The real estate development business has been around since human beings first made caves their homes about 750,000 years ago. These proto humans lived in caves in what is now Beijing. Recognizably modern humans (cro-magnons) lived in caves beginning about 35,000 years ago—they built tents near the front of these caves and used their dark, damp, cold interiors for ceremonies, cave painting and defense when threatened.
Inventions in structures, tools, techniques and fabrication like the arch, architectural glass, the truss, reinforced concrete, insulation, elevators, scaffolding, shingles, brick, level, saw, hammer, ax, nails, screws, nut, bolt, CAD, lever, pulley, theodolite, steel frame, drill… took the next 35,000 years to develop so modern cities like Yokohama, Abu Dhabi, Bangalore, Hong Kong, Toronto, San Francisco and Helsinki could form.
But when we talk about innovation in real estate these days, people get a quizzical look on their faces thinking, for the most part correctly, that not too much invention is taking place in this business, the world’s largest. It is, in fact, ripe for reinvention.
Having said that, the industry is populated by many people who have an enormous stake in the status quo—owners, operators, constructors, financiers, developers, realtors, mortgage brokers, lawyers, architects, appraisers, regulators (involved in building/safety/health/fire code/by-law enforcement), city politicians, planners and building inspectors who either actively oppose change or are simply too wed to the current state of the industry to support any changes.
Here are some inventions over the last thirty years that for good or ill have changed the industry. First, let’s start with the ones that it might have been better if they had not been discovered and implemented—
Gated communities have divided societies into have and have-not populations.
One-way streets and “no left turn” have made car trips longer and streets less interesting and less pedestrian friendly.
Urban development has gone away from grid-based block design to curvilinear streets and collector roads. Thought to make traffic flow better, it resulted in a few streets taking all cross-town traffic, slowing it to a crawl. It’s also impossible to get “there” from “here”.
Banning on-street parking has taken away protection for pedestrians and led to huge swaths of property being used for car parking.
Mono-cultured zoning rules have led to suburbs that have no jobs or shops; impossibly dreary places that are ultra low density, expensive, unsustainable no-places where every trip is a car trip and children, elders and people without automobiles are second class citizens.
CBDs (Central Business Districts) that feature endless office towers become dangerous spaces after dark after office workers go home. They also contribute to mass traffic jams.
Mirror glass curtain walls that come down to grade create an impenetrable layer between city streets and building interiors. These blank walls contribute to urban no-places.
Triple net commercial leases that give incentives to Landlords to be as inefficient as possible with their operating and utility costs since they usually charge a percentage fee on these so the higher they are, the more money they make.
Rent controls that reduced supply of rental property and both increased its cost as well as reduced its vacancy rate.
NIMBY (not-in-my-backyard) objections to change in the urban environment.
Woodlot control by-laws that in anticipation of their implementation cause the very problem they are trying to avoid—clear cutting.
Pseudo-environmental movement that is really NIMBY’itis in disguise.
Tolerance of vandalism and urban decay as well as their encouragement via poor urban design.
Development charges, which penalize first time home buyers by making homes more expensive and transferring wealth from young people to entrenched interests.
Restricting urban expansion reduces lifestyle options for citizens, increases cost of homes and concentrates land ownership. Also makes it difficult for entrepreneurs to own their own buildings/they are forced to lease from large landowners/developers.
Disallowing industrial uses with accessory residential meaning that a traditional type of development (mom and pop live in front with workshed in back) is illegal in many cities and towns.
Over-investment in residential real estate—“People will work in a cave but want to live in a castle!”
Here are some innovations in the real estate industry that have had more positive results—
Presenting your commercial building at 0 to +1 meter to the road makes for a more human scale city. If your building is below grade, it makes humans uncomfortable. If it has many steps up to its front door, it presents a barrier. For a development like Canadian Tire Centre, the structure is nearly half-buried in the ground so people enter at +1 meter, essentially at grade. It also makes the distribution of fans attending events much simpler since half go down and half go up reducing elevator capacity and stairwell requirements.
