession, the paper draws on case studies of property developers to elucidate some of the practical measures adopted to im-prove resilience and enhance the sustainability of buildings. The paper re-ports that developers build resilience by combining sustainable practices with a range of building and firm specific resilience strategies.

Introduction

Businesses play an important role in local, regional and national economic growth.

Any threats to their survival as a result of fluctuating markets or climate change not

only affects them directly but also the rest of the economy. This will be manifest

through reductions in employment job, income and tax revenues, putting a strain on

neighbourhood and communities’ livelihoods. To guard against these threats busi-

nesses need to develop resilience. The growing recognition that the world is chang-

ing extremely rapidly has further emphasised the importance of sustainability among

policy makers, industry practitioners and the general public. Policy makers through

their initiatives have pushed the agenda for sustainability and the role it can play in

driving urban and industrial development. Among the key sectors most likely to be

affected by these unexpected changes is the built environment including the property

development sector as it provides the core framework for most human activity

(Bosher et al, 2008). Property developers are part of the service sector. They are in-

2

volved in developing buildings and managing property portfolio. They tend to operate

on a fringe of financial services as their primary product is also an investment vehi-

cle. Like many businesses they have been faced with a number of challenges and

risks over the years with devastating impacts. In particular, they have struggled with

the recession and other property-related and operational risks which have under-

mined their ability to flourish in a competitive environment. Some developers, howev-

er, have responded positively to these pressures by reinventing themselves, whilst

others have failed. This process of creative destruction during which some business-

es decline has allowed some developers to outperform their competitors by incorpo-

rating sustainable practices into their business models (Bryson; Lombardi, 2009).

During a recession new ideas, products and technologies can emerge which become

a driving force of subsequent economic activity and growth (Bryson, 1996; Kitching et

al., 2009). In a turbulent market environment with growing concerns for climate

change and its possible impact on the building and construction sector (Bosher et al.,

2007) it is important for property developers to think forward into the future and to

build resilient firms. Doing so will improve their ability to respond quickly, positively

and accurately to socio-economic and environmental disturbances. Also, it will put

them in a far better position to develop a world class business with a sustainable

competitive advantage (Sheffi, 2007).

Resilience is an important aspect of a business’ sustainability, its long term competi-

tiveness and ultimately its survival. In the UK while there is some available research

on resilience in the construction sector (Bosher et al., 2007; Dainty; Bosher, 2008)

very little research investigates property developers’ resilience to uncertainties. It has

been suggested that different professions have different perceptions of risks as a

result of education, learning and development and traditions. Developers’ response

to risks is therefore likely to differ on the basis of the professional background and

experience of the management team. It is important to encourage developers to de-

velop a corporate culture of risk management which is spread throughout the whole

firm. In a business environment where sustainable development is coming sharply

into focus and customers are increasingly demanding greener products the develop-

ment industry needs to develop strong resilient strategies to achieve long term com-

petitive advantage (Hamel; Valkangas, 2003). This means adopting an integrated

approach to manage unexpected disturbances which may come from economic cri-

3

ses, climate change related risks such as floods or business operational risks such

as internal system failures. The purpose of this paper is to explore the concept of re-

silience within the property development sector using three best practice property

developers as case studies. The paper explores how developers understand and

manage change and their strategies for managing sustainability and guarding against

future risks. Section two explores sustainability and resilience as it is related to prop-

erty developers. Section three provides details of the methodology; section four

brings to light the different strategies adopted by property developers to manage

change and develop a resilient business. Section five concludes the paper.

Sustainability and resilience

Property development is a complex, multifaceted and financially risky process which

involves various actors and agents (from developers, investors - insurance compa-

nies, pension funds - building contractors, and landowners, planning officers to com-

munity groups) from the private and public sphere (Fisher; Robson, 2004). Develop-

ments are purpose built-space created to meet the needs of investors and users

(Bryson, 1997; MacLaran, 2003). The completion of the various phases of the devel-

opment process is influenced by the performance of the economy and the confidence

of occupiers, investors and developers. The recent economic meltdown has had a

devastating effect on the development sector as the housing and commercial proper-

ty markets collapsed (Kitching et al., 2009). In the UK, bank’s loans dried up; some

existing and new developments have come to a halt with business closures and re-

dundancies (Cadman; Topping, 1995; Athey, 2009; Jones et al., 2009). In these diffi-

cult times new entrepreneurs have emerged to tackle existing market challenges in

radical and new ways, creating new business opportunities for themselves (Bryson;

Lombardi, 2009). Added to the meltdown are the government’s stringent and manda-

tory requirements to force developers to construct sustainable buildings. Developers

have to produce modern and commercial buildings that not only meet these sustain-

ability criteria but also the needs of property investors and, occupiers.

