Plain talk on building and development
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Blog: Plain Talk

Plain talk on building and development.

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Whadda Ya mean "Farming"? I thought we were talking about Development?

Cabbagetown Neighborhood, Atlanta Cabbagetown_0

Dallas Developer Monte Anderson has a marvelous and elaborate metaphor for explaining how to do incremental development.  He calls it "farming".  His recommended approach is straightforward.  Pick the place you are going to focus your development efforts.  Mark off the boundaries on an actual paper map.  Do it on purpose.  That's your farm.  Look for opportunities within the boundaries of your farm.  Mark the locations of vacant or underutilized parcels, empty buildings, the street that is too wide and fast that could benefit from on-street parking, the place for the street market.  Look for excuses to walk around the place where you have decided to work.  This is the place where you are going to create and harvest value.

Incremental Development is a better description for what Monte is advocating than small scale development.  In the end you should be building/rebuilding a neighborhood one increment at at time.  If you are committed to that neighborhood you will want to build lots of relationships with the folks who already live and work there.  You should understand the local institutions, schools, churches, local non-profits, hospitals, and barbeque joints.  The more time you spend in your chosen neighborhood, the greater your chance of finding ways to help make it better. You will also increase your chances of meeting people who are glad to help you. In addition to being the right thing to do, cultivating the neighborhood is going to be the right thing for the financial performance of the buildings you build or renovate.  The neighborhood is going to provide the principal amenity for your buildings.  So if you have chosen the place you want to stake your claim on, don't get distracted by attractive "one-off" projects outside of your farm.  Those projects might produce some revenue, but that revenue will come with a significant opportunity cost.  Those isolated efforts won't add any value to your other buildings in the neighborhood that should have your attention.  Don't let your analysis of how a building might perform become myopic.  Look at the context in addition to the simple back-of-the-envelope pro forma you should be doing for any property you are considering.  Understand why an OK deal in close proximity to your other buildings could be much better than an excellent deal in a distant place where you will see zero synergy.   Your time, attention, and relationships are your critical resources.  Nothing will move forward for your efforts without those resources, so don't spread them around.  Focus and concentrate them on your chosen farm.

What's the Big Deal with Small Developers Anyway? ---Capacity Building.

Modest Building with Big Potential. Who is going to build the finer-grained Missing Middle housing, the small workspaces, the two and three story mixed use buildings that Municipalities and neighborhoods are looking for?  Will it be large development firms that see a 10,000 SF single story commercial building or 100 apartment units as a "small deal"?  Doubtful.  Very Doubtful, for the simple reason that large scale developers need large scale deals to support their operations.  They can't execute small deals effectively and they see a lot of opportunity cost in small deals.  "Why would I take on a 4 unit project when I can build 40 units or maybe even 400 units with about the same amount of brain damage?"

Monte Anderson keeps hearing from folks who want him to move to their town and develop there.  To his credit, Monte is determined to focus on the communities in the Southern Dallas Metro that he knows and cares about.  His advice for the people that want him to come to their town is that they need to find someone who is committed to their town and help that person develop --or become a developer themselves.

This is actually very pragmatic advice, because the big outfits are not coming.  Monte Anderson is a great guy, but he's not coming to your town either.  Who does that leave?  You (or someone a lot like you). Start small.  Learn the business.  Build a reliable team that cares about the place.  There is a growing network of support for small developers, some of them are just a few years ahead of you on the learning curve, but they will do whatever it takes to keep you from having to repeat their mistakes.

Consider what a small enterprise could accomplish in your town, not just he buildings you might renovate or build, but the local wealth you could create that stays in your neighborhood.  Think about the jobs that you could create in the trades, and in property management.  Think of the other folks in your neighborhood you could mentor, paying it forward once you have learned the business.  Real capacity for local and lasting economic development is hard to come by, but building the everyday buildings that people need, in a place that you care about will raise up more than walls and a roof.

Parking Hysteria, Sloth, and Indifference

scl-pwp-aerial-empty There is a relationship between how woefully uninformed people are about parking and how epically they lose their shit over parking problems.  I am really tired of explaining the basics of modern parking management to people who seem incapable of using the Internet.  Here are the highpoints from Donald Shoup's fine book The High Cost of Free Parking:

  • Recognize that all public parking is not equal.  Some spaces more convenient than others, so price them accordingly.  The spot at the curb in front of the coffee joint should not cost the same as the top floor of the seven level parking structure.
  • For retail areas, price the parking at the curb for a 15% clearance rate. Raise the prices for curb parking until you reach the point where when 15% of the spaces are available.  Reduce the price of parking in a rational gradient, the further away from high demand the cheaper the space.
  • Make it easy to pay with a credit or debit card or with a phone app.  Phone apps that message you to ask if you want to add another hours are particularly handy.
  • Folks that live in residential neighborhoods close to areas with high parking demand like universities, hospitals or retail areas get bent out of shape when the public parking spaces at the curb in front of their house gets a lot of spill-over parking.  This can be solved through the use of resident parking permits and the sale of parking permits in that area for daytime hours.  Proceeds from the sale of the permit can be used for public works and parks within the neighborhood by setting up a Parking Benefit District.

Folks that don't care enough about solving their parking issues to use these proven tools need to get a real problem.  How much sympathy or patience fan you have for difficulties born from sloth and inattention?