ULI Fall Meeting in Dallas Provided Insights for Everyone

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The Urban Land Institute held its 2016 Fall Meeting in Dallas last week with a tizzy of tours, sessions, networking events, and dinners. In my experience, the biggest benefit of a conference is in the networking. But the content at this one also covered a large array of subjects, from community engagement to redeveloping skyscrapers, to global trends, to niche discussions like “To Sell or To Hold,” and “The Fundamentals of Attracting and Keeping Companies North Texas Style.”

Tuesday I led a tour of the seven new development projects going up in the Bishop Arts District for the Colorado ULI chapter through the North Central Texas Congress for New Urbanism (more on that to come!) Wednesday and Thursday I got to catch a few sessions.

Highlights from the sessions included:

  • new metrics to qualify which dense urban cities are the best investment opportunities
  • innovative ideas for community engagement (from Detroit, of course)
  • the argument for building wood frame apartments above concrete podium parking.

And one topic repeatedly came up in each session — whether in the presentation,  in conversations with attendees, or by Q&A with audiences — affordable housing.

Density vs. Sprawl

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The panel, left to right: Lisette van Doorn (CEO, ULI Europe), Christopher Leinberger (Chair, Center for Real Estate and Urban Analysis, George Washington University), Vanessa Mascara (Senior Research Analyst, M&G Real Estate), and Rosemary Feenan (Head of Global Research Programs, JLL)

In the session “Density vs. Sprawl? The Investment Case for Smart Urban Growth,” the panel might simply have debated the merits of each, but the real meat was in the nuance of what makes “density” work best.

Lisette van Doorn (CEO, ULI Europe) highlighted a research model analyzing innovation and connectivity metrics to qualify investment areas outside of the typical top global cities. The model rates cities by ‘Enablers’ (such as wifi speed, number of journeys by green transport, length of dedicated bike lanes, frequency of electric car chargers) cross-evaluated with ‘Effects’ (such as affordability of monthly transport ticket, passenger satisfaction, commute times, safety, and recognition awards). High density cities, where most global real estate investment goes, typically score high on ‘Enablers’ but not ‘Effects’ and relatively lower density global cities typically score the opposite. The idea is to find those that score high on both and invest in real estate there.

The panel clarified, they weren’t not talking ‘drivable density’ like China is building now, but walkable multi-modal density. Christopher Leinberger pointed to walkscore’s data, where homes in an area over a score of 70 increase in value $20/sq ft with each additional walkscore point. Walkscore.com has additional research quantifying the added value to office and commercial.

Copenhagen. By Kristoffer Trolle

Copenhagen. By Kristoffer Trolle

The Pushback on Density

We forget that the automobile-centered lifestyle has been a massive experiment this century. For centuries before we’ve thrived in human-scale environments. The psychological case for density now is quality of life and wellbeing: increasing lifestyle fitness, encountering diversity in everyday life, seeing neighbors on the street, and frequenting neighborhood shops, etc.

There’s also a strong business case for public & private investment. At the federal level, we subsidize sprawl at $450 billion per year in loans, subsidies, tax credits, and deductions — plus local level expenditures. Government expenditures to supply and maintain the sprawling infrastructure (streets and utilities) cost taxpayers much more than dense urbanism. Walkable urbanism, Leinberger quotes, creates 6 to 12 times the return on investment per acre in government revenue through sales tax and property tax.

In the 20th century, we mandated that everyone drive. It’s been a massive experiment. We mandate it down to the zoning level.”

– Christopher Leinberger

Affordability and Equity

Many cities struggle with rapid gentrification of inner-city neighborhoods, a result of the low supply and high demand. Surprisingly, according to Smart Growth America’s “Foot Traffic Ahead” report, metros with the most walkable urbanism are also more equitable — according to the levels of spending on housing and transportation by moderate-income households (80 percent of AMI), and access to employment.foot-traffic-ahead-cover For more analysis on equity and urban density Leinberger also recommended looking into his WalkUP Wake-up Call report published for D.C., Boston, and Michigan metros. He’s now looking at the DFW market to identify the real estate opportunities, the social and economic impacts they’ll have, and the actions needed to take advantage of these market trends.

