Cursed By Knowing The Numbers

is the claim Al Masdar makes.  This is a new US$22B development I visited last week when I was in the United Arab Emirates on a project for my solar power business.

Along with Dongtan City in China, this new zero-carbon community designed by Sir Norman Foster is setting the bar for triple bottom line development.

This new city is seeded by a US$15B investment from the Abu Dhabi Emirate, and is located 10km from the center of the city.

Scheduled to be complete by 2016, this new 640 hectare [ 1,700 acre] home for alternative energy industries and research will be home to 50,000 people, create 70,000 jobs, and 1500 companies.  Passive solar design and energy efficient design will result in a community that

• uses 80% less energy,
• 50% less water--a big deal when all your water is produced by desalinization, and
• 1% of the waste going to landfill

than current community needs.

Green design principles will enable this community to save over $2B in oil consumption over the next 25 years, and add an estimated 2% to the GDP of Abu Dhabi.  A streamlined regulatory environment and a unique enabling environment, and a location in the trendsetting UAE completes the feasibility picture.

A Chicago architecture firm recently won the commission for the headquarters--using a positive energy, mixed use program.

A great example of developing like you give a Damn.

Posted by Ted at 11:59 AM | Permalink

Sometimes it helps to take a step back and get the bigger picture...

The CPUC came out last Friday recommending that all new residential buildings developed after 2020 be net zero energy.

Time to get to work...

Posted by Ted at 9:37 AM | Permalink

Global warming is becoming such a core issue that for a project to be attractive economically it needs to make sense environmentally. 

Economically sustainable is environmentally sustainable.

I don't see any other option--getting the numbers to work environmentally makes for a more attractive project, and is the right thing to do.

Buildings contribute over 60% of total carbon dioxide emissions during their lifecycle.  Learning how to build and operate for a minimal environmental footprint is essential. As a builder and developer, I see no other way to build.  You are creating a more attractive asset--for neighbors, investors, tenants, and owners. 

Posted by Ted at 7:14 AM | Permalink

If you are a student of the property business, you are a student of economics, of architecture, of politics, and of human nature.  I am 80% through the 16-CD audiobook that is combination memoir followed by a series of essays on global economic issues.

I am now more deeply grateful for Alan Greenspan's contributions. This book deftly handles the story of his life while not preening over his accomplishments.

Economics can oft times make for dreadfully boring reading--but not here.  This is the story of an extremely interesting character.

Here is the Economist's review of the book--succinctly captures what this 544 page tome is about.

One thing I did not fully appreciate was how influential Ayn Rand was on his life.

Here is the Chairman's interview on Jon Stewart--

Posted by Ted at 7:56 AM | Permalink

Great article in the Economist [subscription reqd] about how biologically inspired design can help reduce the environmental impact of development.

This concept resonates with me.  Growing up on a farm in southeastern Pennsylvania, I came to greatly respect two things:

1. Nature designs for performance.  There is very little about natural design that does not serve a purpose or essential function.
2. Nature always gets last bat.  As little as 20 years after man has left an area, nature reclaims the site and continues to do what it has always done--grow, reproduce, transform, and return to the soil--a closed loop.

Biomimetic principles can be taken to a point where they add measurable value to a building through increased tenant demand for the building's brand identity, reduced operating costs,  and increased investor demand.  At a minimum, a building should be able to generate it's own energy.

"Nature has had the benefit of a pretty long R&D period."

It is going to take a while to get this right--so start with simpler techniques, like incorporating smog eating concrete into the facade, employing photo-voltaics to harvest the available solar resource, understanding a site's environmental attributes, and maximizing daylighting/solar orientation.

"Part of the challenge, I believe, is to reconnect people with resources."

Precisely.

Posted by Ted at 8:17 AM | Permalink

...take a minute and express gratitude for all of our young people (~135,000) who are making a difference half a world away.  The sacrifice is great, and we can only hope that it makes a difference. 

