Tag Archives: developers

There are at least 2,000 active adult communities in the US

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One recent article suggests the United States has at least 2,000 active adult communities:

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There are more than 2,000 active adult communities from Florida to California, and all along the Sunbelt in between. Click on websites such as PrivateCommunities.com or 55Places.com, and the results can be overwhelming. Florida has 673 to choose from. California has 220. Arizona has 151. There are 217 more in the Carolinas. Pennsylvania has 215. 

“Over the past decade, the housing market has been driven, in part, by the 73 million Baby Boomers who have been buying homes as they retire and adopt new lifestyles,’’ says Rob Parahus, president and chief operating officer for Toll Brothers, one of the leading home builders in the U.S. 

Multiple forces helped bring this together: developers and builders seeing an opportunity, a growing number of aging Americans, people with money wanting to have communities with particular amenities and protections against what they might find elsewhere, and an ongoing interest in homeownership.

I imagine there are things missing from these communities. If a group of people with means have come together in an age-restricted community, they will not encounter all the same people and/or neighbors they might elsewhere.

What happens to these communities in a future when there are fewer older Americans who want to live in such places? How easy might it be to convert communities back to the general housing stock?

What is the modal experience in these communities or does it vary quite a bit? Some of these places get more media attention than others. Take, for example, The Villages in Florida is well known. But, it is hard to know from the occasional news story about whether this is a “typical” adult active community or not.

Secretariat as the sports figure with the most streets named after them

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A few years ago, ESPN looked at how many American roads are named after athletes. Secretariat led the field:

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But perhaps nothing drives home the impact of Secretariat’s life more than looking at a map. Like, any map. We know because we’ve looked at them. All of them. In an effort to identify roads in the U.S. named for athletes, ESPN cross-referenced 2010 Census data with Google Maps. We were stunned to uncover 263 roads named after the horse — far more than for any other athlete, human or otherwise. “I’m not that surprised,” says Kate Chenery Tweedy, whose mother, Penny, raised and owned Secretariat. “Secretariat came along at a time of great crisis in this country — Watergate, the Vietnam War, Nixon’s impeachment. And unlike any other athlete ever has, he restored our sense that there is beauty and good in the world.”…

Born in Virginia. Won Triple Crown races in Kentucky, Maryland and New York. So it makes perfect sense that the states with the most Secretariat streets are … Florida and Texas?…

Road experts say there is little rhyme or reason to the way our streets get their names. It’s mostly just real estate developers who submit names to their town, there’s usually a relatively easy approval process, and voilà. Case in point: Somebody in Butte, Alaska, sure likes horse racing. You can take Sea Biscuit Lane to E. Man o’ War Drive, then hang a right onto E. Secretariat Drive — the most northerly road named for Secretariat. And if you wanted to ride Secretariat the 3,920 miles back to his burial site? At the record 37.8 mph he ran the Belmont in, he’d have gotten you there in a little over four days.

As someone who studies suburbs, here is my own theory for this naming pattern. Developers often want names for nicer subdivisions connected to tradition, certain lifestyles, and success. Why not reference both horse racing and one of the most successful horses ever? Horse racing requires money to participate and the audience for horse racing might fit particular demographics. Additionally, horse racing hints at nature. Secretariat is a well-known athlete. Such names will help establish their subdivision as an exciting place for people with means.

My own community has at least a few street names that connect to horse racing. This is not just a connection to racing in the abstract; our suburb has links to horse racing near these sites with a racetrack that was in existence in the early 1900s and another farm with wealthy owners who bred and raced horses in the second half of the twentieth century.

By linking single-family homes to horses and one of the most famous American athletes, how can a developer go wrong?

Celebrating property owners who hold on to their land even as development surrounds them

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The movie Up starts with a portrayal based on a true story: property owners continue to live in their home even as it becomes surrounded by new buildings. Their home is now isolated amidst change.

