January 18, 2012

The Cents of Place is Moving...Home

Dear Reader!

After an intensive process of reworking the Donjek web space, I am pleased to invite you to visit the blog in its new location within the Donjek.com domain, at http://donjek.com/blog

If you previously signed up to receive these blog posts by email, you will automatically continue to receive them from the new location. If you receive these blog posts by RSS feed, please find the new feed address here or visit the new blog space and sign up! I will not be posting new blog content to this site, only to the blog within the Donjek website.

I look forward to continued conversation with you, on issues of public finance, urban redevelopment, and policy.

Home1


December 22, 2011

Donjek Project: Site Evaluation and Selection

2011.12.22 ParcelsOver the last few months, I've been partnering with a client to examine potential redevelopment sites along a planned rail transit corridor. As I described in this previous post, some property owners and users are in search of sites that are not only near station areas and other nearby assets, but clearly and conveniently connected.

In my home market in the Minneapolis Saint Paul region, the same impulse can be observed. Take, for example, the 34-story residential redevelopment recently approved by the Minneapolis Planning Commission, which is adjacent to a light rail transit platform at the Nicollet Mall station, next to the prospective Gateway Park, and reachable (both by pedestrian and transit mall and skyway) from all work, civic and entertainment locations in the central business district.

The Minneapolis example, however, made for easy site selection - its value is obvious. As customer preferences shift and transportation (both in mode and in cost) evolves, new opportunities will arise to identify and redevelop less evident, but very high-potential sites. Welcome to the future.

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December 12, 2011

The Business Case: Connect to Your Surroundings

"We're at a very interesting inflection point in real estate history. The next 10 years will be very different than the last 30." – Peter Miscovich, Jones Lang LaSalle, 2010

Connections bring foot traffic, and foot traffic underlies prosperous places. We depend on and value connections in different ways than in the past. Census data released this year confirms falling commuting by car and rising use of transit, bike commuting, and walking. America’s two largest demographic groups – Baby Boomers and the “Millennials” – are aligned in driving this trend.

Stronger links between buildings and their surroundings have long been values of urban designers. Increasingly, because these links present a business case by reducing vacancy and increasing lease rates, commercial tenants, property managers and owners are focusing on connections to neighboring property.

Connections nearly always involve interaction with both private and public sectors. Consider these examples:

  • Average space per employee has fallen from 500-700 square feet to 200 today, and is still dropping. Accommodating the needs of more employees, and maximizing spillover benefits, involves the public and private sectors, and can distinguish property owners and increase demand and values.
  • In 2011, transit in the region will move over 80 million passengers, including 69% who choose transit instead of their cars. In Minneapolis, the number of bicycle commuters increased by 27% from 2007-10. Property owners and managers prepared to engage these audiences will link to a growing base of consumers arriving by bicycle and foot. 

Donjek has demonstrated expertise in real estate finance, public/private sector negotiations, and planning to help owners, managers and other users of urban real estate increase the function and desirability of property. More specifically – I can work with you to:

  • Enhance visibility, increase safety, and boost foot traffic
  • Create value by taking advantage of proximity to nearby large employers or institutions
  • Produce real-time analysis of TIF cash flow of any district that may contain your property
  • Monitor the development process of nearby parcels in transition, for impacts on your transportation, zoning, or other assets
  • Create communication about these initiatives in a way that sets you apart.

The preferences of businesses and their customers are evolving. Tenants and their customers are leading the way, and you have an opportunity to attract and retain them with innovative strategies.

Related Articles:

November 28, 2011

Mobility Understood Best at Metro Scale, Not State

Analysis of 2010 Census data reveals that Americans are relocating at the lowest levels recorded since the public began tracking these trends in 1948. Mobility is influenced by conditions in housing and labor markets, which vary substantially by region or metropolitan area, and are continuously shifting.