4

Sustainable development, which combines the growing concerns of social, economic

and environmental issues, has received significant attention since the influential

Brundtland (1987) report (Goodier et al, 2008; Hampson; Brandon, 2004). In the last

two decades, it has become a key item on the agenda at all levels from government

to civic society. The public sector has become sensitive to the issues of sustainability

through planning and building regulations (Bryson; Lombardi, 2009). Consumers are

increasingly demanding greener products and are putting pressures on businesses to

incorporate sustainable strategies into their business processes. As a result, most

businesses, regardless of size, are becoming aware of the link between their activi-

ties and the environment. Property developers, in particular, realise that traditional

ways of building is no longer possible and that future developments must (Keeping;

Shiers, 2004), minimise waste and energy use, prevent pollution and make use of

renewable technologies, whilst increasing profitability and shareholders’ value

(Moore; Manning, 2008). Developers have also come to realise that sustainability has

become a ground on which competition is based. Studies have reported ways that

businesses have responded to climate change and sustainability challenges by posi-

tively and radically considering areas of innovative production technologies, integrat-

ing processes and intelligent building systems. Bryson and Lombardi’s (2009) case

study of two UK property development firms helps illustrate this process. The two

firms have responded positively to environmental challenges and sustainability by

creating new business models which balance profitability and sustainability values.

These firms have been trying to position themselves in the market by developing a

competitive edge and maximising their returns in developing sustainable buildings.

As resources deplete beyond the assimilative capacity of the environment, business-

es becomes more sensitive to external unexpected shocks (Arrow et al., 1995). This

means that pro-environment strategies alone cannot improve firms’ ability to react

and adapt to unexpected socio-economic and environmental changes. Resilience is

an important tool for achieving sustainability and contributes towards guarding firms

against the unexpected. As Levin et al (1998) argue resilience is the preferred way of

thinking about sustainability.

The concept of resilience gained prominence in the post Brundtland era, shifting from

the concept of ecological systems (Adger, 2000; Pimm, 1984; Holling et al., 1995;

5

Folke et al., 2002) to one of psychology and psychiatry (Bonnano, 2004), risk man-

agement (Starr et al., 2004) and network theory (Calloway et al., 2000). More recent-

ly it has been extended to human social systems, economic and disaster recovery

(Bosher, 2008), promoting research in science and policy. Various definitions of resil-

ience exist and tend to be discipline and context specific. Over the years the concept

has been diluted to the point of loosing its meaning and it is suggested that there is

little fruitful structural conception of it (Klein et al., 2003). Folke et al (2002) describe

resilience as “the capacity to buffer change, learn and develop”. In engineering, resil-

ience is associated with a state of equilibrium following a disturbance event (Holling,

1996) or the ability to resume an original condition after shocks. The key themes as-

sociated with resilience often include diversity, adaptability or adaptive capacity, effi-

ciency and cohesion (Fiskel, 2003). In ecology, resilience is the ability to “absorb per-

turbations by changing the variables and processes that control behaviour” (Adger,

2000, 349), or “buffer perturbations, self-organize, and to learn and adapt” (ResAlli-

ance.org).

Earlier research on resilience focused on individuals and communities and then the

focus shifted to understanding social and economic disturbances. Scientists who ap-

plied the concept to social systems define resilience as the ability of social units - or-

ganizations/institutions, families and communities - to cope with or bounce back from

external disturbances caused by social, economic or environmental change (Adger,

2000), without loosing the ability to allocate resources efficiently (Perrings, 2006).

Resource dependency is therefore an indicator of resilience, defined as “the reliance

on a narrow range of resources leading to social and economic stresses within liveli-

hood systems” (Adger, 2000, 351). It is influenced by market fluctuations. As will be

shown in subsequent sections resilient developers are those that are able to accom-

modate perturbations without loosing their functionality and they are able to allocate

resources efficiently and deliver essential services (Perring, 2006).

Social resilience is essentially about behavioural responses to shocks. From an or-

ganisational perspective resilience is an organisation’s ability to anticipate key trends,

adapt to change and rapidly bounce back from unexpected and adverse change. It is

a dynamic process that grows and develops over time. Whilst some studies have

been conducted on business resilience (Goble et al., 2002; Starr et al., 2003) there is

6

very little that directly explores resilience in the context of property development

firms, especially within the framework of the current financial turmoil. Because prop-

erty development is a complex process resilient building development will require a

full collaboration and participation of the key actors involves in the development pro-

cess. A resilient building in this context is one which has been designed, located,

built, operated and maintained to maximise the use of sustainable materials and pro-

cesses (Glass, 2008). Further, the resilient building can withstand the impact of both

climate and human-induced hazards. For the firms which are providing the buildings,

resilience will not only involve developing buffer mechanisms to environmental haz-

ards, but also mechanisms to protect their businesses against internal system fail-

ures. Doing so will allow them to maintain their function - continue to invest, buy, sell,

rent and manage properties, and meet occupiers’ needs - when shocked. In the pro-

cess, they can develop a competitive advantage (Sheffi, 2007).

