I have seen the future, and it is collective.

I speak of the Collective, a development in Grand Rapids, Michigan, that was mentioned in a recent Economist article called The New Oases. The article was part of a larger special section about Nomads, or “knowledge workers” who aren’t tied to a location-specific office.

The Collective provides an answer to this segment. Developed by Bob Dykstra,
the Collective is part executive office, part health club, with guitar lessons, a climbing wall and coffee shop thrown in for good measure. I visited last month as part of an assignment for an upcoming case study for ULI.

The existing building is a former health club, and Mr. Dykstra has created a prototype of approximately 40,000 square feet. Members pay an annual and monthly membership. WiFi access is additional, as are lockable desks or private offices, which can be rented by the hour, day or month. Guitar lessons, fitness classes and computer courses are pay as you go. One of the real advantages of the Collective is the networking opportunities.

The target market is young “knowledge workers” and baby boomers who have flexible hours or are recently or semi-retired. That encompasses anyone who does or can work from home, either with a home office or a central office that they do not need to commute to daily. Thus, large companies need not lease vast amounts of regional office space - rather, their employees can use a Collective.

Collectives can be in suburban or urban locations - they can be amenities in a mixed-use town center or a transit-oriented development. As long as they are near population centers who use them, they can reduce vehicle miles traveled and provide a place to work and work out.

Maybe places like the Collective will change the way we live and work, or maybe they are simply a real estate market reaction to the change that has already occurred.

In January of this year, I participated in an all day charrette as part of the Great City Design Team initiative, the brainchild of Minneapolis Mayor R.T. Rybak. The intention is to take a commercial corridor or node of the city that needs improving and design a solution.

We gathered a group of designers, architects, landscape architects, and other members of the development community, and just like the numerous other charrettes around the city, came up with some really cool streetscapes, open spaces and building massing for an area of Glenwood Avenue, just west of downtown.

Design is important and plans are critical, but I found myself staring at them, doing quick calculations on cost and gasping at the chasm between what was on the paper and chance of it getting built. I fear these sketches and drawings we and all the teams came up with are perhaps destined to rest for eternity in some architect’s file drawer and never see the light of day. The problem being there is no implementation plan or program for providing additional public effort to link these drawings to reality or a built end product.

If I learned anything about planning while working for my previous employer, DSU, it is that a plan is worthless without community buy-in and appropriate implementation. DSU marketed (and still does after being bought by another firm, Bonestroo) themselves as a company whose plans get built. That is important. DSU did some very good work in their day and I’ll be damned if they weren’t one of the better community planning firms in the Twin Cities at getting buy-in from elected officials and the general public for the plans they created. So often plans are simply pretty pictures with no results. I’m always asking “yes, this is a nice plan, but did it get built?”

The lesson here, for my mayor and other visionaries, is of course to get those pretty pictures drawn by leading designers in your community. Create the vision. Get the public excited about it as well. But provide political will and mechanisms for the follow-through. Make sure the necessary zoning changes can be made, and leave some budget for finding a development partner and even some elusive public dollars to offset gaps in the market, which of course is often the reason for the charrette in the first place.

Building great cities indeed takes good design teams, but the uncomfortable reality is the process often exceeds the term of most mayors. I guess you could say it takes a village to build a village.

The last time I surveyed the Twin Cities condo market was first quarter 2006. I updated the data for first Quarter 2008, and as one would expect, the market has worsened considerably since then. Sales have, of course, slowed. Numerous projects have been cancelled, stalled or converted to rental or senior housing. Unsold units on the market are mostly in completed buildings, which is bad news for developers. The good news is the market has self-corrected considerably, and some projects in the best locations continue modest sales.

The condo boom began in the Twin Cities in 2002-2003, when the number of new units per year rose from an average of fewer than 100 to over 500. The market peaked the following three years, with 2,136 new units in 2004, 3,377 in 2005 and 3,038 in 2006. Demand declined considerably since, with 1,912 units in 2007 and just 592 forecast for 2008. No doubt even less will come on line in 2009.

Interestingly, new condo units, as a proportion of all housing units permitted in the Twin Cities annually, has increased and remained high. Even as the condo boom began, condo units as an overall precentage of all housing was no more then 3 percent. In 2004 that figure jumped to 10 percent, and even as construction declined in 2006 and 2007, condos rose to nearly 20 percent of all new housing units built. It remains to be seen whether condos will continue to remain in (relatively) high demand as a percentage of all new housing. If they do, it is likely because of sheer lack of demand for single-family housing, which is driven by demographic changes and even rising gas prices.

