Car-less in California

What an interesting two weeks it's been. I returned from my trip to Dubai to land in Los Angeles. Considering my love for urbanism, it's definitely not the first place I would have expected to end up. But I landed here and I'm out of money, I have family and friends here, the weather is lovely and there are more employment options in this region than most others in the country. So I might as well stay put until I come up with a plan. What I didn't count on is the new appreciation I have for Los Angeles as a polycentric city. That is, a city with many beautiful and individually vibrant urban cores. Some of the towns here have fantastic centers!

Yes, I studied LA at the 2006 CNU, but I've never had the opportunity to experience it as a resident. And certainly never as a car-less resident! That's right folks... LA, no car. Give it a shot sometime, it's not what you'd expect. In a strange way it reminds me of living in Bogen, Germany (Bavaria) [which I did for nearly a month at the tender young age of 15]. At the moment, I'm splitting time between the two respectably urban neighborhoods of Pasadena and West Hollywood. My daily needs can be met by foot or bicycle but what's remarkable is that the transit system here (while slow) actually can get you to most places you'd want to go. The problem is that it stops running long before the bars close, making it completely impractical to leave your neighborhood to work late or socialize unless you plan on driving. In Bogen, I had a similar experience. Despite my age and inability to drive at the time, I was able to take day trips by train to Straubing or Munich, but at night was limited to the social scene exclusively within walking or bicycling distance.

As a corollary concept, and I may be wrong about this, my impression is that people here are more isolated than they are in NYC, or on the east coast in general. It's hard to put my finger on exactly why I say that, but there seem to be several imperceptible social differences that scream "I'M ISOLATED!" My theory for at least one cause is this; people are trapped inside a relatively small neighborhood social scene, and their only means of escape, aside from becoming friends with the locals, is to sit alone in a car for 30-45 minutes each direction. It's sort of like living in Lincoln, NE but instead of being surrounded by cornfields you're surrounded by similarly sized cities. Each one has everything necessary for life, but individually they lack the depth of larger cities.

But the symptoms are what I can't quite figure out. Is the built environment affecting people's behavior? If so how? My buddy Demetre suggested that the Hollywood culture has something to do with it too. I can feel a certain distance in interactions here compared with the Northeast, but I haven't figured out how to identify or name the elements yet. Any helpful comments or suggestions?

Dubai: Final Thoughts

It's been a week since I returned to the US from the United Arab Emirates. The best way for me to describe Dubai to Americans is to say that it’s a strange combination of the three well known US cities; New York, Los Angeles and Las Vegas. It is a city, like Los Angeles, where every destination is linked by a freeway. There are virtually no functional avenues or boulevards. A city, like Vegas, where most large buildings are iconic in nature and intended to shock and amaze the average person with engineering feats and architectural marvels. And thirdly a city, a bit like New York, where everywhere you look, you see skyscrapers. Some of them are truly magnificent and capture everything I love about the form; but unlike NYC, Dubai lacks the urban fabric. The places in between. There are so few hole-in-the-wall places worth exploring, because there is no wall.

To be fair, there are two older neighborhoods (Bur Dubai and Deira) where urban fabric is the norm, but they are both eyed with some level of contempt by city planners and are marked for destruction. These neighborhoods are where the action is and they are actually quite remarkable. As other neighborhoods like the Dubai Marina, The Greens, and Jumeriah struggle to maintain value, Bur Dubai and Deira will be affected the least.

This leads to my second key observation: Dubai seems to have the very real and common problem of value retention with age, much like most of the American suburbs. It would seem that most buildings over ten years old are slated for the wrecking ball if they haven't been demolished already. Fortunately this is a problem that will eventually go away as some buildings are spared and the age of the city diversifies. My biggest question is how will they patina. The Empire State building has become increasingly valuable over time, will these? At present, the design of most of these buildings and their neighborhoods makes them difficult to maintain and challenging to repurpose for adaptive re-use. It will be interesting to re-visit the city over time, to see how condo buildings have been converted to offices, or dead malls into living neighborhoods. Fortunately for the Emiratis the Americans will have to tackle this problem first.

