Why Don’t Real Estate Developers Just Ask Us What We Want? – WestMill Capital

November 09, 2012

Atlantic Cities — by Emily Badger

It’s not all that difficult to identify what kinds of new development a neighborhood needs. There’s no pharmacy, no grocer, no gas station for miles? These are pretty obvious missing pieces in a community. It’s much trickier, though, to identify what the people who live therewant. A bagel shop? A vintage store? A vegan farm-to-table karaoke bar?

Real estate developers typically handle this question by not asking it at all. If you’ve got a hole in your neighborhood, a street frontage of a certain size on the vacant ground floor of a certain kind of building, you’re probably getting a Starbucks. That’s the safe bet that can shoulder the highest rent, regardless of whether or not it’s also the business that locals really want.

And so the vegan farm-to-table karaoke bar never comes to pass, and the people who’ve been coveting one must continue daydreaming. Technology, though, could potentially bridge this disconnect between what communities want and what developers are willing to give them, returning neighborhoods to something similar to that earlier time when building owners stood in front of empty storefronts and asked people, “what do you want to see here?”

Hardly anyone literally does this anymore. But the Internet can.

“Real estate development a long time ago was done by a family, or a person who generally had some sense of being in the community,” says Dan Miller, a developer with WestMill Capital in Washington, D.C. “They built something that they wanted, that they cared about, that they tended to own for a long time. It wasn’t always corporate development.”

He and WestMill unveiled a web tool in December aimed at helping neighborhoods that want local businesses instead of national replicas to communicate that to the people who might make such places possible. The site, Popularise, is currently asking what potential customers want to see inside a property WestMill owns, a 4,250-square foot building on Washington’s eclectic H Street Northeast, that had previously been an underutilized convenience store.

If the real-estate crowdsourcing concept proves workable, Miller and his colleagues envision expanding it – to other neighborhoods and other real-estate developers, other cities and even other parts of the planning process. Matching a business to a vacant space is just the first step. What if that business also wanted to gab with the local community on everything from what to put on the menu to how to design its patio to where to find the financing?

The responses for 1351 H Street NE have been wide-ranging and sometimes weirdly specific (“I want a place that sells these healthy and tasty korean lettuce wraps but also has a fun bar and good music. Perhaps a party atmosphere at night… “).

“A lot of the suggestions we got were for a gym,” Miller says, laughing, because a 4,000-square foot gym would fit maybe five treadmills. “But people generally want a gym in their neighborhood.”

Other people want a cupcake shop, which is, on the other hand, too small for the space. Also on the neighborhood wish list: Korean barbeque, a paella bar, craft donuts, Shanghai dumplings, and a space for trampolines.

“We found a lot of the answers people were putting out were not directly answering our question, which is what do you want here?” Miller says. “It was ‘what do I want in my neighborhood?’”

But this isn’t a bad result. If anything, the flood of random ideas reflects the fact that no one has been asking these people what they want at all. It’s like they’ve just been waiting to plead for a fitness center, and these are the first folks to come along remotely broaching the topic.

Miller says one of the Popularise front-runners – a local bar manager who wants to open his own spot – was even offered a property two blocks down the street and $150,000 in build-out capital by another developer in the neighborhood, thanks to the display of enthusiasm on the site.

“When we saw that it was like, ‘OK, this is not a zero-sum game on our property,” Miller says. “We should rethink of it as what do people want in their neighborhood?”

WestMill happened to launch the platform with a test property of its own. But Miller and his colleagues want to decouple Popularise, the community tool, from WestMill, the real estate developer, in the process introducing technology to an industry that still largely runs on hand-mounted “for sale” signs.

Whether or not the concept takes off will depend on what happens next. Within the next two months or so, WestMill will announce the tenant for the H Street NE space. And this will be a tricky juncture. Popularise isn’t literally promising democratic elections. The concept with the most votes won’t necessarily take the space. But in theory, the business that does take root here will reflect the input of the neighborhood.

“We can put ourselves in a tough position,” Miller acknowledges (and this is why some more traditional developers think these guys are nuts). “But the way we view it is that maybe it would anger a few people if what you picked was not the No. 1 most popular [idea], but one of the more generally popular. But it’s a huge improvement on how things are done now.”

The true value of the concept may take years to prove. The real question isn’t whether a community should help pick the businesses in its midst, but whether a business picked by the community can hold its own financially.

And this is the piece Popularise’s creators haven’t figured out yet: Is there a way to source not just ideas from within a neighborhood, but financing, too?

“That’s ultimately the biggest issue,” Miller says, hinting at the prospect that Popularise will eventually try to tackle this piece, too. “You’ve seen what people can do with Kickstarter. That’s a different community in the sense that it’s not a location-based community. But it’s a community that supports a certain concept, topic, program.”

Why not a certain wine bar?

Link: Why Don’t Real Estate Developers Just Ask Us What We Want?