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developer culture

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Apr 13, 06 9:31 am  · 
 · 
Nevermore

hell Now I have made up my mind..
Im not going to find satisfaction in my 4 % fees
they'll be no creativity left to find...
Im going to be a land shark cruising my mer ce dees

Apr 13, 06 9:44 am  · 
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Ms Beary

What is eye opening perhaps is the amount of money there is to be made in the business of developments and buildings, and the designers get the smallest share. Developers (not all, as discussed above) make lots of cash on the same projects we "get by" on or lose money on. If fact the more they talk us out of, the more they pocket.

When and why did the architect's share get diminished? Because the developer is savvy and knows how to get the architect right where he wants him. Old Fogey's post in another thread has been jumping around in my head since he posted it. Something about how developer's strategies are to trick the architect into thinking he will have design lee-way so he will lower his fees, and then not giving the designer much lee-way at all. Can we be any dumber, collectively?

Is anyone familiar with the onset of the developer as profession? What are the roots? Europe does not run on this model. Sanya, I know what you are talking about, I have visited Europe, and fell in love with the diverse yet homogenous, beautiful yet raw and unrefined etc everything all at once of the European city, but these were mostly the older city centers. What model do NEW European cities use for project development?

As an architect, I often think, "The whole is greater than the sum of the parts" is a good way to think of the value of a project or development. Developers tend to have an isolated, distorted view of value where the whole IS simply the sum of the parts, and they are heros for taking a piece of "empty" land and turning it into something "usefull".

Apr 13, 06 12:20 pm  · 
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quizzical
Strawbeary

: we cannot be victims without our own participation. Nothing is happening to us that we don't permit to happen ... either through complacence or ignorance.

Do you know any manufacturers or retailers who routinely sell their wares at or below cost ?

Yet, architects routinely take work at fee levels where we have almost no hope of earning a profit -- we rationalize this by such thoughts as: a) it'll help me create a relationship with a new client; or b) this job has great design potential and it will help me establish a design reputation; or c) we need this work so we don't have to let ____ go. I've been in this profession for a while and these rationalizations (and, that's exactly what they are) almost never turn out well.

We have to start making a compelling case that what we do has significant value, or we have to start saying "NO" and mean it. Until the majority of us operate in that manner, the economics of our profession will continue as they are, or worsen.

Apr 13, 06 2:00 pm  · 
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on my way

Here's some information from a banker to shed some light on development financing, based on the following question:

How would I, personally, go about raising debt for my first project? Let’s say I was seeking $800K and had $200K in equity. What would I have to do to accomplish this? What do you think the rate and fees would be?


Answer:

First do an Income and expense projection on the finished product (that way you will know if the deal works). You may have to do this a few times to get the right type and mix of space you are going to build. Next, look into financing options. We can do an 18 month loan with one 6 month option to extend, 1.5% over prime rate (7.5% + 1.5% = 9.0% Rate),

You may have to come up with more equity, most lenders like to see 75% loan to cost, not 80%.

Do you have to aquire the land or do you own that already. If you need to acquire the land then we can give a small bridge loan for up to 65% of the land purchase price or appraised value which ever is lower.

We will order the appraisal, environmental and plan and cost review.

Time from accepted term sheet to approval - 5 weeks, time from approval to close - 4 weeks, total time is 9 weeks.

You will need limited liability at time of closing the land and builders risk insurance at closing of construction loan.

You will need to provide 100% personal Guarantee. Check your net worth, many lenders, including us, like to see a net worth statement of 2X the loan amount (1.6MM in your case). You may have to get someone with deep pockets to sign on with you for the personal guarantee.

If this is you first project, you will have to marry up with a good General Contractor and Architect. Most lenders want their borrowers to have real experience before lending money. Since your project is not large you might get away with just a good GC and Architect.

Get a good idea from your architect as to when you will have approved plans ready. You will not be able to close on a construction loan until plans are approved by NYCDOB.

