Having Focus and Passion About Everything You Do

Breaking News: Steve Jobs died a few months ago.  If this is news to you, I’ll let it sink in for a minute.  Ok, ready to continue now? Good.

Years before Mr. Jobs past he gave what has become a famous commencement speech to the 2005 graduating class of Stanford University.

You may ask “That’s a good speech, but why put it on a real estate blog?”  I think there is much a real estate graduate student in Mississippi can learn from this California college-drop out.

One of the most interesting things about Auburn’s MRED program has to be the intent of this students.  Why are they there?  These answers range from “I wanted to stay in school.” to “The military told they would pay for it.”  However, between those two extremes you will find many interesting reason they chose to alter their path for two years in order to gain the knowledge and experiences that graduate school offers.  It is easy to see that our class loves real estate.  We are practicing real estate brokers, developers, commercial and residential builders, finance, and appraisal professionals.  With all of these specialty backgrounds, the “Why are you hear?” question varies greatly from student to student.  For me, it is to gain a better focus on my my love of real estate.

In the speech above, Steve challenges the audience to discover what they love and then pursue it with great passion.  While this speech was intended for a commencement ceremony, I believe its message could apply to all of us.  I for one know that I have been guilty of loosing focus, both professionally and personally, from time to time on the things and people that I love.  If your not clearly focus on these things, how do you expect to successfully pursue them?

“Do you have a clear focus on your loves?  If so, are you pursuing them with great passion?”

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Sustainable Seattle

Recently Auburn’s MRED 2013 visited Seattle Washington for field study.  After visits to New York and Los Angeles, we knew the feel of Seattle would be different.  The focus of this trip would be centered on sustainable development.  In three days, we were scheduled to visit a handful of projects that would discuss what measures they were taking to build better projects.  However, what I found most impressive was the effort that Seattle has taken to be sustainable on a much broader scale.  Hybrid taxis, an extensive light rail system, and comprehensive recycling plan were just a few examples of the sustainable measures that were obviously present.  The trip made me think “If cities such as Seattle, Portland, and Denver can take these measures to make their cities better, what is holding cities such as Atlanta, Dallas, and Los Angeles back?”  Feel free to read a rough draft of my paper Sustainable Seattle.

Touring Amazon’s new headquarters. I would take this view!

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The Battle Between Vision and Reality

“If you build it, they will come.” 

The famous quote from the 1989 movie Field of Dreams where Ray Kinselle (Kevin Costner) hears voices while walking through his Iowa cornfield suggesting that he plow over his crop in order to build a baseball field for the ghost of major league players to reunite.  After almost going bankrupt, the last scene of the movie shows lines of cars coming to his ballpark to watch the games.

While not apart of the movie, I could assume that Ray did not perform a market study on his proposed development.  If he would have, the voice might have said something like “Don’t build a major league ball park in a cornfield.  It will not work.” While this makes for a pretty good movie plot, I am convinced that developers hear these same voices today.  “If you build it, they will come.”  There dreams become bigger than their realistic demand, but they choose to push through.  In reality, this normally does not end with the scene of cars coming to see his development and save him from devastation.  It simply ends in devastation.

However, there is always a battle.  Without vision, many of the best projects would not be in existence.  Who would have thought that building a city in the middle of a Nevada desert centered on gambling would attract visitors from around the globe?  However, with extreme vision, today Las Vegas is an international destination location for visitors that want to let loose for a few days. With over 150,000 hotel rooms, the city host over 39 million people every year.

I personally experienced this battle at our recent MRED residency.  This previous semester our class was broken into groups and assigned to present a response to a RFP (Request for Proposal) on an eight acre waterfront site in Columbus GA.  After completing the market study, our group made the decision that we would present a very basic project because the demand was simply not there.  On presentation day we told the group of owners, architects, and Auburn faculty that we propose one building on the site and leave a lot of green space for future growth if demand calls for it. Total project cost: $17 million.  We thought we nailed it.

We soon found out that the winning bid was priced over $80 million dollars and included a 200-room boutique hotel, retail, multi-family, concert amphitheater and two parking garages (including a sky bridge connecting the buildings).  I ate lunch thinking to myself “What the heck could these guys be thinking?  If I played any role in that project, I would want to be the bankruptcy attorney.  They will be the only ones that make a profit!”

It was later in the week that I begin to learn the lesson that was set for this assignment.  We were charged with the task of presenting a competitive bid to the owners.  While the winning bid was guilty of having no reality in their proposal, we were just as guilty of providing no vision to the site.  Professor Michael Robinson said, “In a setting like this, it is your fist job to win the bid.  Once you have been granted the job, only then is it your job to work out the details to make it become reality.”

