Where Have the Real Estate Investors Gone? David Twiggs, AICP

Placemaking Planning: Grove Park Market Drawing by Dr. Yang Luo, Director of Placemaking Hot Springs Village, AR

Placemaking Planning: Grove Park Market
Drawing by Dr. Yang Luo, Director of Placemaking Hot Springs Village, AR

I was recently in two meetings that seemed to be lamenting the same condition. All of the real estate investors have disappeared. The consensus seemed to be, the recession killed the real estate investor. One of these meetings was a discussion by several community professionals trying to revitalize their respective master planned communities. The other was a grassroots organization to revitalize a historic but challenged section of a tourism driven city. This got me thinking about the role of private investment in existing community development and redevelopment.

In my present project, I find that the investor has not disappeared at all. The unsophisticated real estate investor is gone. The easy money for any project is gone.

The amateur buying twenty overpriced lots in pre-sale based on a rendering of what might be built is not a reliable entity as it was in the past. We must now supply sound business plans with specific value enhancing strategies; in other words, we must work hard to have projects worth investing in. The recession has killed the lazy uninformed investor that perpetuated mediocre projects. And that’s a good thing.

So how do we find investors in revitalizing our communities? The recession has brought on so many opportunities for assembling property that had previously been sold. Property may have been abandoned and fell into the ownership of an association. It may have reverted back to a town, county, or state for failure to pay the taxes. There is also the shadow inventory of people who pay taxes and assessments but would gladly rid themselves of an unimproved property if there were a market or an entity that would take it. My point, there is now property available at a low cost basis that was not available pre-recession. What are our plans for that property?

Today’s investor wants to see a clear plan for a property to become marketable and relevant to the present and coming marketplace. There needs to be specific strategies for adding value to specific property. Personal real estate is the ultimate lifestyle product. It fundamentally must have real community and ultra-local value. Community value is the lifestyle improvements you receive by living first in the chosen region and then the specific community. There must be true quality of place. There must be relevant lifestyle options.

Ultra-local value opportunities come from fulfilling the original lifestyle promises for all the properties inside a community. Many developers in the past 30 years focused on the premium lot sales. Waterfront, golf courses, view and open space lots were the cash cows and the remaining interior lots were simply not considered as to the livability. This worked in the sales process because the lifestyle of the premium lots was being promised to all; but  it was  never delivered to all in a livable fashion. The buyer of an interior lot finds that they do not have the access and lifestyle of the lake house across the street. They must get in their car and drive to access the lake or any other lifestyle amenity for that matter. It has no ultra-local value. I define ultra-local value as what I can leave my home and do without getting in an automobile. Can I walk the dog down to the lake, can I access a trail system, walk to the art studio, or bike over to a social area, have coffee and people watch? This is ultra-local value.

Value can be a point source. There is not much value to “your neighbor has great lakefront but you can drive to the access just 3 miles away,” or “you can’t see it or access it from here but there is a great open space just over there that you can drive to.” Property was sold as if the prime amenity had ultra-local value rather than simply community value. Look at where your homes developed. What was the source of that value? How much “gravity” does that point of value have? In other words how large a radius of lots does that value impact. A single private home with a great view radiates no gravity to the neighboring lot with no view. A coffee shop that is walkable from 300 homes radiates a lot of ultra-local value while still supplying community value. While we do want to have premium properties available, the premium price garnered by the view, lake or open space lot could be leveraged much better by allowing common access to that point source value gravity in the form of a neighborhood gathering area. This allows the property value and marketability to be raised over all property in a radius rather than at a single point.

The amount of value gravity will always vary by location within the community. From a technical point of view, the investor is looking for investment areas where the existing socio/spacial value gravity can be influenced. Specific improvements are wanted. Defined, understandable, and doable. In more general terms, we must get to work planning our futures. If we have feasible strategies to improve the livability and relevance of specific areas and market those correctly; the savvy investor will find you.

 

 

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Ouachita Rod and Gun Club Launch

Thanks to my Village Placemaking Team for helping me take the Ouachita Rod and Gun Club project from concept to startup in less than a year. Placemaking is more than just buildings; it is bringing people together to create a sense of belonging.

Rural Tourism Economic Development: Human Scale Sustainable Development and Placemaking

People helping themselves and their community with economic development through tourism. A great model for rural America.

Changing Destination Values: David Twiggs

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Who wants to be treated like a tourist?  We are now faced with creating and recreating destination communities to meet a new set of values that have rapidly shifted from the pre-recession model.  Perhaps it was the financial reality check that accelerated the already growing shift in values into the mainstream.  Many have shifted from seeking a tourist experience to wanting to feel belonging and experience self-discovery when we travel, invest in a second home or look for a quality place for retirement.

In 2009, Kurt Anderson began the conversation about a great reset in American values.  He and others speak of a “new frugality” that has resulted from values being shifted away from a consumption-based mentality. Conspicuous consumption has lost favor as a value proposition and is being replaced with a value for simple honest and authentic experience.

This includes a shift away from credit-based lifestyle, which will slow our traditional metrics for economic growth.  Those metrics do not clearly recognize the vitality that can come from formally marginalized places being rediscovered and appreciated.  It doesn’t directly show the benefit of the local shops, restaurants, cafes and services being supported by a shift from corporate destination tourism to destination community based tourism patterns.

When we speak of a value shift, it begs the question “from what.” Dr. Brene Brown (brenebrown.com,) speaks of moving away from a culture where being preoccupied, over scheduled and over connected has become a status symbol and into living wholeheartedly. Technology, industrialization and automation of tasks that formally were part of basic home economics has both created a lifestyle free of what many consider preindustrial “drudgery” but it has also a disconnected us from the basic human processes of thousands of years.

In the past many experiences were designed to allow us escape into artificial environments. Destinations today should seek to bring us into a different rhythm, show as another lifestyle point of view or seek to connect us to nature and the basic systems of being human. The common denominator in this value shift to more authentic experiences is a desire for greater understanding, physical and spiritual growth and renewal. For some this may be a place for adventure, meditation, or learning.  In looking at how to grow tourism or relocation in your community, don’t worry about trying to satisfy this vast array of potential interests, remember you are not trying to attract everyone, you want those visitors and new residents that appreciate the authentic subcultures of your community.  Be who you are. Be inclusive. Share your passion.