My final thought is on velocity and market segment. In our new market reality of limited credit and less flexible lending, there are many building sitting vacant in what should be desirable neighborhoods. This leaves the neighborhood relatively lifeless and exposes it to the possibility of urban blight. Dubai has never seen a neighborhood devalue or become dangerous. What will happen if the target demographic never moves to a half built neighborhood? There are still newer ones on the books, waiting to be built as soon as the economy turns around. How will the built environment absorb an unexpected population of differing means and culture? I believe the best way to handle such a scenario is simply to accept it and open the door for the neighborhood to reinvent itself at the smaller scale. Poor neighborhoods need smaller, cheaper spaces in order to nurture new growth. Cheaper will happen with time, but the zoning code must also allow for storefronts to be modified, apartments to be split in two and offices to be resized. This is what NYC has done so well for so long, what Los Angeles is still learning and what Vegas will soon experience. I hope that Sheikh Mohammed recognizes the opportunity for appropriate infill when the time is right and allows it to happen naturally.

The Life of an Expat?

This evening I went to a piano bar and I felt so connected with the movie Casablanca. There's essentially no swing scene in Dubai, and hardly any respectable live jazz music. It's a huge difference from NYC and a painful one for a guy who used to see live music a minimum of three times per week.

It helped me understand what Humphrey Bogart's character must have been going through living in some random city as a sort of lonely expat. I'm not there yet, but I can see that sort of lifestyle creeping up on me. There must be amazing days and must be really hard ones too.

Going to a bar like that makes me miss home a bit; not that I've even been away that long, but it's more the idea of being away for a long time that makes me expect to miss it and makes one wonder what kind of new spots you'll find.

Dubai: First Impressions

On Wednesday 1/8/09 I took the London underground back to the airport and boarded a plane for Dubai at 9pm. I landed in Dubai 1/9/09 at 7:40am and spent the day touring the southern side of the city, went to the gym, napped and went to a handful of hotel bars/nightclubs.

Two of my most interesting observations are that the city is far more dense than I expected, but only about half occupied in places (at least near the Dubai Marina). Secondly, many very nice buildings/hotels have been "out-luxuried" in five years or less. In other words, what was a luxury product five years ago is now just an average to below average hotel due to the constant architectural one-ups-manship here. This begs the question, "what do you do to differentiate your luxury product in an environment like this?" Apparenly the answer here has been to just build taller, more fancy buildings with increasingly nicer finishes, but that only creates an exciting game of real estate hot potato. People keep trading properties back and forth until there's a collapse in perceived value, the last man holding title gets sunk.

When I asked my friends on twitter and facebook I got several responses. One idea to "create the illusion of higher quality by being the most expensive." sounds to me like the above solution. Someone else suggested that the investor "start targeting middle class and sell the product in a way that influences and supports them in feeling productive." in an effort to capture both the mid and high end markets.

In the Dubai market the one exception to this policy of participation in the iconic building arms race is a company called Limitless, which is focused on creating the next destination neighborhood instead of iconic buildings. The problem of course with iconic buildings is that they can be eclipsed, but if you create an iconic district, it retains it's charm despite the lavishness of the buildings. Think of your favorite urban neighborhoods, SoHo, Wicker Park, Rittenhouse Square, the French Quarter, the Pearl District, etc. If someone builds an iconic building in a different part of town does it affect the quality of the life or the property values in your favorite area? Not usually... because a neighborhood is about people. People who live and die, but en mass have the ability to be timeless.

Direction of the Industry: Part 4

4) Green Technology, the 2030 plan and Original Green - There are several new city plans including PLANYC (2030 plan) and the Abu Dhabi 2030 Plan that talk at length about a city with intelligently designed transit, water, electrical, communications and other building infrastructure. They also heavily emphasize sustainability goals. I believe the concepts behind the plan are relevant to the city of the future in the extreme. Conservation of resources is not just important environmentally, it is fiscally intelligent as well. The enthusiasm for green technology will continue to drive improvements in the real estate products that can be provided, and I have done my best to stay on top of the subject. I am a LEED Accredited Professional, attended the annual GREENbuild conference and the Congress for the New Urbanism this year and have been exploring a much deeper level of the movement.

