Academic journal article Environment and Planning D: Society and Space

Sustainability and the Financialisation of Commercial Property: Making Prime and Non-Prime Markets

Academic journal article Environment and Planning D: Society and Space

Sustainability and the Financialisation of Commercial Property: Making Prime and Non-Prime Markets

Article excerpt

Abstract

At the same time that the sustainability agenda has gained purchase within the commercial property market, financialisation has also been having an impact. This article argues that this impact has been concentrated in the prime sector of the market and that there is a significant non-prime sector that also deserves attention. Using a new economic sociology framework, it presents an analysis of how sustainability concerns have penetrated both the prime and non-prime commercial property sectors, looking at the construction of the object of market exchange, the modalities of valuation and the role of calculative practices based on classificatory tools. It demonstrates why promoting sustainability is occurring in the financialised prime sector and largely being ignored elsewhere. While showing the value of a new economic sociology framework, it suggests that the claims for creating a disentangled abstract object of exchange are exaggerated where commercial property is concerned.

Keywords

Commercial property market, sustainability, calculation, financialisation, valuing

Introduction

This article situates itself at the intersection of two important trends affecting the built environment: the sustainability agenda and the financialisation of the commercial property market. The commercial property sector is understood as comprising a range of non-domestic buildings and premises; retail, office and industrial (warehousing and factories) are the main uses, together with some smaller subsectors. The analysis questions the extent to which financialisation has penetrated the commercial property market, pointing to its concentration in the most valuable 'prime' sector, and suggests that equal attention should be paid to the more prevalent but less financially valuable non-prime sector. It argues that engagement with the sustainability agenda is quite different across the two sectors and using a new economic sociology framework relates this to the construction of the object of exchange in these sectors and the modalities of valuation that operate. This has implications for the uptake of the sustainability agenda across the built environment.

The argument unfolds from an account of the sustainability agenda as it relates to commercial property, identifying the very partial nature of current research on this. It then situates this within a discussion of financialisation and whether this applies across the commercial property market. This brings the terms 'prime' and 'non-prime' to the forefront of the analysis and sets up the key focus of the article as the engagement of a partially financialised commercial property market with sustainability concerns. The conceptual framework that is used to progress the analysis is then introduced. Callon's economization project is outlined and links made to contemporary valuation studies. Key concepts are defined: the construction of the objects of exchange within markets; the modalities of valuation and specific calculative tools; and the performativity of these processes. This leads on to the analysis of prime and non-prime commercial property sectors, using these concepts, to understand how sustainability may impact commercial property as a whole, and hence commercial areas within the built environment.

Commercial property and the sustainability agenda

It is almost three decades since the Brundtland report popularised the concept of sustainability--with its holistic emphasis on environmental, social and economic interconnections--and the term has penetrated many areas; the property sector is no exception. Within the academic, policy and professional literature, there is now an established body of texts considering the application of the sustainability agenda to the property sector and, in particular, commercial property. While the professional and academic literature makes reference to the holistic nature of the sustainability concept, it is clear that the dominant construction of sustainable commercial property concentrates on environmental issues and within that, carbon and energy (Sayce et al. …

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