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December 22, 2006

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

Understanding The Long Tail, 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 full line of products' that appeal to what individuals really want for themselves. Behind the scenes, there's a sophisticated Content Management System** (CMS) for online content or Supply Chain Management System (SCM) for physical product. In front of the scenes, the customer gets exactly what they want.

The next gen real estate developer/investor will utilize such a system. If they refuse, they will be the last ones, and they can be rest assured no customer will associate the word 'passionate' with their products. This 'Long Tail'-based system does not discriminate whether the profit margin is small or large, just the fact that it's delivering what the customer wants at a profit. If there's anything to take away from the 'why' behind this, it's this: Small-profit items leverage large-profit items, and vice versa. Yesterday on Amazon you were buying books - today you're buying books and half the things on your shopping list.

**One ongoing CoolTown Studios 'production' is a Content Management System (CMS) and Supply Chain Management System (SCM) for both developers and cities. We assure you won't regret being among the first to implement them, if passionate customers are a priority.

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December 21, 2006

Blue Sky Cafe, Athens, GA

Applying 'The Long Tail' to real estate (2 of 4)

As explained in the previous entry, much of what is built today is in 'the big head' of mass production rather than diverse niches of The Long Tail. However, in the internet age, companies focusing on both the Big Head (the mainstream 'hits') and the Long Tail (hundreds of niche favorites) are starting to eat the Big Heads for lunch - companies like Google, Netflix and eBay that pretty much cater to every niche, every personal interest you can think of.

In other words, we want a lot more choice, diversity and uniqueness in the kinds of homes we buy, the offices we work and the places we play, rather than the mainstream 'hits' that in our opinions are complete misses. So how does this apply to our built environment? There are several transitions:

- Various online companies allow you to find exactly the house among thousands that you want to buy rather than what the realtor suggests, at a fraction of the cost.
- The internet's knowledge sharing and networking has enabled hundreds of smaller 'independent', progressive entrepreneurs to get into real estate development niches (ie lofts, rehab). We host a network of those very developers here at CoolTown Studios.
- Indie businesses are thriving again, catering to the niches in the Long Tail now that the internet helps connect - like maybe a bookstore that focuses on social impact or more ethnic restaurants, or a cafe that appeals to the creative class...

Tomorrow, what would be the real estate equivalent of an Amazon, Google/YouTube, eBay...

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December 20, 2006

The Long Tail

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, which make up a vast majority of new real estate investment?

Enter The Long Tail - "the realization that the sum of many small markets is worth as much, if not more, than a few large markets." For instance, iTunes now has more brand recognition than Tower, Netflix forced Blockbuster to follow their business model, and Amazon is preferred over Wal-Mart by the next generation of shoppers. The graphic shows why - there is a much larger market if the 'long tail' (in yellow) is added - in other words, anything overlooked by the mainstream. In fact, the long tail is often larger than the 'big head' (orange):

"What percentage of the top 10,000 titles in any online media store (Netflix, iTunes, Amazon, or any other) will rent or sell at least once a month?" People typically guess 20%. The answer is 99%. Full story here. The 'why' or 'how' is the internet, and the reason the future of real estate is in the long tail. Part 2 tomorrow.

Speaking of daily resources, you can find one at The Long Tail blog.

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December 19, 2006

Creativity Exchange

A blog on the creative class, a source for place-making

People often ask me what I read on a daily basis as far as keeping on top of the industry. I'll tell you what exists, and what should exist.

Daily Sources that Exist:

The Creativity Exchange: This is Dr. Richard Florida's blog on the creative class, and it's fairly new. If you want to understand the market, this is where to go.
Planetizen: This is the portal for any news pertaining to visionary placemaking, cities, development and planning. It's a bit comprehensive, so you still have to filter a lot of material out to find what appeals to you.
Springwise: A daily dose of real-world innovation.

Daily Sources that Should Exist:

A progressive GlobeSt.com: The present GlobeSt.com is the Wall Street Journal of real estate, which is what you need when it comes to implementation, but every project is over $20M and industrial economy scale rather than a more fine-grain, knowledge economy scale.
A daily Urban Land blog: Urban Land magazine is monthly and exclusive to ULI membership ($350/yr.), but it has the best case-studied, photographed urban real estate development examples (although, among the worst as well.)

In the meantime, this site will try and pick up the slack on the latter two as we focus more so on the results of implementing the content in the first three. This site is ultimately about documenting our implementation of the vision, not so much talking about it.

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December 18, 2006

Fruitvale Village, Oakland CA

Evolving a retail center into a community center

Retail seen as ‘the Achilles’ heel’ of some TODs (transit-oriented development), reads a recent New Urban News headline, spotlighting the Latino Fruitvale Village retail center in Oakland, CA.

We highlighted its difficulties with attracting patrons at the beginning of this year. The key is to establish the retail center as a community center - the equivalent of the town square where 'everything happens'. In other words, the place needs events, events and more events, and collective ones at that, like First Thursdays in Austin, TX. Compare the top image with the lower image. Good news, there are plans for more of what you seen in the top image:

- A popular, adjacent farmers’ market will extend into the main plaza.
- An outdoor cinema operates on Friday evenings in the plaza in the summer.
- First Thursdays, (sound familiar?) featuring food and mariachi music, will run from spring to fall.
- A public market will occupy one of the buildings.
- Permanent and temporary outdoor stalls will host smaller merchants selling arts, crafts and handmade foods such as tortillas. This outdoor marketplace can become the signature attraction in the plaza, for anyone who has traveled the world knows very well.

Finally, though, the plaza needs to be surrounded by the best up-and-coming entrepreneurial Latino chefs (aka VIBEs) in the Bay Area, for it's these kinds of venues that first establish a destination. It may be too late for that (ie a CoolTown-assisted casting call of VIBEs), which is why the above events are so critical.

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