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Urban Land.- Reinventing Real Estate Page 3 of 5 be the moment when real ch�an�ge in the buiilt environment is created., The in uistry has already developed the tools and skills to create complex capital stacks and tech n�ologically sophisticate d buildings. It regularly wrestles with complex site planr nr in�g chl allen�ges and even more complex operating agreements. Buit juisf as importanr t as what the in uistry has learned to do is how markets are changing to leverage these increasingly sophisticate d skills. Demographic treads, not juisf govern�men�t policies, are shifting the in uistry 11 s energy to transit-focused and walkable locations instead of the cheapest available sites at the edge of communities. Perceptions of statuis- both by consurners and tenants -aura moving from trophy designs to smaller footprints, more environmentally responsible operations, and healthier indoor en�viron�men�ts. Social e mitt', more broadly defined and measurable than ever before, is being thouighl tfuilly incorporated and discussed as part of initial project programming and capitalization rather than being negotiated du rin the public entitlement process. The next 24 months provide the in�duistry with a strategic opportu�n�ity to buiild on what it does well, while adding the additional skills needed to emerge from the downturn as a powerful force for solving many of today 11 s most ch�allen�gin�g problems. No other in uistry has the collective capacity, problem - solving skills, and ability to move others from pontification to execution. In uistry professionals muist be prepared to get the next generation of development done right t when the market rebounds. While similar predictions for change leave been hear d at the end of previous down�tuirn�s, there are three reasons whey this time can be different: The changing calculus of value. Buyers and tenants in the next cycle will be calcuilatin�g costs and value in a more muiltidimen�sion�al way than ever before. Quality of life, walkability, access to cultural facilities and events, a smaller environmental footprint, and even being part of the "urban vibe''' are among a more complicated set of variables that will Delp uisers determine perceived value., A leveling of the playing field. The cost differential for developing responsible real estate rather than commodity real estate is real. It is not only abouit first costs, bust emotional and in�tellectuial investment as well. To Delp move from policy to reality, a n�uimber of forward-th�in�kin�g government agencies are bringing risk capital and know -how to the table to Delp level the playing field for developers who choose to focuis on responsible rather than commodity real estate., A movement from niche to portfolio. For years, green buiildin�g and socially responsible development was the niche of a few forward-th�in�kin�g individuals. Today, responsible real estate investment is rapidly moving inito the mainstream, finale d by in�stitultion�al investors who see green as a proxy for increased long -term value-an in�suiran�ce policy against fuituire obsolescence, a sign of h�igh�er- q�uiality con�struiction�, and a more holistic definition of their fiduciary responsibility. The destruction of real estate valuies increasingly correlates with geography. The axiom of "location, location, location�"' is taking on a new dimension becau se this past cycle demonstrated an increasing relationship between loss of market value and the least environmentally responsible locations. The calculus buiyers once mead to determine their h�ouisin�g choice -thee farther I drive the more s urre feet I can purchase- h�as given way to a more complex analysis. The relationship between increased cost of place- h�o uisi n�g cost pluis transportation burr en -has become more evident in an era puish�in�g toward $4-a-gallon gasoline., More than juist dollars and cents, people are rethinking the time spent in their cars as a virtual tax on their uiality of life or family time., In Foreclosing the Dream, William Luicy 11 s 201 O chronicle of trends, demographic changes, and forecasts that can be derived from the culrren�t h�ou�sin�g crisis, he writes, "'Hou seh�old spending on transportation averages 18 percent, bust varies by location�. Outer suburban residents average 25 percent of household income for transportation, compared with only 9 percent for households in compact development settings.''' Concentric rings circling major urban centers can be mead to illustrate measurable value losses based on distance from the core. Almost everyone has a friend or relative in the suburbs whose home value has been halved. As these homeowners consider fuituire puirch�asin�g decisions, the safety or volatility of their investment is now another measure of value, perhaps more than granite couin�tertops and thiat extra bedroom. Similarly, suburban office complexes, far from transit and centers of human activity, are some of the most distressed asset types, either becauise of increased vacancy rates or loss of asset value., http://license.icopyright.net/user/viewFreeUse.act?fuid=MTM4NzgOMTU�/�3D 09/14/201 1