THE FOUR MUST-HAVES

I wrote last week that the first step in property development is walking your dreamland. I got quite a few questions asking what, specifically, I look for.

As in, “Hey, Sean. Give me some specifics, dude.”

Side note: Extra points if you email me and call me “dude.” Reminds me of my former life on the West Coast.

Okay, so on to specifics….dude.

Depending on what geographic areas you’re dreaming in, the specifics are going to change, but let me run through four must-haves that are at the top of my list.

Rents

Chances are I’m not dreaming much in an area where rents aren’t strong. No developer is a magician - projects have to be financially feasible and rent levels are a key component to that. Am I looking for a white-hot area where I can squeeze every last nickel out of tenants? Definitely not. But, I am looking for areas where rents are steady and predictable, as this is a quick way to take the economic pulse of that particular zip code. Solid rents mean (ideally) rising incomes, and with rising incomes come tenants who are looking for the specific design-forward projects I like to build.

Walkability

Walkability means short distances to amenities like grocery stores, coffee shops, schools, and parks. You’ll likely never see me develop a building where you can’t park your car for the evening, walk to the grocery store, cook a quick meal, and then head out to meet friends for a drink. If you live at Kolo, you can grab a donut at Bogart’s, and if donuts aren’t your thing, grab breakfast and coffee at Gigi’s or Our Kitchen. If you live at Akin (still under construction), you can walk to Argentinian pizza at Boludos, amazing fried chicken at Abang Yoli, eat arepas down the street, or have a beer next door at Pat’s Tap. All of this is to say that you can get to good (and tasty) things on foot.

Trees

And when you’re walking, you’d better be walking under trees. Researchers at MIT created “Treepedia,” leveraging an algorithm and Google Street View images to tally trees on the streets across 27 global cities.

What does this project reveal?

It reveals that canopy coverage is directly correlated to income. Simply put, the more trees a neighborhood has, the more resources it has as well. I can’t tell you how often I hear from new developers who send me sites they’ve scouted. The price is right. The size is right. But, man, I think: Where are the trees? On one hand, I see the desire to dream something into existence where nothing exists. On the other hand, as developers, we have to ask ourselves. Is this where I want to create a home? I remember flying down the freeway when I lived in California, reading those signs developers would hang over cinderblock walls: If You Lived Here, You’d Be Home By Now.
No trees. No sidewalks. Nothing to walk to. That’s not home.

Which leads me to the last thing.

The Third Place

If you read that article I recommended last week, you know that, essentially, the third place “is a term coined by sociologist Ray Oldenburg and refers to places where people spend time between home (‘first’ place) and work (‘second’ place). They are locations where we exchange ideas, have a good time, and build relationships.” I think a lot about this when I’m choosing sites. For one, I think we are all looking to build relationships. Frankly, I wonder if, in part, this enormous resistance to returning to the office is our dissatisfaction with the ways in which the offices we work in fail to nurture relationships. We go from home (‘first’ place) to work (‘second’ place) and back again, breathless and tired, never quite making those human connections we need. Yes, a third place is a place to socialize, but it’s also a space where we get to shed, in some small way, the burden of our identities tied to work and home. What does a third place look like? It’s likely a neighborhood bar or coffee shop. A bookstore. A gym. Anywhere where we can have sustained moments of connection. And this isn’t me getting all soft and earnest on you here because I want you to think about this “third” place in the context of what it means for the “first” place you want to build: Your tenants walk to their neighborhood coffee shop. Meet friends. Laugh. Share gossip. And then, after a long night of warm feelings, they return home to a place (that you built!) now coated in the positive emotions of the evening they’ve just shared.

And they do this over and over again.

What does that mean for you?

It means happier tenants. It means less turnover. Easier lease-ups. Sometimes, waiting lists for apartments via word of mouth!

You can’t buy it with marketing. You can only build it.

So let me end with this one easy-to-remember sentence:

Rents are predictable, where people walk and talk.