National service, service to a cause greater than yourself, has long been an American virtue, and we have an entire generation that is walking the talk in Iraq, Afghanistan, and too many other places to iterate.

All make some sacrifice, some make the ultimate sacrifice.

Pat Tillman would have been a decorated veteran, a Ranger alumnus, and finally home from Iraq and Afghanistan, back in the bosom of his family.  Instead his fate is a story in microcosm of how our nation went wrong, and how the real truth may never be known.

A true American tragedy--our best and brightest giving their lives in hot and dusty places far, far away--and we at home never seem to learn the lesson. 

Pat was one of over three thousand Americans who made the ultimate sacrifice in the last five years so that the rest of us can sleep safely. Theirs is a violent profession--they do it by choice--not because they are not smart enough to avoid being sent there.  That is Pat's brother Kevin on the right, now a Ranger alum and civilian once again, who reminds us of the legacy of his brother--a true American hero.

What is the lesson here? My takeaway is to pay homage to the sacrifice that men like Pat and their families pay by;

• one, leaving things better than we found them--each and every day--at home, on the job, and in the world and
• two, only put these heroes in harm's way when it is absolutely needed.
  

There is too much other stuff in this world that needs to be fixed to detail these heroes to fix something irrelevant.  And when tragedies like this happen, tell the truth, so we all can learn from it.

HOO-ah?

Posted by Ted at 8:57 PM | Permalink

Here is a recent article that concluded that human relationships are built from four types of interactions.  This got me thinking about land use economics--entitlements, getting uses approved, and why we miss the boat sometimes on leaving things better than we found them. 

The gist of the article is that all human relationships, are built from four  types of human interactions:

• Communal Sharing
• Equality Matching
• Authority Ranking
• Market Pricing.

Too often, I focus on the last in meetings/negotiations and don't fully understand/value the other three building blocks--and the process of entitling a specific land use becomes more difficult because I don't fully understand the other three building blocks of a relationship.

Communal Sharing--of benefits like views, open space, and utility access and traffic impacts.  Malama 'aina, the care and nurture of the land, is a great description of this.  Community.  Oft times we run into trouble when the use we are proposing is less than the value the community places on the current land use.

Equality Matching--restoring balance--mitigating traffic impacts, affordable housing set asides.  Transferable development rights.

Authority Ranking--non-conforming uses.  zoning.  Think San Quentin State Prison.

Market Pricing--investment go/no go decisions.  option payments. value add strategies. Cost of debt, equity.  Terminal Cap Rates.

If you are up to geeking out on this, here is the original study the article was based on--The Inherent Sociability of Homo Sapiens.

Try this metric out on your next meeting--how do you fare on the four elements?

Posted by Ted at 5:22 PM | Permalink

I believe great project managers need four things above all else--resourcefulness, a logical view on incoming events, humility, and loyalty. With a keen eye for quality.   Here is my resolution for the new year:

• To develop the resourcefulness of MacGyver;
• To reason with the logic of Kasparov;
• To understand with the humility of the Dalai Lama;
• To be as loyal as our dog.

And to be as action oriented as House, MD.

 Wish me luck.

Posted by Ted at 1:24 PM | Permalink

  ...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.

Posted by Ted at 1:30 PM | Permalink

 Was at ULI this last past week, and listening to friends and participants there got me to thinking again about a triple bottom line approach to real estate development.

Majora Carter, in her TED talk last spring, articulated a triple bottom line for her projects. I am sold on this approach to recasting a property's land use, and I believe ULI can do much more in shaping how planners and practitioners understand what "best land use practices" really means. At this point, I need to get beyond the talk--4.9 million hits on Google for Triple Bottom Line--and get to the execution stage.

The question is how this affects my competitiveness--gaining control of sites, raising capital, executing on a plan.  Does including two other elements into the calculus of recasting property make me more competitive?  Or less?