Developers should think outside the preverbal box.  Who wants to see another boring strip mall?  Not me.  We should look for a balance between reality and vision to create a place that people will remember.  As a developer, if you do not see the vision in your project, the odds are that no one else will either.  Finally, to my classmates that won the bid; the presentation was great!  But we both know it was a crazy plan.  However, I learned my lesson!

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Where Is Your Third Place?

“Sometimes you want to go where everybody knows your name, and they’re always glad you came.  You wanna be where you can see, our troubles are all the same.  You wanna be where everybody knows your name.”  Cheers Theme Song


Andres Duany, founder of the  New Urbanism and The Smart Code, known by many as “Andres the Great” and “Duany the Dynamic” is scene as a visionary of what better communities can look like.  After all, he was the genius behind Seaside Florida in 1982.  Since then, many have attempted to recreate this small (only 80 acres) town.  Most have failed.  Today Andres spends much of his time speaking on urbanism topics and giving his stamp of approval on development worldwide.  It is common for developments to get approval simply based on his name being associated with it.

Walking Path in Seaside

In his book Suburban Nation, Andres covers the importance of this “Third Place.”  Third places are defined as one of three places that meet fundamental human needs: home, a first place; work, a second place; and a third place, where we go to find community, relaxation, and simply “be” when we aren’t at home or working.  Examples of these places can be a local coffee shop, pub, park, inexpensive diners, and social clubs.


Many Urbanist, like Duany, suggest that the third place plays just as big of a role as our “other” places.  With proper third places, we are less dependent on building a self sufficient McMansion that has a separate room for every area of our lives.  You simply do not need a 500 sq. ft. home gym and a two-acre front yard if there is a fitness facility and community park within a safe walking distance.

So, where is your third place?  You can get an idea of how your area scores at Walk Score.com .  You simply type in your address and it will give you a score 0-100.  A zero means that you could possibly be a hermit while a 100 shows that you are living in Manhattan.

A personal note.  Being in graduate school and a father of a two year old, I would say that my third place is a local coffee shop and a newly renovated park nearby.  Both are within walking distance of my house.  However, my “walk score” is 42.  You may ask “why is it that you are within walking distances to plenty of third places but you score is so low?”  Well, it is because the score factors in accessible routes to these locations.  For me and my little girl to go to the park that is located within .5 mile of my home I have to get both of us loaded into the car, cross traffic and drive ¼ mile, and turn into the park.  The reason that we have to go through all of this is because our city lacks of sidewalks that can safely get us to the park.  But hey, that is a whole different blog!  What’s your third Place?

What do You Think?

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Sustainability for Developers Starts at Their Attorneys Office

In real estate, we have gotten used to words such as “green” and sustainable.” It is easy to find a flood of information regarding making your buildings better for the environment and future owners or tenants. Additionally, you can see examples of Andres Duany’s founded Smartcode that allows towns and individual developments that are designed on a human scale rather than simply for maximum speed of vehicles. Since its conception in the early 1980’s in Seaside Florida, the idea has been replicated many times across the nation.

We have covered making better homes, offices, and building codes but a recent article in Urban Land has me thinking about what developers can do on the front-in of the development to insure sustainable building. (HOA Covenants for Sustainability) suggest that developers and their attorneys can write HOA covenants in a way that support sustainable growth.

Most new developments use HOA covenants to enforce details on how big your house has to be, what type of shingles you must use, where your cars need to be parked, what mailbox to buy, and even what garbage cans allowed. They even go as far to tell you what you can and cannot do in your home. These covenants are written before the first resident moves in and will cast the vision and expectations of the development moving forward. The article simple suggest casting a better vision.

The author suggests that these same documents can be used to promote sustainable living in using a two-step approach. The first step is in drafting the covenants to reflect sustainable activities. Seth Weissman suggest “When covenants specifically permit things like vegetable gardens, rain barrels, solar panels, cisterns, compost piles, and architectural changes that promote more sustainable living, a different set of values is articulated. These things become legitimized. Sustainability is then being accorded the same value in covenants as the preservation of order and the consistency of community appearance.”

The second step in this process is use these covenants to promote this new set of values. Many believe price premiums will be placed on developments where the above examples are present. Developers can use their input in effort to promote sustainable living prior to the first lot being sold. Well-drafted covenants are a great first step in this direction.

What Do You Think?Sustainable HOA's

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A Case for Building Green for Residential Rentals

Question: “If you’re a multi-family developer, why would you build green?”

Your not benefiting from your tenants lower utility bill, why should you care?

It’s becoming clear that terms like “green” and “sustainable” are not just a passing fad in the development industry.  As gas and other utilities continue to rise, it is clear that it just makes since for you to build green in most scenarios.  Studies are beginning to pour in from sources such as the Urban Land Institute and National Association of Home Builders showing statistics that single-family homeowners want sustainable building techniques in their new homes.  What’s more important for developers is they are willing to pay for them.

