Conscious Development: Creating Places Where People Thrive

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Density and Intensity of Eureka Springs, AR

David Twiggs

When is development good?  Many projects and developers took a bad rap over the past few years as projects slowed or were abandoned in the wake of the real estate bubble bust.  I have found this a very interesting time as we have been able to really see the wheat separated from the chaff.  Real value became evident from the sales prices. Some communities held and even grew in value while other stagnated and declined. We can read endless statistics on trends in housing types, square footages, amenities and governance structures.  We can study the different margins offered by new construction techniques. Even after sorting through these, I can find clear examples of  communities that remain great places and seem to defy much of the statistical logic.  Exceptions to the rules so to speak, with varying degrees of buildout, widely different amenity focus and different community personalities.

After looking at hundreds of communities from the most successful to the worst failures, I believe that the communities that have sustainable success are those disciplined enough to keep a conscious focus on creating relevant value during initial planning and as the community matures throughout the years.  Often when we think of value in real estate, perceived value is top of mind.  This seems to stem from a bias to the sales point of view.  A marketers creation of urgency and desire to purchase a specific property is creation of  perceived value in the mind of the potential owner. Property must sell for developers to get return on investment and everyone to paid. Nothing wrong with getting paid for working hard.  I wouldn’t use a marketer who did not know how to create perceived value.  In common usage the term perceived value is used generically to say how a resident feels about their property.  However, as creators of communities, we need to sharpen our vocabulary and be specific in what is created and evolved over time.

Truly successful communities have a different vibe going on. The success of great places comes from the sustained satisfaction of the dynamic population overtime. I call this Relevant Value because it evolves to prove or disprove the perceived value at the point of sale. As our products are typically the most expensive purchase our customer will ever make, we have the responsibility to assure that our marketing promises will not only be kept, but actually create inherently satisfying place to continue to evolve where individuals can thrive.

I believe life is happiness based.  Perceived value can be true or false for a potential owner, was it based in reality or just hype.  A property purchase is typically as aspirational as it is functional. Even more so in second home or retirement based real estate purchases.   Perceived value creates sales.  Some promises even when kept turn out to be hollow. The are not inherently satisfying.  Relevant value creates happy people over time.  It does not matter if our development is for  starter homes, a major tourism destination, or a mix of lifestyles and stages; being conscious of creating places that meet the higher happiness needs of the subcultures we attract is our responsibility.  We must focus on the nature of the different subcultures we want to attract and be sure they are complimentary.  We must be specific not generic.  One community model will satisfy everyone.  Yet for years, the second home and retirement market has basically supplied a single model and cast questioning glances at anyone wanting something different. We must make the right promises and keep them.

Recently, I was having a conversation with Todd Zimmerman of Zimmerman/Volk Associates who is doing a market study for a project I am putting together. After discussing the holistic approach I was planning for this project, Todd gave me the language to describe the elements I was trying to influence, a new framework for the terms of  “density and intensity.”  While Todd was much more eloquent and nuanced in his explanation, I simplified it to fit my need.   Density is how the built environment engages people. Intensity is how the mix of cultures engages people  To create relevant value, we must be conscious to address both to these elements. Exactly how we do this varies with the nature of the place we seek to create and the subcultures we seek to serve.  The quality of place we create impacts the happiness and wellbeing of those we seek to attract. That is a fundamental  responsibility of Conscious Development.

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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.