A key attribute of resilience is redundancy or preparedness, which relates to the

availability of alternative coping systems and allows continuity of function during a

disturbance (Goble, 2002). These coping systems may be workplace communities,

employees, suppliers or other businesses. In property development context, prepar-

edness can be translated into the availabilities of alternative suppliers in case of a

disruption in the supply chain, giving the organisation time to continue operating after

a disruption. An organisation with a greater degree of redundancy is said to improve

its response to disasters (Sheffi, 2005). Another key attribute is the adaptive capaci-

ty, which measures the ability to absorb or recover from a disturbance. This concept

which originates from biology has received attention over the years (Timmerson,

1981; Smit; Wandel, 2006; Adger, 2006; Gallopin, 2006) and has been extended to

include the viability of social and economic activities. More recently it has been ap-

plied to the field of climate change and is said to be a system’s ability to adjust to cli-

mate change, to take advantage of opportunities or to cope with the consequences

(Gallopin, 2006). In this paper, adaptive capacity is the capacity of a development

firm to learn and adapt to change. It is the firm’s behavioural response to a disturb-

ance.

7

In summary, the term resilience has been transformed considerably since its early

conception. The recent transformation which has linked social and ecological resili-

ence has incorporated dimensions such as disturbance management and reorgani-

sation within systems; transformation, learning and innovation (Folke, 2006). Whilst

there is increasing work on resilience, more is needed on the resilience of property

developers, in the wake of the credit crunch, increasing regulations on new builds

and threats of climate change. The next section explores the methods used to collect

evidence from three best practice property development firms in Manchester, Bir-

mingham and London.

Methodology

In property development, resilience can be described as the capacity of the organisa-

tion to survive, adapt and grow in the face of an unexpected change such as the

global recession. What will be explored in this paper is the developers’ ability to re-

bound from shocks through perseverance and ingenuity and their capacity to learn

and be transformed. Evidence for this paper is collected using in-depth interviews of

three leading property development firms in Manchester, Birmingham and London.

For this paper, Bosher et al (2007, 40) definition of property developers is adopted: “a

small to large scale commercial entities predominantly involved in the business of

realising financial gain from land that has been developed for residential or commer-

cial purposes. The firms were identified using desk-based search, during which em-

phasis was placed on development firms that are regarded by industry experts and

practitioners as sustainable and best practice. All three firms have received a number

of accolades for their approaches to sustainability. Codes have been assigned to the

firms (Firm A, Firm B and Firm C) to maintain anonymity. An interview guides was

prepared in advance; but during the interview the respondents commented freely and

confidentially on any matter they wished. Managing Directors and/or individuals re-

sponsible for driving sustainability into the business were asked a range of questions

reflecting their approaches to sustainable development and risk planning. In particu-

lar, the respondents were asked to discuss their responses and strategies to any so-

cio-economic and environmental disturbances that they have experienced, what they

learnt from the experience and how they plan against unexpected events. The inter-

8

views usually lasted forty five minutes to one hour, were recorded and transcribed.

The interviews were complemented by the analysis of additional company infor-

mation available on the web. The three firms are different in size and in their ap-

proach to sustainability.

Firm A, established in 1774 is a Birmingham based leading developer

and investor whose approach to sustainable development has won the

firm a number of industry awards. It is the smallest of the three firms

and its scale of operations includes a range of mixed use, office and

science park developments for rent.

Firm B, established in the 1856, is a major listed property development

and investor in prime properties based in London. Scale of operation

includes prime retail and office assets with long leases.

Firm C, established in 1994, was ranked as one of the “Times“ top list-

ing of SMEs. Based in Manchester with presence in Birmingham, Bristol

and Liverpool, this firm is also well-known for creating social and envi-

ronmental values in its property projects. Its scale of operations in-

cludes mixed use schemes, including residential property, commercial

offices, retail and leisure.

All three firms in the sample recognise, to varying levels, the importance of sustaina-

ble development in guarding against unexpected changes such as climate change.

They have all incorporated sustainability into the core of their business practices but

have different views on the popular use of the term sustainability. Firm C argues that

there is an “overuse and abuse” of the term and as a result prefers to refer to their

approach as “environmental responsibility”. Firms B and C have developed sustaina-

bility briefs which support their Corporate Social Responsibility policies.

9

Responding to Risk and Recession: Property Developers’ Resilient Strategies

There are a number of potential risks that need to be considered during the devel-

opment process. These range from climate change related risks such as extreme

weather, man-induced risks such as terrorist attacks, to internal failures such as con-

tractors going bankrupt or unfavourable changes in demand and supply (Adair;

Hutchison, 2005; Bosher et al., 2007; Coaffee et al., 2008). These risks can have

devastating economic impacts on businesses. Since the global recession developers

have recognised the need to further strengthen their risk management controls. Dur-

ing the interviews the respondents were asked to discuss the key risks that affected

their business. They reported that the prolonged effect of the financial turmoil has

been a key concern which poses enormous strain on their development portfolio, a

danger to property values, to borrowing and occupiers’ business. Property markets

are cyclical and any unexpected change in the market environment often results in

underperformance of investment portfolio and devastating firm financial performance

(Fisher, 2010). The three firms highlighted a number of risks although two key risks

factors are pertinent: property investment and development risks, and operations re-

lated risks, including health and safety and environmental risks. They have com-

mented on their favourable attitude toward embracing change rather than going

against it. As such, they have devised a wide range of strategies to respond to these

risks and to the increasing demand from both policy makers and some occupiers for

sustainable development.