Apr 13, 06 2:09 pm  · 
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strlt_typ

my boss, who's an architect and general contractor, is currently working with a developer. instead of him just playing the role of the designer and builder, he created a partnership with the developer. it seems like that's the best way to go as far as getting your design built and also getting a good amount of cash in return...my boss has made not just a business relationship but a personal relationship with this developer (that sounds like some BS business talk there...i'm embarassed) and that helps in my opinion because he's able to be completely open with him...no guessing games or tac-tics...just straight communication on what they want to do and "this is the kind of design" and "this is what you'll make"

strawbeary, i think you've touched on this topic, the most difficult and time consuming for my boss has been collecting proof that the design he wants to create can translate to money. so far he's opened his eyes on the real estate market by working with a few real estate agents and having them find what real estate agents call "comparative market analysis" ...i call them comparisons (even though i don't know shit about real estate, he makes me do this from time to time)...they're buildings or developments with similar characteristics as the one you and your developer are planning on pursuing...your developer/investor should be made aware of these comparisons...

here in l.a. a person named Brian Linder runs a real estate office and a program called "The Value of Architecture"...He's an architect and a real estate agent...He's made a niche on selling "modern design" (i know it sounds superficial)...he has put on the market a building by neutra, rm schindler, and a few more contemporary architects for selling prices that can make a developer excited...what this guy is doing has been helpful to my boss in convincing his developer/investor partner that the design he wants to do doesn't necessarily translate to no profit but can make profit...the developer can now link or make a connection between what the building looks like and it's value in money...that is the difficulty that i've been seeing with my boss is that the developer relates a certain building look to the profit gained by that look...its like "italian style= million bucks"...this is what the investor sees so finding comparisons that are superficially similar and selling on the high end is a good way to make your case to the developer on why they should support your design...it feels almost as if my bossis selling out but generally, the developer don't want to hear design...my boss and i do that in the office when we're actually drawing up some schematic plans...

that might be something you can look for in your area...the real estate agent is important because his/her job is to link a certain design with a certain profit..


one thing i've noticed is the different languages used and the translation in languages...the information or comparisons that the real estate agent has collected has to be translated to numbers and calculations, a language that the developer understands...

i don't know if all that made sense

Apr 13, 06 3:12 pm  · 
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Rim Joist

quizz-- I think your third paragraph is a fabulously concise summary of the excuse mainstream purported by most architects. I hear a version of your list almost daily in my office...

Apr 13, 06 3:22 pm  · 
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SuperHeavy

Danny boy has another starchitect condo going up next to my office. This is hot right now where the equation is starchitect = million(s) bucks. Unfortunately, for all the 'progressive' design in a city where the mayor's name is Butch, this building will still most likely suck. So, while I'm happy to get something good built by whatever means, I worry that as long as buildings equal only money, we will never get across the board better design.

Apr 13, 06 3:42 pm  · 
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dia

It is possible, and often routine, to make 100% above the construction cost of a project. For example, a $6M project [Construction costs, consultant fees, marketing, land and holding costs] will retail at $12m, making $6m precost project.

If you are interested in becoming a developer, spend some time talking to independent financiers [ie, people who arrange finance for building projects] and see what they require.

As I mentioned above, as well as other people, dont assume that these people have money in the bacnk to do this. Often they have nothing except for nouse and balls. Often developers might have the money, but will spread the risk by involving other people.

As I mentioned in another thread, I wil be developing some infill land where I can put 4 housing units. this will be near the end of the year. I'll keep you posted.

Apr 13, 06 8:16 pm  · 
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vado retro

well u just betta read about discounted cash flow developer wannabees

Apr 13, 06 8:18 pm  · 
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eion

sanya,
I went through the same professional 'identity crisis' when I moved here from Eastern Europe. I couldn't quite come to terms with the fact that here, an architect is paid only for project managemet work. The design work brings revenue only when it's made relevant by branding. Branding turns design into a product with x monetary value for investors/ clients. You know the rest...
But putting the "developer" aside, what I hear most of you express here, is a concern with the fact that design is being conditioned by a mere marketing technique.
Hence the on-going discrepancy between schooling and practice.
The solutions that most of you bring up, are about surviving as a design professional under these circumstances. Somehow advancing architectural discourse gets left behind in school. When it comes time to practice, we have to do "translation" work. Well put, Dammson!

Apr 14, 06 2:52 pm  · 
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Nevermore

what if call ourselves The Creators ?

Apr 15, 06 5:29 am  · 
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tinsec9

Ultimately developers are middlemen translating risk into profit by ostensibly satiating a need/want of usable space. The culturally weighted significance of their medium -- the land, Scarlet -- is what makes much of their activiety seem so criminal, and much of ours seem so missionary.