Here is a similar recent story from Australia:

https://www.facebook.com/7NEWSsydney/videos/790734838563206/

Their large five bedroom property with a sprawling 200 metre-long drive is located in The Ponds area in west Sydney, where hundreds of new homes have popped up in recent years…

The home looks bizarrely out-of-place wedged between identical chock-a-block newbuilds, where its 1.99 hectare garden could fit over 50 of the matching new homes inside.

However, when their neighbours upped and left – choosing to sell to the developers – the Zammits made a last hold out.

They refused to sell, despite being offered millions, and prevented the developers snatching up the last plot of land.

“The fact that most people sold out years and years ago, these guys have held on. All credit to them,” local agent Taylor Bredin told 7News…

In short, the land could be worth over £25million, especially after ten years of their private rebellion.

The valiant resident holds on to their land despite possible riches; all they have to do is move. Such a story fits the image of the sacrosanct property owner. A home is their castle. No one can tell them what to do. If they want to stay, they can stay. The government or private actors should not be able to move them.

At the same time, we believe growth is good. If even just a few property owners hold out, they can interrupt larger plans for new buildings and activity. Imagine an important highway project or mass transi line or new tall building that need several properties to make it better for others but those owners will not sell. Are there limits to whether a property owner can hold on?

In the Seattle story referenced by Up and in this Australian suburban story, developers could not force the issue but they could build right around them. Edith Macefield’s Seattle home was boxed in on three sides. The suburban property above is surrounded on all four sides by dense single-family homes. The property owner has stayed but the surrounding area has been radically transformed.

For now, the single-family home owner reigns supreme. That there are relatively few similar cases also tells us something. It is nice to hold on to a property but it is also nice to profit tremendously from selling it. Some may not like teardowns but the initial homeowner can make a lot of money. Housing and land is an investment. Few can hold out against the available money and resulting changes.

Violating suburban boundary agreements

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One Chicago suburb is accusing another of violating a long-term boundary agreement in order to pursue a sizable property formerly occupied by a notable company:

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Glenview officials indicated the Allstate campus is described as Territory D within the Milwaukee Road and Sanders Road Corridor Agreement between the two communities, which specifies that Glenview alone has the right to its annexation and that Prospect Heights shall not object to Glenview’s annexation.

But David Just, community engagement manager for Glenview, said Prospect Heights notified his village in late March that it intends to seek annexation of the former Allstate campus itself…

“We are disappointed to learn that Prospect Heights is now attempting to annex the former Allstate campus,” Jenny said. “This violates our long-standing agreement and partnership with Prospect Heights, and our community intends to take any and all actions necessary to enforce the terms of the agreement that governs annexation and development of this property.”

The statement added that Glenview strongly encourages Prospect Heights to respect the communities’ long-standing partnership and continue to abide by the promises made when the agreement was negotiated and approved.

Based on what I read, this strikes me as having two dimensions. There could be a legal dimension involving boundary agreements and annexations. How might the law and courts look at land between communities that could be claimed by both community or either community?

The second area involves interactions between communities in the long-term. Will Glenview and Prospect Heights see each other differently for years because of this? Will one community do something in response?

Suburban land is valuable, particularly if developers have plans for a land use that will generate additional revenues. Suburban communities are in competition for business and revenues so an opportunity like this might be too good to pass up, even if it ruffles the feathers of other actors. Given a good chance to secure a new development, how many municipalities would abide by agreements?

“60 Minutes” on the 4+ million housing units needed in the United States

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This past Sunday, 60 Minutes addressed the sizable need for housing throughout the United States:

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Daryl Fairweather: We are not building enough housing for everybody who needs a place to live. We built fewer homes in the 2010s than in any decade going back to the 1960s, and at the same time millennials are the biggest generation and they’re entering into home-buying age. Millennials aren’t living in their parents’ basement any more or shacking up with roommates, they want a place of their own, and we didn’t build any housing for them in the last decade because we are still so traumatized by the last housing crisis. We didn’t put any investment into housing…

Daryl Fairweather: The government has estimated that we are short about 4 million homes in this country, and that number is likely growing, especially since the pandemic.

