The current financial model for real estate investment is pretty depressing for the creative-minded, where an overwhelming majority of real estate investment capital is reserved for object-oriented buildings at least a block in scale (ie office parks, strip malls, towers, subdivisions...)

However, just as YouTube is slowly redefining television and wikipedia has rendered encyclopedias obsolete via crowdsourcing, just wait until $ are applied to this customer-driven phenomenon then used in

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Posted by Neil Takemoto in • Investment | (0) Comments | (0) Trackbacks | Link |

"time for real estate investment to catch up to the market”, it’s also time for local independent tenants to make it easier for developers to lease to them. The simple reason why an overwhelming majority of new developments prefer leasing out to national chains rather than local independent businesses is because chains can pay more rent, and that’s because they have an established patronage once they open. This is why

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GlobeSt.com, the de factor real estate investors website, and you’ll see the problem. In the now outdated industrial economy, it didn’t make any sense to build one customized widget when you could mass produce thousands for a lot less.

With investment it’s the same - all your pension and insurance payments are sourcing a tremendous pool of capital that has to

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‘The Long Tail’ real estate developer/investor (3 of 4)

Understanding , the way it’s evolving our economy, and its applications to real estate, what would be the real estate developer/investor equivalent of an Amazon, Google/YouTube, eBay, Netflix?  What’s the big deal?  Millions of people don’t just use these companies’ services, they’re passionate about them. When’s the last time anyone said that about Kodak, GM or Kmart?

As you know, all of these companies invest in ‘a

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The future of real estate is in ‘the long tail’ (1 of 4)

“For too long we’ve been suffering the tyranny of lowest-common-denominator fare, subjected to brain-dead summer blockbusters and manufactured pop. Why? Economics. Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching - a market response to inefficient distribution.” Wired Magazine, The Long Tail, Oct. 2004.

Sound familiar when it comes to strip malls, subdivisions and office parks,

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Is the U.S. too rich to invest in human- scaled places?

The Conflict. Take one look at GlobeSt, the portal for real estate news and see for yourself. A vast majority of real estate investment dollars are held in institutional funds (trillions, via banks, insurance funds, retirement funds) and not surprisingly, they don’t invest in projects less than $10 million, preferraby much higher. What’s worse is that in the past they’ve advocated against human-scale development in order to ensure

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Why is it that one look at the image above tells you this is not in the U.S.? The bigger question is, why not? How about a place like this in your own town, with your own local, independent cafes and shops below, entrepreneurial offices above, and lofts above that? Or perhaps a section where the whole street is full of outdoor dining? Wi-fi everywhere. Nightly happy hours and live music, weekly poetry readings and plays, monthly international socials and cultural events, a genuine sense of

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The last two entries covered crowdsourcing 101.  Are you ready for crowdsourcing 201?  This is for when you’re ready to invest $ collectively as a future community of tenants to develop a common product, such as that affordable, green-built, downtown loft building with roof deck and indie ground-floor coffeehouse and restaurant - or even better, a whole block of them (pictured).

The term used to describe this team development methodology is angelic crowdsourcing* (combining angel investing

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City taking charge to attract investors...

Most cities wait like hopeful dancers at a school ball. Others get up and ask or just start dancing, like West Palm Beach, St. Louis, and Everett, Washington, profiled in its local newspaper, The city plots the next stage of its downtown renaissance.

The map shows strategic investment areas that the City of Everett (within the Seattle metropolitan area) is proposing for its downtown plan.  Incentives include promoting greater residential densities

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Where to invest? 13,000 years of history will tell you

There’s no better body of knowledge than history when identifying the right buildings, neighborhoods, cities and even countries to invest in, especially when your scope is 13,000 years.  That’s what biologist, physiologist, and biogeographer Jared Diamond provided in his mind-boggling Pulitzer Prize winner, Guns, Germs, and Steel: The Fates of Human Societies.

Not that anyone can condense 13,000 years into a 400-page into fleeting blog

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Seeking the CoolTown adventure capitalist

One reason why more of us don’t walk down the street each day and exclaim, “Wow, I’d love to live/work in that building!”, is because we’re missing adventure capitalists when it comes to real estate.

Adventure capitalist - An entrepreneur who helps other entrepreneurs financially, and often plays an active role in the company’s operations. It’s a more defined role than a venture capitalist; someone who invests in a business venture, providing

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Establishing an investment network for CoolTown developments

There’s no better way to present the kinds of communities, buildings and venues that the creative class, cultural creatives, influentials, and free agents want than to actually build or revitalize them.  There is an emerging group of innovative developers in the CoolTown network that are willing to help cities and neighborhoods realize their vision to become compelling destinations, but the private sector finance industry has not

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Developing a community for their peers

Ben, Naomi and Josh knew their town of Oberlin, OH was lacking the kind of housing and businesses that kept their university peers from leaving after graduation. Not only did they stay, they formed Sustainable Community Associates and rather spontaneously began to develop the kind of place that would excite their friends about staying as well. One of their biggest assets as developers was that no one knew the market better than they did.

