Perhaps the key component behind America’s great economic achievements is the entrepreneur. For example, Henry Ford helped the US dominate the global auto industry for decades, and Bill Gates helped it dominate the software market. Investors in Google, Facebook, YouTube and Twitter secured dominance in social networks. While these success stories are well known, the factors behind them are less so. For his part, Ford did not invent the automobile, nor did Gates invent the computer or DOS. And the key technological components of all social networking sites and search engines were invented by others.
Similarly, real estate development followed a similar pattern with many innovative developments started by “idea men” who did not bring the project to fruition. Those dreamers are lost in the mist of history.
In the latter part of the 20th century, developers were often accused of inducing sprawl, endless paving, and undermining natural beauty. Some of this stemmed from bad ideas, but true real estate innovators created outstanding concepts that they might not have completed due to a variety of reasons. Insufficient financing is the main cause of development failure. The current carnage in the housing market has destroyed many good development ideas along with the bad.
One such innovator was Charles Fraser, considered the father of the modern American spa. Mr. Fraser, along with his brother and father, developed the Sea Pines resort on Hilton Head Island, creating a resort of beachfront properties, shops, marinas, golf courses and tennis courts on a sparsely forested island. populated. Mr. Fraser was also involved in the initial development of the Amelia Island Plantation Resort. Both developments were ahead of their time and eventually experienced financial difficulties with other investors who turned both resorts into viable businesses.
Donald Trump also made a name for himself as a real estate innovator WITH some of the first brownfield redevelopment projects in New York City. His first attempt was to rebuild the Penn Central yards on the West Side in 1974, but lack of funding caused him to lose the project to a competing group. When that group failed to secure financing, Trump re-entered the scene in 1985 with a new plan for Television City, but it never materialized due to zoning issues that caused NBC to pull out of the project. While Trump completed most of his vision, he eventually lost control in the 1990s due to financial problems. The final pieces of the project were finished with a Hong Kong development group.
Many other examples of smaller, less famous developers can be seen in nearly every city in the US due to the financial turmoil and global housing bubble, but this is the exception rather than the rule. More often than not, less well-funded developers base their plans on idealized conditions, and when these conditions do not exist, they generally have no alternative plan.
Americans often say that they want something unique, that they are against sprawl and uniform subdivisions. However, what they really mean when they want something different is simply a different colored front door. Innovators who offer revolutionary ideas are often met with skepticism and resistance to change. Ultimately, this resistance causes the innovators’ plan to veer off course. With little time and capital to react, they are prone to failure. Only after a larger source of capital picks up the pieces is the project completed. On rare occasions, the original vision of the “idea man” survives the change. Most of the time the vision is modified and in the end it is only a shadow of what it could have been.
Interestingly, I think the root cause of the plan’s failure is our own resistance to innovation. Two innovative development concepts currently under threat are “New Urbanism” and “New Ruralism.” Both are reactions to suburban development. New Urbanism is the more established of the two, so it is more likely to survive current real estate conditions. The public has embraced New Urbanism, but many of its capital-intensive projects face tough challenges in current market conditions. Redeveloping an area that includes essentially all the infrastructure of a small town requires enormous capital resources. These projects must include an urban center with commercial elements. Initially, an interesting anomaly arises when homebuyers see an empty city while businesses see empty houses. As such, a delicate balance is required to shorten the natural life cycle of city development.
The New Ruralism, on the other hand, is much less established with the general public or with sources of capital. It suffers in part due to lack of a clear definition and developers having a different interpretation of the concept. Some have focused on agriculture, with a bed and breakfast restaurant as seen in the Atlanta Serenby development. Others, like Harvest in North Carolina, focus on individuals who own large tracts of agricultural land. Another budding trend combines America’s love of wine with a development with Montaluce Winery and Estates as an example. The big question given the current economic climate is whether unconventional developments like these will survive. (For a more in-depth discussion of the New Ruralism, see my previous Ezinearticles posts.)
http://en.wikipedia.org/wiki/Sea_Pines_Resort
http://en.wikipedia.org/wiki/Riverside_South_(New_York_City)