In my opinion, the emphasis in the rest of the segment on institutional buyers is a weird way to go given the numbers cited above. If we need over 4 million housing units, it seems like more of this falls on developers, builders, and communities to open up opportunities for new housing for millennials and others who really want it.

I wonder how much of this now works like it seems to in the auto industry. Auto makers have shifted to making trucks and SUVs because there is demand and a higher profit margin. These vehicles are not greener but there is a lot of money to be made. Is the same true of starter homes? Smaller units simply do not bring in as much money as a larger house with more amenities. And, if builders and developers have to go through a significant process to purchase land, get approval, and go through construction, wouldn’t they want more money at the end?

I think we should ask about the civic responsibility of those who can approve homes and/or build homes. Don’t we need more housing? Shouldn’t this be a shared responsibility across actors? Why are so many Americans willing to get into their particular housing unit and then shut the door to those who want a similar opportunity?

A developer describes the difficulty in redeveloping a suburban shopping mall

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A developer describes the challenges they face in planning a new future for what used to be Charlestowne Mall in St. Charles, Illinois:

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“The redevelopment of a vacant enclosed mall is one of the most difficult undertakings in real estate development,” he said. “The Wall Street Journal ran an article a few weeks ago describing how none of the options for a mall makeover are easy. Conversions to other uses are complex and capital intensive. Unless there is a great shortage of land in an area, most developers would much prefer to buy land and avoid the expense, time and complexity of tearing down an old mall.”…

He said the challenge is to figure out how to redevelop the mall in an economically feasible way that pays for an estimated $35 million in redevelopment costs while maintaining the existing commercial uses during reconstruction and satisfying the city’s desires for something that will serve the needs of the residents of St. Charles.

The developers plan to initially foot the bill for those redevelopment costs. But to make the project financially feasible, he said a tax increment financing district will have to be put in place…

“A tax increment financing district must be established to pay over time for the estimated $35 million cost of demolition and reconstruction of site improvements that are necessary to accommodate many uses for the property,” he said. “This is exactly the purpose for which TIFs were created. Without a TIF, the redevelopment of the mall is not financially possible.”

In addition, he said a revenue stream must be created to pay for the project’s costs. After analyzing the situation, the developers said the revenue stream must come primarily from real estate taxes generated from at least 500 residential units.

The American shopping mall is in bad shape. Redevelopment ideas have been circulating for years and malls have added restaurants, entertainment options, and housing. But, as the above suggests, this is not necessarily an easy task. Shopping malls were supposed to be good for communities, providing shopping, a place to gather, and tax revenue. Redevelopment offers the possibility of a brighter future but it requires work.

It is not surprising to hear that a developer wants help in redeveloping the property. This will help them make money. It is common practice in many communities to offer such help, particularly for important properties. At the same time, this property has some value. Malls are typically located on valuable land, often at the confluence of major roads and adjacent to other shopping and restaurants but also possibly near housing. Would a TIF and other incentives make sure the developer sees a profit or has a bigger profit?

Considering this proposal is part of a long process. See earlier posts about the troubled Charlestowne Mall here and here. Trying to revive a mall, finding a developer to significantly alter the property, and then seeing how it all works can take years. This particular mall may only be in the relatively early stages of this with years to come before residents and visitors see a transformed location.

Where are the heights, mounts, hills, and ridges referenced in the names of Chicago suburbs?

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WBEZs’s Curious City looks into the elevation implied by the name of multiple Chicago suburbs:

Mount Hoy offers views of Chicago thirty miles to the east.

For real: Highland Park, Park Ridge, Arlington Heights, Mount Prospect, Prospect Heights, Palos Heights, Chicago Heights, Ford Heights, Barrington Hills, Palos Hills, Rolling Meadows.