It is the relative cultural ignorance of the consumer-citizen that is being exploited by the devloper, the real estate sales team, and by extension the compromising designer.

Are we to attempt to educate a population that reveres "old Europe" or CapeCod, or the new Glass Box House or whatever it is that envelopes the short term props necessary to complement the cliche people call their lives ? The answer is no, we cannot educate people. We can only market to them.




developer : development

Apr 15, 06 4:15 pm  · 
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babs

tomsec9 certainly has an interesting perspective - not sure I agree with the phrase "the cliche people call their lives"

but, with respect to developers, stop for a moment to consider fairly what developers really do - sure, they're easy to despise - but the bulk of commercial real estate in the US simply would not exist without the initiative of developers

developers are profit minded, to be sure. but they also seize opportunity, orchestrate action, take substantial risk and produce something that can be used by other people. they expect to be rewarded very well for the risk they take and, at times, they lose everything if they guess wrong or manage the process badly

the fundamental developer mentality is not "risk avoidance" but "risk control" - they know they cannot avoid risk, but they can do everything within their power to minimize that risk. that is why developers don't want to pay architects high fees, don't want to pay us at all until they close their development loan, don't want to put more quality into buildings than is absolutely necessary, etc. - every dollar they spend is a) a dollar they must pay back; and/or b) a dollar that worsens the risk/reward ratio

for the most part, developers are operating in a totally rational mannner - the question for us is this: can we adapt and still function ?

this has been a GREAT thread - very interesting

Apr 16, 06 11:05 am  · 
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digger

developers ... can't live with 'em ... can't kill 'em

Apr 17, 06 2:28 pm  · 
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Rim Joist

Developers generally function within the mainstream of the markets.
Architects generally function outside the mainstream of the markets.

Like it or not, within the the only game in town, architecture is a luxury.


Apr 17, 06 3:24 pm  · 
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Ms Beary

spotted a bumper sticker on a Wyoming pick-up truck: Save a moose, shoot a land developer.

Apr 17, 06 4:54 pm  · 
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scorr88

great thread. let's take the generalization that architects largely operate in a different cultural realm than developers/investors, etc - typically we have colleagues who are artists, filmmakers, writers, musicians - young professionals in our firms live in fringe communities - we are connected to the people who have the ability to create new communities that people want to live in ~

archts are in a better position to see the value in something hidden from a developer's eye. maybe a question is not how to raise millions to compete with developers in nyc/la/atl, but to look in alternative locations, outside the developer 'box' - using our skills to find the right locations to 'seed', and homing in on locations that have characteristics we see as valuable. architecture can draw people from far away and be cultural catalysts to create/revitalize new places.

obviously, in large markets - nyc, la - it is extremely difficult to compete with the financials/formulas of large development companies/construction, etc. but by using our position in society, our place in culture, we can be catalysts for creating small differences that can snowball into revitalized/new/better communities. start small.

we have every reason to be better speculators than developers are.

Apr 17, 06 8:40 pm  · 
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futureboy

it's definitely interesting to question the role that architecture has found itself in. the thing i might begin to suggest is that architecture is very good at being very strategic about the wrong things. something that blows my mind is that a building at the beginning of the twentieth century had 3-5% of its budget tied up in MEPFP, now we have 30-50% of the budget tied up in such items. where has the architecture gone, well literally down the drain....or into the stuff that sits within the stud walls that we build. so why is an architect only as valuable as the plumber in many building design projects, well...to tell you the truth, the plumbers probably holding onto more of the monetary value of the project. now how does this work into this discussion...one might think it a bit of a tangent...but maybe this should be just seen as an extension of the dialogue questioning the role of design. just as we need to understand the economic ramifications of our design decisions and the political ramifications of our drawings (after all the line is the fundamental building block of ownership/nationality/difference), we as architects need to question the stuff that fills our buildings and begin to conceive of ways to change the course of building spending. part of this is about getting involved in communities (way undervalued in the profession and a very good point up there in the thread), but part of it is also changing the direction of how we conceive of design as a strategy.

