Developers of master-planned communities (MPCs) must innovate to remain relevant, said Kathleen B. Cecilian, a ULI governor and chief executive officer (CEO) of Flemington, New Jersey–based marketing firm Cecilian Worldwide, speaking at the 2016 ULI Spring Meeting. “There are innovators in each of your companies who should stimulate discussions about the future of MPCs,” she said. “Sometimes we don’t understand exactly what people need or want, so we should consider more of the community’s most innovative thinking.”
“We need a new playbook,” said moderator Gadi Kaufmann, managing director and CEO of Bethesda, Maryland–based RCLCO, “so our business can remain relevant in today’s and in tomorrow’s marketplace. Let’s shift from the big monolith approach to a more diverse human scale. It’s all about the MPC experience. It’s that simple—and that hard.”
One of the notions presented to the panel was to offer health care for MPC communities. “If a company has 10,000 employees and can offer insurance to all of them, why can’t an MPC insure the 5,000 people in the community?” Cecilian asked. “When we consider millennials today, the two great concerns are health care and student loans. Why not look at the residential community to provide group health insurance? It’s a very interesting concept, especially with what’s happening in tele-medicine. You could make group health insurance part of the real estate package.”
Another idea: integrate offerings from today’s multifamily developments, particularly amenities such as rooftop gathering spots, splash areas, gourmet community kitchens, and business centers—even fitness centers. “You could take fitness to the next level with a state-of-the-art facility that includes nonphysical spaces and programming so it’s not just something to check off your list,” said Gregory S. Bielli, president and CEO of California’s Tejon Ranch Company. “When we were planning Mountain Village, one of our MPCs, we took everything off the wall and started from scratch when discussing amenities. We looked at possibly having cooking classes, offering farm-to-table options—virtually anything and everything. No idea was too stupid. We must innovate to stay ahead of the curve.”
Tony Green, managing partner, the Pinehills/New England Development in Plymouth, Massachusetts, added that with changing demographics and demand, developers must examine their assumptions about buyers. “Buyers want both community and different types of homes, so we need to offer a diverse array of home choices because we want to attract different segments of the broader market,” he said. “We were one of the first MPCs in the area to offer multifamily rental in the community, partnering with AvalonBay Communities and this year with the Hanover Company. Renting is a choice. Some people who can afford to buy want to rent. Hanover has leased 84 apartments in the last seven-and-a-half weeks—their fastest lease-up in the entire country.”
Companies should avail themselves of one of the best fonts of information available today: the younger workers at the firm. “Tap into the millennials you work with to see what they want in their communities,” he said. “Maybe it’s more mass transit or greater use of the community centers, or even the potential of renting a ladder instead of owning one or sharing a vehicle instead of buying one.”
Among the other topics considered: raising equity or debt through crowdfunding and providing for driverless cars. Crowdfunding in MPCs could be used to support community amenities, create retail options earlier, or construct revenue-producing venues such as golf courses. “Crowdfunding is coming and hitting real estate very quickly,” said Kaufmann. “Smaller-scale projects could be crowdfunded. There is a lot of money out there and it’s not that hard to organize. You should think about it for some pieces of the community.”
In addition, in the not-too-distant future, residents will be using driverless vehicles. “What are you doing now to future-proof yourself for driverless vehicles?” Bielli asked. “Most people already have some of the technology in their cars. We know it’s coming and we’re looking at space alternatives. The hardest part is getting the government regulators to understand this and to provide incentives such as rights-of-way.”
Continually talking to people in the communities also is important, Green said. “We ask our sales force to find customers who want something we don’t have, so we can talk to them about what they want to see if we could possibly provide it in the future,” he said. “We continue to listen to the community about what they want and have a workshop program to give them a place to say it. Asking what people desire is the core of our business to discover niches we haven’t discovered yet.”
While MPCs are here to stay, the product needs to change to address future tastes. “Even millennials are going to want that single-family house, and it’s incumbent on us to provide that,” Bielli added. “Greenfield development is still out there. The consumer is still asking for it. I’m wondering if we’re delivering it and if regulators will enable us to deliver it. There is so much infill development now, but the rapid pace of infill development won’t continue to satisfy the consumer’s lifestyle needs.”
Emphasized Kaufman: “Millennials are still coming to the single-family house, too, but slightly later in life. So now is a great time to innovate MPC solutions.”