And before you say: “But wait! There is some elevation out in the ‘burbs!” Let’s make something clear: You’re not wrong. Chicago’s Loop is at about 570 feet above sea level, and the high point of Cook County is near Barrington Hills at 950 feet. That height difference is just under 400 feet, and that’s spread over 40 miles. If we were talking about any other state in the country (besides Florida) you’d barely notice the difference. In other words, in Illinois, the default standards are low for what’s considered high…

Chicago suburbs end up with names that imply elevation in these two ways: crowd-sourced rebranding and straight-up marketing…

One-hundred years ago we named places very differently, Callary says. Places were named after a town founder, or family member, or after something that indicated the place’s actual, physical presence in the world. Today, it’s more common to name a place after what you want it to be, rather than what’s actually there.

Real estate development is a powerful driver. How could developers and communities differentiate themselves from the hundreds of other suburbs in the Chicago region? Pick an idyllic name and hopefully the moniker plus the new development brings in people and businesses. The image of a mountain or hill would be an attractive one; they are both pleasant to look at and offer vistas from the top.

While none of the communities near me are named after a higher elevation, this story did remind me of the highest height around (see the picture above): a small hill made out of a landfill. Because the area is so flat, on a clear day you can see the tallest buildings in downtown Chicago thirty miles to the east. All this from an artificial 150 foot hill:

Starting in 1965 trash collection agencies and community members were invited to drop off junk and other discarded garbage items. At the end of each day county workers spread the clay, which they had excavated, onto the growing pile of garbage named Mount Hoy after the pioneering family.

Mount Hoy quickly earned its nickname of Mount Trashmore. As the Chicago Tribune article in 1973 announcing the competition of the project read, the hope was to create a popular ski destination by literally “turning garbage to ski slopes.” Although the idea seems a bit farfetched, the City of Evanston was undertaking a similar project and many were trying to convince the City of Chicago to do the same thing.

Overall three millions cubic yards of garbage and clay went into Mount Hoy, becoming a 150 foot hill. By 1974 Mount Trashmore was supposed to host four ski slopes, a snow machine and a chair lift along with two toboggan slides, however a less elaborate setup welcomed skiers and tubers to the area.     

Ignore the venting for the gasses in the landfill and it is almost like a real hill…if we know what those are in northeastern Illinois.

Developers not willing to build a particular Chicago project because of affordable housing requirements?

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Chicago, like many American cities, asks developers of particular projects to include a portion of the space for affordable housing. But, developers argue this may make an entire project not worth their while. Here is a recent example from proposed developments on Chicago’s North Side:

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But those fees and the sites’ location within a pilot area where there are higher affordable-housing requirements – 20%, all on-site – have made some projects difficult to finance. The 700 W. Chicago project also has been made more difficult by the COVID-19 pandemic, which leaves a record level of vacant office space in downtown Chicago…

Omni Group appears to have been able to overcome financing challenges in part because it negotiated a lower purchase price for the site – $38 million, down from an initial $50 million deal with Greyhound – in response to the affordable-unit requirements

The firm is also known for keeping apartment buildings it develops, rather than selling them after they’re built and filled with renters. The decades-long investment strategy may help offset the 500-plus affordable units, which typically lose money for developers because of high construction costs.

The affordable housing requirements are not the only factor at work here but they are a regular part of proposals in many locations. The goal is to have some of the benefits of a new development in a desirable urban location – a valuable asset – address the important issue of affordable housing. If developers have no or little interest in constructing affordable housing on its own, the construction of desirable projects can still help lead to affordable housing.

What would be very interesting to know is how exactly the money, including financing, costs, and profits, works out with the requirements for affordable housing. Can the developers here not make any money or does it reduce their profits below acceptable levels? It is one thing if money will be lost but another if the affordable housing requirements limit the profit. How much return do they expect on a large project like this? Is the goodwill of participating in providing affordable housing worth anything (status, money down the road, favorable approaches to future projects, etc.)? While this is likely firm-specific proprietary information, I imagine some money still could be made.

