[PPT] - 10 IMPORTANT TRENDS IN LAND DEVELOPMENT THAT 10 IMPORTANT TRENDS IN PowerPoint Presentation

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10 IMPORTANT TRENDS IN LAND DEVELOPMENT THAT 10 IMPORTANT TRENDS IN LAND DEVELOPMENT THAT WILL DRIVE YOUR BUSINESS FOR THE NEXT DECADE

AMERICAN COUNCIL OF ENGINEERING COMPANIES AMERICAN COUNCIL OF ENGINEERING COMPANIES 2013 ANNUAL CONVENTION

Adam Ducker, Managing Director | aducker@rclco.com | April 22, 2013

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ABOUT OUR FIRM

RCLCO helps developers, institutional investors, and organizations active in land k t b i d i i b

SERVICES  Metropolitan Opportunity Studies  M k t F ibilit St di

use make smart business decisions by providing market intelligence, strategic planning, and implementation solutions

 Market Feasibility Studies  Scenario Modeling/Highest and Best Use Analysis  Workouts and Repositioning

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Repositioning  Public/Private Partnership Structuring  Economic & Fiscal Impact Analysis Analysis  Smart Code Review  Regional Visioning  Strategic Planning for Real E t t C i Estate Companies  Recapitalization Planning  Management Consulting

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Summerlin; Las Vegas, NV

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THE 10 TRENDS TO GET AHEAD OF

1. Government (MPOs) will begin to truly govern metro growth patterns
2. The mixed-use/multi-use delusion/confusion will be resolved

3 Development companies will be far more strategic but with a broad view

3. Development companies will be far more strategic, but with a broad view
4. The suburbs are not dead. . . Far from it
5. The homebuilder/land developer line will be blurrier than ever
6. Green technologies with a demonstrated cost benefit will catch on at an

accelerating pace

7. Passive “green space” and simplified “engage space” will dominate
7. Passive

green space and simplified engage space will dominate community amenitization

8. (Slightly) smaller homes are here to stay, but true market segmentation

will be more important than ever p

9. High-density and mixed-income housing forms will proliferate, even in the

‘burbs 10 Off shore land investment/development in the U S will rebound rapidly

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10.Off-shore land investment/development in the U.S. will rebound rapidly

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1. GOVERNMENTS (MPOs) WILL TRULY BEGIN TO

GOVERN METROPOLITAN GROWTH TRENDS

Ocala

New Smyrna D l d Port Orange Pierson Deland Sanford New Smyrna

Mt. Dora

Umatilla Apopka Maitland Tavares Deland Leesburg Longwood

Orlando

Clermont Bithlo Apopka Celebration Cocoa ? Taft Maitland Tavares Groveland Titusville Citrus Ridge Kiss/St Cloud

?

? ? Holopaw Haines Viera

Lakeland Melbourne

Winter Haven

Bartow Frostproof Lake Wales Mulberry

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Destiny

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1. GOVERNMENTS (MPOs) WILL TRULY BEGIN TO

GOVERN METROPOLITAN GROWTH TRENDS

WHY IT MATTERS?

1. Your client may be (at least at first) different

2 D i f l d l b di ll diff t

2. Drivers of land value may be radically different
3. Infrastructure investment likely to become more rational (and perhaps

also significantly higher)

4. Density patterns likely to change dramatically
5. The vast majority of developers (let alone land owners) will not be able

to get ahead of this to get ahead of this

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2. THE MIXED-USE/MULTI-USE DELUSION/

CONFUSION WILL BE (SOMEWHAT) RESOLVED

Mixed-Use: Bethesda Lane; D.C. Metro Multi-Use: Southlake Town Center; Dallas ; Town Center Community: Summerlin, LV

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2. THE MIXED-USE/MULTI-USE DELUSION/

CONFUSION WILL BE (SOMEWHAT) RESOLVED

WHY IT MATTERS?

1. Much more rational economic discussion about what works where

2 L iti t t it t i th lti d l t d l

2. Legitimate opportunity to improve the multi-use development model
3. Give space for community development to respond rationally to

market demand

4. Vastly improved entitlement processes/outcomes
5. Clarified and simplified financing environment

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3. DEVELOPMENT COMPANIES WILL BE FAR

MORE STRATEGIC, OR NICHE PLAYERS

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3. DEVELOPMENT COMPANIES WILL BE FAR

MORE STRATEGIC, BUT WITH A BROAD VIEW

WHY IT MATTERS?

1. “Development” companies much more likely to be run (or very closely
verseen) by hedge funds
verseen) by hedge funds
2. Driven by regional growth trends and not deal junkies
3. Multi-regional, multi-product capable, horizontal and vertical
4. Not nearly as willing to take entitlement risk
5. Not nearly as capable/able to leverage their own political connections

6 C t t ll f th b th ill b t i ll

6. Contrary to all of the above there will be very strong, regionally

focused, niche players—but likely to be small and cost constrained

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4. THE SUBURBS ARE NOT DEAD, FAR FROM IT

New Privately Owned Housing Units Authorized by Building Permits in Permit-Issuing Places, U.S. Census Bureau 100% Boston 70% 80% 90% Not Moving San Francisco

Housing Affordability at 90% of

40% 50% 60%

at 90% of Area Median Income (AMI)

AFFORDABLE

10% 20% 30% 40% Washington, D.C.

