Real Estate
Globally, 54% of the population lives in urban areas today, and this trend is expected to continue. By 2045, the number of people living in cities will increase by 1.5 times to 6 billion, adding 2 billion more urban residents. The challenges cities will face with this growth can be overcome in ways that allow them to thrive by optimizing the use of capital, improving environmental impact, increasing economic opportunity, and enhancing overall quality of life through the built environment. With more than 80% of global GDP generated in cities, urbanization can contribute to sustainable growth if managed well by increasing productivity and allowing innovation and new ideas to emerge.
We believe that strong communities are the foundation of a prosperous society where real estate is a critical component to help address social and civic challenges. RIDGE-LANE Limited Partners has the experience to help create cities that “work” – that are inclusive and livable, while at the same time resilient, innovative and sustainable - using strategies that include stakeholder engagement, public and private sector coordination, and intelligent investment allocation. We are committed to urban revitalization and building cities in a way that allows them to thrive and grow.
OUR GUIDING PRINCIPLES & THEORY OF CHANGE
Empowering Urban Revitalization and Growth. Societal and economic changes are converging to create a new urban reality that is transforming the nation’s cities. Demographic changes are creating markets for mixed-use and mixed-income models of urban design. Job growth in advanced industries reflects the preferences of knowledge workers attracted to urban neighborhoods. The “smart” institutions of the new economy, such as research universities and medical centers, are becoming the knowledge anchors of cities, spinning off employment, contracts, businesses, residences, and public amenities. Global energy challenges are putting a premium on core city locations and on public transit. New technologies are matched to creative architecture to advance concepts of sustainability, walkability, and affordability. As a result, cities are becoming denser, more diverse, smarter, safer, more dynamic, more interconnected, more social, more environmentally aware, more attractive, and more essential to the nation’s prosperity.
Addressing the Demand for an Integrated Lifestyle. There is an increasing demand for integrated community development concepts where people can Work, Learn, and Play where they Live. Communities are now hubs for ideas, commerce, culture, science, economic productivity, social development, health and fitness, and are the physical fabric of our society. Many surveys show that residents place a higher value on homes within walking distance of stores, public spaces, and employment. Developers and planners must imagine designs for urban sites that can be assembled into a compatible pattern of mixed uses to create an urban village. “Villages within the city” create a sense of identity for submarkets within an urban area, encourage resident involvement, and create loyalties to neighborhood businesses. The emergence of these integrated Live/Work/Learn/Play development concepts is creating new opportunities for communities and developers to respond to this new demand. The companies that are embracing this new trend are finding much success. Older, established developers will be left behind if they don’t recognize this new demand and find ways to innovate and adapt their current approaches.
Attention to Density and Design. Greater demand for core urban sites almost always means higher land prices. To offer competitive rents or sales prices, increased density is often the only business solution. Density, however, frequently generates a negative response from nearby residents and from public officials who oppose large, overbearing structures and increased traffic. But good design can be an antidote to such opposition. Creative architects can break up the mass of large structures, altering heights and varying elevations and exteriors, as well as reducing the unsightly imposition of parking structures. Urban designers today can use materials of various textures, weights, and colors; light patterns; nontraditional shapes and soaring lines; water features and foliage; and nearby topographical features to make projects attractive, functional, and economically feasible. Careful attention to density and design can generate positive urban dynamics, including more vibrant neighborhoods and more cost-effective public services.
Incorporating Public Spaces and Amenities. The importance of creating common areas where people can safely relax and enjoy the urban setting cannot be overstated. In a commercial project, common space may take the form of a sitting area with internet connectivity. In a multifamily community, it may be meeting spaces for professionals who work at home. On a public street, common space may mean wider sidewalks, or a lighted bus stop shelter for transit passengers. Plantings, water features, street furniture, public art, green open spaces, exercise equipment, performance stages, jogging paths, children’s play equipment, and pet parks are all desirable features that help make the urban streetscape more humane and vital. Mass transit stops are also obvious locations for urban residential, commercial, and office developments. Developers should probe beyond the obvious sites to explore the potential of underused properties along transit lines to unlock the value of transit-related real estate.
Building for Sustainability. Community builders must be attentive to the use of building materials and systems that minimize environmental impacts and ensure long-term sustainability. Important contributions have been made by individual builders, advocacy organizations, and nonprofit community builders who have designed prototype homes and other buildings using more sustainable and energy efficient materials, HVAC systems, water conservation, landscaping, and construction methods. Urban leaders must also seek to make entire cities contributors to environmental solutions. As the reality of our changing climate become more widely understood―hotter temperatures, longer heat spells, drier or wetter conditions in some regions, and more violent storms―public and private sector leaders will confront higher pricing for scarcer water allocations, higher energy costs for more air conditioning, worker productivity losses, and the insurance costs of flooding and other storm damage. Sustainable building solutions will be an increasingly important way to address these challenges.