I think the USGBC and other rating organizations like it (BREEAM, CASBEE, CaGBC, GreenGlobes, etc.) are achieving meaningful results through the use of standards which (for better or worse) are increasingly becoming law across the globe. International real estate investors need to understand the principles and goals behind these systems as they become increasingly popular in the marketplace and in regulation.

I also believe that the more fundamental solution to our environmental problems comes from a historical understanding of transportation, planning and architecture. Before the US and British industrial revolutions, all energy was expensive. There are literally thousands of years of building tradition in cities from all types of climates all around the world. These traditions incorporate the best practices from generations of master builders and end users. I am very much in favor of technologically modern buildings that make financial sense in the current economy, but I am also very interested learning as much as possible from our ancestors.

This leads to a concept called the Original Green, which discusses the more fundamental issues I'm referring to. As architect and author Steve Mouzon puts it, "If a building cannot be loved, it will not last. And its carbon footprint is absolutely meaningless once its parts have been hauled off to the landfill." In a nutshell he argues the following:

1. We must first build sustainable places before it is meaningful to even discuss sustainable buildings.
2. Sustainable places should be nourishing, accessible, serviceable, and secure.
3. Sustainable buildings should be lovable, durable, flexible, and frugal.

These tenants encompass the entire green movement and are the universal principals Abu Dhabi 2030 seems to be based on. The Congress for the New Urbanism (CNU) is an organization I have been involved with for the past five years. My membership in this organization has provided inspiration and perspective for most of my ideas on environmentalism in the real estate industry. The CNU works to create compact, walkable and diverse places that are inherently sustainable and enjoyable to live in. The Original Green concepts derive from many of the principles discovered by the CNU.

Direction of the Industry: Part 3

3) Crowdsourcing/Crowdfunding - Crowdsourcing is a popular topic at the moment. I believe that it has and will continue to fundamentally alter the business environment. The goal of crowdsourcing is to leverage the mass collaboration enabled by Web 2.0 technologies to achieve business goals. It is commonly used to compile building data, provide tech-support, solve complicated research problems, or create t-shirts that sell out every batch. The opportunities in real estate are endless. Some ideas I've had are to improve building management services, revolutionize the design process, alter the property search/acquisitions process (already in progress), and to identify specific demand for a product type before investing in it.

Its close cousin, crowdfunding, could be used to finance projects in a much more fine-grained, sensible manner than the large funds currently building cities with limited and unidentifiable character. As I see it, large investment funds will continue building the raw spaces and crowdfunded smaller projects will occupy them or create infill spaces with the character and diversity typical of the best old cities.

Direction of the Industry: Part 2

2) BIM - Building Information Modeling is possibly the most revolutionary technology in the history of design and real estate project finance. It is still a technological toddler, but the first developer, investment group or architect to properly use it will reap huge rewards. The principle is simple. Instead of creating a voluminous set of drawings and construction specifications, create a precise computer model of the building or renovation. The ideal software will generate the construction documents, error and omission free.

Because the model has every component that the physical construction will have, it should be easy for the software to count quantities and compare them to online directories of cost data. This gives owners, investors and architects the ability to price proposed changes in real time. It also has the potential to calculate schedule changes, zoning or code compliance and several other major hiccups common in the building process due to proposed changes.

AutoCAD Revit software is a popular choice, but several systems exist. Some examples of successful projects using the technology can be found on the AIA's website here.

Using BIM, will open developers and investors up to a much more flexible design environment. In my time working for Bovis Lend Lease on several of Extell Development's projects, I realized that one of the things Extell does very well, is work hard to please it's clients (the condo buyer) through customization. Extell was on the cutting edge in NYC of customizable new construction. While at BLL, I oversaw several major unit combinations, partition modifications and finish changes, and every single one of them was a construction coordination nightmare. The cost of modifications to a building as it is being built is astronomical primarily because the design is static. The construction documents have to be manually adjusted with each change, and when something is inevitably missed, it costs the builder and the owner money. Until BIM, there was no conceivable way a design team could effectively find every drawing and specification that each change affects and make the required notations in the middle of the project cycle. That is all starting to change.

The the potential value of predictable changes to investors, developers and buyers is enormous. Soon homes, apartments and offices will be as easy to customize as tennis shoes, and the developer most capable of doing it will reap serious financial rewards.