Plain talk on building and development
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Blog: Plain Talk

Plain talk on building and development.

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Mapping the Small Development Project/Process

Development Process Overview 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:

  1. Urban Design, Site Selection, Site Planning and Civil Engineering.
  2. Building Design.
  3. Deal Architecture, Pro Formas and Finance.
  4. Entitlements.
  5. Construction and Construction Management.
  6. Marketing, Sales, Leasing and Property Management.
  7. 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?

Whadda Ya mean "Farming"? I thought we were talking about Development?

Cabbagetown Neighborhood, Atlanta Cabbagetown_0

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.

What's the Big Deal with Small Developers Anyway? ---Capacity Building.

Modest Building with Big Potential. Who is going to build the finer-grained Missing Middle housing, the small workspaces, the two and three story mixed use buildings that Municipalities and neighborhoods are looking for?  Will it be large development firms that see a 10,000 SF single story commercial building or 100 apartment units as a "small deal"?  Doubtful.  Very Doubtful, for the simple reason that large scale developers need large scale deals to support their operations.  They can't execute small deals effectively and they see a lot of opportunity cost in small deals.  "Why would I take on a 4 unit project when I can build 40 units or maybe even 400 units with about the same amount of brain damage?"

Monte Anderson keeps hearing from folks who want him to move to their town and develop there.  To his credit, Monte is determined to focus on the communities in the Southern Dallas Metro that he knows and cares about.  His advice for the people that want him to come to their town is that they need to find someone who is committed to their town and help that person develop --or become a developer themselves.

This is actually very pragmatic advice, because the big outfits are not coming.  Monte Anderson is a great guy, but he's not coming to your town either.  Who does that leave?  You (or someone a lot like you). Start small.  Learn the business.  Build a reliable team that cares about the place.  There is a growing network of support for small developers, some of them are just a few years ahead of you on the learning curve, but they will do whatever it takes to keep you from having to repeat their mistakes.

Consider what a small enterprise could accomplish in your town, not just he buildings you might renovate or build, but the local wealth you could create that stays in your neighborhood.  Think about the jobs that you could create in the trades, and in property management.  Think of the other folks in your neighborhood you could mentor, paying it forward once you have learned the business.  Real capacity for local and lasting economic development is hard to come by, but building the everyday buildings that people need, in a place that you care about will raise up more than walls and a roof.