Filed under: Volume 002 | Tags: Andrew Malone, Authentic Development, Development, Innovation, Living Urbanism, Practice, Real Estate, Technology, Volume 002, Web 2.0
There has been a lot of talk over the past couple of years regarding the interactivity of web 2.0 technology and how it is profoundly changing the way we think about life and business. Applying this to the New Urbanist movement poses some interesting questions. To me, the 1.0 way to look at the New Urbanism is “How do we avoid building more sprawl, and start building vibrant urban neighborhoods?” I believe the 2.0 version of this question flips the problem statement on its head, “How do we identify vibrant communities and build neighborhoods for them?”
In other words, how do we empower people to live where and how they want to, within the confines of a sustainable economic reality? This is not new. The Transect embraces the idea that there is a place in the built environment for everyone. Indeed, the next step for savvy builders may be to profile a given community’s preference for each T-zone and build to meet the expected, but unmet demand.
The future of real estate is in The Long Tail, which is the concept that many small markets are often more valuable than a handful of large ones. The legacy of the information age may well be in granting people the power to organize themselves based on interest, not geography, and the real estate developer of the future will need to recognize that these interest groups offer pre-built markets begging to be served. Each one may be small, but the whole spread is significant if that spread can be funneled into what we consider to be a single product – the diverse neighborhood. This leads to a new set of questions: What if any individual could participate in the decisions that create place? Presume the city is always in a perpetual state of change. Constant planning already occurs; but how can we improve this sometimes ugly, political process? Imagine a continuous online charette for new and existing blocks and buildings, bringing a disparate group of people together to design and build a place that represents this diversity. Is this vision to find, funnel and serve the long tail at one source even possible given the complex nature of the product?
What might it look like? Who gets the final say on design? Can residents give an existing neighborhood a new identity using the power of the internet? If I can select the people I spend time with online, why can’t I select them for the physical environment; ethnic groups do it, but how about kayakers, trapeze artists, businessmen, bicyclists, or the myriad of other interest groups?
I’ve been working as a project manager on construction projects for the past six years and worked as a general laborer while completing my mechanical engineering degree. As a contractor you’re placed in the center of the design and development process and are frequently called upon to make suggestions that have wide reaching impacts on the project for all parties involved. This has given me an exceptional opportunity to observe the building industry from the implementer’s perspective. At this moment, I believe there are four “tectonic shifts” altering the building industry as a business environment. Each area promises enormous payoffs, but will not realize its full potential until they are properly unified into one complete business model. They are:
- Information systems
- Building Information Modeling (BIM)
- Green building & sustainable efficiency
1) Information Systems
Much of the project management process could be simply and easily improved by using more intelligently conceived documentation software. This “smart” documentation software should help track contract costs, change orders, RFI’s, approvals and submittals seamlessly. Too often, these systems work as stand alone programs separate from your AutoCAD plans and shop drawings, MS Outlook email inbox and MS Excel based tracking sheets. While working for URS Corp at the Chicago Transit Authority (CTA), I was blessed with the opportunity to use a state of the art program/project management system coordinated by Kristine Fallon Associates. The CTA’s system was completely integrated with all processes and every document that passed through their office was scanned and available on their servers. The centerpiece of the system was a customized version of Citadon’s ProjectNet software. I didn’t realize what a gem they had created until I joined Bovis Lend Lease in NYC and began using another uninspiring software system. One thing the URS/CTA team understood well is that this change must be led from the top. The CTA used its $5.1 billion charter to force its general contractors and subcontractors to make the necessary changes in each of their organizations.
Kristine Fallon Associates (KFA) is a Chicago based consulting company specializing in online collaboration for the technical professions. They served as a consultant to the CTA and helped to put the CTA’s information systems in place. More information on the project can be found in the whitepaper published on KFA’s website, but a few of the concluding points are telling of the problems with implementing new changes to the construction industry:
- For many parties within a construction project, productivity is not a clearly defined concept. To put it bluntly, if one is being paid by the hour, reducing the number of hours required to get the job done is not an attractive proposition – unless there are balancing considerations, such as competitive pressures. Only the owner is clearly motivated to do more with less. And only a fraction of Web-based project-management systems are bought by owners.