My take on triple bottom line development is its value in perfecting a land use and its entitlements to create positive returns to the community, the environment, and those who build the asset.  The three "bottom lines" are:

1. Environmentally sustainable
2. Community enhancing
3. Rewarding to capital

The components of my projects are:

• Land Use
• Labor Utilization
• Return on Capital
• Quality of Plan and Execution
• Environmental footprint
• Community benefit

My goal is optimizing ROI's achieved from sustainable, community friendly development that have satisfactory returns to us and our investors.   Environmentalists embracing their inner capitalist, developers embracing their inner flower child, and politicos embracing their inner Jefferson Smith.

Environmentally sustainable is where I am seeing the most potential. Awareness of how to build in an efficient manner, how to use technology to produce more more carbon neutral assets, and use of the internet to offset your carbon footprint is becoming an integral part of our project planning. And sustainable technology, thanks to demand being induced in Europe, is really attractive.

Community enhancing is a little more ambiguous, as diverse communities have diverse needs.  Its mostly about seeing the bigger picture, creating crazy-good places where people who just love the area walk everywhere. Daily needs within a couple of blocks.

Posted by Ted at 2:56 PM | Permalink

...is typically a sign to me that we are approaching a market top, climbing that wall of worry.

A recurring theme throughout ULI last week was "Paranoid Optimism"--the idea that the future holds a number of low probability/high impact events, but the high probability/high impact of continuing low inflation, global trade, and a high rate of innovation means that optimism is warranted.

Bill Emmott, the former editor of the Economist Magazine, gave a ULI breakfast talk with paranoid optimism as its implied title.  The benefit of the pumping of global liquidity evidenced by a lower cost of capital  has a big multiplier effect--combine this with the internet driving a higher rate of innovation--the risks to a better global economy are political ones.  He believed there was a 50/50 chance of a US recession in '07, leading to a recovery right about the time the new president takes office.

His datapoints: 

• The 1993 global average inflation rate of 37% has decreased to 3% in 2006.
• The US two largest problems--a current account deficit of 7% of GDP, and a budget deficit of 3% of GDP are problems, but over-dramatized. A falling dollar will be the largest result of these imbalances.
• US$ has fallen 15% since 2000, and will fall further over the next several years.
• The Middle Eastern risk premium reflected in oil prices (currently $58/bbl) is falling and will fall further.

If politics and low-probability but high impact risks--terrorists with WMD, North Korea's collapse into violent civil war, or political instability and strife in China--do not strangle global trade and development, times should be good.  We have quite a tailwind at present.

George Soros is still looking for his crisis--the one predicted in his book failed to come to pass due to the pressure of global competition, increase in global labor supplies, low inflation and a high rate of innovation.

Emerging markets are now 50% of global demand--25% from China and India alone.

It is the politics behind the economics of a rapidly integrating global economy that are the risk.  It is how our societies adjust to the supply and demand disruptions that growth in labor supply bring.  It is how we price and incorporate environmentally friendly and carbon neutral development techniques into our best land use practices.

The environmental awareness and sustainability championed by Al Gore  in his movie are becoming more widely adopted.  The good news is that his ideas will eventually win--and his advocacy of carbon neutral lifestyles---the bad news is that he will not [be the next president of the United States].

The current "supercycle" of increasing commodity prices is due to twenty years of underinvestment.  Or rather undersupply caused by underinvestment. The current surge of investment in creating greater supply should reverse this financial commodity bubble.  The current 700 hedge funds working the commodity bubble has increased from 4 funds ten years ago, creating bubble conditions that will soon correct.

If the US does lapse into a recession next year, led by cuts in consumer spending, it is likely to be a mild one if interests rates stay low.Lower global demand by the US is likely to be counteracted by higher demand by Japan--now coming out of a ten year recession.

Posted by Ted at 8:45 PM | Permalink

Nothing like snow and freezing temperatures to get this whiny Cali boy going--and there was plenty to go on about.

I believe that Council participation is the single greatest benefit of ULI, and working shoulder to shoulder with these elaborately educated, type A personalities is often humbling.

