The global real estate industry is in an era of change. The Three Horizons model can help accelerate the global real estate industry in its transformation to a force for Good. Regeneration is primarily a matter of changing perspective and goes beyond sustainability.
Today we have not crossed the important bridge of Sustainability yet. The dominant narrative of 'separation from', 'power over', and 'ownership of' planet Earth is a mistaken belief that allows us to manage, innovate technologically and (carbon – with our carbon tunnel vision) trade ourselves out of the evolutionary dead end we already have gone by for several centuries.
Working regeneratively will help us cross this bridge faster and help avoid negative impacts by healing the degenerative way of working and building capacity for local regeneration. Unfortunately, regeneration is often seen as "sustainability+". If we frame regeneration this way, we miss a fundamental point. In these cases, the paradigm shift underlying regeneration is not fully recognized. By approaching our economic, social, and environmental problems as problems to be solved, with regeneration as an enhanced tool in our toolbox, we are still working from a mechanistic mindset. It could be argued that this mindset is at the root of our degenerative practices.
As the world grapples with complex and interconnected environmental, social, and economic challenges, the real estate industry is increasingly recognizing the need to go beyond traditional sustainability approaches. Enter regeneration – a holistic and forward-thinking concept that transcends conventional sustainability and offers a powerful framework for driving positive impact across three horizons.
The global real estate industry is a dynamic and ever-evolving industry that plays a crucial role in shaping our built environment, impacting our communities, and influencing our economies. As the industry continues to evolve, it is essential to consider a forward-thinking approach that embraces sustainability and regenerative practices. In this context, the concept of "regeneration" as Horizon 3, as proposed in the Three Horizons framework, offers a compelling vision for the future of the real estate industry.
Three horizons
The Three Horizons framework, originally introduced by Bill Sharpe, provides a framework for understanding and navigating the dynamics of change in complex systems. In this framework, Horizon 1 represents the current state of business-as-usual practices and is approached from a more managerial perspective. In H1 we also hear the most expensive words in the real estate sector “This is how we have been doing it here for years”. We assume the system is stable and reliable, but when the world changes then the 'business as usual' starts to feel out of place or no longer fit for purpose. Horizon 3 represents the transformative practice that have the potential to create systemic change and is emerging as the long-term successor to business-as-usual. This successor is created by activities in the present that introduce entirely new ways of doing things. H2 represents the Transition zone and can be divided into two types of innovation: sustainable innovation (H2-) and transformative innovation (H2+). Sustainable innovation repairs make efficient, and improve 'business as usual' while transformative innovation makes room for the emergence of a whole new system (with new patterns and values). H2 is the zone of innovation and turbulence and is approached from an entrepreneurial mindset.
Regenerative: “Creating the conditions conducive for life to continually renew itself, to transcend into new forms, and to flourish amidst ever-changing life conditions” (Source: 'Regenerative Leadership - The DNA of life-affirming 21st-century organizations' by Laura Storm & Gilles Hutchens).
Regenerative: “The act of improving a place or system, especially by making it more active or successful” (source: Cambridge Dictionary)
According to the Three Horizons model, Horizon 3 represents potential future disruptions and breakthrough innovations that can fundamentally change an industry. Considering regeneration as a potentially disruptive force in the global real estate industry would represent a paradigm shift in the way real estate is conceived, developed, and managed. Regeneration, in the context of the real estate industry, refers to the sustainable and holistic revitalization of existing properties or areas, with an emphasis on environmental, social, and economic considerations. It involves designing, building, and managing real estate assets and communities in a way that regenerates natural systems, enhances social well-being, and fosters economic prosperity.
The concept of regeneration aligns well with the growing global awareness and urgency towards addressing pressing challenges such as biodiversity loss, social inequality, and economic disparities. Real estate, being a significant contributor to environmental degradation and social inequities, has a critical role to play in addressing these challenges and driving positive change. Regenerative practices can bring multiple benefits to the real estate industry and society at large.
Firstly, regeneration can have significant environmental benefits. Real estate is responsible for a significant portion of global carbon emissions, resource consumption, and waste generation. Regenerative practices can help reduce the environmental footprint of real estate by incorporating sustainable design and construction practices, utilizing renewable energy, optimizing and minimizing resource use, and promoting circular economy principles. Regenerative real estate projects can also restore and enhance natural systems, such as urban green spaces, biodiversity, and water management, contributing to climate resilience and ecological sustainability.
Secondly, regeneration can promote social well-being and inclusivity. Real estate has a profound impact on communities, shaping the quality of life, access to amenities, affordability, and social cohesion. Regenerative practices can prioritize social equity, affordability, and inclusivity, security (social and basic needs), ensuring that real estate projects are accessible and beneficial to all members of the community, regardless of income, background, or ethnicity. This can involve affordable housing initiatives, mixed-income developments, community engagement, and cultural preservation, creating socially inclusive and cohesive neighbourhoods.
