What happens when the economic life of an investment has expired? What is one's responsibility to the community with regard to the grayish area of perceptions of blight, value, impact, etc.? And finally, how does an all too typical 3-5, or even 10-year investment timeline impact the likelihood that we leave blight in our wake while moving on to create "greatness" or other "enhancements" and "community amenities?" Is there a better investment strategy that also accomplishes more in the way of making our world better? Thankfully, there are many leaders in the real estate, planning, and economic development communities finally asking these questions and applying the scientific method to our varied theories of how things ought to be done. I plan to focus on these elements going forward, hopefully blogging more frequently than I have in the past with some thought provoking issues and their proposed solutions.
For now, I offer my follow-up comments on an article that appeared recently in the local newspaper, The Arizona Republic. This article was posted by local business leaders seeking to take back greater control of Phoenix and frustrated that the retail landscape here is mostly undesirable to small businesses for one reason or another -- mostly due to not offering the kind of main street connectedness that they seek within the market, and yet local businesses should be the key to an economic recovery. So without further ado:
If you've been in any area of Phoenix for a considerable amount of time, just reflect on how that area has evolved over its first two decades (or the last two if it's an older part of town). What too many in our real estate industry readily accept as a cyclical market is really just wasteful self-cannibalism in many cases.
Having grown up in South Tempe, I often think about all the office space and retail that was built on the edges of Awhatukee. Back in the 90s, this was one of the hot spots to be in the Phoenix area, but then the market "shifted." The reason for the shift? Ambitious new plans for Chandler Mall and the 101 corridor. The same thing has happened again and again throughout Phoenix, and we end up with dilapidated shells of buildings that serve little value unless, miraculously, the surrounding neighborhood gets "revitalized."
The failure of this formula is that our community often treats housing exactly the same way -- get into the neighborhood while it's new, sell high, and move on to the next booming area..... How's this working for us today? Is it maybe time for a change in how we treat our surrounding community and overall environment? I think so.This issue has been on my mind quite a bit lately. In fact, as I type this, I await the final word on a controversial zoning hearing for a downtown permit application to demolish an older Phoenix hotel. One of my acquaintances appeared in this news story about the case and he has blogged extensively about it. I too have engaged in many quite similar debates about prematurely laying older buildings to waste, or overbuilding a particular area in one way or another with little regard for the surrounding land uses, infrastructure, and/or community needs and wants.
As we throw around such massive amounts of money in the development industry, I feel that it's perhaps important to remember what it should mean to "invest." We're dealing with a rather illiquid investment instrument here, after all. So why not try to reap the greatest possible long-term rewards by directly serving the community and always gaining buy in from the local residents who will inevitably become customers, strategic partners, and even co-investors in a project? I know several successful developers already employing this kind of strategy to their projects, but think the industry as a whole has a long way yet to go.
Posts