I have been a council member for two years now, and am really appreciative of all the work that goes into these events. If you belong to ULI and are not on a council, get on one.The camaraderie brings out the best of ULI.

The councils focus on specific land use areas, and study best practices in each of these areas.  The councils get together twice each year for a day, and review recent deals, sharing ideas and perspectives.

We toured Stapleton, the ten year redevelopment of Stapleton Airport into a new community. The land takedown is staged, allowing Forest City to get greater land utilization. Infrastructure is paid for by a tax increment financing over the entire property, and development has been at a measured pace to maintain demand and pricing levels. There is a wide variety of housing available here in an infill location--the largest question from a community development standpoint is whether Stapleton's dependence on the Denver Public School system can be mitigated. The Gates Foundation is involved in the Science and Technology high school.

 
The second project tour of the day was Aero Flats  given by my friend, the wine-making, mountain climbing, real estate financier John Williams. John is the Managing Partner, Capital Markets for Carmel Partners, a group of perceptive, professional and principled real estate pros based in San Francisco. John has been instrumental in opening up opportunities created by Carmel to a larger institutional investment universe, and it looks like both groups have benefited.  This project was the successful renovation of a thirty year old property on the edge of Stapleton that used to be under the main flight path of the old airport

The third development we toured was 1600 Glenarm Place,  a redevelopment of an empty office building into an upscale highrise apartment community with great moves and  a well choreographed marketing campaign.

The property is in leaseup at some of the highest rates in Denver. The building was completely renovated to bring 333 units of rental housing into a great downtown location. Interior finishes were well designed, and well constructed.

The developer kick-started an upscale grocery/prepared foods store in the building, a very nice amenity for residents, but a land use that really needs training wheels to make it into a great neighborhood resource.

Fifty percent of new leases came from internet inquiries--foretelling a change in how we need to think about resident acquisition. A good management team, well executed plan, and a great asset.

Posted by Ted at 6:02 PM | Permalink

If things seem under control, you are just not going fast enough.

--Mario Andretti

This blog started on  20JUN06.  This post shares what 100 days of living in this new subculture has felt like.

My goals were:

• become a better professional by using this weblog to gain insight into the trends, pressures and vacuums in the residential development space. Ask the right questions, induce change, and understand the underserved spaces in producing distinctive residential properties;
• develop a more disciplined approach to investing and building by noting issues in this weblog;
• become a better storyteller about producing insanely great places for people to live;
• better understand the roles in the real estate development food chain and utilize network effects to understand where focus is needed;
• develop conversations with architects, investors, land owners, builders and consultants about how we add utility and value to real estate through quality, design and execution--ie become the English Cut for those people wanting an architecturally significant home in Northern California or Hawaii;
• provide a series of essays on getting the development numbers to work instead of just bitching about them;
• find current problems in the real estate production food chain and figure out a faster/better/smarter fix;
• post in one area subjects to be referred back to--ie, not answer the same question twice;
• become a better investor in the the value add process, and
• quantify this amorphous marketing process.

The hardest part was the lack of direct feedback.  The metrics of this subculture are of roughly 100 people--1 of them will blog, 11 will comment, and 89 will view with no feedback.  A very different way of communicating for me.  But yet you have to keep talking, or you risk your blog looking stale and tired.  Now I know what those people on NPR fundraisers must feel like...Feeding the content beast with no well defined feedback is like sailing in the middle of the night with cloudy skies...

Second hardest thing was sitting down and posting 1x day.  I only mustered 71 posts in 100 days.

The easiest thing was the actual posting.  I blog on Moveable Type software.  Not intuitively obvious to set up, but once I was set up, I use Windows Live Writer to compose my posts with, making it one-click easy.   Now I understand why there are 55 million of these weblogs out there--35 million of them in China.

How did the first hundred days go?

• Initial Technorati Rank: 1,387,589 of 42.1 million blogs.
• Final Technorati Rank:  1,699,000 of 55.2 million blogs.