Thirdly, regeneration can foster economic prosperity and innovation. Real estate is a significant driver of economic growth and job creation. Regenerative practices can spur innovation in design, construction, and operations, creating new business opportunities, promoting entrepreneurship, and driving economic development. Regenerative real estate companies and projects can also generate long-term value by creating resilient, high-performing assets that are attractive to investors, tenants, and buyers, leading to enhanced financial returns and market competitiveness.
There are several inspirational cities and real estate developments making the transition to regeneration and benefit from this movement, such as Copenhagen (Denmark), Amsterdam (Netherlands), Portland (Oregon, USA), Seoul (South Korea), Malmo (Sweden), Auckland (New Zealand), Adelaide (Australia), Nairobi (Kenya), Cape Town (South Africa), Singapore, Mondragon (Spain), Curitiba (Brazil), El Hierro (Spain), The Eden project (UK), Eastgate Centre (Zimbabwe), Green Belt movement (Kenya). Companies that have regeneration in their DNA, are transforming and/or serving as examples for components of a regenerative business are Patagonia (outdoor fashion retailer), Interface (carpet manufacturer in the US), Tony Chocolony (chocolate retailer), Lush (cosmetics retailer), Houdini clothing (fashion retailer), Buurtzorg (healthcare organisation), Triodos bank (bank), Ørsted (energy company), North star (housing association). These are just a few examples of a growing regenerative movement.
By embracing regenerative practices, real estate professionals can position themselves for long-term success in a rapidly changing world. Achieving the goal of creating conditions conducive for life to continually renew itself and flourish in the real estate industry requires a strategic and comprehensive approach. Here are five steps that can be taken:
1. Embrace Regenerative Design: Incorporate regenerative design principles into all aspects of real estate development, from site selection and planning to building design and operations. This includes strategies such as regenerative landscaping, green and and generation proof building practices, low carbon design (less is more but with long-term quality retention), energy-efficient design, water conservation, and waste reduction, which can help minimize negative impacts on the environment and create a positive ecological footprint. It requires a holistic approach with an eye for externalities.
2. Foster Community Engagement: Involve local communities in the decision-making process and prioritize their needs and aspirations. Engage stakeholders, including residents, businesses, and other relevant parties, to ensure that development projects are aligned with their values, promote social inclusivity, and contribute to the well-being of the community. This can include creating affordable housing, public spaces, and amenities that enhance social cohesion and equity.
3. Promote Economic Resilience: Consider the long-term economic resilience of real estate projects by incorporating strategies that promote economic diversity, local job creation, and economic empowerment for underserved communities. This can include supporting local businesses, providing training and job opportunities, and promoting economic development that benefits the broader community. Ensure involvement, commitment, and trust. Go for vibrant communal urbanism with a strong identity.
4. Adopt Circular Economy Practices: Implement circular economy practices in real estate development and operations, which prioritize resource conservation, waste reduction, and material reuse. This includes strategies such as recycling, repurposing, and upcycling of materials, as well as designing for durability and adaptability to extend the lifespan of buildings and reduce their environmental footprint.
5. Foster Innovation and Collaboration: Embrace innovation and collaboration across stakeholders, including architects, developers, policymakers, investors, and local communities, to drive positive change in the real estate industry. This can involve exploring new technologies, business models, and financing mechanisms that support regenerative practices, as well as fostering partnerships and collaborations to leverage diverse expertise and resources. Albert Einstein once said, "We cannot solve our problems with the same level of thinking that created them". So don't get stuck in the old familiar networks that represent the traditional real estate culture.
To bridge the gap between theory and practice, it is essential to bring regeneration to life by moving beyond discussion and into action. Real estate companies and thought leaders need to collaborate, experiment, and innovate to create tangible, successful examples of regenerative practices. By doing so, they will demonstrate the value and practicality of regeneration and inspire more organizations to adopt and contribute to this paradigm shift.
Navigating the three horizons together
Let's not reject "sustainability" — nor should we continue with the old pattern and simply change the label to "regenerative!". Regenerative practise is about unlocking potential and not disappearing down rabbit holes to solve problems in isolation. It’s a continuous process of personal development (that also counts for me). Let’snavigate the three horizons, cross the bridges together, create positive impact, and let the economy, society, and planet thrive.
Author:
Menno Lammers with the support of Chat GPT (ChatGPT Mar 23 Version), a language model developed by OpenAI.
Join the ‘Urban Regenerators’ group on LinkedIn.