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.