Humbling numbers, indeed.  Insane that you can even track to this amount of detail.

I accomplished:

• putting together a library of technical notes on the issues I repeatedly ran across over the last 15 years of my career.  When I run into them again, I start the discussion by sending the note to who I need to cover the topic with.
• understanding the blog tool. It is a relatively unstructured way to maintain market and project information for future reference, and the ability to frictionlessly share it.
• producing an alternative market development tool to cold calling property sellers and brokers.
• identified competitive open space and new markets for products and spin-off companies.
• a tool for riffing from conversations I have with architects, owners, and contractors.

I did not accomplish:

• building huge traffic to this site. 
• driving visible change to issues that mean alot to me, ie. what is happening out at San Quentin,
• starting up a large number of meaningful conversations.
• finding a pot of gold at the end of the rainbow.

The biggest positive surprise?  The comments I received back on posts were great feedback--they helped me reframe issues that challenge me.

Thinking about putting a blog together?  Here is Guy Kawasaki's take on his first hundred days.  Here is Matrix' take on why the NYT real estate blog failed.  In short, you need to provide:

1. Consistency: post every day if possible
2. Voice: the language and tone need to be familiar to the reader
3. Passionate: express your views, not what you think the reader wants to hear.
4. Content:  Don’t use it as a vehicle to link to all your feature stories. It ok to do sometimes.
5. Original thoughts:  Don’t glom off of other blogs.
6. Better graphics:  Leverage the photo archives and use charts and graphs.
7. Champion the blog:  Have a representative, the person most identified with the blog.
8. Sense of community: Think about how much you want to orient the content to reader feedback.

Thanks for reading.

Posted by Ted at 10:17 AM | Permalink

I am asked occasionally by people looking to enter the industry for advice on how to do it.  And the fall is a great time to start looking and planning.

The rock stars of most real estate development companies are their project managers.  Most are well educated generalists--who have mastered the key skill of learning, observing, organizing, and delegating. 

Project managers are T shaped people--broadly empathic and with a deep understanding of a craft.  A craft could be that of an engineer or architect, it could be in the trades--carpenter, cabinetmaker, or an electrician--or it could be having the knack of performing an artful way of putting together deals, knowledge of how a building goes together, knowing the numbers, or structuring the cap stack.

Most development companies look for their project managers to have a graduate degree in architecture, real estate, an MBA, or a law degree.  I like the real estate development degree because it typically:

• has a mid-career student profile, designed so you can learn a lot from your fellow students,
• consists of small classes, and is only
• twelve months in duration, so you don't have to spend a lot of time offline reprogramming yourself.

Unless you are independently wealthy, or come from a prominent real estate family, the  first direction I would point you in is to find a grad program that is a fit for you.

The one I went to was started by Hank Spaulding and Larry Bacow at MIT's Center for Real Estate.

Michael Buckley, whom I learned under and worked for, heads up the real estate program at Columbia--and there may be no better location in the US to learn the art of real estate development than in New York City.

Stan Ross, the eminence grise of real estate accountants and dealmakers, is the chairman of the Lusk Center for Real Estate at USC.  And the winters in Southern California are a lot better than those in Boston...

Tony Ciochetti, the director of the MITCRE program, is in SF on 13NOV recruiting for the Class of '08.  I recommend this program very highly.  If you are interested, it is worth your time to come listen to the pitch.  I will be there and look forward to meeting you if you go.

The other group you want to get involved in is the Urban Land Institute.  They have a San Francisco Young Leaders Group that is a good platform.  They have a Learn from the Best program on 28SEP. 

I know, I know...grad school won't teach you everything...there are several essential skills you  need that you pick up best in el camino de la vida (loca)...  These include the ability to not be bullshitted by brokers, contractors, consultants, architects, et al and to survive the tedium of the public approvals process. 

A keen understanding of value, where the pain points are, and where you need to build momentum in the development food chain is what I  constantly strive for.  Keeping your eye on the prize.   These skills you pick up as best you can, either on your own projects, or working with a developer.

