Louisville, Kentucky has a lot of excellent smaller scale buildings. My favorites are the great 3 bay mixed use buildings like the one above. They are all over the place at 2, 3, and sometime 4 stories. Attached in the more urban parts of town, and typically freestanding out in the neighborhoods. These are very flexible buildings “just right” for their settings. Very cool.
When I hear the question “How Do I get Started as a Developer?” it is usually followed by a string of questions which amount to “Can you draw me a map that will guide me through every detailed step to becoming a developer?”
People who are interested in this line of work come from a wide range of starting points. A lot of them already have a fair amount of skill in one aspect or another of the built environment. They may be very accomplished in one or more specialized areas as a contractor, broker, planner, activist, architect, or property manager. They know enough about how things work to recognize that they have a lot to learn outside of the field that originally led them to development.
So let’s group the skills a developer needs into 7 groups:
- Urban Design, Site Selection, Site Planning and Civil Engineering.
- Building Design.
- Deal Architecture, Pro Formas and Finance.
- Construction and Construction Management.
- Marketing, Sales, Leasing and Property Management.
- Communication and Follow Through.
Very few people master all of those skills. If you start with small projects, you can gain an overview, and understanding when they are needed at the various stages of a project. You get a sense of the basics for each skill set. If you don’t have the skill which the project requires, you can’t go without. So you should borrow or rent the needed skill. Look for people who are genuinely interested in your project and who are actually happy to teach you about their specialty. I figure a developer does not have to know everything, but they should have a good idea who to call before it is too late.
After a number of Small Developer Boot Camp (calendar here) Jim Kumon and Gracen Johnson have put together the graphic above which has three types of skills and activities allocated over 5 phases of a development project. I think it is a substantial improvement over the list of 7 skills because it give the reader a sense of when they need to know what, or when they have to find help as they move their first project from idea into an actual building. This is a work in process, so comments and critiques are welcome and needed. What do you think?
Dallas Developer Monte Anderson has a marvelous and elaborate metaphor for explaining how to do incremental development. He calls it “farming”. His recommended approach is straightforward. Pick the place you are going to focus your development efforts. Mark off the boundaries on an actual paper map. Do it on purpose. That’s your farm. Look for opportunities within the boundaries of your farm. Mark the locations of vacant or underutilized parcels, empty buildings, the street that is too wide and fast that could benefit from on-street parking, the place for the street market. Look for excuses to walk around the place where you have decided to work. This is the place where you are going to create and harvest value.
Incremental Development is a better description for what Monte is advocating than small scale development. In the end you should be building/rebuilding a neighborhood one increment at at time. If you are committed to that neighborhood you will want to build lots of relationships with the folks who already live and work there. You should understand the local institutions, schools, churches, local non-profits, hospitals, and barbeque joints. The more time you spend in your chosen neighborhood, the greater your chance of finding ways to help make it better. You will also increase your chances of meeting people who are glad to help you. In addition to being the right thing to do, cultivating the neighborhood is going to be the right thing for the financial performance of the buildings you build or renovate. The neighborhood is going to provide the principal amenity for your buildings. So if you have chosen the place you want to stake your claim on, don’t get distracted by attractive “one-off” projects outside of your farm. Those projects might produce some revenue, but that revenue will come with a significant opportunity cost. Those isolated efforts won’t add any value to your other buildings in the neighborhood that should have your attention. Don’t let your analysis of how a building might perform become myopic. Look at the context in addition to the simple back-of-the-envelope pro forma you should be doing for any property you are considering. Understand why an OK deal in close proximity to your other buildings could be much better than an excellent deal in a distant place where you will see zero synergy. Your time, attention, and relationships are your critical resources. Nothing will move forward for your efforts without those resources, so don’t spread them around. Focus and concentrate them on your chosen farm.