Excerpt from Prologue of How Real Estate Developers Think by Peter Hendee Brown
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.
For many community members, real estate developers remain a mystery, and because we don’t really understand who they are, what they do, and why they do it, we are in a difficult position when it comes to working with them. And that’s why we need to come to a better understanding of developers, because they are going to keep on developing, and their buildings will remain with us long after the construction dust has settled. The purpose of this book is to begin building that deeper understanding.
This book is based on interviews with more than one hundred people involved in the real estate development business in Chicago; Miami; Portland, Oregon; and the Twin Cities of Minneapolis and Saint Paul, Minnesota (although the emphasis is on development in those first three cities). Together, the stories from these developers and their projects paint a vivid picture of what is common to the real estate development process. They also offer vivid contrasts that illustrate how development is a distinctly local activity that is influenced by climate and geography as well as by the unique social, political, and economic cultures of different cities. An understanding of what is common and what is different will help community members, elected officials, and others participate more productively in the development process in their own communities.