So much of the real estate industry is extractive, where far-away investors mine the value from properties that line our streets. We are working toward a more generative real estate model, where local people can invest in their own neighborhoods and in that process, create new life and value that benefits their community. The kind of places we want to live in are built and maintained by people who really love them.
However, even beloved and successful places are at risk. We all know stories of boom and bust. Buildings, neighborhoods, cities are all put under great stress in times of fast economic change, whether growth or decline. At the local level, the best way we know to protect against the negative impacts of both growth and decline is this: spread the risk and the reward. We need more neighborhood-based small developers creating buildings that can adapt in times of trouble.
Scale makes all the difference. The small-scale developer is limited by their size to a certain scope of project. They don’t have the team or the resources for mega-developments; they need to stick with small, simple buildings in a fairly concentrated area so they can easily keep an eye on things. Instead of large apartment blocks or a subdivision of single-family homes, small developers are more likely to build duplexes, triplexes, quadplexes, live-work buildings, backyard cottages etc.—perfect for adapting neighborhoods on a lot-by-lot basis.These buildings are too small for a conventional developer whose profits depend on an economy of scale. Small developers depend on economies of resourcefulness and relationships, and that economic model is what makes small developers so adaptable in times of trouble.
This country is covered with inspiring precedents of buildings that punch above their weight, giving back to the city through taxes, to the neighborhood through street appeal, and to the owner through a positive cash flow. Across the country, communities are realizing that big developers cannot be induced to come build the neighborhoods they want. No one is coming to save them from the status quo. They’ve got to do it themselves.