Implementing efficient and flexible strategies

Two factors that drive resilience are flexibility and adaptability (Gunderson, 1999;

Carpenter; Gunderson, 2001). By implementing flexible solutions to adapt to envi-

ronmental changes businesses can speed up their financial recovery. The property-

related risks that the three firms have encountered mainly derive from the financial

turmoil and impact on property values, market liquidity and debt covenants. In partic-

ular the developers placed emphasis on tenants’ risks or low occupier demand for

property and its consequential impact on revenue. Firm A’s response strategy is flex-

10

ibility in its approach to moving tenants or diversifying the tenant base to buffer

against the impact of the disturbance. Following the credit crunch Firm A assessed

its tenants’ needs and requirements; it became aware that some of the tenants were

experiencing difficulties keeping up with rent payments. An agreement was made

following a consultation to reassess rents and embark on a relocation programme

where necessary to ensure that the business was getting continuous streams of fund

necessary for its operation. In doing so, the firm also satisfied its customers’ needs.

This process has improved Firm A’s ability to adapt to an unfamiliar circumstance

and demonstrated its capacity to move to a less vulnerable position by taking strate-

gic actions. This adaptive capacity is a very important component of a firm’s resili-

ence, especially in allowing the firm to learn from experience (Gunderson, 2000). As

the Head of Sustainability commented,

“We have had occupiers gone out of business; we lost occupiers and we have had to

make provision for people, be patient with them but we would rather retain them and

give them sometime if we can. We don’t want to push them over the edge. So if they

have got too much space and they want to downside then we would rather keep them

and move them into something smaller rather than loose them all together. It is about re-

lationship over the long term and retaining people rather than anything else. (Firm A,

2010)

Adopting a flexible approach to risk management can improve a business’ ability to

take advantage of a number of options or opportunities available within the industry

(Marshall; Marshall, 2007; Carpenter; Gunderson, 2001). Firm B is particularly known

for adopting a risk adverse strategy. It has a structural risk management strategy

which involves prioritising the risks and analysing the likelihood of their reoccurrence.

The risks with the most significant impacts on the business are then tackled by de-

signing and implementing mitigation strategies. The management team then con-

ducts a continual review and monitors the risks to ensure that any change is taken

into account. When asked about its risks management strategies, Firm B first high-

lighted that its priority is to ensure that it continues to provide excellent quality and

prime property developments, whilst offering incentives for tenants on pre-lets for

long leases and good covenants. One of its principal concerns is the fear of its cli-

ents/tenants’ businesses going bankrupt. Because of the dynamic nature of property

markets Firm B and C argue that they mitigate against this risk by closely monitoring

11

market trends, diversifying where necessary and ensuring they maintain good rela-

tionship with the tenants.

Operational risks and mitigation strategies

Operational risks are firm specific risks which are related to human errors and inter-

nal system failures; they can have detrimental impact on a businesses’ everyday ac-

tivity. Operation risks are essentially about preventing disruptions to business pro-

cesses. In the development sector, operational risks are largely related to planning,

knowledge management, skills and resources necessary to respond to a disturbance

(Bosher et al., 2007). Frost et al., (2001) argue that operational risks can lead to

health and safety concerns, lost reputation and poor performance. All three firms

stressed the importance of taking a strategic approach to mitigating against these

risks.

Maintaining a resilient supply chain

Property development and management is a complex process which requires collab-

oration from all stakeholders, including the supply chain. As such resilience needs to

be systematically built into planning and design process and would require full col-

laboration from the supply chain. Supply chains can face disruptions of various sorts:

industrial disputes, natural disasters and terrorism (Christopher; Peck, 2004), de-

pendency on a single supplier, supplier insolvency or political instability. All three

firms emphasised the risks associated with disturbances in their supply chains and

have introduced a number of risk assessment checklists into their development pro-

cesses. Contractors’ insolvency for instance can result in undelivered components

and materials to development sites and may lead to delays in completing projects.

The financial implications can be devastating with declines in sales growth and cus-

tomer goodwill. As mitigation strategies, the three firms placed emphasis on strong

coordination, collaboration and cooperation involving supply chain partners. Firm A

maintains strong linkages with the supply through continuous exchange of infor-

mation which may impact on development projects and through monitoring of key

12

supply partners’ activities and performance. Firm B also suggested reviewing con-

tractor’s financial covenant before agreeing contracts.

