Outside the Comfort Zone

One underlying thread through many of my posts is the role of the developer. It's easy to see why, when they are frequently the ones putting their hind ends on the line.

To clarify, a real estate developer is a private party or company who decides what goes on a piece of land, and then makes it happen. That means they're risking a lot of their own money, as well as other people's money, not to mention their reputation.

As I mentioned before, many developers, especially in suburban hotbeds, are used to creating subdivisions or shopping centers or business parks, and don't stray outside the projects they're used to. In addition, they are very used to building on "greenfield" land (greenfield is simply land that's never been built on before).

They also like to stay inside their comfort zone to minimize risk. They understand the financials of greenfield and single-use development. On top of that, brownfield development (developing on potentially toxic land) and redevelopment (taking a piece of land, potentially demolishing existing structures, and changing its use) often come with surprises that can cost money.

So, why am I so insistent on getting developers to go outside their comfort zones? I obviously have opinions on moving away from traditional suburban development.

"But Matt," you say, "isn't that more competition for you?" If I had my way, most development would at least have elements of mixed-use, transit-oriented design, walkability, or some other aspect of urban design. I can't do it all, and I'm definitely on the small end of the developer world. On top of that, more urban development will create even more demand, so it helps me.

All this begs the question, "What's it going to take to get developers out of their comfort zone?" I think it comes down to two things:

1. Developers need to be willing to look at the financials of urban development. They don't always work, depending on a number of factors, but a little patience and creativity will help them come up with developments that are profitable at about the same level of risk that they're used to.
2. Developers could use assistance in dealing with the land issue. I have seen many incredible pieces of land - ones that would be perfect fits for urban-style development. However, they have some sign that they could have toxic soil or some other expensive problem. If the developer has assurance that the site cleanup would be done for them, or at least completely paid for, a project on that land becomes much more viable and attractive. The funding for the cleanup could come from previous owners; or federal, state, or local grants that have been established for that purpose.

So, bring on the competition - or is it cooperation?