PRICED OUT

0% 10% 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

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1 Unit 2 to 4 Units 5 + Units

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4. THE SUBURBS ARE NOT DEAD, FAR FROM IT

7 R l Movement of Gen Y Renters (%)

12 7

Rural Suburban 14

Not Moving

37 Urban 45

Move within Current Metro

44 Close-In (Urban-Lite) 41 (Urban Lite) Where They

Move to Another Metro

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Will Move

SOURCE: RCLCO Consumer Research

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4. THE SUBURBS ARE NOT DEAD, FAR FROM IT

WHY IT MATTERS?

1. Much of the industry is foolishly giving up on the suburbs

2 Th h d th h ill h t d i t f th

2. The where and the how will have tremendous importance for those

smart enough to focus on this strategy

3. Time to think about right-sizing the suburban MPC and much more

fl ibl h i h flexible phasing approaches

4. Note: Don’t slavishly buy the fuel price/cost of commute argument

5 Repurposing existing (bland) suburbs will also be a huge opportunity

5. Repurposing existing (bland) suburbs will also be a huge opportunity
6. Retail opportunity in the suburbs will be quite slow in rebound
7. Office opportunity will be limited for the foreseeable future, as

l t ti t t t employment continues to concentrate

8. There will be industrial opportunity, but with far more location logic

behind it

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5. HOMEBUILDER/LAND DEVELOPER ROLE LIKELY

TO BE BLURRIER THAN EVER

WHY IT MATTERS?

1. Engineering sophistication will be more valuable than ever

2 E titl t ti lik l t b li it d th i th t

2. Entitlement expertise likely to be ever more limited than in the past
3. Operations no longer driven by the acquisition guy
4. Transaction terms and take down schedules far more complicated
4. Transaction terms and take down schedules far more complicated
5. Lot inventory management will be critical
6. Speed to market becomes the key economic metric for the business

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6. GREEN TECHNOLOGY WITH A DEMONSTRATED

COST-BENEFIT WILL CATCH ON

What impact does your home have on the environment?

29% 33% 21% 11% 5% 21% No Impact Some Impact Acceptable Impact Significant Impact, Nothing I Can Affect Significant Impact, Something I Can Affect

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13 SOURCE: RCLCO Consumer Research – 2008 (very dated already)

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6. GREEN TECHNOLOGY WITH A DEMONSTRATED

COST-BENEFIT WILL CATCH ON

WHY IT MATTERS?

1. Your customers are spending lots of money on the wrong things—

need to really develop a better customer understanding of green need to really develop a better customer understanding of green

2. Entitlement authorities raising “green barriers” to entry
3. Resource management (water) going to become a much more

i ifi t t f th significant part of the process

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7. PASSIVE “GREEN SPACE” AND SIMPLIFIED

“ENGAGE SPACE” WILL BE KEY AMENITIES

The Family Barn: Martis Camp, Lake Tahoe, CA The Community Farm: Prairie Crossing, IL

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7. PASSIVE “GREEN SPACE” AND SIMPLIFIED

“ENGAGE SPACE” WILL BE KEY AMENITIES

WHY IT MATTERS?

1. Time to learn a lot about conservation easements (30% to 50% of land

set aside) set aside)

2. Your customers are spending lots of money on the wrong things
3. Different amenity paradigm allows for smaller project—more feasible
4. The social interaction is more important than the place character,

particularly to Generation Y 5 Community development really about the community as much as the

5. Community development really about the community, as much as the

development

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8. (SLIGHTLY) SMALLER HOMES ARE HERE TO

STAY, BUT SEGMENTATION STILL RULES

3,000

Preferred Home Size

2,000 2,500

Average

1,000 1,500 500

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17 SOURCE: Associated Designs, Homes from the Heart Annual Survey, Trulia-Harris Interactive Survey conducted July 22-26, 2010

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8. (SLIGHTLY) SMALLER HOMES ARE HERE TO

STAY, BUT SEGMENTATION STILL RULES

1. $100,000 2 $200 000 2. $200,000 3. $300,000. . .

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8. (SLIGHTLY) SMALLER HOMES ARE HERE TO

STAY, BUT SEGMENTATION STILL RULES

WHY IT MATTERS?

1. Land planning and engineering needs to allow for more dramatic

change (density and home character) over the life of the project change (density and home character) over the life of the project

2. Quality not quantity
3. Learn to love TND. . . Because the planners sure do
4. Innovation in the homebuilding business yet to appear (although

hopefully it still might)

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9. HIGH-DENSITY AND MIXED-INCOME HOUSING

WILL PROLIFERATE, EVEN IN THE ‘BURBS

1/2

Median Lot Size (Acres)

2/5 4/9 2/7 1/3 Acres 1/4 2/7 1/5 1999 2001 2003 2005 2007 2009 New Construction (4 Yrs) Owner Occupied Renter Occupied

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20 SOURCE: American Housing Survey

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9. HIGH-DENSITY AND MIXED-INCOME HOUSING

WILL PROLIFERATE, EVEN IN THE ‘BURBS

WHY IT MATTERS?

1. In the last cycle we built housing almost exclusively for the high-end—

a market that is much more forgiving a market that is much more forgiving

2. Systems expertise becomes that much more indispensible
3. Economics of development still don’t allow for variability as much as

th h ld they should

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21 SOURCE: American Housing Survey

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10. OFF-SHORE LAND INVESTMENT/DEVELOPMENT

INTEREST IN THE U.S. WILL REBOUND

WHY IT MATTERS?

1. Your customers are going to be a lot different than they were in the

last cycle last cycle

2. Familiarity of with U.S. “ways of doing” it, will be much lower
3. European players, in particular, are way ahead in understanding

t i bilit i i l sustainability principles

4. Sense of scale and density is radically different

5 Work style and approach to process is dramatically different

5. Work style and approach to process is dramatically different

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22 SOURCE: American Housing Survey

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