Cursed By Knowing The Numbers

  ...in producing insanely great places to live.  And plenty of links to help you figure out what needs to be done in the New Year.

Elegant Green--building sustainably without  screaming green.  Daylighting, sustainable materials palette, fresh air,  and employing logical common-sense solutions on interior finishes, and energy use.  

Performance Green--

• Photovoltaics make sense to replace any power requirement that PGE is charging you 130% of baseline rates or greater.  This tariff is currently $0.23/KWh.  Photovoltaics pencil out at greater than $0.20 for homeowners, and at all investment properties where Owners cannot pass through electrical costs to tenants and can take advantage of the 30% investment tax credit and depreciation shelter.
• Bamboo--will become the "hardwood" [actually a very attractive weed] of choice due to its workability, sustainable growth, hardness,  and value.  I like working with it, and the meaning behind the material says alot.  Be careful where you buy it--the hardness of bamboo harvested at three years is a fraction of its hardness when fully mature (~six years).
• Green building materials--flooring, glass, steel, copper, will become more widely used as the carbon footprint is understood. 

Triple Bottom Line Development is the way I am underwriting all my projects going forward. 

Everyone starts to understand the economics of climate change. 

UMXD--land uses as encrustations around experiences--pull people back to 24 hour cities, next to water, alongside openspace to better capture the experiences of daily life.  Livable streets.  Make transit options to the SOV a better experience.

Residential Land--the crash and burn of the public homebuilders mean that there is land available--buy carefully, the public builders will be back, and they will need land. Demand should be lower now than in the foreseeable future.  Probably a three to six month window.

Construction Costs increase at a more measured level than the 20 to 25% of recent years, primarily due to the dollar's continued depreciation.  We are baking in 10% cost increases next year on materials and 8% on labor.  No further pop in trade contractor OH&P, which almost doubled in the last 24 months. 

Carbon Neutral Development--is a great concept, but I don't know if investors here in the Bay Area will really give a flying flip about how we spec and produce our product.  It all gets down to the numbers and how well our neighbors understand the economics of climate change, and leaving things better than they found them.

Demographics-- William Frey of the Brookings Institution recently produced

Two trends that are not happening uniformly across the United States.

Boomer Induced Aging--Fastest growing demographic segment will be the baby boomer gains in the 55-64 set.  Predicted to age in place.

The age wave of well-off,  young seniors continues to emerge in Vegas, Denver, Dallas, and Atlanta.

The Bay Area trends younger with recent immigrant driven population growth, and immigrant families (>20% of the population), becoming a "New Minority" locale.  The Bay Area, like California, Nevada, AZ, Texas, Florida and NY are both "aging" with aging in place Baby Boomers and "younging" with new immigrant minorities.  Different real estate products in a vibrant economic setting

Look for land use patterns responding to this generational segmentation--for example, Riverside CA has the greatest distinction--only 3 of ten children are Caucasian, while 7 of ten 65+ are caucasian.

Color--Pantone's interior paint color forecast for 2007.

Longer term trends:

 Competitiveness--Superstar Cities, as described in the NYT, are forcing us in the "insanely great places to live" industry to focus on the changing market.  Living in SF, NY, or London is now perceived as a "scarce luxury good", and demand is reflecting this.  Michael Bloomberg, Gotham's mayor, political pragmatist, and urban planning visionary has been establishing a vision for New York that accomplishes three things:

• Accommodates a 12% increase in population over the next 25 years,
• Rebuilds NYC's infrastructure--water, transport, communications.
• Transforms New York into a "sustainable city", including the pledge of New York having the cleanest air of any big city in America.

Housing Equity--providing a balance of housing options to meet our regional housing needs.

VLJs change high end travel patterns.  Eclipse Aviation is getting the bugs out of their glass cockpit avionics, and ramping up production.  Ability to fly in Class A airspace, 1200 mile range and 2400# payload at a total op costs of $352 per flight hour, create demand for this flight option with ability to land at over 10,000 US airports.  Initial cost of $1.5 million are driving the economics of this travel option--but wait till they get the glass cockpit technology straightened out.

Ground based ops at exotic locales--Angwin in Napa County--merit further study.

Big Urbanism-- where best to participate in this value chain-- where can my company utilize its tactical advantages, rather than laying siege to a large land holding.

..coupled with a budget bust and inability of our legislators to get us out of the corner that we have painted ourselves into.  I am referring to the 275 acres of bayfront, sun-drenched coastline that is probably the most poorly utilized piece of property in Marin County.

If you have been reading Cursed, you know that the old prison, a grandfathered land use from the 1850's, has been nagging at me for a long time.

The legislature approved $220K per cell in 2002.  We are now told the price has doubled.   I am cursed by knowing the numbers, and the numbers seemed funny a year ago.  For a land use that is wrong.  On a spot with incredible potential...

Is this game over?  Or a wake up call?  The corner we are in is because this is the only spot in California authorized by the Legislature to house condemned male inmates [the women are housed in Chowchilla].  The state auditor questioned the location.

We can start to fix this by changing the law...giving ourselves more options.  Now may be the last chance to recycle this site for a use that will make a difference--to California and to us here in Marin.  There is movement in Sacramento to solve the prison problem.  Now is the time to press for another location--let's change the law and get on with it.  Nothing can happen until the legislators change the law regarding death row and San Quentin.

This Glamour Slammer is running $440,000 a door, $1,100 PSF, just because it has always been there..

There is an alternative.

 A transit village linking ferry, car, SMART with homes for anywhere from 4 to 10,000 Marinites.  The State Auditor said from gains in prison operating efficiencies alone, the payback would be less than 30 years.

ABAG says we need the land for housing.  I understand that prisons are the third rail of State politics.  Not sufficient reason to continue this land use insanity.  This needs to stop.  Now.

Print out this letter [.pdf]and fax it to our State Senator, Carole Migden.

Print out this letter [.pdf] and fax it to our State Assemblyman, Jared Huffman.  Email Assemblyman Huffman.

...is Execution.  You can plan and pro forma all you want, have your pitch down cold, attain your approvals, but execution is the key skill in our chosen profession.

I was reminded of this when I spent some time at an exclusive Napa winery last week.  The fact that execution was a key part of the plan was evident from the moment you arrived on the property.  The carefully tended hillside vineyards, the winery building designed by Howard Backen, the oak fermenters, the spotless crush pad. 

Their goal?  To be the American Premier Cru, a wine that defines Napa and New World winemaking.  To create an operation that would be the equal of the world's great wine houses.

And their execution?  The branding, the viticulture, the winery practices all resonated with the quality needed to achieve this status.

Execution can make a bad deal survivable, a good deal great, and a great deal...well. you get it.

Execution is focus, awareness, and agility.  It's understanding what can be done--Gen. Douglas MacArthur's father told him, "Never give an order that can't be obeyed'. 

It's how you finish, not how you start that defines how successful your projects are.