Supply chain resilience has become a highly documented strategic function for firms

in ensuring that they continue to deliver sustainable cost efficient solutions to cus-

tomers (Sydner et al., 2006; Christopher; Lee, 2004). As supply chains become more

complex as a result of global sourcing, supply chain risks increase. In particular the

increasing requirements for sustainable behaviour have meant that a business-as-

usual- approach is no longer an option. The three firms have highlighted the im-

portance of ensuring that sustainable practices are maintained and delivered

throughout the supply chain. Firm B for instance, adopts a structural approach which

involves (1) reviewing upstream suppliers, (2) communicating all sustainable stand-

ards and practices to the key players and (3) tracing the sources of components and

materials used in construction. The firm argues that the process is about “aligning

sustainable practices with the suppliers”.

For a number of years Firm B has worked on an informal trust based system with its

suppliers, taking little care to request evidence of their sustainable practices. The firm

has recognised that this strategy is risky in today’s turbulent and uncertain markets.

An investigation into its supply chain procurement and sustainability has revealed

that most of its tier 2 suppliers had a good awareness of environmental issues which

they managed effectively. However, very few of those suppliers manage all three pil-

lars of sustainability, especially the social dimension. Also, very few of the tier 2 sup-

pliers request social and environmental reporting from tier 3 suppliers; and beyond

tier 3 the environmental sustainability assessment becomes blurring as there is very

little visibility. Resilience is the preferred way of thinking about sustainability (Levin et

al., 1998). To be resilient and deliver buildings to the customers’ needs, Firm B

needs to meet all three pillars of sustainability. This requires full collaboration from

the entire supply chain partners and not just from the first tier supplier which tends to

be the primary focus among developers in terms of sustainability assessment and

reporting. Firm B acknowledges that there needs to be a deeper level of communica-

tion among a wider range of companies along the supply chain, and more attention

spent looking on the sourcing of components. Consequently, it is looking to adopt a

more formal approach to supply chain partners’ selection and management. Because

13

sustainability and resilience are said to be the guiding principles behind risk planning,

Firm B hopes that by ensuring a sustainable and resilient supply chain it can reduce

vulnerabilities and safeguard against future disruptions. Doing so can help the firm

develop a longer and more sustainable adjustment to disruptions.

Information and communication are the key to supply chain management and coordi-

nation (Christopher; Peck, 2004). A lack of clear communication increases uncertain-

ty and reduces resilience. Firm A, B and C all stress that strong relationship with their

supply chain means that they can rely on them during major crises. Firm A added

that this relationship must be maintained over a long term.

Building strong occupier-developer relationships and delivering sustainable buildings

The property developers in this study are involved in speculative developments, pre-

lets or developments for owner-occupation. Speculative developments are often un-

dertaken with no occupier in mind and are intended to be extremely profitable. Occu-

piers’ demand property for accommodation and investors’ demand property as an

investment which establishes yields and values. Pre-let and pre-sold developments

carry different risks. Letting carries the most risk (Fisher, 2010) for developers; as

such, finding quality tenants (or tenants who can pay the highest rents) becomes

fundamental for developers’ survival. The three firms investigated carry letting-related

risks and argue that pre-lets can be an effective mitigation strategy which can elimi-

nate risk. Occupiers/tenants therefore become key players in the developers’ overall

resilience. Their decisions and behaviour vis a vis developments are often based on

the developers’ corporate values and approach to sustainability. Because occupiers

are increasingly demanding greener and more sustainable buildings (Bryson; Lom-

bardi, 2009) it is in the interest of the developers to ensure that the properties are

developed to the right design and appearance, and financial criteria, to attract the

appropriate tenants or investors. Property development is not a purely economic

phenomenon but one that is marked by social, political and environmental perturba-

tions (Fisher, 2010). As such speculative developers may find it particularly hard to

14

develop a strong resilience; an all rounded approach to managing resilience is there-

fore required. This often means getting the occupiers/tenants on board: all three firms

have noted that they engage regularly with their occupiers/tenants to keep them in-

formed of changes and to ensure the firms meets their socially sustainability goals.

Referring to occupiers, Firm A noted that,

“[FirmA] had to keep them [occupiers] all informed with a monthly newsletter, what activities were taking place. We had school visits coming in from local primary and secondary schools, showing them what goes on there“.

Developing buildings that meet socio-economic and environmental sustainability and

that promote innovation can add to the long-term reputation of a development firm

and the value of the properties. In particular, incorporating sustainable and innovative

features into the design not only meet investors and occupiers’ requirements, but can

also build resilience to unexpected events such as floods. Moreover, the innovative

approaches can strengthen the firm’s sustainable competitive advantage. All three

firms have been appraised by industry experts for taking sustainable approaches to

development. They have developed BREEAM (BRE Environmental Assess-

ment Method) excellent buildings and adopted innovative approaches. For instance,

they have incorporated a number of sustainability solutions in their recent develop-

ments, including the use of sustainable building materials, urban drainage systems,

green roofs, photovoltaic panels and voltage optimisation system. However, the deci-

sion to incorporate sustainable technologies in the buildings was not solely based on

meeting building regulations and occupiers’ needs, but also to add value to the firm.