Apr 17, 06 8:46 pm  · 
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scorr88
http://www.washingtonpost.com/wp-dyn/content/article/2006/04/15/AR2006041501087.html?sub=AR

..or maybe developers will just do that too.

quote from article:
"Neighboring is one of the biggest concepts in America," Warrick said. "People want connections. And as good community developers, we should recognize what it means to create community."

Apr 18, 06 1:44 pm  · 
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A Center for Ants?

the wierd thing is that the developers in that article ultimately create these very homogenous and uniform "communities". in my opinion a good community needs a level of diversity to make it successful. it factionalizes and labels our communities and social groups into incompatible types rather than trying to bring them together.

"I see lots of blond women," she said. "I know there's a very high number of Christian-based families, and . . . How do I say this nicely? I think if I were gay, I'd never live here."

it just furthers the problems were created by suburbanization. it creates socio-economic enclaves which intrinsically discourages people that don't fit a certain demographic or "psychographic" (per the article). sounds really sorta elitist when you boil it down.

Apr 18, 06 2:46 pm  · 
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scorr88

yeah, i certainly don't think it's an attractive place to live but i think it shows a giant disconnect between developer and architect, and the people in between. it's just frustrating to see these things happening without a borader architectural perspective, because they would most certainly be much different.
homes as investment - people want to know that the neighborhood is ok to invest, and an unfortunately 'secure' way to do it is to live next to people that you think are like you.
tho' not only a suburban problem- lots of urban areas are homogenous too...

Apr 20, 06 2:12 pm  · 
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trace™

what I see is basic marketing. People are naive suckers (in the US, at least). Show them something and tell them it's exactly what they want, something familiar and touching on some of their fundamental beliefs, and viola, you have an instant fan.

It's the easiest 'solution' to a complex problem. Give people a 'buffer' of familiarity and they'll buy wihtout thinking. Good ploy on the developer's side.

Sad, too. I don't think people, in general, are really this shallow. They may seem that way, may even act it when blatantly obvious 'groupings' are artificially formed (like this or like church, or a club), but underneath it all we are all complex creatures. I think that successful design combined with power marketing can help elevate people's taste. This has happened with things like the iPod and the RAZR, even with cars. It's happening with contemporary furniture, too.

So, it all comes back to education, which, eventually, will create stronger opinions on the consumer side. But, again, this most likely will never get too far simply because there are too many bad architects making bad architecture, teaming up with bad developers.

Apr 20, 06 2:30 pm  · 
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A Center for Ants?

i agree. the danger with this mission to educate is to become overly presumptuous and prescribe what people want. as architects we have to remain open and receptive to the variety of desires of the individual and help them to balance it against societal or group needs. (it's like politics!!!)

does anyone know of any really good projects or even urban environments where a good blend of diversity comes together to make a truly mixed and enjoyable space/place? it seems like those types of areas start having a good diversity of population and then begin to get gentrified as more of the educated and affluent move in...

Apr 20, 06 3:30 pm  · 
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Rim Joist

Center and Trace -- how is what you're suggesting not simply a variation of the same thing you are both criticizing?

Apr 20, 06 4:15 pm  · 
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tinsec9

Gentrification is really a troped outgrowth of the suburban phenomenon.

A delayed reaction to the television/automobile suburban privateness and isolation of the postwar/coldwar.

What if these communities are short term and unsustainable in our culture/economy ? Next question then: what is the oldest, maybe most successful, gentrified neighborhood in this country ? Greenwhich village? Mission district ? I don't know -- anyone ?

Apr 20, 06 7:07 pm  · 
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tinsec9

Gentrification is really a troped outgrowth of the suburban phenomenon.

A delayed reaction to the television/automobile suburban privateness and isolation of the postwar/coldwar.

What if these communities are short term and unsustainable in our culture/economy ? Next question then: what is the oldest, maybe most successful, gentrified neighborhood in this country ? Greenwhich village? Mission district ? I don't know -- anyone ?

Apr 20, 06 7:07 pm  · 
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strlt_typ

we have new jobs coming in the office because of a developer

Apr 20, 06 7:13 pm  · 
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Ms Beary

Update, my husband has been offered a job by the group and had his interview yesterday. If he gets it, he is going to take it.

May 19, 06 9:51 am  · 
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wurdan freo

so did he get it? Are you Archi-Developers now?

The suspense has been killing me.

Apr 14, 08 4:57 pm  · 
 · 

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