Posted by Ted at 12:01 PM | Permalink

...as determined by the editors of Fine Homebuilding. 

A Schindler, a Maybeck, Greene & Greene, Jefferson, Samuel Mockbee,  Joe Esherick, and a James Cutler grace the pages of this review.  Frank Lloyd Wright's Fallingwater is declared the most famous house in America, natch.

Issue is available for $8.99 by clicking here.

Posted by Ted at 11:53 AM | Permalink

is how John King describes San Francisco in his SF Chronicle Place column.

too true.

This image brought to mind Joshua Prince- Ramus' talk at TED about how the conceptual design process for this project developed.  I can only imagine the fun of trying to convince a banker to give me a hefty enough construction loan to successfully capitalize this deal. 

The structural steel premium alone has to be $100PSF. Staging? elevators?  At least the land residual cost would be cheap...I like the visual of jacking the museum pod into place, very cool.  Would love to develop one of his designs, my problem would be populating the capstack. 

I am all for architectural over-commitment, but remained cursed by knowing the numbers...

Posted by Ted at 10:22 AM | Permalink

that the London based terrorist plot was foiled.  Thankful for the good guys, the professionals doing their jobs, and the for strength of the network detecting the bad guys in enough time to do something about it.

Air travel just gets tougher and tougher.  The need to for face to face meetings is still important, but with broadband, skype, and the quality of the data threads we can find online, it is becoming less so. The quality of information available online has gotten remarkably better. There has to be a better way than standing in lines at the airport, or drop $3K per flight hour for private air travel to properly allocate capital or deliver an asset on-time, on-budget.

Makes one thankful for that place of refuge, that insanely great place to live, called home.

Maybe it is time to look into that Eclipse again...

Posted by Ted at 10:50 AM | Permalink

Every once in a while I am exposed to something that recalibrates my view on my profession.  A book, a conversation, a performance that knocks me back to first principles, that I am in this game to make a difference, to leave this place better than I found it.  And that there is so much more to do...

I have been doing soapbox duty recently on what passes for planning at San Quentin.  This top down approach that has left me dumbfounded. No response to date from our elected officials about why the law proscribes such a use on this irreplaceable 275 acre bayfront property and what it would take to change the law.

Here is a talk by an amazing woman, a MacArthur Fellow, about creating sustainable communities--an amazingly inspiring use of ten minutes of your day. Watch this, and think about what is about to happen here. 

 Download the video here.

I warn you, it is a powerful presentation.  If public presenting is part of your life, you might also appreciate Guy Kawasaki's take on Majora Carter's performance,

"I would love it if my daughter would grow up to be a warrior like Majora."

As Majora said, "We have nothing to lose...and everything to gain."

Posted by Ted at 2:46 PM | Permalink

...contribute the glue, the focus, and the talent to make good stuff happen on a jobsite.  The focus on getting things done--on getting the entitlements, balancing cost and value during design, and driving construction through to an on-time, on-budget outcome--is the value a project manager brings.

Not every project needs a project manager.  As long as team members are willing to be responsible for communicating what needs to be done, simultaneously keep their eye both on the prize and their next three milestones, and are willing to jump into the breach to do what needs to be done to get things done, there is one less mouth to feed. 

There needs to be clear authority on keeping the project on-time and on-budget, and triaging issues. Much as a hospital ER has a lead doc deciding care for a patient, a project needs a voice that can make decisions and blaze the trail. This Venn diagram charts the space you start from.  If no one owns this space, dysfunction and finger pointing can be the result. 

The prime responsibility is to make the project, and all who contribute to it, as successful as possible.  This role is ambiguous, and requires a combination of conviction, confidence, and empathy to be effective.  You need:

• a top level view necessary to keep focus on where you are and where you need to be,
• the insight to ask the right questions, and the willingness to parachute in and do anything that needs to be done that no one else is doing (well).
• the focus on getting things done means keeping a simpler view of what you do.  But simple does not mean easy.

