New Urbanists' Competitive Advantage in a Tough Market
A lot of dark clouds hang over the real estate market right now. But for astute New Urbanists, there's an abundance of silver linings too. By managing their debt carefully, building on existing infrastructure, and maintaining flexibility on what to build when, they've been able to hang on at a time when conventional suburban developers are really hurting.
Those were some of the takeaways from Friday's morning plenary, "The Competitive Advantage of the New Urbanism." The session included some pretty stern counsel, though, from William Geitema, Jr., of Arcadia Realty Corporation. He will presumably be continuing his message as a panelist on this afternoon's session, "Urbanism and the Market Turmoil – Staying Ahead and Coming Back Stronger."
The single-use suburban context is where the trouble is, Scott Polikov of the Gateway Planning Group said in opening the Friday plenary.
Steve Maun of LelandAlliance LLC said his firm has had good success in building where infrastructure is already in place – in areas that are attracting empty nesters wanting to move back into town, and millennials wanting to be in walkable communities. New Urbanists, Maun said, "are particularly well set to attract that market."
Greg Weaver of Catellus, the developers of Mueller in Austin, said, "There's been a flight to quality." It's important, he added, that a project be "truly mixed use" if it is going to make it in this tough market. Ostensibly New Urbanist projects that are really just residential subdivisions with a little retail sprinkled on the street corners don't count.
Geitema stressed the importance of debt management. His advice: "When you're back in your office on Monday, read your loan documents." Go over every line, he stressed. Be prepared to renew loans early, and to pay the fees if necessary. If you see trouble, go see your banker early – and come prepared to present a solution, not just a problem.
Developers may feel they've been hard hit by the mortgage meltdown. But every bad loan is a problem for the lending officer who persuaded his loan committee to approve it. Those officers will be glad to work with borrowers who can keep them from looking bad to their loan committees.
Another takeaway from Geitema: "Nobody buys below the market. The market is being reset….But there's never been more vulture money out there in American history."
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