Innovation in Community Engagement

The gem from the “Rethinking Community Engagement” session was Dan Pitera’s presentation on the Detroit Future City (DFC) project. Pitera’s the Executive Director of the Detroit Collaborative Design Center in the Mercy School of Architecture at the University of Detroit. The mission of DFC is fostering innovative ideas of engagement that lead to a spontaneity of idea sharing. It’s all based on achieving goals in the Detroit Strategic Framework. Basically, to stabilize and improve neighborhoods.

For years, they’ve been coming up with creative initiatives to gain insights and make an impact in neighborhoods. 

Roaming Table

The Roaming Table, Detroit Future City

This roaming table may not look like much, but it allowed project staff to set up shop on any sidewalk on any street corner, to meet and talk with people in the community. It’s just one of their design methods that lead to spontaneity of idea sharing – as opposed to setting-up participants for specific results, the way planning meetings often feel. And it allowed them to reach people in the community who likely wouldn’t come to a neighborhood planning meeting.

“If you’re not at the table, you’re on the menu.” – Charles Cross, landscape architect

Pitera employed the audience to “think in verbs (experiences) not nouns (things)” when designing strategies for engagement. It turns your mind around to the people you’re planning for, not just the outcomes you hope to see.

Affordable Neighborhoods and Displacement

Displacement and being priced out of rapidly changing neighborhoods is a nationwide problem, due in part to successful planning and neighborhood engagement. Lara Merida (Deputy Director for Community Planning with the Boston Redevelopment Authority) shared their creative approach. Boston‘s Diversity Preservation Policy program, launched in 2016, will assist residents in high-risk neighborhoods gain preference for finding new homes and provide immediate case management for issues such as eviction. In Jamaica Plain, a streetcar suburb of Boston, the pilot program includes the city replacing a blighted 6-unit low-income housing complex with a similarly-sized structure on the site, with units deed-restricted as affordable housing in perpetuity, available to residents making no more than 60 percent of the metro area’s median household income. Not revolutionary, but it’s a new approach on the issue.

PODIUM STICK APARTMENTS

At the session “A Lid for Every Pot: Strategies for Urban Apartment Development,” podium-stick development dominated the conversation. When audience members asked about modular construction, the panelists spoke of experiencing over-reliance on one manufacturer which wasn’t beneficial overall – the young industry just isn’t stable enough to support large projects yet. Cross-laminated timber (CLT) was also brought up as a new building material — it’s similar to heavy timber. It’s not widely used yet but its sweet spot for cost-effectiveness seems to be around 8-12 stories.

IMG_6206The podium-stick model, building wood residences above concrete parking or retail, provides major savings in construction time (once the podium is built it goes up faster). More importantly, the mix of construction materials allows a bit more density with lower costs in situations where much higher density would be cost prohibitive. Bruce Dorfman, Principal at Trammell Crow Residential in the California division sited a project in Oakland where they were only able to build half the number of units with podium-stick than with a concrete and steel high-rise, but it was a third of the cost to construct (approximately $650k high rise vs $190k podium-stick.) High-rise units would have held a view premium of 10-15 percent, but it’s still more difficult to make the numbers work. 

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The panelists all agreed that the first four floors essentially capture existing rents in the marketplace, and operating costs are high unless over 250 units. But investors don’t seem to consider podium-stick construction a risk, as long as you’re not building condos.

Green Building – Pros and Cons

The US Green Building Council’s Leadership in Energy and Environmental Design certification (LEED) can be an expensive add-on but panelist Brian Dinerstein (of Dinerstein Companies) enthusiastically assured the audience that the costs to build and certify LEED are more than offset. Though going further, as in Zero-Net Energy, can be complicated – with solar actually being the least financially viable component. For a large project, it typically won’t be able to power more than 15 to 50 percent of the needs, and costs outweigh that by far. However, as a bargaining amenity to gain higher density allowances, it can make sense.

In Summary

Four packed days brought so many talented real estate professional here in Dallas last week. We hope visiting attendees enjoyed hearing and seeing all the great things we’re doing in Dallas as much as we enjoyed your great insights.