In other words, there was a need for a balance the costs of the materials and tech-

nologies against regulatory requirements and the needs of consumers (Bosher et al.,

2008). As Firm A argued,

“Part L [of the building regulation] is constantly changing so we have to fulfil every time the bar moves up. We do whatever [is required] whenever the bar goes up and we never do the minimum. We will always exceed what is required and we look at what else we would like to do above and beyond that. We see whether it is worth doing it; if we think somebody will value that and seek it out; if there is go-ing to be a market benefit and an advantage to us, then we will seek to do that” ( Firm A, 2010)

15

All three firms have developed sustainability briefs which guide their developments;

however, only Firms A and B have written corporate Social Responsibility policy and

employed dedicated sustainability personnel to oversee the firms’ sustainability

agenda. Firm B recently commissioned a report to assess its strengths and weak-

nesses as a sustainable firm. The firm hopes the report’s findings will help strengthen

its position as a best practice sustainable developer and to improve its overall resili-

ence. The report identified strengths in the firms’ procurement strategy but suggests

some improvement in social sustainability. Firm B recognises that by using non-UK

suppliers for development projects it could put a strain on local business develop-

ment, create a danger of non compliance to international labour standards and po-

tential corruption in the supply chain. It proposes to mitigate against these social risks

by closely monitoring markets conditions which rive developments, monitoring fore-

casting and costs as well as conducting regular risk review meetings.

Learning and planning for the future

All the firms have developed strategies to respond to external disturbances. When

asked to discuss their strategies to guard against future risks, the firms expressed

the view that they are still recovering from the financial turmoil and that the experi-

ence gained in the process can help them prepare against future crises. This is con-

sistent with the literature, which suggests that a truly resilient firm is one that is able

to build its capacity to learn lessons from how resilience was achieved (Levin et al,

1998). Nevertheless the respondents did not comment specifically on their strategies

for storing and transforming the knowledge to facilitate its use in case of unexpected

events. Firm A argued that it “still [has] a long way to go” and prefers to focus on

short terms strategies to fully recover from the credit crunch. Firm B’s immediate

strategy is to continue to do what it does best: ensuring that its developments are

sustainable, evaluating and tracing the sources of the materials and technologies

used, working closely with its suppliers and incorporating any important policy

changes into future developments. Firm C argued that it is also focusing on recover-

ing from the prolonged downturn. Learning from risks is said to allow firms to make

informed guesses about the future and enhance risk management processes (Atkin-

son et al., 2006). However, the risks management strategies learnt need to be com-

16

municated to all stakeholders involved in the development process, inside and out-

side the firms. For the firms concerned there are a number of issues to consider: first-

ly, this generation of staff employed by the firms, who are learning to adapt to dis-

turbances such as the recession, will be retired when the next major economic

downturn occurs. This means that much of the learning is likely to be forgotten unless

a system is in place to store and transfer such knowledge to the next generation of

employees. Secondly, whilst the firms aim to develop resilient buildings that are at

the cutting edge in terms of technology they must balance development cost against

sustainability. They need to ensure that the technologies incorporated into the build-

ings will work and be resilient (i.e. last long). Any difficulties balancing the risks in

their business operations - buildings, property management portfolios and supply

chain risks - will undermine their viability. Whilst envisaging what risks firms would

face in 30-50 years can be difficult, especially for smaller firms whose priorities are

survival, the stock of knowledge gained from previous risks can be a first point of call

in responding to shocks. With the threat of the economy entering a double dip reces-

sion, the difficulties that these firms are experiencing is likely to be heightened. Hope-

fully the lessons learnt today will improve their future defence mechanisms.

Conclusion

Unforeseen disturbances whether business or climate related can place significant

vulnerabilities on firms and their long term competitive advantage (IBM, 2002; Sheffi,

2007). The property developers interviewed for this paper have faced an array of

risks. However the prolonged impact of the economic recession appears to be the

main danger that threatens their survival. It is worth mentioning that due to the differ-

ences in their sizes, skill base and the types of resources available to them the firms

have managed risks and their approaches to sustainability differently. This reflects a

number of studies which argue the business case for sustainability among small firms

(Revel, 2006). Large firms have advantage over smaller firms such as Firm A and

Firm C.

Evidence collected prompts to the argument that resilience in the context of property

development is about preparedness and prevention, quick effective response and

17

recovery from disturbances, learning and developing a long term disaster manage-

ment plan. The three firms have achieved these in a variety of ways, some more than

others. Of all three firms, Firm B appears to have a more formal strategy in place to

respond to disasters. It has a formal approach to risk management, which involves

prioritising risks based on the ones with the most damaging impact on the business,

planning and designing mitigation strategies which are continually tested and imple-

mented. It has responded to the recession by adopting a range of diversification and

supply chain management strategies. It has acquired new knowledge following an

investigation into its sustainability and risks management and plans to implement

positive changes in future developments in response to the report’s findings. This

demonstrates strong adaptive capacity and a testament of the firm’s resilience. All

the firms have acknowledged in theory the importance of building a resilient busi-

ness; the reality for some is somehow shadowed by the intensity of the impact of the

recession they are recovering from. The developers are aware of the economic im-

pact of climate change on businesses and the importance of adopting a sustainable

approach to managing climate change related risks. Most importantly they also real-

ise that doing so in an innovative fashion would allow them to develop a sustainable

competitive advantage. As a result, they have embedded sustainable principles into

their business practices, which also include using sustainable building materials and

components, adopting renewable technologies and ensuring sustainable practice are

communicated to the supply chain.

