Incremental Development does sound like you need a lot of capital and that there would be a lot of risk if you don’t know what it is. If you didn’t know what indoor plumbing is and how it works, that might also sound like a crazy risky idea. But Incremental Development is not that complicated nor that risky. The biggest barrier to entry is the initial step. What is the road map? What is the territory? It’s a black box in a lot of people’s minds.
Developers are held in very low-esteem. I see that as more of a feature than a bug because if the bar is low, it’s pretty easy to under-promise and over-deliver. On the spectrum of all possible developers that might arrive in your neighborhood from Mahatma Gandhi to Darth Vader, people expect a developer to resemble Darth Vader.
A small developer just needs to be a noticeably less shitty version of Darth Vader.”
One of the themes I have seen following the recent election, is that many people are tired of being talked down to by people who seem to think they are better. Call it a backlash against smugness, for lack of a more precise term. Recently I proposed that for people trying to build better places, the alternative to smugness would be to become authentic assholes. I am serious on this point. Authenticity appears to be the quality that lets you get a partial pass on being an asshole, as long as you don’t talk down to people..
I’m directing this approach to the Architects, Engineers, Planners, Policy Folks, and Academics who are members of the Congress for the New Urbanism or similar place making advocacy groups. If being the fancy people who know stuff, (the people perceived as smug or condescending) is not working, then let’s not be those people. Let’s be authentic assholes.
The fire marshal’s mandate is not a collection of sincere feelings that we should help the community process through group hugs. It’s bullshit that hurts the town. Some asshole needs to call the fire marshall out for being part of a calcified over-reach that makes no sense.
Off-Street Parking minimums? More bullshit that needs to be called out. Municipalities completely suck at guessing how much parking is going to be needed for all possible land uses, and the community was wrong to give them that job. The result was they picked numbers that produced fewer complaints and phone calls. Some asshole needs to call out that lazy bullshit in stark terms and poison the well. Make the position of advocating for such nonsense so awful that anyone who defends parking minimums (or maximums) is discredited for being a lazy bullshitter.
You want to make a difference at the local or regional level? Become a developer or a builder. Free yourself from the shackles of propriety and elaborate argument. Every community needs people who can build and rebuild the place. That’s where we can find our place in the moral, economic, and cultural fabric of a place. Architects, Engineers, Planners, Academics have a professional obligation to at least appear to be interested in making the city a better place with ideas. People who are fearful see a host of horrible outcomes, real or imagined, when ideas are advanced in clumsy ways disconnected from the base concerns of daily life. Developers and builders are not burdened with those expectations and when the dust clears there are buildings built or rebuilt, people find benefit in the buildings or they don’t. (–Keep in mind that the bar for a decent building or street is quite low many places). Nobody expects virtue from a developer. They may look to exact virtuous action from the developer under duress, but they really do not expect it as a natural expression of what is in the developer’s greasy soul. An exaction or tax is often given reluctantly, out of resignation. An unexpected gift can be a sincere expression of our better nature.
This is a framing thing. When New Urbanists propose a better place that starts to sound like some kind of utopia and the built effort that follows only delivers 68% utopia, folks get disappointed and pissed off because their high expectations (however unreasonable) have not been met. If a developer commits to meet all local codes and regulations and to deliver something the market seems to want and the built result is 32% utopia, people are accepting and sometimes even happy, because their low expectations have been exceeded.
Be virtuous in your heart, but don’t wear it on your sleeve. Be cunning and deliberate. Have a plan for your neighborhood. Gather resources that others cannot access. If we can be the people who actually get stuff built during a recession (And that stuff doesn’t suck), if we can build well, despite the severe shortage of skilled construction labor, who is going to mess with us at the local level?
If you would like a glimpse of what an insurgency of Small and determined developers might look like, wander over to the Small Developer/Builders Group on Facebook and see what those folks are talking about. We worked to keep the group fairly politics-free. If you are not on Facebook, find somebody who is and they can guide you. Come to a Small Developer Workshop where you will meet folks who are serious about making a difference in their neighborhoods (even if other people think they are assholes).
Nobody suspects virtue in a developer. You can pick the opportunity to surprise them. Under-promise and then over-deliver.
I think there are lots of great precedents for small single story main street buildings that work well. Above are some studies David Kim and Will Dowdy did on small, shallow storefront spaces that could be used as parking lot liners or in conjunction with small apartment buildings and cottage courts located behind the small commercial/flex building to provide mixed use without requiring the use of commercial steel pipe fire sprinklers that can be required if the residential and non-residential Occupancy Types were combined into in one mixed use building.