Every time you draw a line on a piece of paper you make money. Sub-dividing and severing parcels to create new, smaller lots is essential to producing more affordable buildings and get greater variety in urban development.
Micro-scale planning—instead of planning at a large scale, greenfield development or brownfield redevelopment that is based on street and pedestrian patterns that create blocks of varying sizes allows more players to participate including smaller developers and investors. The result is areas like the Byward Market in Ottawa and Granville Island in Vancouver not Lebreton Flats (in Ottawa).
Creating interior spaces with a lot of differentiation. When the Mallorn Centre was built in Ottawa with the largest sloped curtain wall enclosing a huge atrium, almost every office space in the structure was different. Some had sloped ceilings, some overlooked the atrium, some looked outside.
A feature stair that connects floors in towers decreases elevator traffic, is good for fitness levels of its occupants, leads to chance meetings that can be highly productive and can be linked to floating platforms that have cafes and places for people to chat. Whether designing interior spaces or the public room, optimizing collisionable hours is very important to creating unplanned synergistic interactions between people in the creative class. Adding a cafe, for example, to a feature stair does this marvelously well in buildings like the Mallorn Centre.
Creating street level, at grade entrances with sign box out front and reception area and feature stairs with skylights leading to 2nd floor
offices to give 2nd floor offices similitude of being ground floor “retail”.
Adding granny flats and in-home apartments to existing homes so elders can stay in their communities longer.
Adding second sideyard entrances so that in-home apartments can have their own “front-doors” to the street. Better yet, such side entries may be at grade, which means, if it is a high ranch-bungalow style structure, the lower level is ½ level down instead of a full flight down. This implies that windows can be larger and provide a safe, second means of egress too.
Connecting in-home apartments to main floor dwelling space with a single door that when removed creates a single family home and when reinstalled, creates two separate units.
Front porches.
Vertical-axis windows.
Complete roof treatment.
Clear legal title to unlock capital in informal settlements.
E-registration of title.
Title insurance.
SBLs (small business loans) supported (and partly guaranteed) by government and used to finance commercial improvements like fit-up work.
Mini offices/co-working spaces.
Mini storage/mini workshops.
Travel/furnished apartments.
Farm stay networks.
Server farms.
BnB makeovers.
Elder care in existing residential structures.
Condos and co-ops.
Walkout basements.
Seller take back financing.
Second, third mortgages and equity mortgages.
Second, even third or fourth, floor offices with ground floor entry—windows on the world at grade with signage above the door. Open the door to access feature stair to above with skylight adding natural light.
Adding full video walls (signage) that are street facing but inside windows so that they are not (usually) subject to municipal by-laws.
GMP, guaranteed maximum price contracts.
Taking advantage of vertical as well as horizontal rent gradients. Producing more ground floor apartments and condos (some of them like 2-story doubles inserted into tall towers) that have their own entries to the street as well as tiny frontyards/courtyards.
Using conservation sub-division design principles to preserve and connect rural lands by increasing the density of non urban development using small bore sewer systems instead of individual septic fields.
Co-broking between realty brokerages or between developer and brokerage.
Paying REALTOR commissions upfront upon signing binding APS (Agreements of Purchase and Sale) instead of waiting for completion of new homes or condos putting new homebuilders on equal footing with existing inventory from the REALTOR point of view.
Grow your useable square footage in residential buildings by replacing stairs with electric elevator.
Airbnb.com market channel for furnished flats, homes. Perhaps elder care site will also evolve.
Non reserved parking spaces create “phantom” spaces since people are on holiday, on training, taking sick days, visiting clients, working from home about 25% of the time.
Adding tech packages to residential rentals including Netflix, Internet, wi-fi, net phones, basic cable, large screen TVs/increase DV, differentiated value
Making residential leases more like net commercial ones by adding on admin fees, property management fees, utilities, tech package and other costs to be paid by tenants
Selling more services (eg meal plans, tutoring, excursions, events) to your tenants
Allowing your tenants to pay their rent twice monthly
While all roommates are on the lease (and maybe their parents too), allowing each roommate to pay separately so that one student doesn’t have to collect from all the others
Exploiting subterranean rights by deepening basements and even extending into setbacks with excavated area/patio on top.
