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 – we can work with you to:

  • Serve as your “R&D” function to take advantage of ways to attract feet
  • 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 that reflect an evolving set of demands.

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Charles Landry: City Making in Minneapolis Saint Paul

Landry Expectations were high for remarks by urban theorist Charles Landry, given late last week at Minneapolis' Guthrie Theater thanks to program partners at Metropolitan Council and the McKnight Foundation. I shared these expectations, due in part to this article, which described Landry's focus as "the complex blend of elements that most effectively draw talented people to specific cities and regions." In my view, interesting work with immediate relevance.

True to form, Landy offered a compelling and global perspective on what differentiates successful cities and metropolitan areas from those in decline. Each region's approach is key: Is the dominant strategy an "urban engineering paradigm," or "creative city making"? Presented directly to us in the Minneapolis Saint Paul region, Landry asked: Is this a city of projects, or is the project the city?

Most of the audience, I believe, share Landry's underlying confidence that urbanization can and ought to bring about a greener, more productive, healthier and happier world. In that vein, he offered five threads found in great cities. In each case, I've offered editorial comments:

  • Anchorage: What is a region's gravity, which attracts people and ideas? The importance of robust networks of people and activity – industry clusters – can't be understated. It's true for people involved in chemistry, and for people involved in music (and for those involved in both at the same time!). See the Metropolitan Business Plan for more.
  • Possibility: What's the potential for the place? Youth development, education, and workforce development (for the young and mature) are the critical areas of possibility for a place. No urban region can thrive without investing in the young, and their potential to generate new ideas.
  • Connection and Reconnection: Beyond the need for physical connections to give community members and workers access to their most significant destinations (whether work, school, civic, religious), successful regions maintain strong bonds well beyond their borders. High rates of immigration and import/export activity, and the ability to communicate a region's message in the global arena are two examples of such ties.
  • Learning: To me, Landry's citation of the importance of learning extends beyond the realm of education, which (as I suggested above) is a cornerstone for effective regions. Learning needs also to include the degree to which governance is flexible and intelligent enough to incorporate emerging trends and past experience, in planning for the future.
  • Inspiration: Establishing shared values and shared identity are crucial, so that a region can articulate what is its inspiration. Why are we here? What do we have to communicate to the world? What is our contribution to the cultural, economic and political life that surrounds and includes us? 

Landry's framework of these five threads offered a provoking platform to consider how regions like Minneapolis Saint Paul move forward. Unfortunately, the speaker's efforts to speak in detail about the Central Corridor LRT line (and even specific sites along it) were neither specific nor reflective of context. He also appeared unprepared to discuss how manufacturing and other industry play a role as economic engines, job providers or as gateways for workers to earn good wages.

As Ed Glaeser argues in the Triumph of the City, places are powered by people, not buildings. Landry's presentation was worthwhile as a full (if high-altitude) depiction of how "creative city making," focused on harnessing talent, can craft durable regions in the 21st century.

Donjek Projects: Victory in the Minneapolis Riverfront Design Competition!

One of multiple reasons for my extended silence on the Cents of Place blog has been my involvement in the intense exercise of the Minneapolis Riverfront Design Competition. I posted in early November that my team, led by Kennedy and Violich Architecture (KVA) of Boston and the Tom Leader Studio of Berkeley, had been among four teams selected from over fifty to engage in a second round of competition.

FP12 This morning, the competition's supporters and sponsors (including the Walker Art Center, the University of Minnesota's College of Design, the Minneapolis Park and Recreation Board, the Minneapolis Parks Foundation, and others) gathered on Nicollet Island to announce that our team is the winner of the competition!

The process, inside our team, unfolded like a charette, only on a broader and deeper scale than I’ve seen before. Since early November, this team pulled together volumes to inform a thorough approach to a complicated river corridor. There are many meeting points in the project area that each represent opportunities: Where North meets Northeast, river meets shores, trails meet bridge heads, industrial meets other land uses, central business district meets neighborhoods. Hydrology, bridge design, area culture and history (indigenous, pioneer and more recent), land use economics, institutions, equity of access to parks – these topics and many others received focused, research-driven attention. Led by Tom Leader, and Sheila Kennedy and Frano Violich of KVA, this team produced an innovative approach to tie these issues all together in physical space.

FP13 It's a privelege to be a member of this team. I've also marveled at the compelling mix of collaborators who made this possible, from the sponsors to standout project manager Mary DeLaittre. That we will together have the opportunity to continue working, focused on a particular site to be determined on the Upper River in Minneapolis, promises to be a professional highlight.

See the final proposal here.

@Strib: Building Productive Places in the Air


Note: An abridged version of the following post was also published online at the Star Tribune's Your Voices forum. Your comments are welcome in each forum.

The realities of climate change, rising gas prices and budget constraints compel us to use our developed area more intentionally and productively. Our assets will need to produce multiple benefits – parking lots become stormwater collection systems, roofs become collectors of energy, and road rights of way become tillable land area. All around us is space that we’ve underused over time.

Bridges are a good example. Inhabited bridges, or bridges that support a superstructure of residential and commercial buildings, are being reconsidered as an innovative way to add capacity, jobs, tax base, green space and character to urban centers. As in many cities located on major waterways, bridges can serve as iconic landmarks that structure the urban landscape and hold powerful symbolic connotations of community integration. And beyond symbolism, inhabited bridges capture space from the air, to house jobs or shared spaces. 