The intent was provide a wide/shallow space that could be flexible. We settled on a depth of 26′ as this leaves an 18′ dimension between the 8 x 8 accessible restroom and the storefront. We were also looking to keep any columns or other intermediate structure out of the floor plan and 20′-32′ of depth is readily spanned without going nuts on the truss design. You can get pre-engineered bar joists at 40′ long, but we wanted to keep the construction technique within the skills of residential trades.
Keeping the depth modest allows for daylighting of the space from a transom and light shelf over the storefront and awning. Spaces this small are easily heated and cooled with a ductless mini-split heat pump/air conditioner.
Using a single pitch roof truss, sloping from the street side to the rear, with a parapet on the street side can provide lots of room for signage, while screening compressors or kitchen hood fans from the street view.
Buildings that are flexible enough to house small and inexpensive workspace for retail, services, food and drink, etc. should be in the Small Developer’s tool box. You may know an under-utilized parking lot that could be lined with something like this. Could be good way to follow up on testing the location with some food carts.
Steve Mouzon has some very interesting thoughts along these lines. His blog has better production values than mine does, so I encourage you to click through and check it out. Steve Mouzon’s Blog Original Green
I continue to ask Urbanists “why aren’t you a developer yet?” That’s a sincere and serious question. I am serious about recruiting Architects, planners, engineers, activists who consider themselves to be urbanists (New or otherwise) into the ranks of the small developer cohort because I think it is the best way for an urbanist to have an impact in a place they care about. If you have devoted thousand of hours of study and practice to what makes a good place, why leave the construction and renovation of buildings to developers? This question becomes a bit more pointed when you recognize that many conventional developers are doing work in urban settings under duress or without much of a clue how to make their efforts fit a more urban context. I think the typical generalist/urbanist will do a better job than whatever big development outfits are working in their city.
While Urbanists are working to heal the city or build better places, they should hang onto some of the buildings that get built/rebuilt along the way. Having a modest portfolio of buildings that pay rent will help them weather the next recession. (It is really hard to make a living doing fee for service or consulting work when nothing is getting built).
With those reasons in mind, we still need to have a sober and realistic grasp of what is involved for someone making a transition to become a developer, given the arena they are likely to operate in. This stuff ain’t easy.
People tend to think that all real estate developers make a ton of money, because some developers have. For every major league star in the real estate game there are scores of people hustling to make a living by making their neighborhood better. Lots of people are fooled by the guy in the nice suit driving a very nice leased vehicle.
I don’t know how people arrive at the amount of money they assume is made on a development project. The assumptions may be ridiculous, but until somebody actually goes through the process, it is not reasonable to expect them to know the math.
I also recognize that until you can demonstrate otherwise, a new developer is part of a disgraced enterprise. So folks considering taking up this work should not expect thanks or regard. Start small. Hustle on a small project will help you acquire the know how and relationships that will make larger or more complex projects possible, but hustle will only take you so far and you don’t want to get into a project that will turn you into a former developer because it is too big or complicated.
I tend to let too many files accumulate on my computer desktop. As I was clearing out files today I came across the photo above and the text below. As you can see from the photo, we did manage to put on the first boot camp in Duncanville. By the end of 2015 we had done six bootcamps and workshops and launched non-profit to coordinate the effort to cultivate Small Developers around the US, the Incremental Development Alliance (IDA). Next Tuesday, June 7th in Hamtramck, Michigan we will running the 7th event of 2016 the day before the 24th gathering of the Congress of the New Urbanism starts up on June 8th.
In addition to running the one day and three day training events, IDA along with Midtown, Inc has been awarded a Knight Foundation grant to do a deeper diver into the Midtown neighborhoods of Columbus Georgia, providing 18 months of extended training and mentoring for local small developers.
None of this would have been possible without the hustle and hard work of local sponsors and volunteers in each of the cities that hosted us and the ongoing efforts of the IDA staff and board. Strong Towns helped us get started, hosting the boot camp registration for the first couple events on their website. Lynn Richards and the staff at CNU have been tremendously supportive as we continue to figure out how to scale up the Small/Incremental Development Effort. The CNU’s Project for Lean Urbanism was the genesis of this entire effort. The time we spent with the Lean Urbanism Working Group exploring what it would take to Make Small Possible made it very clear that we need a new business model for development, That shifting the scale of the development enterprise was going to be critical to building better places. Thank you everyone.
June 5, 2015
Things are moving FAST with the rapidly expanding Small Developer/Builders Facebook group that we set up last April prior to CNU 23 in Dallas.
I have heard from a number of group members via email and phone calls that they would be interested in a hands-on workshop on basic skills needed as a small developer builder. There is an effort percolating to hold a one day workshop for Small Builders in Atlanta the day before the National Town Builders Association (NTBA) Fall Roundtable October 16-18.
But that’s all the way into late October and folks are pressing for something much sooner.