That's why I take issue with an interpretation recently put forth by respected author and speaker, Richard Florida, in a pair of short posts ("America the Stuck" and "The Geography of Stuck"). He distills his interpretation into a claim that "America can be divided into two distinct classes, the stuck and the mobile." These "classes," in his view, are not only sorting themselves geographically, but by state: Residents of coastal states are mobile, others are not.  

In my view, the Census data really don't support this narrative. As Florida and others have documented, America's economic and cultural landscape is increasingly metropolitan. Those metro areas with the highest proportion of residents born in another state are found primarily in states that Florida highlights as "mobile":

TableLN

These data don't support the "two class" thesis for two reasons. First, while clearly in-migration is good for regions in forms including new ideas, cultural vitality and diverse labor pools, the specific kind of mobility Florida is calling out doesn't appear to correlate with economic strength. The right column in the table shows each region's rank (out of 366) in income growth from 2009-10; these aren't the nation's star performers. Second, as the map below illustrates (click on it for a larger image or see the source brief here), mobility continues to occur within states, from rural or micropolitan regions to larger metros and Census_Mob among metros. This is occuring in the states he calls mobile, and in many of the states he deems "stuck." As it turns out, neither label accurately reflects recent trends.

There are structural shifts underway, and Florida has named some aspects of these in recent years. This most recent chapter strikes me as a departure from his record of nuanced analysis. Some American communities are clearly less mobile than others, but these dynamics haven't developed in clean ways that follow state boundaries in an either/or fashion. They've developed by region, subregion, and neighborhood - and that's where our focus belongs.

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November 17, 2011

Donjek Project: Historic Hudson Manufacturing Building Reuse


Hudson6I'm currently in the process of concluding work with a historic reuse team focused on next steps for the H.D. Hudson Manufacturing Building in Hastings, Minnesota. The City-owned Hudson Building is of substantial size, and offers open floor plans and high ceilings - a blank, solid canvas. The Hudson was featured as a "hot property" recently in the Minneapolis Star Tribune.

From a finance perspective, the chief hurdle for historic reuse is reconciling long-term lease rates or purchase prices, with a rehabilitation investment that may include remediation, demolition, site costs, and a collection of items that can petrify typical investors: HVAC, roofs, stormwater management, vertical circulation, accessibility improvements. My role on the team, led by Will Stark of Stark Preservation Planning, has been to:

  • Evaluate and quantify the long-term financial gap between the value of the building's net income and its required investment
  • Identify funding sources and mechanisms that private and public parties could employ to make reuse of the building feasible in a financial sense
  • Inform scenarios for the City's next steps with the building, with financial analysis. Cost, speed, and scale of reuse each impact the financial outlook for its future
  • Narrate findings related to the downtown marketplace and project finance, to citizens, the City Council, and other stakeholders.

Historic structures offer uncommon attributes for the very reason that their construction occurred in a different marketplace. In the late 1800s when the Hudson Company put up the Hastings facility, materials including stone and lumber were available at lower real cost than today. The proximity of the building to the Mississippi River distinguishes the building regionally, in part because regulations have evolved to protect the river from development impacts. The reuse or demolition of the structure will, either way, continue to influence the health of downtown Hastings.

Related Articles:

Hudson Building image courtesy of Stark Preservation Planning and Peter Musty

September 23, 2011

Donjek Projects: Upcoming Speaking

I'm working on the concluding phases of work on an urban park-oriented redevelopment analysis, a reuse study for a historic manufacturing building, and a feasibility study for a commercial land trust. As each comes to fruition, I look forward to sharing results with you in the coming weeks.

LC2 In the meantime, I'm preparing for two events where I will present as a panelist. On October 5, I will be in Washington, D.C. to participate in an intensive one-day conference on economic vitality, coordinated by the Living Cities Integration Initiative. I will be joining Tracey Nichols, Director of Economic Development, City of Cleveland; Olga Stella, Vice President of Business Development for the Detroit Economic Growth Corporation; Leslie Anderson, Executive Director of New Jersey Redevelopment; and Paul Graziano, Commissioner of Housing & Community Development for the City of Baltimore.