- Most Web-based project-management vendors underestimate the extent of computer-illiteracy in the construction community, and thus underestimate the amount of training required for successful project implementation.
- Construction projects are not highly disciplined affairs. Unless the use of a new tool can be tied to payment, subcontractors will tend to do things “the old familiar way,” despite any benefits they might gain from the new tool.
Probably the most important point here is the first one. Best practices, including new technological solutions in construction management can only come with the support of owners, because they are most incentivized to realize the gains.
Building Information Modeling is possibly the most revolutionary technology in the history of design and real estate project finance. It is still a technological toddler, but the first developers, investment groups or architects to properly use it will reap huge rewards.
The principle is simple. Instead of creating a voluminous set of drawings and construction specifications, a precise computer model is created for the building or renovation. Ideally the software will generate the construction documents, error and omission free. In reality, contractors will probably be better served by learning to build directly from the model rather than rely on paper drawings.
Because the model has every component that the physical construction will have, it should be easy for the software to count quantities and compare them to online directories of cost data. This gives owners, investors and architects the ability to price proposed changes in real time. It also has the potential to calculate schedule changes, zoning or code compliance and several other major hiccups common in the building process due to proposed changes.
AutoCAD Revit software is a popular choice, but Google Sketch-Up and the simulation software from Second Life offer less technical modeling capabilities that could be used by amateurs to interface with a base model. Some examples of successful projects using the technology can be found in the TAP BIM Archives on the AIA’s website.
Using BIM, will open developers and investors up to a much more flexible design environment. While working for Bovis Lend Lease (BLL) on several of Extell Development’s projects, I realized that one of the things Extell does very well is work hard to please its clients (the condo buyer) through customization. Extell is on the cutting edge in NYC of customizable new construction. While at BLL, I oversaw several major unit combinations, partition modifications and finish changes, and every single one of them was a construction coordination nightmare. Unfortunately, the cost of modifications to a building as it is being built is astronomical primarily because the design is static. The construction documents have to be manually adjusted with each change, and when something is inevitably missed, it costs the builder and the owner money. Until BIM, there was no way a design team could effectively find every drawing and specification that each change affects and make the required notations in the middle of the project cycle. That is all starting to change.
The potential value of predictability to investors, developers and buyers is enormous. Soon homes, apartments and offices will be as easy to customize as tennis shoes, and the developer most capable of doing it will reap serious financial rewards.
Crowdsourcing is a popular topic at the moment. I believe that it has and will continue to fundamentally alter the business environment. The goal of crowdsourcing is to leverage mass collaboration enabled by Web 2.0 technology to achieve business goals. It is commonly used to compile building data, provide tech-support, solve complicated research problems, or create t-shirts that sell out every batch.
The opportunities in real estate are endless. Several ideas are to adapt the technology to improve building management services, revolutionize the design process, alter the property search/acquisitions process (already in progress at loopnet.com, zillow.com, craigslist.org, etc.), and to identify specific demand for a product type before investing in it. This real-time marketing effect could be a way for New Urbanists to prove demand and hopefully secure better financing terms than with the conventional economic market study.
In fact, the traditional financing model may be completely altered with the introduction of “crowdfunding.“ The concept is to use small deposits from a large number of potential end users and cause-motivated investors before a design is even started. The funds would be used to purchase and construct projects in a much more fine-grained, sensible manner than the large funds currently building cities with limited and unidentifiable character. As I see it, large investment funds will continue building the raw spaces and crowdfunded smaller projects will occupy them or create infill spaces with the character and diversity typical of the best old cities.
