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Always Good Decisions To Be Made; The Apartment Developer's Dilemma

Not long ago, I toured an apartment complex with two friends; one was the architect who designed it and the other, the developer who built and owns it. The exterior was gorgeous and appropriate. The amenities were unique and clever. The units appeared to be attractive and reasonable for the market…that is until we entered the kitchen. This room was comprised of dark hardwood floors, rich wood cabinetry, stainless appliances and a builder-grade white laminate counter (that stuck out like a sore thumb). I winced. I looked to my architect friend- who gave me the ‘this isn’t the time’ slight head shake. We continued the tour. 

Later, I took the architect aside and asked ‘What the [email protected]*k was that?’ He explained that there were originally granite counters spec’ed, but that they were lost in the V.E. process. To me, this was yet another example of the bad results of not training our young developers to know the difference between a good and a bad decision. It’s the problem of not teaching them that development happens in the real world- not on a spreadsheet. Which brings me to our theme;

‘Whenever there is a decision, there is always a good decision to be made.’

Now I’m not saying that every decision has an option which is ideal, just that there are always better and worse choices. When, as developers, we accept the opportunity to reshape the world around us, we also take on the responsibility to understand the ramifications of the decisions we make. In part, this knowledge comes from experience…but more significantly, it comes from respect.

I’m referring to respect for each of the complex and mani-varied components that go into creating a single building. Currently, we train our youth to be masters the simplest aspect of our job- the financial component. As I’ve said before ‘You can teach a monkey to work a proforma in three months time.’ But it takes years to teach a young developer how and where to assemble land, why some dirt is better than other, how to lead a team through vision, how a building goes together and why, how to use amenities to make a community (and not just a series of disjointed boxes), how to align marketing efforts and how to be an exceptional salesman.

As developers we make a hundred decisions a day, so there are always going to be mistakes. We expect eighty percent of those decisions to be right and twenty percent to be wrong- and we can fix those twenty percent tomorrow. Of our inevitable mistakes however, our goal needs to be to eliminate the stupid ones.

 So what should our young and under-supervised Development Manager above have done when presented with a budget shortfall in the kitchen? The answer is simple: He should have understood that ‘countertops’ is more than an excel line-item. The counter is component of a complex kitchen composition comprised of floor, cabinet, counter, appliances, backsplash, fixtures and lighting. He should have known that they all must work together for the composition to achieve harmony. Even though it would have taken more work, he should have down-graded them all slightly, rather than one dramatically.

 So as we approach our own training and the training of those we lead, we need to make sure that we learn to find the challenge and the beauty of every aspect of our wonderful profession. It is only through a respect for the totality of our work that we learn how to make good decisions. And remember- there is always a good decision to be made in every situation and at every price point.

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I've seen situations like this a few times with new development and it just makes me shake my head. I was fortunate to work for a company that would spend whatever it took to produce an amazing product. Another company built a property at about the same time down the street and they had "partial granite" kitchens and "black and stainless steel appliances." Apparently they had originally planned for granite counters and all stainless steel appliances, but ran out of money. The compromise was to make ONE counter in the kitchen (usually the island or breakfast bar) granite and the rest were faux. Also, they mixed cheaper black appliances with stainless and/or clean steel. Sometimes the refrigerator was metal and the rest black. Sometimes it was the dishwasher. I still think back to that property and laugh.

  David Kotowski
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Every one of our developments have been unique since we deal in adaptive reuse or "from the ground up" projects in historic neighbohoods.
VE is definitely one of the most difficult and critical components of our planning process. After thirty years in the development business, I am still learning and making mistakes (just not as many and not the same ones).
We learned years ago to assemble a team before the first lines are on paper. That team is comprised of the architects, construction company, marketing company (or in house marketing personnel) and us as developers. We have that team present at every planning meeting. This eliminates a lot of wasted time.
My goal is to use these meetings to come up with solutions to make every stage of the project "Better, Faster, Cheaper". This approach prevents the government method of just throwing money at project until it meets the quality needed or the stingy method of delivering a sub par project just to meet budjet goals.
Bruce Gallmnan, CCIM

  BruceGallman, CCIM
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I've recommended the developer live in an apartment for at least 6 months before he considers developing. Once he has developed, I tell him to live on his site for a year....it's always a series of AHH HAA moments that make for a better/more educated project the next time.

  Debbie L. Mauro
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Well it looks like my blog touched a nerve in the ATL- I like that.

David, your comments are well received. I see you were with Worthing so I'll try not to pick on you too much. It is amazing to me to tour properties where the wrong mistakes are made. It seems that too often, the undertrained and undersupervised DM has no understanding of how their decisions affect the ongoing rentability of the projects that they are building.

Bruce, I've been in a number of your projects and have typically enjoyed them. One of the things that I've particularly liked is that you are one of the few local firms that really showed direction and purposefullness in your work. You have a product type and a neighborhood focus that is evident in your buildings. With that focus, comes an integral understanding of community. Gables is similar in approach under Johnny Ladson and the appropriateness of place is also clear with them. Outside of that small grouping, I feel that much of the development product is very scattershot around our city (and its that way in most metropolises that I've seen). What do you see as the key traits that we need to instill in our next generation of developers?

Debbie- I like where your head is at! I began my career as an architect in Boston (before moving to the evil side of development) and then when I began developing, worked primarily building ultra high-end condos in Boston and Chicago. So when I incorporated the for-rent side of the business, it took me a while to make the leap of really understanding that apartments were harder. The reason being that with for-sale product, you build it, you sell it, you're done. For-rent, on the other hand is development in which you intend on dropping a business (that you own) into. Development is just the first step. I was fortunate to work with a woman named Melanie Gersper on the PM side who, along with my boss John Bell (who was a long-term apartment guy out of TCR), encouraged me to spend a day each week...

Well it looks like my blog touched a nerve in the ATL- I like that.

David, your comments are well received. I see you were with Worthing so I'll try not to pick on you too much. It is amazing to me to tour properties where the wrong mistakes are made. It seems that too often, the undertrained and undersupervised DM has no understanding of how their decisions affect the ongoing rentability of the projects that they are building.

Bruce, I've been in a number of your projects and have typically enjoyed them. One of the things that I've particularly liked is that you are one of the few local firms that really showed direction and purposefullness in your work. You have a product type and a neighborhood focus that is evident in your buildings. With that focus, comes an integral understanding of community. Gables is similar in approach under Johnny Ladson and the appropriateness of place is also clear with them. Outside of that small grouping, I feel that much of the development product is very scattershot around our city (and its that way in most metropolises that I've seen). What do you see as the key traits that we need to instill in our next generation of developers?

Debbie- I like where your head is at! I began my career as an architect in Boston (before moving to the evil side of development) and then when I began developing, worked primarily building ultra high-end condos in Boston and Chicago. So when I incorporated the for-rent side of the business, it took me a while to make the leap of really understanding that apartments were harder. The reason being that with for-sale product, you build it, you sell it, you're done. For-rent, on the other hand is development in which you intend on dropping a business (that you own) into. Development is just the first step. I was fortunate to work with a woman named Melanie Gersper on the PM side who, along with my boss John Bell (who was a long-term apartment guy out of TCR), encouraged me to spend a day each week touring our properties and working with PM and maintenance to see what their jobs actually entailed. I did this for about 6 weeks and learned more than I ever expected. It is amazing how wonderfully complex our jobs can be when we layer a focus on how the ongoing operations will work, once our job of designing and building the property are complete. And when you know how to make 'good' decisions, the whole process is so much more gratifying.

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  Ross Blaising

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