The Reasons We Don’t Have Small Development by Small Developers

Since I was a kid, Dallas’ landscape has always been in constant flux. I would leave for six months or more and come back to a city that looked different or changed inexorably. Real estate development is natural in any healthy city, and it’s a good sign that there’s investment in ours. But what really matters to me is what gets made and how.

à la boulangerie après Trader Joes sur Greenville Ave avec mon chien

We know for a fact that Lowest Greenville, Deep Ellum, and Bishop Arts are some of the most popular places to be right now. Walking around those districts just feels good and you want to be there. I’ve also shown that these places are very good investments for the city. We also know that because DFW is in short supply of these districts, demand is very high and cost of business is rising. So why are there so few of these places, and why can’t we build more of them?

Talking to financial people, policy makers, and developers themselves, I’ve come up with 4 reasons why we only develop huge 300-unit apartment complexes and town homes instead of the beautiful older districts that we love.

  1. Financial – It’s difficult today to find $800K-$1M to build a three-story walk up with retail on the ground floor that’s less than 1 acre, but investors are more than ready to finance 30 million dollar, 300-unit, 6 acre+ developments. There’s a checklist that big banks will require of a developer before financing construction, and none of those factors (like mandating a leasing office and 1.5 parking spaces per unit) benefit small development.
  2. Policy – Given the current process that governs development, a bureaucrat would much rather deal with one applicant (who has an existing relationship with the city) over 6 acres than 24 applicants over the same area. Since the paperwork is the same regardless of the size of development, small development has no advantage. Additionally, our parking requirements make Bishop Arts, Deep Ellum, and Lowest Greenville impossible and illegal to replicate.
  3. Construction – Cost of construction is increasing. From cost of materials and labor to permitting, nothing is getting cheaper in the 21st Century. Economy of scale dictates cutting cost by building bigger, quicker, and cheaper.
  4. Developers – The game is rigged to build big, so it’s a huge risk to develop land in a way that goes against code and is difficult to finance, despite the fact that the market proves traditional development to be successful. In turn, development is left in the hands of those who have experience handling 30 million dollars worth of project management. In order to have small development, we need to equip and empower small developers.

Reflecting on these four reasons, 3 of them are explicitly subject to market forces: Financial, Construction, and Developers. Policy is the only thing that citizens can control through elected representation, so our voter turnout rate is directly related to how much control we have over development. Still, voter engagement has no bearing on the kinds of places where we want to be.

The policies in place that govern development should allow for a diversity of developers who want to create places that we know citizens will like and will want to invest in. My next blog will detail some of the strategies for policies that equip communities and empower small developers to build places we will love instead of financial formulae that waste opportunities to make our city better.


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