Digitizing Urban Real Estate. The wave of technology innovations, automation and digitization is growing. Home systems currently exist to calibrate landscaping to weather conditions, to monitor energy use, to tighten security, and to communicate with light switches, locks, and other devices in a smart building via a remote tablet or smartphone app. At the city level, “smart city” technology is on the rise where computer automation can help first responders arrive faster, assist police in reducing crime, help decrease peak energy loads, manage street lights, and schedule public transit arrival times. The advent of cloud computing makes it possible for millions of residents to be connected to “the internet of things” in their smart homes and for entire cities to be interconnected. These technological advances will continue to power the urban renewal of the future.
Anchoring Advanced Industries and Institutions. The advanced industries powering the new American economy employ a workforce skilled in science, technology, engineering, and mathematics. In many metropolitan areas, these advanced industries work in concert with anchor institutions—research universities, medical centers, corporate headquarters, research and development complexes, and arts and cultural institutions. These “smart” industries and institutions of the new economy are becoming the knowledge anchors of cities, spinning off employment, contracts, businesses, residences, and public amenities. As these advanced industries and institutions become America’s crucial drivers of global competitiveness, cities will want to attract them, and real estate developers will need to build the facilities and incorporate the unique building features and spatial designs these advanced industries and anchor institutions will require.
Addressing Demographic Trends. Over the next 30 years, the population of Americans over age 65 will double, and the number of those over 85 will triple. Minorities are already approaching 50 percent of the homebuying market and in many areas account for 100 percent of population growth. Cities also employ workers across a wide range of incomes. The rapid growth of seniors, minority populations, and mixed income levels, means that residential builders must consider affordability, floor plans, locations, and community amenities that respond to this growth. A well-functioning city needs a mix of housing types. Developers and public officials must make affordable and workforce housing a priority. An important way to add affordable and workforce units is cross-subsidization within a project, with a developer voluntarily or mandatorily including a percentage of such units. It has been demonstrated that distribution of those units within a project has no negative effect on the marketability or functionality of the community, and the positive effects for a city are real.
Modernizing Urban Infrastructure. In the core areas of many U.S. cities, water lines are more than 100 years old and pose health and safety risks. Vehicular traffic flows along rutted roadways and congested arterials. Public facilities, whose deterioration undermines public confidence in urban governance, include rundown schools and other public buildings, aged airports, dated rail stations, fragile parking structures, and crumbling bridges, tunnels, and underpasses. America’s municipal and metropolitan leaders must make extensive investments in their basic infrastructure if they are to position cities as platforms for economic competitiveness. In doing so, cities must focus on the modernization of existing infrastructure that will create the conditions to draw future private investment and the public private partnerships that are needed to modernize urban areas.
Financing Urban Real Estate. The flow of global capital to U.S. metropolitan markets will continue because investors value the relative stability of U.S. real estate markets and are particularly attracted to the “gateway cities” with which they are most familiar. Institutional investors with actuarial obligations for pension and retirement funds, as well as individual investors will continue to be attracted to the higher returns associated with various forms of real estate as they seek to achieve acceptable overall returns. For these investors, relationships with highly competent real estate operators who manage strong pipelines of attractive projects and who have stellar records of performance will be especially valuable. Public-Private Partnerships can also be an important tool in the financing of urban real estate. City governments have become very capable drivers of economic development, using every municipal resource to create comparative advantages and to offer incentives. These economic development calculations almost always involve urban real estate decisions. Cities provide property tax abatements to make the economics of industrial sites more palatable for relocations or expansions. They offer cash outlays from bond programs to offset the construction costs of apartments, and they often add further incentives for including percentages of workforce or affordable housing units. Public authorities can also commit to investing in physical infrastructure to support employment-generating projects, including approach roads, freeway exit ramps, transit stations, water extensions and pumping stations, electrical power generators, land acquisition and assembly, and leases of public land or facilities. This kind of aggressive involvement by the public sector in real estate transactions is likely to increase as cities become more determined to be masters of their economic destinies and to connect permanent jobs with the urban workforce.
Opportunities in Real Estate Abound. Many of the trends responsible for America’s urban renaissance have been coming for years. However, demographic shifts, technological advancements, and sustainability concerns have all accelerated this growth. These trends are creating new opportunities for the nation’s cities and the developers that build them.
We drive urban transformation by identifying novel concepts and aligning strategic partners to projects that will have the greatest social impact and economic return.