4) Sustainable Efficiency (Green Technology Old & New)
There are several new city plans including PLANYC 2030 plan and the Abu Dhabi 2030 Plan that extensively reference a city with intelligently designed transit, water, electrical, communications and other building infrastructure. They also heavily emphasize sustainability goals. I believe the concepts behind these plans will become increasingly relevant to our cities of the future as traditional energy sources become scarce. Conservation of resources is not just important environmentally, it is fiscally intelligent as well. The enthusiasm for green technology will continue to drive improvements in the real estate products that can be provided, and while conferences like GREENbuild may not reach the deeper sustainability movement, they do serve to educate the masses.
and other rating organizations like it (BREEAM
, GreenGlobes, etc.) are achieving meaningful results through the use of standards which (for better or worse) are increasingly becoming law across the globe. International real estate investors and consultants need to understand the principles and goals behind these systems as they become increasingly popular in the marketplace and in regulation.
The more fundamental solution to our environmental problems comes from a historical understanding of transportation, planning and architecture. Before the US and British industrial revolutions, all forms of energy were expensive. There are thousands of years of building tradition in cities from all types of local climates around the world. The buildings constructed using these ancient techniques perform admirably as human shelter without the use of electricity or fossil fuel. These traditions incorporate the best practices from generations of master builders and end users. Modern technological solutions designed to maintain a comfortable indoor environment make financial sense in the current economy, but may not always be so cost effective. We should be doing as much as possible to combine new passive green technology with well designed traditional methods. Our reliance on mechanical ventilation, unnatural lighting and “maintenance free” materials that can not be repaired must be curbed if we are to create places that can be used for generations.
This leads to a concept called the Original Green, which discusses the more fundamental issues I’m referring to. As architect and author Steve Mouzon states, “If a building cannot be loved, it will not last. And its carbon footprint is absolutely meaningless once its parts have been hauled off to the landfill.” In a nutshell he argues the following:
1. We must first build sustainable places before it is meaningful to even discuss sustainable buildings.
2. Sustainable places should be nourishing, accessible, serviceable, and secure.
3. Sustainable buildings should be lovable, durable, flexible, and frugal.
These tenants encompass the entire green movement and are the universal principals PLANYC and Abu Dhabi 2030 claim to be based on. The Congress for the New Urbanism (CNU) works to create compact, walkable and diverse places that are inherently sustainable and enjoyable to live in. The Original Green concepts derive from many of the principles discovered by the CNU.
Predicting the Future
As New Urbanists, we should be asking ourselves first “what is our mission?” Now that the principles of good urbanism have been largely rediscovered, where do we fit in as thought leaders? The CNU can no longer afford to operate at the small scale it has been working at for so many years. It’s time to take it to the masses. The only way to do this quickly will be by embracing the technological solutions I’ve discussed above. I’m describing a world where the end user becomes the designer.
Will they be educated enough to help design quality urban spaces? Is there an architect within our network who can tell an owner exactly what a building will cost before it’s built? How many architects or general contractors do we work with that can organize and share all of the data involved in constructing a building so that it produces a change-order free construction process?
Is there a developer who has already discovered and consulted his target market to pre-sell the building to a crowd of people with similar interests and taste before taking out a loan? Can that developer also put a new commercial tenant in the building with confidence that they will grow and prosper?
Does the developer even need a loan in this scenario or can he use the money of the end users? We are at the edge of a massive building industry revolution! None of these concepts are more than five to ten years away. Let’s assume the CNU’s actual mission is to “empower people to live where and how they want to?”
How are we doing?
Andrew Malone is a construction project manager based out of New York City. He currently works for Conelle Construction Corp. completing renovation projects throughout Manhattan. Follow him at twitter.com/AndyM1928, at andrewmalone.blogspot.com or email him at amalone [at] asgarddev [dot] com.
If you would like to participate in discussions on the ideas presented in this paper, please join the “Real Estate 2.0” facebook group, sponsored by Andrew.