Tom Peters, in his essay, Pursuing the Perfect Project Manager, describes the paradoxes inherent in pursuing the required outcome.  Project management is a balancing act, an art that requires intuition, judgement and experience to resolve the raw inputs of capital, knowledge, labor and material into the desired asset.

Go "Make Good Stuff Happen!"

Posted by Ted at 11:59 AM | Permalink

I am always trying to understand the numbers behind why things get built, and why they don't.

And I am amazed at the things that get promoted when the math does not work.  The market seems to get last bat, but it reminds me of what my father used to tell me:  "It's the third guy that owns the property that makes money.  The first two lose their dough."

One of the most illuminating books I've read was Innumeracy by John Allen Paulos. 

A little long winded, but his point is well taken.

Paulos admits that

"at least part of the motivation for any book is anger, and this book is no exception. I'm distressed by a society which depends so completely on mathematics and science and yet seems to indifferent to the innumeracy and scientific illiteracy of so many of its citizens."

Have a good weekend.

Posted by Ted at 7:05 PM | Permalink

Gaining the right to build is the second most critical skill a developer needs, after the ability to do the math and handicap a potential project.

What is the first step?  Read your adopted codes.  Understand, or have your architect explain to you, what your as-of-right envelope is.  Unless your project is open space or a wetland, there is a bulk, massing and use envelope that will provide you with an initial square footage, use, height, and percent of site utilization.    In my opinion, if what I need to produce fits within the adopted codes, I have an 80% chance of getting my project approved.

You ask:  Why only 80%, grasshopper?  Because if you read the codes carefully, there are often conflicts that give the power of discretion to the commissions, boards, and staff that have the ability to grant you your entitlements.

To understand the discretionary element, study the envelope on other properties in your neighborhood.  Find out where your proposed use compares with others in your neighborhood in terms of density, height, parking, shadow bulk. How do you compare? If you recently purchased your property, go down to the planning office and look at the public file on the project.  Look at the history of it.  Read staff reports on similar uses and sites.  After you have done your survey of comparable sites, find out where you stack up.  Are you in the top 50%, 25% 10%?  Your likelihood of success drops the closer you get to the top of the stack.

You will now understand what is as of right, and what is discretionary.  Envision this as an envelope of use, height, footprint, and bulk on your property.   The further you go outside your envelope, the process gets increasingly expensive, the processing time increases, and your likelihood of success decreases.

 Once you understand the numbers, then you can proceed with the how.

Here is a recent example of how you do it.  Very impressive technique  by someone who has made a tremendous contribution to the City of Cupertino, whose company is their largest taxpayer, and needs to do a fifty acre campus.

Posted by Ted at 3:58 PM | Permalink

when stories abound of the cost, the difficulty, and the time involved?  Because for some of us, the essence of building is transforming quotidian, real world needs into art that works for us. 

The design of the single family, private home is an architectural touchstone.  Even though they take more time, more decisions than ever thought possible, and are utterly irrelevant socially, they are the crucible of how we want to live our lives today.

"When one has finished building one's house, one suddenly realizes that in the process one has learned something that one really wanted to know in the worst way--before one began."

--Nietzsche

The modern American home provides an owner and an architect an opportunity to create a singular design reflecting the outward and inner directed motivations of the owner.  Much as wealthy patrons commissioned concertos or portraits, Americans see their homes today in much the same way.

Paul Goldberger (he was the architectural critic for the NY Times) wrote a piece entitled Houses as Art (12MAR95 NYT Magazine) where he described three general categories of people who undertake "this mad indulgence"

1. Patrons motivated by pure belief--the house is an opportunity to prove the power of architecture.
2. Patrons motivated by hubris--They are trophy hunters and a home represents a chance to reinforce their place in the food chain;
3. Patrons motivated by the collecting instinct--the home is another way of indulging in a passion for acquiring art.