Through a

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Interview with a ‘CoolTown’ developer (part 2)

Continuing yesterday’s interview with urban pioneer Larry Warshaw… How did you come to choosing this development type for the creative class?

“In our designs we put our money into the structural components of the buildings � great structure, great windows, long-lasting roofs, concrete floors, and we expose as much of the interior structure as the city code will allow.  The rest is very simple with as few walls as necessary and interior

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Interview with a ‘CoolTown’ developer

While true CoolTown/creative class real estate developers represent the next generation of real estate developers, they’re still a rarity.  I was fortunate to come across one of them, Larry Warshaw of Austin, Texas, developer of the Saltillo Lofts (pictured).  Here’s what he had to say…

Why are you targeting the ‘creative class’?

“We started targeting the creative class a little over three years ago with the Pedernales project because we knew that

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A very cool town founder...

His name is Kiki Wallace, and he’s the founder of a striking new town called Prospect located outside Boulder, Colorado, as introduced in yesterday’s blog.

I’ve known him for a few years since the town first broke down - he was one of the first to get his hands on the VW New Beetle when it came out, and he could never attend a conference because he didn’t have the patience to sit and watch speakers who talked about what he was already doing.  Well, he couldn’t

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‘Developers target ‘creative’ class with infill projects’

is already one of the coolest cities in the country, so it’s no surprise that it has some of the most progressive developers as well, such as Interurban Development, documented in this business article, Developers target ‘creative’ class with infill projects.

Their first two projects are Bel Air - ‘urban lofts on South Congress Avenue’; and SageBrush, ‘bungalows in the heart of Round Rock’.  What makes them especially cool

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Q: Can individuals invest in CoolTowns as well?

Here’s the exact question someone just posed, “Can I invest small amounts of money in this fund or other New Urbanist projects? There don’t seem to be any ‘socially responsible’ mutual funds that screen out sprawl.”

The short answer is yes, but… The industry hasn’t matured enough to the point where large sums of money (ie billions in pension funds) can be trusted to be invested in what is considered a relatively new market, however, that

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$150 million equity network for CoolTown redevelopment projects

Got a cool project that needs capital? Need a project to invest in? CoolTown Investments is assisting a diverse network of real estate investors across the country ($150 million to date) to invest in medium and higher risk, medium-high return urban rehab/developments.  One such fund focuses on investments of $3-$10 million each, which translates to $10-$30 million developments. The underlying philosophy of the investment

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What would be an ideal equity fund for CoolTowns?

I get the feeling that there’d be a lot more CoolTowns built if the capital were there for them, because there’s certainly enough demand for them, from either the tenant or city government’s point of view.

What would be an ideal source of capital? It would have to come from visionary people, and managed by visionary people. It’d need at least $20 million or so to start off with, then grow as more and more projects were successfully

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Update on New Economy Town investment initiative

A few years ago I assisted in the founding of an investment group, The Town Builders Collaborative (TBC), that was looking to invest in university towns via new urban villages that focused on the post-graduate crowd - what they referred to as ‘new economy towns’.  They sought cities that were interested in such investment to build places like this image that’s used on their website.

The TBC ‘plate is now full’, as they are involved in four

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Investing in infill

So what can the private sector do to invest in infill neighorhoods in cities and towns when public sector legislation favors sprawl?

Find out if City Hall is ‘cool’.

1. If you’re in one of those cities that is legislated for sprawl (ie disallows mixed-use, higher densities, low parking ratios and tax reinvestment back into the project’s infrastructure) - find another city to invest in.  You’ll have a very low ROI, if any, otherwise.

2. If you’re in one of those

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Investing in ‘Entrepreneur Villages’

The Conflict: Visionary municipalities have an overriding interest in improving their quality of life, retaining university graduates (stemming ‘brain drain’) and catalyzing the creation and growth of gazelles, but simply don’t have enough financial or human resources to fully carry out their most progressive economic development plans.

One Solution: With limited resources, a talent-producing university and recognition that a vibrant, affordable,

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Investing in the CoolTown ‘resort’

Resort: A place frequented by people for relaxation or recreation
Recreation: Refreshment of one’s mind or body after work through activity that amuses or stimulates; play

So, what if a visionary financial group invested in places that people specifically visited to play in, to refresh their minds?  Now what if that same group invested in places that people lived in to play, and continually refresh their minds?  That’s the notion of a cool town.  Thus, a

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