The total cost of a real estate development project can, in its most simple form, be boiled down to three inputs: how much the land costs, how much the outside of the building costs, and how much the inside of the building costs.
The logical way developers remain competitive, then, is by unlocking the value in one (or more) of those inputs. In the Upstate, there is currently little room to save money by making the inside or outside of the building more cost-efficient and still maintain long-term value for the developer – the market just demands beautiful buildings inside and out. So, then, it should surprise no one that the best developers in the Upstate are also the best at unlocking the value of dirt – which, coincidentally, is often the most elusive undertaking. You know how the saying goes, though: “If it were easy, everyone would be doing it.”
There are plenty of ways that developers cultivate value in their land holdings, but I’d like to highlight a specific design trend that I’ve observed being successfully implemented in countless cities, including those blossoming in the Upstate. Allow me to bring forward the concept of pedestrian-centered design.
People want to be able live in a place where they have no use for a car, but also struggle to reach their Fitbit step goal every day. Developing just an apartment complex, or just an office building, won’t cut it.
To define pedestrian-centered design is like explaining what the color red looks like – the term is the definition, and vice versa. However, in the spirit of adding value, I’ll attempt to loosely define pedestrian-centered design as an urban design approach that focuses on the way pedestrians use a building or space. This approach often focuses on walkability and transitions between the three main uses of an urban space – living, working and playing.
Up until recent years, developments would usually include one, maybe two, of the three uses of an urban space. Many developers were operating under the age-old assumption that “if you build it, they will come.” By understanding the dynamic ways people are now using their cities, though, developers have been able to respond with truly mixed-use spaces. Now, developers are hearing, “They’re here, build what they want,” and what “they” want is simple – a place for everything. People want to be able live in a place where they have no use for a car, but also struggle to reach their Fitbit step goal every day. Developing just an apartment complex, or just an office building, won’t cut it.
The hardest obstacle that developers have to overcome in developing modern, tri-use developments isn’t in finding out a way to fit three fundamentally different spaces in one building – it’s mastering the transition between the three. If done incorrectly, a building can feel overcrowded and cluttered. The only way around this, seemingly, is to take away some of the space to make room for pedestrian zones within the development (e.g., green space or promenades). This is the toughest pill for some developers to swallow. We live in a universe where matter can neither be created nor destroyed, which means that pedestrian areas have to go somewhere – and that somewhere is in a place where leasable square footage could have gone.
It’s the opposite of conventional wisdom. Pedestrian-centered design often costs money that won’t be directly recovered through rent or sale. However, sacrificing leasable square footage is often rewarded with a higher value for the square footage that’s left over or, in some cases (think ONE City Plaza in downtown Greenville and the Epicentre in uptown Charlotte), more opportunity for retail square footage. I had the opportunity to hear an amazing quote from a speaker at the annual Urban Land Institute Capital Markets Conference last month that went something along the lines of, “If you make the sidewalk beautiful, no one will bother to look up.” My, how true those words are.