The following week, I look forward to walking down the street to the University of Minnesota's Saint Paul campus on October 12 for the 27th Annual Conference on Policy Analysis. The conference topic is this year focused on defining the public good and the role of government in the state; I will participate in a panel with Caren Dewar, Executive Director, Urban Land Institute-Minnesota; Ann Mulholland, Vice President with The Saint Paul Foundation; and Mark Vander Schaaf, Director of Community Planning and Development at the Metropolitan Council.

I'm looking forward to the opportunity to present in each of these forums; even more, anticipating all that my colleagues will have to say on the issues of urban economics and policy that form the core of my work.

Last: While I'm unable to attend (and post from) the Inner City Economic Summit to be held by the Initiative for a Competitive Inner City in Chicago on October 3-4, I hope readers present there will share a summary for the rest of our collective benefit.

September 07, 2011

Productivity and Design Merge in the Gated City

Cover3 Since his publication in the New York Times' Sunday Review this past weekend, Economist magazine correspondent Ryan Avent has been showered with digital ink following release of his short book, "The Gated City." Based on his Sunday excerpt, it's clear his fundamental argument is that land use and productivity are inextricable.

Amen.

The policy arena is stocked with arguments over which strategy or which sector provides the most efficient return for job creation (for a sample, search "jobs per dollar" on Google - although, as this commentary indicates, your results will be different than mine).

This dialogue, however, does not usually consider the spatial issues involved. How many jobs, and of what type, are created across a city or region? Employers rely on a workforce that is trained and educated, able to reach the workplace reliably, and able to transport a product - by rail, by digital means, or other mode of movement. Employers and the economies of which they are part also rely on relationships that form networks around industries, innovations, or particular skill areas. Success or failure in each of these areas is all about how our cities are designed and how intensely infrastructure is used.

It's relatively simple to evaluate job creation initiatives if direct public expenditures and jobs ("full time equivalents") are the only terms examined. As I suggested a few months ago, Steven Johnson and Ed Glaeser illustrate this would miss a substantial part of the essence of why and where jobs are created. The last few days' eruption of interest in Avent's message indicates we're headed for a more nuanced, comprehensive view of how urban design and productivity are linked. That's a very good thing.

*Postscript: Thanks to Ryan Avent for including this short post in his list of commentary pieces on the Gated City. See the others here.

August 26, 2011

The Medium is the Message, or Parks as Performance

IMG00020-20110812-0852 Last night I enjoyed seeing good friend, a professional musician, perform with two bandmates. As at times in the past, I was struck by the generative power of a talented, experienced performance artist. At one moment, there are three people on a stage, poised to play. The next moment, they create something that establishes a connection not only among the producers, but among the audience, and between the two groups.

Given that a primary filter of mine is that of placemaking, I wondered what this shared musical experience means for our work in urban design and redevelopment. Current Donjek projects include an initiative on urban open space, focused on building links between residents and workers to a major riverway and to the green space itself. An (implicit) goal is connecting people to each other using open space as the medium, to create a distinct experience. Another current engagement relates to exploring reuse of a historic industrial building; a substantial element of the community’s preservation interest is to use the structure to connect people today to yesterday’s residents and the heritage of the place. In each case, physical design acts as a language that allows us to relate to others.

Music and other performances can trigger a powerful connection among us. Our places can become more vital and durable if we build and preserve them with connection in mind. 

August 03, 2011

In Search of Inzichten

Amst1 Over the last several years, readers of these periodic posts may have noticed I have had a longtime appetite for inzichten uit de Nederlandse stedebouwkunde – insights of Dutch city planning. I’m intrigued by the international nature of Dutch culture, its democratic roots, and the relationship of their planning to scarcity of land. The constant threat of flooding through their history has stimulated shifts in each of these areas.

