I’m often asked by both friends and listeners to the show how we decide to take on a specific project versus passing on an opportunity.
The fact is, there is no exact science. But we are looking for certain characteristics.
It starts with the people. Are the right people involved? If not, there is no sense starting on the project. Then we need to look at the market and then finally the specific deal.
- I want to be in an area of strong demand. We want to see population growth. We want to see a shortage of supply and we want to see resistance to development. That sounds paradoxical. Why would a developer want to work in an area that is pushing back on development? It’s a balance. We don’t want so much resistance that it becomes impossible.
- Simply buying a property that has no distinguishing features is not interesting to me. I believe that we are on a mission. That mission is to create communities that people feel at home in. They need to feel connected. The community has to exist for a reason, not just cheap housing.
Let me give you a an example.
Our latest project is the design of a new residential subdivision in the outskirts of Boise Idaho. Boise is a city that seems to be attracting people from higher density communities on the west coast. They’re moving for access to the outdoors, for the lower cost of living. The city is #4 in the country in terms of growth. There is a massive mismatch between demand and supply.
A recent survey of the home listings found only 154 homes for sale of any description. The average days on market was 5.5 days. Prices were up on average 13.5% in 2020.
When we found 45 acres across the street from a brand new high school, with new infrastructure including roads, a water treatment plant across the street and ample electric supply we saw a lot of potential. We are not fans of auction situations because we always end up paying more in those situations. In some cases we will engage in the auction if the numbers make sense. This was one of those rare cases.
The property is located on the edge of the suburb of Middleton. Middleton has grown by nearly 50% in the past few years. Future growth will require the annexation of more land from the county into the city. Even with the tremendous growth, there is nothing for sale. Any development land has sold out very quickly.
We saw this project as an opportunity to participate in community building. We had direct talks with the planning department and with the Mayor. We understood what the sentiment was within city council. We felt that we could develop a winning concept for the area, that would truly add value to the community.
I know what you’re thinking. How is it that some guy up in Ottawa Canada is having conversations over zoom with the Mayor in Idaho about developing a new neighborhood thousands of miles away?
Middleton has another problem. 85% of the people who live in the community, don’t work there. How could we be part of the solution? We are not talking about necessarily building lots of commercial property. The work from home phenomenon is not just a temporary pandemic solution. Even once the pandemic is over, there will be a residual and substantial portion of the population who will want to work from home.
When you consider the design of most homes, even recently designed homes, the question of work space has been largely ignored. This particular project represents a unique opportunity to create a live work play community.
We held our first community meeting last week with local residents where we shared many of the design concepts. It was an opportunity to hear first hand from local residents how they felt about development in the area.
Finally, is this going to be an isolated project or does it form part of an ongoing stream of investment projects?