How Real Estate Developers Think. Peter Hendee Brown
really is making an honest and forthright effort but he’s being abused and we are being called liars and whores.” Haymes is disturbed not only because the developer’s efforts are being minimized, but also because good things for communities are being passed up—like what happened in Evanston.
Figure 1. The improved design for the Kedzie project, Evanston, Illinois. Courtesy of Pappageorge Haymes Partners.
In what became a lose-lose outcome, the developer spent extra time and money in a costly and fruitless effort to secure the support of the neighbors. But at the same time, in overplaying their hand the neighbors failed to stop the project and also still lost their views across the vacant parcel, views that were not really theirs to begin with. In giving up their leverage they also gave up views of a more handsome façade from their own windows in exchange for a plain brick wall. By forcing the developer into an as-of-right design, the neighbors forfeited the opportunity to let the developer of the adjacent property increase the value of their own property by building a more attractive building next door.
Unfortunately, for everyone involved, the neighbors misunderstood that the developer had rights and options too. Indeed, his best option was to give up trying to do a more creative design that required minor variances and settle for an as-of-right design that complied with all codes and regulations and could be administratively approved without the need for zoning commission review and a public hearing. The developer could no longer bear the carrying costs on the property, the uncertainty of the approvals process, and the related risk of being late to market. He needed to regain control of the project.
More important, the developer understood the neighbors’ strategic position better than they did themselves—certainly better than they understood his position and particularly his property rights. If the neighbors had only been able to see the project from the developer’s viewpoint, they may have realized that taking an absolute position—opposition—was a risky strategy that was not necessarily in their own best interests. Then they may have been more open to a collaborative approach and the ability to influence the design in a way that would have maximized the benefits flowing from the project to them and to the larger community.
A Common Story
Unfortunately, this is a common story and anyone who lived in an urban neighborhood in the 2000s and since can probably remember attending a meeting of the neighborhood organization and hearing a contentious debate over a similar project. Nearby neighbors of development projects deserve consideration, and savvy developers know that they will gain public support and attract more potential buyers and tenants if they listen and adjust their designs to reflect the community’s feedback and concerns. But how can community members most effectively use their influence to improve the design of a project? Which things can a developer change, which are nonnegotiable, and how can the neighbors tell the difference? How can the neighbors even tell the difference between a good project and a bad one? What powers do members of the community have to influence private business decisions through the public regulatory review process? And what should the neighbors do when a developer walks through the door with a proposal for a project?
Figure 2. The completed building, an as-of-right design. Could it have been better? Photo by Daniel Kieckhefer/Phorio.
The most common strategies are apathy or opposition. Apathy means de facto support and forfeiture of the opportunity to become engaged and to contribute useful local knowledge to improving the project for all parties. Blanket opposition, on the other hand, signals the end of a discussion rather than the beginning of one, and, again, it turns away from the opportunity to positively influence a project. When community members stop talking to developers, they give up whatever voice they do have in shaping projects in their community. Worse, as in Haymes’s story, successful opposition may kill a good and creative proposal only to pave the way for something of lesser quality. The answer lies somewhere between the simple extremes of apathy and opposition—in conversation, compromise, and understanding. Before neighbors and community members can effectively participate in this kind of conversation, they must come to a better understanding of developers and, before that, they must first acknowledge their own motives, interests, and fears.
Fear of Change
Buildings made of glass, stone, and metal make us think of permanence. But cities are fluid and ever-changing places where, over time, streets, infrastructure, public spaces, and buildings are constantly being built, improved, demolished, and replaced. For the people who live next door to a potential development site, such as a vacant lot or an old obsolete building, this means something new will be built on that property sooner or later and it is not a question of if but of when. Yet change is frightening and many people are more comfortable with the familiar, in part because they have difficulty visualizing how a proposed project might actually look and fit into their community. Fear of the unknown begins with rumors of a potential development and increases when community members see the first images of the proposed project at the neighborhood meeting. For people who are not in the development business, it can be difficult to know what to focus on, what to worry about, and how to try to influence the project. Neighbors also have a relatively brief period of time to review the proposal and offer their feedback to the developer and city officials in community meetings and at public hearings. And if the project is approved they know that the inconvenience and aggravation of construction will soon follow.
For a typical project all of this may take less than two years but in the heat of the moment some community members will be unable to pull back and take the long view of this relatively brief period of stress and discomfort. They will have difficulty imagining how the completed development might improve their own lives and make their community a better place—for years, decades, and even centuries to come. It can bring new benefits to the community, including more neighbors, businesses, services, bars, restaurants, retail shops, and perhaps even a grocery store. The development will also increase the tax base and cause the city to increase spending on infrastructure, parks, and other public facilities. And a real estate development project represents a significant and concentrated investment in the community that usually increases surrounding property values. But well before any of these good things will happen, those community members must attend that first public meeting where they learn that change is coming—and that the person who is delivering that change is the real estate developer.
The Stereotypical Developer
Each year, on the first day of the real estate development class that I teach, I ask my students, “What words come to mind when I say ‘real estate developer’?” Their answers include “rip-off artists,” “greedy,” “bloodsuckers,” “bulldozers,” “used-car salesmen,” “devils,” “rich white men,” “opportunists,” and so on. They pile it on and I have difficulty writing everything on the board fast enough. Then, after most of the class has exhausted itself, someone nervously chirps, “entrepreneur” or “creative” or “visionary” or “risk taker,” and a more positive, if shorter, list emerges.
Like my students, I suspect that many people believe that developers are rich, greedy, and driven by profits alone; that they know little about planning or design; that they are egotistical if not arrogant and often untrustworthy; and that they neither understand nor care about the impacts of their projects on nearby residents and the larger community. But developers are not all the same and as in any other business or industry, while there may be some “bad” ones, there are many others who have made and continue to make important contributions to cities and communities. As with other industries and government agencies, sensational media accounts of the antics of a few often overshadow the good efforts of many others who quietly go about doing their work. Many people have never met a developer and they know of only the famous and larger-than-life Donald Trump. Some have met developers at neighborhood meetings and others through the experience of buying a new home or condo. And then there are those pervasive stories and sometimes all-too-personal experiences with developers that reinforce the