Goldberger then mentioned a fourth kind of patron, "the accidental patron, the client who does not intentionally start out on the mission of building a serious house but who finds a talented architect, establishes a comfortable relationship with him and, in the process of fulfilling the basic needs of a house, ends up transcending them and creating a great work."

This is building as challenge.  A challenge to the patron to advance a clear vision of what is to be achieved by the home.  A challenge to the architect to walk that fine line between architecture as unlivable art and a connection to the world that uniquely guides the architectural vision into practicality.

For when we build, our goal is to practice an elegant efficiency and steady pace to get to the heart of the problem and build a home that has both a unique sense of place as well as to provide shelter with an emotional intensity not found anywhere else.

As for Nietzsche, my antidote to his described fruitlessness is to keep building--because whatever we have  built, we are always beginning again.

Posted by Ted at 10:28 AM | Permalink

a dream of a home, a home you may have seen, experienced, or just dreamt of. A custom built home, no matter how large, is the ultimate tool for a well lived life.

No less than Robert A.M. Stern recognizes that the typical American house reveals in its design subliminal and overt expressions of the realities and myths of our individual and collective experiences.

"Virtually every aspect of the American single family house--defines who we are as well as who and what we would like to be."

Stern goes on to note that "Architecture should be an affirmation of place--that is the physical product of a truly environmentally responsive approach."

Your dream begins with a place, and a sense of that place, both externally aware and internally focused.

This tome is a great way to stoke the dream-making process. 

Architectural styles are very portable--a drive through a modern neighborhood is a catalog of architectural voices.

The numbers behind this dream? All things considered, your total development cost ( everything other than the land) will run anywhere from $350 to $1000 per square foot in the areas we work in, and the average new home is roughly 2,400 square feet.

What's your dream?

Posted by Ted at 12:17 PM | Permalink

is how some describe the construction process. "It takes twice as long, and costs three times as much" is a common refrain when getting the update on a project. 

Our industry is a storied one, and customer relations like this have been going on for far too long.  Part of the reason lies with scope creep, part lies with poor risk management, part lies with crappy construction.

It doesn't have to be this way. On-time, on-budget delivery is about defining scope, managing risk, obtaining quality, and making decisions. The goal is maintaining a pace and intensity to get to the end faster, better and smarter than your last project.

The critical path of any successful project starts with you and your dream.  Breathing life into this dream involves four things:

1. reducing the dream, and any perceived options, to a 101 for your architect, who is the person who will articulate this dream to the building team;
2. finding the architect who has the voice to articulate your 101 and surface design constraints for resolution/acceptance;
3. resolving the articulated 101 (schematic design) with the budget;
4. recruiting a building team to can buy out the job within the budget without fatal cuts to the schematic design.

The design and the budget iterate until equilibrium is reached. Additional resolution and reducing the over/under on the budget is achieved by producing the permit set, and pricing version 2.0.0 of the finish schedule. My firm provides instant feasibility scope/budget checks that help to iterate faster and identify trades that need to be brought in early to resolve open items. Frustration is reduced, and the questions about scope become clearer.

The numbers to do this?  Getting to a schematic design that provides enough information to get to a +/- 20% of your budget number should burn 15 to 20% of your architectural budget. 

Posted by Ted at 10:08 AM | Permalink

To be a successful developer, you need three human capital assets--You need to know your numbers, you need the right relationships, and you need the juice or startup capital to get deals to a point where you can perfect the cap stack.

This blog is about refining the numbers--getting your algorithm right. By looking at situations with a keen sense of both the cost and value side, you get a better sense of where you should be deploying the juice and depending on your relationships. Top down and bottom up composition of the cost and value components of a project.

What is the value of good design? How do you characterize good design? Can you enumerate all the project risks? How do you eliminate/shift/mitigate project risk? How do you characterize the value side in a constantly shifting marketplace? Can you produce an algorithm for a constantly moving value indication--managing the moonshot?

They did put a man on the moon, didn't they?

Posted by Ted at 1:12 PM | Permalink