Vecchio_by_CGoulao Certainly not a 21st century innovation, bridges that contain residential and commercial uses have been an historic solution to limited available land for development in medieval European cities. From the 12th to the 18th centuries, at the apex of their popularity, mixed-use bridges were built throughout Europe. In economic terms, their construction shows that the value of proximity outweighed building and maintenance cost. Notable and popular examples include Old London Bridge, Ponte Vecchio, and Ponte di Rialto (here are the shops). The Old London Bridge was built in 1209 and housed nearly 200 shops as well as numerous residences that provided the revenue for the bridge’s construction and maintenance. 

Still standing in Italy, the Ponte Vecchio of Florence and the Ponte di Rialto of Venice (built respectively in 1345 and 1591) continue to be iconic structures and popular tourist attractions lined with flourishing shops. With little land available for expansion, medieval cities built inhabited bridges to maximize available space while minimizing government expenditure on maintenance through the taxation of residential and commercial entities inhabiting the bridge. The popularity of inhabited bridges, however, all but vanished following the 18th century as the demands of traffic and outward movement escalated, and the value of proximity fell in relation to construction and maintenance costs. 

Nonetheless, the inhabited bridge may not be a mere relic of the past but innovative solution to modern urban problems. The surviving Italian inhabited bridges testify to their modern applicability and the lasting import of their unique construction.  

Following their heyday, numerous plans for inhabited bridges have both been proposed and denied due to their perceived impracticality in a world dependent on motor vehicles. However, at the turn of the 21st century, the idea of inhabited bridges has gained greater attention. Construction of inhabited bridges appears to offer significant benefits and opportunities for the modern city. The “Living Bridges: The Inhabited Bridge: Past, Present & Future” exhibit at the Royal Academy of Arts in London in 1996 brought the concept of inhabited bridges to global attention and was met both with enthusiasm skepticism. A large component of the exhibit was an architectural competition to design an inhabited bridge. 

Again, in 2009, a similar competition was undertaken to commemorate the 800th anniversary of the construction of the Old London Bridge. While much of this interest has not begotten bridge construction, the inhabited Zaragoza Bridge crossing the Ebro River in Spain was constructed in 2008 to combine a pedestrian walkway with exhibition spaces focusing on water sustainability. Although new construction, the Zaragoza Bridge is an initial effort at redeploying the inhabited bridge for modern development. 

As global and economic factors converge to redirect our attention inwards, we are faced with cities that are compartmentalized by networks of major roadways. Communities and businesses within our cities are separated by natural barriers like rivers as well as man-made ones. Symbolically and physically, these communities are in need of being bridged. The inhabited bridge may serve to restore a disjointed urban social fabric, and release space for the creation of jobs, tax base, green space or others uses in places across the country.

Photo: Ponte Vecchio detail. Courtesy of Flickr/CGoulao

Donjek Project: Glossary of Transit-Oriented Development Finance

Cover Access is valuable. In metro regions effective passenger transportation is a critical ingredient of continued competitiveness and quality of life. Due to a range of economic and political factors, rail transportation is expanding as a mode for moving freight and people alike.

Shared experience of regions in the U.S. and internationally suggests that rail transit infrastructure endows nearby property with a substantial value premium. Economist Joe Cortright analyzed 94,000 home sales in 15 metropolitan U.S. markets, and found that homes located within walking distance to varied amenities are valued more highly in the marketplace than comparable property situated elsewhere. Examining two neighborhoods in Charlotte, North Carolina, Cortright identified that a typical home in the Wilmore demands a premium of $34,000 or 12% of median value, compared to much less pedestrian-accessible Ashley Park. The experience of other metro areas including Jacksonville, Chicago, Sacramento and Austin reflect premium levels of $10,000 or more for homes of median value in neighborhoods with high levels of non-auto access.

Early evidence of light rail transit (LRT) lines in this region is consistent with Cortright’s findings. The University of Minnesota’s Center for Transportation Studies released preliminary results of a second-phase study of property appreciation near the Hiawatha LRT Line in Minneapolis.  The process, using residential sale data, has found positive impacts of roughly 25% on single- and multi-family housing located near station areas. Candidly, the Hiawatha Line has been a success in terms of ridership but isn’t particularly effective in stitching neighborhoods together with downtown. If effects are favorable here, they will be so for coming lines that connect Saint Paul and Minneapolis, and Minneapolis’ downtown to its south side and suburbs beyond.

It’s not just residential property values that are influenced by accessibility. Analyses undertaken for the Urban Land Institute and the National Association of Realtors found a 23% premium in California’s Santa Clara County land values within ¼ mile of light rail transit stops.  Another study of the San Diego LRT system found land value premiums as high as 72-91% for commercial land located near station areas on particular lines; the same study found that commercial land on other lines was discounted by the presence of the LRT stations. A 2007 study of the dense network of Dutch rail stations concluded that commercial property within ¼ mile of a rail station exhibited a land-value premium of over 12%.

Recently, Donjek was hired by a client in the Southeast U.S. to explore national models for financing development adjacent to LRT investments. We focused on multiple tools used to great effect nationally:

  • Transportation Development/Improvement Districts (TDDs, TIDs)
  • Special Assessment Districts (SADs)
  • Tax Increment Financing (TIF) / Project Development Financing Districts
  • Tax Abatement 
  • Joint Development 
  • Transportation Utility Fees (TUFs) 
  • Air Rights, Grants and Loans

Each region is distinct in its history, its disposition about public/private partnerships, its attitudes toward transit, and how high-impact regional decisions are formulated and implemented. These tools are applicable in degrees depending on these and other factors.

LRT and fixed-rail transit infrastructure doesn’t belong everywhere. And as the Federal Transit Administration has made clear in the last week, the federal government doesn’t intend to build systems that can’t be supported by ridership in the long term. 

One key element to making transit work – for the environmental and fiscal health of the country and its communities – is concentrating development and redevelopment potential where it will be most accessible. These public finance tools can be part of that equation.