Creating social enterprises to fund NFPs/charities/foundations, like adding residential rentals in church basements or renting surplus land for development on long term land leases
London developer Al Waxman’s exploitation of subterranean rights: 2-story basement (the depth of two doubledecker buses) under a new 3-story home built on a lot bought by Mr Waxman for 1 million pounds (a tear down)–
Add mini contractor yards/create truck parking by stacking sea cans 2-high and adding roof/double end it w/ storage as well
Mash together two non obvious uses like twinning say a greenhouse and a biomass power plant, where greenhouse plants can thrive on the CO(2) produced as a byproduct of power generation or adding a livable treehouse to your urban property and marketing it via airbnb.com.
Create private outdoor space for tenants using chain link fencing with fabric screening
Create a “human terrarium” where offices/workstations/meeting rooms are in nature inside a glass dome (as proposed for the Googleplex expansion in 2015)
Add a tribal council ring inside office spaces and in community parks
Use wood slats (eg from IKEA) over decks/patios that are deteriorating to prolong life span–”lipstick” job
Put in raised garden beds
Add outdoor kitchens/create outdoor “room”
Convert garage to micro retail/mini office/workshop/bachelor pad and install carport in driveway
Add frontyard or sideyard parking
Make sure every detail inside and outside your property is attended to/completed/clean/neat/painted/patched–build a brand and remove all sources of doubt about tenant care
Give your tenants premiums like branded promotional products, air miles, “tenant” points, event invitations, books/learning opportunities–make them feel part of a community and part of something special
Using accessible ramps to get to roof or next floor instead of stairways
Build a media tower
Add a TGB, tethered gas balloon
Some real estate inventions that may yet arrive include—
Rezoning all property along major arterials to permit not only residential development but also commercial. This means that existing homeowners on major routes will get a windfall by being able to sell their properties for more for commercial use and getting their families away from traffic. It will also provide far more choice for their entrepreneurs to own their own properties. Likewise, city revenues will spike since commercial assessment is almost always higher than residential while service demands (for libraries, schools, garbage collection, …) are lower.
Performance zoning where everything is allowed unless explicitly forbidden instead of prescriptive zoning codes where everything is forbidden unless expressly permitted.
Adding leisure components to practically every new development.
Homebuilders that allow clients to design their own homes using a web application.
Homebuilders (virtual homebuilders) that integrate the Internet into their development process allowing lenders, contractors, trades, homebuyers, lawyers, realtors, mortgage brokers, suppliers and others access to make the development business more open, innovative and transparent.
Legalize work from home with more employees.
Density bonusing for adding residential components to office towers.
Add elder care in residences, make more homes accessible/visitable by elders.
Require build to lines, minimum heights and minimum densities.
Allow on street parking.
Permit more not less ingress/egress.
Add corner stores/small plazas in residential zones.
Add accessory residential uses to industrial zones.
Allow outward expansion to drive up density in existing areas.
Require that every new commercial building have a window on the world—at grade, they open to the street.
Allow zero side yard setbacks.
Mandate uniform vertical transition lines.
Create neighborhood theming.
Plant organized street trees.
Reinstitute boulevard design.
Encourage street art and mural art as well as micro farming
Create an “eyes on the park” program to lease building sites on a longterm basis for homes to be built overlooking public spaces, making them safer and creating a new revenues stream for municipalities as well as a supply of affordable lots.
Allow many media walls on buildings—this would be a new revenues source for landlords.
Negative property taxes providing neighbors of less desirable uses with compensation through the municipal property tax assessment process.
Much greater density and intensity (mixing together of varying uses).
Transit via lightrail that makes cars almost irrelevant within urban agglomerations.
RFID transmitters in al vehicles that make payment and ingress/egress for parking, drive-throughs, etc fully automatic.
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