This week, I leave for travel that will include time spent with family in Holland, and I’m looking forward to exploring another tradition’s approach to city building and public finance. A few examples I’ve touched in here at the Cents of Place include:

  • Understanding the value created both by access to transportation, and by a mixing of real estate asset types, remains a driver in Donjek projects. The Dutch connection is diluted in this piece, but I cited evidence from the Lowlands suggesting the premium for commercial real estate located near rail stations exceeds 10%.
  • Highlighting the historical connection of urban success stories and concerted public investment, I cited the model of Amsterdam as it emerged from the Middle Ages in reviewing Joel Kotkin’s 2006 book, “The City, a Global History.”
  • As a past adjunct instructor of economics, I could not be expected to forego some consideration of the fascinating period of Dutch history that centered on the mania of the tulip bulb. Similarly, I could not be expected to forego the comparison to the housing bubble, which I did in 2008.
  • Given the intensive construction underway outside the Donjek office, which will lead to easy access to nearby light rail transit, I’ve been reminded of the promising product of Dutch firm, the Ooms Avenhorn Group. Using street infrastructure for more than multimodal transportation, the geothermal systems collect and store warm and cool water beneath road surfaces for climate control in nearby buildings.

This is a small, unscientific sample of ideas. There are a great many who have both a more authoritative and more comprehensive perspective on Dutch planning and development. Call me a student. With luck, I will bring home more ideas for applying the most effective Dutch practices in American central cities.

Photo: Courtesy Flickr/Tashenka

July 25, 2011

Urban Economies: Going with the Flow

River1j Reading Ed Glaeser's Triumph of the City (which I mentioned in this post on transfer of ideas in cities), I learned that in the year 1816, transporting goods across land in early America cost an equivalent amount to shipping it from Boston to London. The comparative relationship tilted settlement and trade distinctly toward our waterways; construction of the Erie Canal and the Illinois and Michigan Canal completed a loop that connected four corners of the developing country. Between 1850 and 1970, at least five of the ten largest U.S. cities were located on this trade circuit.

Waterways remained critical as arteries to transport commodities and other inputs for trade and commerce; they also provided the doorway through which most entered frontier towns like my place, St. Paul. Over time, comparative pricing and relationships to rivers changed - railroads, then cars and trucks, airplanes, and digital thoroughfares provided radically cheaper modes of overland movement. 

Ports facilitate accumulation of value through transfer of material from one transportation mode to another. In the past, the fact that river ports fronted riverways was only significant in that barge transportation was cost-effective. As freight rail (for long runs) and trucks (for shorter runs) compete with river navigation, many river ports have declined. Minneapolis' Upper Harbor Terminal, for example, has managed falling volumes in recent years, the region's barge traffic dominated by the St. Paul (downriver) harbor.

Today, the relationships of "prices" continue to shift. In particular, the pressure to attract and retain talent is familiar to American mayors and business operators across the country.  In addition to creating recreation amenities, urban riverfronts also create collective open space that draws the eye through the city landscape. When perceived as safe and clean, access to river frontages creates substantial property value and economic potential. In addition to moving things in and out, the role of some riverfronts has expanded to focus on use as open space magnets that  make places more distinct and attractive. 

Our river, the Mississippi, formed and shapes both Minneapolis and St. Paul in important ways. Earlier this year, a team to which I served as regional advisor won the Minneapolis Riverfront Design Competition, now evolved into the Minneapolis Riverfront Development Initiative. I've been engaged for several months managing a project focused on strengthening the connection of downtown Minneapolis to the Mississippi via the Gateway. Comparable efforts have been underway in St. Paul over the last twenty years, including the Great River Park master plan developed in the last year. This subject, conveniently, presents an opportunity for field work: I'm looking forward to August visits to Roman river towns Maastricht, Ghent, and London.

Open space and riverfronts cannot by themselves replace key economic functions such as port activities. Still, as larger forces transform cities, the prominence and role of rivers continue to be key in distinguishing prosperous regions.

Photo courtesy of pmarkham/Flickr.