Presently this technology, like most, is experiencing a “trickle down effect.”  Our vision of green has changed.  Ten years ago the typical vision of a “green” house looked like a spaceship with huge solar panels covering the roof with a price tag that included two commas.  However, today’s LEED Certified house could go undetected on a residential street.  Today it is not uncommon to see products such as more efficient insulation and Low-E windows being installed in affordable housing.  Just a few years ago items such as these were viewed only as options for high-end construction.

What many people think a "green" house must look like

What many people think a "green" house must look like

 

What today's LEED Certified could look like.

What today's LEED Certified could look like.

Similar studies show that tenants in green office buildings experience increased productivity and fewer sick days. The research also found that that green buildings have lower vacancy rates and higher rents than non-green counterparts.  Therefore, it is easy to see why owners and tenants alike could clearly see benefits to building sustainably.

Which leads us back to the question.  Developers that are debating spending the extra time, effort, and money to build green should consider focusing on the under-35 demographic in their area.  This “Generation Y” demo were the first to grow up thinking “You know, it might not have been the best thing for my parents to have painted our baby cribs with led based paint.” has now graduated college, and started their career.  Due to current economic conditions and trend in this age group, many have chosen to hold off purchasing their first home and opted for renting.  This is also the primary group that will place value on your development not only lowering their utility bills but possibly raise their standard of living.

Most developers are willing to invest in sustainable features when it is clear that consumers are requesting them, or they believe it will be a factor in their decision making process.  If a feature can offer the developer less than a five-year return on investment, most would consider this a “no brainer.”  It is important to consider the idea that this return may not come only in the form of premium rent.  Particular markets my choose “green housing” over standard construction but not see a need to place premium rent on it.  A developer could additionally view the lower vacancy as a form of return as well.

Answer: “It Depends.”   I see valid points on both side of the discussion.  Some developers believe that it is their responsibility to always build green, no matter the cost or return.  There are also developers that refuse to build anything more than the market will accept to maximize profits.  Personally, you can find me in the middle of these two thoughts.  I do not believe that every structure built needs to be Net-Zero or LEED Platinum with disregard of financial outcome.  However, the investment should be made if your research shows there is potential to see positive returns with the addition of green components.  If for no other reason you are after all doing your little part to save the earth.

I would love to hear what you have to say about this.  “Why build green?”

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A Look Inside an Auburn MRED Residency Week

If you asked me to describe an Auburn MRED residency week using one word it would be “INTENSE.”

Personally, I like eight hours of good sleep per night.  I work well if I get it.  My wife will tell you that you do not want to be around me if I don’t.  Because of this, I now know that I might want to stock up on sleep heading into residency week because I will be lucky if I get five hours per night while in Auburn.

The class schedule itself is pretty straightforward. Class starts at 8:00 am sharp. The instructors for the semester plan to use this week to lie out the framework for the semester ahead.  Our days are filled with lectures, guest speakers, and future project discussion.  They try to have us out of class by 5:00 but if certain professors are on a role they have no problem stretching it out for a while.  I guess they know that we are all from out of town we have nowhere else to be!

The 36 (or so) hours spent in the classroom are only a part of the learning experience during this week.  From the first day of our first residency the program has been built around teamwork.  In real estate, you simply cannot do it alone.  So why should this program be treated differently?  Every morning we eat breakfast as a group at the hotel before class.  We walk across campus to our classes as a group.  Lunch is prepared for us on the 5th floor of the Lowder building that we will eat together as a group.  After class we normally break into a few small groups simply because most restaurants in Auburn are not built to hold a group of 15-17.

 

MRED 2013 Team Building Exercise

It is during the out of class experiences that you can learn just as much as in the classroom.  MRED 2013 is made up of 14 students.  To say we are a diverse group would be an understatement.  It is not uncommon to look around your table during dinner at a local dive just off Toomer’s Corner and see an commercial appraiser from Atlanta, a real estate broker of over 150 agents from Birmingham, an environmental consultant from Augusta GA, a developer from New Jersey, a timeshare marketer from Los Angeles, and an architect professor from Cambridge Massachusetts.  Conversations can range from finance, to commercial office rental development, to how to keep dozens of middle age women agents from killing each other.  These dinners, drinks, and discussions can easily go late into the night.  However, most nights we try to remember that we have to do it all over again tomorrow.

Looking back, it takes five hours to drive from Jackson to Auburn.  I thought this drive would become burdensome.  However, I have grown to enjoy the time.  The trip there allows me to prepare and look forward to the week ahead.  The trip back lets me decompress from the past few days and start to appreciate the craziness of “residency week.”

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