Who exactly designs “zany McMansions”?

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Are architects capable of designing McMansions?

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Pro tip: One of the more fun ways to hunt for real estate is to go to your favorite site and search the keyword “architect.” You’ll end up with a lot of zany McMansions, but among the chaff are some well-pedigreed gems.

While this sounds like an interesting exercise, it brings up an important question. Who exactly is designing the McMansions that critics revile?

One of the biggest critiques of McMansions is that they are poorly designed and their architectural quality is suspect. This might come in the form of odd proportions or a mish-mash of styles or a blending of features. Instead of a pleasing aesthetic, the McMansion presents a mass produced version of something that tries to nod to established homes but only succeeds in aping such residences.

Typically left unsaid in these critiques is who exactly put together these unpleasing designs. Often the designs for homes come from builders or developers. What they have in mind when designing a home may not be the same as architects.

I would guess that architects would prefer that more single-family homes are designed by architects. Not only would this supply more work, it would have likely lead to more architecturally coherent homes. The emphasis might be less on providing space, an impressive front, and the most bang-for-your-buck, and instead focus on beauty plus functionality. Of course, some homes could l look great in the eyes of some and not be very desirable (see some modernist structures).

Perhaps more of the focus should come back to builders and developers: what could they do to provide the features American buyers want while also designing more architecturally pleasing homes? The same McMansions might not be so bad for many if they had a better design or fit the neighborhood better. Some would still object to the size of the home – is it really necessary to have 3,000-10,000 square feet? – but at least it would not be in danger of easy attacks. The architectural coherence could affect the price point but might also help the long-term reputation of the neighborhood and builder.

Argument: Trump “is acting like a real estate developer”

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Want to understand the behavior of President Donald Trump? Megan McArdle suggests he is simply doing what a real estate development might do:

Because what you see on TV shows about house-flippers is, writ large, the nature of the whole business: To compete in a highly capital-intensive industry, almost everyone takes on a lot of debt. Like most real estate people, Trump loves debt — “There’s nothing like doing things with other people’s money,” he told a rally in 2016. “Because it takes the risk, you get a good chunk of it and it takes the risk.”…

That’s why the real estate business rewards a certain willingness to put everything you have on a long shot; if you can’t cheerfully take risks with horrific potential downsides, you need a different job. The best argument for this approach is that some problems can’t be solved any other way — if developers demanded steady, predictable incomes like the rest of us, most of America would still be farmland.

In its best form, the developer’s way of thinking can achieve the impossible — or at least what the more staid and methodical folks said was impossible. I opposed moving the U.S. Embassy to Jerusalem and was at best ambivalent about sticking with Kavanaugh, but I have to admit that the apocalyptic doom predicted by Trump’s opponents has so far failed to materialize, while the political gains were immediate, and large.

Then again, there’s a reason most of us don’t live like real estate developers, or want to. Bankruptcy is a sadly normal fact of life in the real estate business, which is why Trump can tout his extensive experience negotiating with creditors. The cost of gaining wins with big bets is that you never know when you might lose everything.

Analyzing behavior and motives from afar is a difficult task. Yet, this argument raises some interesting questions:

  1. Could an average American describe how a real estate developer operates? A few might be known to a broad number of people but I’m guessing many operate behind the scenes. And these developers can significantly effect communities.
  2. It would be interesting to know how the president polls among real estate developers. Would they proudly call him one of their own? Would they recognize the approach?
  3. Are there examples of other real estate developers who became political leaders? If so, did they act in similar ways?
  4. Is there a way to quantify or easily explain the amount of influence real estate developers have had in cities or places? Donald Trump was a big name developer: widely recognized, some degree of wealth, and a number of large buildings with his name on it. Yet, how much did he influence New York City or other locations?