The market is correcting itself, albeit painfully. In 1st Quarter 2006, the entire market had over 6,200 unsold units actively marketing. In 1st Quarter 2008, that figure had fallen to 4,000, still a considerable number of units. However, it is likely that a large proportion of those units are in projects that are either in unbuilt projects that will simply be cancelled, or in existing buildings that will be converted or repositioned as rental or senior units (indeed, this has already occurred at numerous projects since the tally was completed in early 2008). By 1st Quarter 2009, there will be considerably fewer unsold units on the market.

Sales also vary greatly depending on geogrpahy. Condos are essentially an urban product, as buyers are giving up both indoor square footage and a yard for nearby amenities and conveniences, often within walking distance. Indeed, sales figures have supported this notion since I have begun tracking them. Minneapolis leads the market, primarily due to condo activity in the downtown area, which is full of nearby amenities. Of all condo projects marketing in downtown Minneapolis as of 1st Quarter 2008, two-thirds of the units have sold, although nearly 1,000 remain on the market.

Inner suburbs, particularly those in the Southwest metro (mostly St. Louis Park and Edina), also perform well, both in terms of sheer number of units built and percentage sold (65% in both cases). Outer ring suburbs have fewer condo units overall, but also a lower success rate. Fewer than 50 percent of units currently marketing in the outer ring suburbs have sold, so the theory holds.

Despite current market conditions, the long term prospects for condos and urban housing in general are strong. Arthur C. Nelson, a professor at Virginia Tech, has conducted housing research that indicates long term demand for attached housing, including condos. Nelson’s research compares existing US housing stock in 2003 with forecast demand in 2025. The results indicate that, whereas there will be no more net demand for single-family homes on large lots, we will need 18.5 million more homes on small lots and 17 million more attached housing units, and a large share of them will indeed be condos.

My predictions for the Twin Cities condo market are tough in the short term and improving later. The remainder or 2008 will see additional project cancellations and continued flagging sales as buyers are unable to sell existing homes. New projects marketing will be nonexistent, with just the buildings already under construction coming on line. A trickle of sales and closings will continue at the condos already open, particularly those in the best locations.

I encourage questions, comments and insight from anybody in the Twin Cities housing market. Feel free to contact me.

I recently visited Philadelphia as part of a trip to Washington DC. I flew in to Philly and took Amtrak to DC, which saved quite a bit on airfare despite the train fare. The bonus was getting to explore Philadelphia some more, including their gorgeous 30th Street train station, Rittenhouse Square on a summer’s evening, the Reading Terminal Market, and the efforts to keep downtown tidy.

Center City Philadelphia is a business-led organization whose mission is to keep downtown Philadelphia clean, safe, beautiful and fun. They achieve this through a Business Improvement District (BID) that encompasses a 120-block area in the core. The BID provides cleaning, security and promotional services that enhance but don’t replace those already existing with the city.

I am impressed by the results. I liked the banners and landscaping, as well as the street cleaning machines that keep things looking well-tended. Most of all, I like the hired staff of personnel that roam the sidewalks at all hours, helping visitors find their way, reporting crime or vandalism, and generally being a happy face for the downtown. These “eyes on the street” help deter crime and improve the entire experience for locals and visitors alike, something Minneapolis and other cities could learn from. Kudos to Center City Philadelphia for making the streets of Philadelphia a better place.

Last week I had the good fortune to travel to Washington D.C. to attend the Blueprint for American Prosperity, an event by the Brookings Institution’s Metropolitan Policy Program. The Blueprint was the culmination of significant research and several publications on how our metro areas are the economic engines of the American economy.

The timing of the event, or “Summit,” as it was called, was to advance an urban agenda for this year’s presidential election and the new congress and president in 2009. The core argument is our 100 largest metropolitan areas (cities and surrounding suburbs) contain 65 percent of our population, generate 75 percent of our GDP and consume just 12 percent of our land mass, so therefore we need policies that maximize the potential of metro areas. We are a metro nation, thus we need metro policy.

The Blueprint looks at four key areas: innovation, human capital, quality places and infrastructure. They recommend that the federal government be a partner in the process; cities cannot simply go it alone. Furthermore, the federal government must empower cities to innovate, utilize human capital, improve infrastructure and create quality places. And the federal government must measure results and maximize performance.

I had the pleasure of interviewing Bruce Katz, who directs the Metropolitan Policy program at Brookings. He is bullish on the potential of this effort. He insists the federal government must be a good partner in empowering metro areas, but ultimately believes it is more of a bottoms up effort, and the metro areas with the best local, metro, public, private, corporate and non-profit leadership will benefit the most.

This is just the beginning. The Blueprint is a multiyear effort, and has the power to create legislatable change at the local, state and national level, supported by thorough research and all in the name of advancing American prosperity. I encourage you to go to the Brookings Metro Policy website and unearth some great information that may help you improve your metro area. Yes, it is all a bit wonky, but their work contains some fantastic maps, charts and statistics. There is a lot of work to do, and the work of the Brookings provides a solid foundation of research to affect change, especially in this important election year.