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July 7, 2006

Boulder, CO

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 capital for start-up or expansion, thus looking for a higher rate of return than might be given by more traditional investments.

Oh, I work with a talented community of entrepreneurs who know how to develop those wow buildings - you know, something like the attainable open-plan loft-type residences with lots of light and high ceilings, over open-plan offices with the same character, over the contemporary neighborhood third place on the ground floor, capped by a roof deck with a great view of the downtown...** - basically investments where the demand to supply ratio is 10:1 (probably more), but we're missing the adventure capitalists. You see, real estate investment funds will invest only in companies like themselves that have developed the same thing over the last several years (most of which is less than wow), but not entrepreneurs. Only adventure capitalists will, who are entrepreneurs themselves, and so far, they haven't quite made the jump to CoolTowns and real estate yet. Yet. My feeling is that when they do, they won't go back.

One such adventure capitalist opportunity is transforming a historical Midwest downtown 100,000 s.f. building into a hub for high-tech companies - a $2.3M investment with a 20% operating income annual return plus $2.2M increase in property value, or a $3M investment in a 300,000 s.f. downtown building in the Mid-Atlantic/South hosting a major university graduate school on the top two floors with even better returns. Each of these is just the first piece in multiple investments in the surrounding area, effectively reshaping a neighborhood from ho-hum to wow.

**and perhaps a few blocks from a pleasant yet bustling pedestrian-oriented piazza or paseo filled with outdoor diners at the coolest indie restaurants, but ah, that's phase five...

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July 6, 2006

Can we develop a place like Dublin's Temple Bar in the U.S.?

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 caught up.

As a result, the most innovative developments that truly hit the mark of what their intended audiences want are far and few between because they have to raise their own equity capital (essentially the cash required to qualify for the development loan). Why? Because sources of equity in real estate (e.g. insurance companies, pensions, stocks/REITs only invest in extremely predictable, mass-produced projects, like strip malls and subdivisions. Suburbia looks the same across the country because an overwhelming majority of $$$$ in real estate will only fund that kind of development!

I work with one equity investment group that's looking to fund a new standard for attainable, mixed-use, and hopelessly cool urban development, but I also work with ten times more development opportunities than there are funds. Here's a call to real estate equity groups that are looking to get entrepreneurial, or to entrepreneurial venture capital groups that are looking to get into real estate: The demand is more than ready for your investment, and there are long-term, profitable relationships to be made.

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July 5, 2006

Palace of Fine Arts, San Francisco

Wildlife prefers urban life over the countryside?

Really? So documents this Newsweek article (part of a series presented in the last entry), Wildlife: Cities Are the New Jungles...

"You can take any big city and find more species, more diverse habitats than in just about any national park or nature reserve," biologist Josef Reichholf, Munich Germany's Technical University.

It's actually the lack of bio-diversity found in extensive mono-culture, chemically treated, single-crop farms that in turn support fewer species. Cities meanwhile host countless diverse micro-habitats: a wide variety of parks, street trees, backyards, gardens, greenbelts and even the buildings themselves. Berlin hosts two-thirds of the 280 bird species in Germany. Biologists estimate that agriculture and forestry cause over 80% of species deaths worldwide, versus just 15% from development of any kind. Imagine how much lower that latter number would be given the much smaller urban vs suburban footprint.

The evolution of cities as wilderness habitat, urban ecology, is growing in study. The U.S. National Science Foundation now studies ecosystems in cities like Baltimore and Phoenix, and universities from Virginia Tech to the University of Halle in Germany have urban biology programs.

That's right, animals, birds and plants prefer cities over the 'burbs as much as the readers do.

Image: Palace of Fine Arts, San Francisco

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July 4, 2006

Happy Independence Day

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July 3, 2006

Florianopolis, Brazil

Newsweek International's hottest cities

This week's (July 3-10) Newsweek International focuses on cities, with no less than 13 full stories from the 10 fastest-growing cities to an essay by Richard Florida to how cities make a better wilderness than the countryside.

The cover story features the 10 'hottest cities' above 750,000 people in each part of the world, that the United Nations recognizes as the fastest growing. However, what the report fails to say is how sustainable the growth is. Many of the cities on the list are benefitting from a single 'old economy' company or industry that in fact, is already a declining one in the U.S. A much better indicator of success, rather than short-term growth, is long-term growth in the knowledge industries such as Florida's Global Austins or the next Silicon Valleys.

In approximate order from long-term to short-term economic/quality of life growth prospects:

Florianopolis, Brazil - aka 'Silicon Valley of Brazil, with beaches', ban on heavy industry (pictured)
London, England - Finance, immigration
Munich, Germany - IT and bioscience
Fukuoka, Japan - aka 'Car City' and 'Silicon Island' (got their bases covered)
Ghaziabad, India - IT, manufacturing, outgrowth from Delhi
Goyang, South Korea - Outgrowth from Seoul, finance
Las Vegas, U.S. - Gambling, entertainment
Toulouse, France - Airbus
Nanchang, China - Ford, automobiles
Moscow, Russia - Oil and gas

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