The evidence in this paper shows that being a resilient property development firm

involves the deployment of a range of strategies in response to buildings, firm specif-

ic and climate related disturbances. These strategies need to be prioritised and in-

grained into day-to-day business activities, and not something that is added as an

after thought (Bosher et al., 2007). Both firms A and B have a clear sustainability

briefs in use during the design and construction of buildings and a post disaster re-

covery strategy in place. Their resilience strategies are continually monitored and

controlled to ensure that the businesses continue to meet their objectives and main-

tain a sound balance sheet. Because the concept of resilience has many dimensions,

within the context of property development, it must not be limited to operational envi-

ronmental risks. It must involve developers devising creative strategies for preparing,

adapting and recovering successfully from a variety of disasters. Furthermore, devel-

18

opers must design successful risk management plans that meet both regulatory re-

quirements and economic, social and environmental sustainability criteria. Part of this

planning is about financial planning: for instance, developers will need to identify

risks as they develop in the portfolio and remove them, especially as one type of

property ages or becomes unfashionable. One thing is certain, developers cannot

predict every unexpected event and their built assets can never be totally future-

proofed (Dainty and Bosher, 2008). Scenario planning would allow them to identify

possible uncertainties based on current social, economic, environmental and political

trends. These scenarios would be constructed in collaboration with major stakehold-

ers and integrated into the firms’ day-to-day operations. Testing and assessing their

robustness will improve the firms’ preparedness and resilience. The collaborative ap-

proach would also strengthen the linkages between the firms and their key partners.

This paper adds to the understanding of resilience building within the property devel-

opment context.

Bibliographic reference

Adair, A., Hutchison, N. (2005): The reporting of risk in real estate appraisal property risk scoring. Journal of Property Investment and Finance 23(3), pp. 254-268.

Adger, W.N. (1999): Social vulnerability to climate change and extremes in coastal Vietnam. World Development 27, pp. 249-69.

Adger, W.N. (2000): Social and ecological resilience: are they related? Progress in Human Geography 24 (3), pp. 347–364.

Adger, W.N. (2006): Vulnerability. Global Environmental Change 16 (3), pp. 268–281.

Adger, W.N., O’Riordan, T. (2000): Population, adaptation and resilience. In: O’Riordan, T. (ed): Environmental science for environmental management, (2nd edn), London: Longman, pp.149-70.

Athey, G. (2009): Economic Development in the UK: Challenges During and After the Recession. Local Economy 24(6), pp. 604-611.

Berkes, F., Folke, C. (1998): Linking social and ecological systems for resilience and sustainability. In: Berkes, F., Folke, C. (ed.): Linking social and ecological systems, Cambridge: Cambridge University Press, pp. 1-25.

Bonanno, G. (2004): Loss, trauma, and human resilience: have we underestimated the human capacity to thrive after extremely aversive events? American Psycholo-gist 59(1), pp. 20–28.

19

Booth, P., Matysiak, G., Ormerod, P. (2002): Risk Measurement and Management for Real Estate Investment Portfolios. Investment Property Forum: London.

Bryson, J. (1996): Small Business Service Firms in the 1990s Recession in the Uni-ted Kingdom: Implications for Local economic Development, Local Economy 11(3),

pp. 221‐236.

Carpenter, S., Gunderson, L. (2001): Coping with collapse: ecological and social dy-namics in ecosystem management. BioScience 51(6), pp. 451-457.

Christopher, M., Lee, H. (2004): Mitigating supply chain risk through improved con-fidence. International Journal of Physical Distribution & Logistics Management, 34(5), pp. 388-396.

Christopher, M., Peck, H. (2004): Building the Resilient Supply Chain. International Journal of Logistics Management 15(2), pp. 1-14.

Coaffee, J., Moore, C., Fletcher, D., Bosher, L. (2008): Resilient design for communi-ty safety and terror-resistant cities. Proceeding of the Institute of Civil Engineers, Municipal Engineer, 161(2), pp. 103–10

Dainty, A. R. J., Bosher, L. (2008): Afterword: integrating resilience into construction practice. In: Bosher, L. (ed.): Hazards and the Built Environment: Attaining Built-in Resilience. London: Taylor & Francis.

