How We Build Cities

The city building process works best at the neighborhood level when people are able to work together around accurate information to help them all clearly understand the needs and opportunities of the local community.

By Starling Childs

Why does building and improving cities take so long today?

Building and improving cities requires many different groups from civic society to work together toward shared goals, but with distinct motivations and interests. The process includes separate yet related and overlapping workflows. It is an ongoing cyclical process, and yet it is often extremely disjointed and dependent on information from a range of marginally accessible sources.

Where does planning fit in?

Planning is an important step in the city building process. Planning provides an opportunity for ideas to be shared, for local communities to express interests and concerns, and for city officials and consultants to align input from stakeholders and other participants toward a framework for development. Frameworks help establish land use policies that will govern development going forward. The goal of the planning process and policy adoption is to ensure that development outcomes align with a comprehensive understanding of opportunities and constraints and a vision that local stakeholders agree on as the best direction for their neighborhood.

Does planning inform development?

Planning is often the first step in a cycle of the city building process. That said, development does not necessarily happen in sequence with planning and policy adoption. Development can take place at any point in time regardless of what stage a local community is at in the process of creating new policies or establishing a new vision and framework for development initiatives. This is true in particular for real estate development, which involves properties trading hands to be repositioned in the market as investment opportunities present themselves. In many cases these opportunities relate directly to public investment in an area, and often as a result of the planning process, but development can takes place under many different circumstances.

Real estate development begins with site selection; finding the optimal real estate site(s) to invest in. Once a site is identified the next step is to realize any new uses and other objectives for the site. This might involve improving existing buildings, constructing new buildings, or it might not involve buildings at all. A variety of different professions play important roles in the design, financing and construction of real estate projects. While investment and development tends to be in a local community’s best interest, the development stage of the city building process culminates in substantial changes to a neighborhood. The impact of these changes are complex and difficult to predict. And yet aligning development with planning outcomes will almost always ensure that development has a positive impact when measured against the most recent set of community-driven goals.

Timing & Decision Making

Even with well-coordinated efforts, from the earliest stages of planning to the construction and delivery of end products, including new buildings, renovations, and infrastructure upgrades, an entire cycle of the city building process takes years. Considering all of the current innovations in the design, engineering and construction industries, the construction process alone for a single mid-rise residential apartment building takes roughly ten months to complete on average.

Take the development of an apartment building as an example. The ten or so months needed to construct the building represents only a fraction of the time, money and energy that is ultimately involved with this project. For instance, to determine where new apartment buildings should be built in the first place, a municipality will often work with local communities, consultants and urban designers to identify suitable locations and, in some cases, establish land use policies that enable or even incentivize the real estate development industry to produce apartment buildings on appropriate sites. Once the land use policies are adopted, property owners, developers, brokers, architects, engineers, builders, and sources of financing all need to work together alongside representatives of local communities and the local government to realize the development of a new apartment building project. Finally, once the apartment building is completed, the real estate market will need to produce enough demand for new housing units in order to return a necessary amount of profit to the capital sources and other parties that hold equity and debt in the building project.

In this apartment building example, the developer is the entrepreneur who decides that she can create an opportunity for herself and her investors to make money if she builds an apartment building at a specific location in a neighborhood. Her decision to pursue the project is based on the information available to her at the time, as well as any information she and her team can gather about the opportunity going forward.

Access to information is important. When the many groups of professionals and stakeholders have equal access to accurate information about a city, they are able to work both more competitively and more collaboratively toward opportunities to participate in the city building process. If information is less accessible, the process can become mired in setbacks while professionals look for ways to source the information they need, opportunities are missed, and poor investment decisions are made. Generally speaking, city building involves different groups of professionals and community stakeholders working together in a process that revolves around timely and up-to-date information about a city.

A graphic interpretation of the current City Building Process

The Information Business

Information drives the city building process. Many different groups from different industries play a role in the same complex process of building a better city. They participate based on their own access to information about the city and the opportunities this information presents. The more accurate the information is, the more likely they will be to make the right decisions based on their interpretations of it. As a result, each group spends time and energy collecting and analyzing local information. In most cases, the information they collect and analyze comes from a range of different disconnected data sources.

The lack of a single trusted source for accurate information about specific neighborhood conditions in cities results in a new business opportunity tied to the city building process; the business of controlling information for the process. In some cases, this leads to private information sharing services that charge substantial fees for access to information about neighborhoods in cities. The most prolific of these services in the US is provided by the CoStar Group (CSPG). For real estate data platform providers like CoStar, information and the research to gather this information is big business. The quality of CoStar’s data may be contested from time to time, however the technology company maintains longstanding tenure in the space and a formidable market capitalization of more than $11 Billion USD, as of January 2018.

In addition to platforms like CoStar’s, real estate firms, government agencies, individual property owners, and even local community-based non-profits will maintain their own datasets pertaining to their involvement with the city building process. Each party realizes that information is valuable to the process and the ability to control the information enables them to control key aspects of the process.

“I’ve always said, we’re in the information business.” — Robert Knakal, Chairman of New York investment sales at JLL

An open information sharing platform that aligns city planning, development, and operations might one day help improve the city building process. In the meantime, the process is evolving with new technologies and new models of governance driving better access to information. And as a result, a new information sharing ecosystem is beginning to take shape.

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