I think we can put this together in the Dallas area rather inexpensively. If the folks attending cover their own travel, lodging and meals, if we can find a venue at modest cost. It could be a very Lean affair. A meet-up with other folks considering or practicing as Small Developer/Builders. Connect with some mentors, roll up our sleeves and get some skills.
Here’s what we are thinking for content:
BUILDING FOR-RENT VS. BUILDING FOR SALE PROJECTS.
HOW TO DO BASIC MARKET RESEARCH.
PRO FORMA BASICS, SORTING OUT YOUR DEAL ON PAPER.
HOW TO BUDGET FOR HARD AND SOFT COSTS.
OPERATING EXPENSE BUDGETS AND THE PROPERTY MANAGEMENT BASICS.
SITE SELECTION – EVALUATE SEVERAL SITES TO FIND THE BEST ONE TO START ON.
HOW YOUR FINANCING REQUEST LOOKS TO YOUR BANKER.
NAVIGATING THE APPRAISAL PROCESS.
HOW TO PITCH A DEAL TO AN INVESTOR.
DEAL STRUCTURES; ALIGNING THE INTERESTS OF PARTNERS.
POP-UP RETAIL AND STREET MARKETS; HOW TO CULTIVATE TENANTS (WHEN YOU HAVE NO MONEY).
UNDERSTANDING FHA LOAN PROGRAMS 203(B) AND 203(K) FOR 4 UNIT PROJECTS.
DEALING WITH CONSTRUCTION IF YOU DON’T HAVE A CONSTRUCTION BACKGROUND (AND EVEN IF YOU DO).
COMMON SENSE DESIGN STRATEGIES AND WORKING WITH ARCHITECTS AND ENGINEERS.
MULTIPLE ON-RAMPS, SCENARIOS FOR HOW TO GET STARTED AS A DEVELOPER/BUILDER.
A STANDARD 4-PLEX DEAL; ALL RESIDENTIAL OR SMALL MIXED USE BUILDING.
A STANDARD COTTAGE COURT DEAL.
What other content should we cover?
We are thinking folks would arrive in time for food and drink on Friday evening, leave after lunch on Sunday. We are doing this on August 14-16, Who’s in?
This afternoon I got another phone call from someone convinced that they should develop condominiums and sell them. I am really struggling to find a better way to communicate on this really basic point. I feel like the guy in the Far Side cartoon above.
If you have the know how required to produce buildings that people live and/or work in, using that very valuable resource to produce houses or condos that you sell to people has a huge opportunity cost. Opportunity cost is a big deal, as in lost opportunity and wasted opportunity. What else could you have been doing instead of building and selling?
I cannot emphasize this enough. If you have the wherewithal to build something, Don’t sell it. Hold onto it and rent out space in your building. The market for new or renovated rental buildings is hugely under-supplied in most markets, particularly in anything even remotely resembling walkable urbanism. There are lots of places where a couple of decent buildings will have a wonderful effect upon the neighborhood. The people who fill in the missing teeth in the neighborhood will do well, while doing good.
Our culture has created completely unrealistic expectations for what is supposed to happen when you buy a home. Avoid putting yourself in a place where you have to deliver on all the delusional nonsense that fills the heads of people who watch too much HGTV. Build to hold and rent. Build in places where the amenities are exotic stuff like proximity to transit, day care, $2 coffee and a genuine local bar.
If a picture is worth a thousand words, then the right diagram is worth at least ten thousand. I am very grateful Jim Heid of Urban Green has boiled down the difference between Large and Master Planned Development and Small and Incremental Development into the series of excellent diagrams above.
I recently had a conversation with a bright guy in a Masters in Real Estate Development program at a serious university. He was wondering if a Real Estate Investment Trust (REIT) would be a good vehicle for people in a local community to be able to invest in small projects in their neighborhood. Just to set things straight, a REIT would not be a good vehicle for this as a REIT has to have a lot of property under management to justify their existence and overhead, so the structure would be way beyond the scale of small projects in a specific neighborhood. Investors would own shares in an outfit that owns a large portfolio of a specific type of real estate.
-But the conversation reminded me of Jim Heid’s diagram. The kind of local in the neighborhood projects my grad student friend was describing belong in the lower left quadrant of Jim’s diagram, the Small and Incremental/Entrepreneurial and Bootstrapped territory. Ownership of real estate by a REIT belongs up in the Corporate and Institutional/Large and Master Planned upper right quadrant. We might want to bring established tried and true tools scaled for the upper right quadrant to bear on projects in the lower left, but often the scale is just…off. I think we can call that a Quadrant Foul.
Rethinking the development business model for Small Developers will continues to uncover habits that may serve folks doing large project well that need to be substantially retooled to work in small projects, or they may just need to be set aside as because they are not fit to the purpose.