DFID (1997): Eliminating World Poverty: A Challenge for the 21st Century White Pa-per on International Development. URL: www.dfid.gov.uk/pubs/files/whitepaper1997.pdf

DFID (1999): Policy Statement on Conflict Resolution and Humanitarian Assistance. URL: www.dfid.gov.uk

Fiksel, J. (2006): Sustainability and resilience: toward a systems approach. Sustain 2(2), pp. 14-21

Fisher, Peter. (2010): The Role of Pre-letting in Office Property Development in the UK. Planning Practice and Research 25(1), pp. 117-139.

Folke, C. (2006): Resilience: the emergence of a perspective for social-ecological system analyses. Global Environmental Change 16(3), pp. 253-267.

Frost, C. Allen., D. Porter. J., Bloodworth P. (2001): Operational Risk and Resilience, PricewaterCoopers.

Gallopin, G. C. (2006): Linkages between vulnerability, resilience, and adaptive capacity. Global Environmental Change 16(3), pp. 293-303.

Garbani J. P., Mendel T. (2004): Forrester Research GigaWorldEurope.

Glass, J. (2008): Facing the future by designing in resilience – an architectural per-spective. In: Bosher, L. S. (ed.): Hazards and the Built Environment: Attaining Built-in Resilience. London: Taylor and Francis

Goble, G., Fields, H., & Cocchiara, R. (2002): Resilient infrastructures: Improving y-our business resilience. IBM Global Services.

20

Gunderson, L.H. (2000): Resilience in theory and practice. Annual Review of Ecology and Systematics 31, pp. 425–439.

Hillary, R. (2004): Environmental Management Systems and the Smaller Enterprise. Journal of Cleaner Production 12, pp. 561-569

Holling, C. S. (1996): Engineering resilience versus ecological resilience. In: Schul-ze, P. C. (ed.): Engineering within ecological constraints. Washington, D.C., USA: National Academy Press, p. 31-44

Holling, C.S. (1986): The resilience of terrestrial ecosystems: local surprise and glo-bal change. In: Clark, W.C., Munn, R.E., (ed.): Sustainable development of the bi-osphere, Cambridge: Cambridge University Press, pp. 292–317.

Jones, A., Lee, N., Morris, K. (ed.) (2009): Recession and Recovery: How UK cities can respond and drive the recovery. London: The Work Foundation: London.

Kelly, R., Sirr, L., Ratcliffe, J. (2004): Futures thinking to achieve sustainable develo-pment at local level inIreland. Foresight 6(2), pp. 80-90.

Kitching, R., Blackburn, R., Smallbone, D., Dixon, S. (2009): Business strategies and performance during difficult economic conditions. Report for the UK Department of Business Innovation and Skills (BIS).

Levin, S., Barrett, S., Aniyar, S., Baumol, W., Bliss, C., Bolin, B., Dasgupta, P., Ehr-lich, P., Folke, C., Gren, I.M., Holling, C.S., Jansson, A.M., Jansson, B.O., Mäler, K.G., Martin, D., Perrings, C., Sheshinski, E. (1998):Resilience in natural and socio-economic systems. Environment and Development Economics 3, pp. 222–35.

Marshall NA, Marshall PA. (2007): Conceptualizing and Operationalizing Social resi-lience with Commercial Fisheries in Northern Australia. Ecology and Society. 12(1), pp.1. http://www.ecologyandsociety.org/vol12/iss1/art1/

OECD (2009): Local Responses to a Global Crisis: international strategies for recovery (Conference Papers, 2 July), Unpublished.

Perrings, C. A. (2006): Resilience and sustainable development. Environment and Development Economics 11, pp. 417-427.

Pimm, S.L. (1984): The complexity and stability of ecosystems. Nature 307, pp. 321–26.

Ratcliffe, J. S., Sirr, L. (2003): The Prospective Process Through Scenario Thinking for the Built and Human Environment. A tool for exploring urban futures. http://www.thefuturesacademy.ie/sites/default/files/Futuresthinking-for-the-built-environment-and-human-environment.pdf. 20 September 2008

Rowe, J., Hollingsworth, D. (1996): Improving the Environmental Performance of Small and Medium-Sized Enterprises. Eco-Management and Auditing 3(2), pp. 97-107

Smit, B., Wandel, J. (2006): Adaptation, adaptive capacity and vulnerability. Global Environmental Change 16 (3), pp. 282–292.

21

Snyder, L. V., Shen, Z. M. (2006): Managing Disruptions to Supply Chains. The Bridge 36(4), pp. 39-45.

Starr, R., Newfrock, J., Delurey, M. (2003): Enterprise resilience: managing risk in the networked economy. Strategy and business 30(1), pp. 1-150. http://www.strategy-business.com/press/16635507/8375.

Walker, B., Holling, C.S., Carpenter, S.R., Kinzig, A. (2004): Resilience, adaptability and transformability in social-ecological systems. Ecology and Society 9 (2) URL:ttp://www.ecologyandsociety.org/vol9/iss2/art5.

Author(s):

Ahoefa Chantal Hales, doctor The University of Birmingham School of Geography, Earth & Environmental Sciences Edgbaston B15 2TT a.c.hales@bham.ac.uk