Commercial real estate and development has always been a complex industry; and more times than not that complexity is heightened by risk. We spend an inordinate amount of time and resources in exercises such as pouring over demographic data, analyzing traffic counts, pulling market comparisons, projecting returns on investment, etc. Each one of those exercises is supported by a tangible piece of evidence to support its respective outcome.
Are there intangibles that impact a location or project’s ultimate success? Of course, there always have been. But none to the degree that I see entering into equation like the topic of today’s post.
I hear it in every meeting. “How does this impact quality of life?” Or “people are looking for quality of life”. The city where our office is located actually created a municipal division in our local government: The Quality of Life Division. Which brings me to my implied headline…WHAT IS QUALITY OF LIFE?
That very question was raised at a lunch meeting I was having with the the CEO of one of the largest employers in our market. Specifically, it was slanted toward the challenges they face in recruiting professionals to relocate from larger metropolitan areas; and under those circumstances, we seemed to talk about things like the proximity of professional sports franchises, 5-star restaurants, and recreational facilities. And that all makes perfect sense; and it certainly is easy to explain how those amenities would be included in that particular group’s wish list.
But then we started talking about other things that come up in public and market meetings. Dog parks, walking trails, sidewalks, water parks, etc. Dog parks? DOG PARKS? As I was adjusting that being an actual “deal maker” or “deal breaker” in $20 million dollar multi-family projects; I learn that the latest trend is restaurants that accommodate your canine companion eating right alongside its owner! And these restaurants are not fringe; they are popping up and they are thriving.
And what about sidewalks? I have sat in meetings with people who literally are brought to tears over their impassioned plea for sidewalks. And at the very same meeting, another person will speak until they become angry at the thought of paying for a sidewalk; or have the city install a bike lane along a city corridor.
As Boomers transition to retirement and Millennials enter the workforce, there could not be a wider gap in how the market interprets “quality of life”. But as commercial realtors assisting developers; or in our case, as developers ourselves, we can no longer afford to ignore the impact that those definitions are having on where people want to live, work, shop and eat. So…what is IT?
The truth of matter is there is no single answer. But in order to be successful, it is on us to better understand what the top concerns are with all segments of the markets that we serve. As I write this, we are about to go into a meeting with a retired couple who have agreed to participate in a focus group to evaluate a particular mixed use development we are involved in both building and brokering. We have previously met with a group of 25 high school juniors who are part of a leadership program to hear what they have to say about their desires for the future; from what kind of restaurants they want to eat at, the type of retail they will support, to the types of neighborhoods they want to live in. It is our belief that if you aren’t talking to Millennials about where your market is headed; then you probably don’t know where your market is headed!
Like I said in the beginning, on its best day this is a complex business with a growing element of intangible risk associated with every decision we make. I think it’s time we take this issue seriously, and not think we can just ignore it and be successful.
After all, OUR quality of life depends it.