Real estate developers as anthropologists?

People who buy raw land and turn it into buildings, streets, and parking lots fancy themselves as many things—financiers, orchestrators, risk-takers, community creators, land barons, even environmentalists. But do they regard themselves as ones who study the origin, behavior, and physical, social, and cultural development of human beings?

Going forward, yes, according to a recent look into the future of planned communities by some of the business’s top builders, bankers, attorneys, architects, and advisers.

Sponsored by the Urban Land Institute, a nonprofit organization that brings together all real estate disciplines to promote responsible land use, the eight-month research effort found that the planned community is alive, if not well, and definitely not living in suburbia—at least not anymore.

Not that there is no longer a place for large, master-planned projects built on what were once horse farms and potato fields some distance from the central city where big tracts of land can still be assembled with relative ease. There is still a need for those, the experts believe. But they also maintain that the traditional definition of planned community is changing as developers bring such projects closer to the core.

“Greenfield development is not going away; it is a much better alternative than sprawl,” says industry consultant Jim Heid, one of the facilitators who helped manage the discussions. “But the best ideas of the last decade’s planned communities are being applied in unlikely locations—dead inner-ring shopping malls, defunct rail yards, and closed military bases.”

The experts also decided that the definition of planned community must evolve, too, from amenity-laden, “hardware-driven” projects loaded with golf courses, clubhouses, sports complexes, and tot lots to more “software-intensive” properties that are more about connecting residents with one another so they can feel a sense of fulfillment.

That’s because the relationship between stuff and lifestyle has reversed itself in the minds of consumers, according to noted trends-spotter and interpreter J. Walker Smith of the Futures Co. in Chapel Hill, North Carolina.

Smith told the group that people are still consumers, that their current frugality is a tactic to survive the tough economic times rather than an attitudinal sea-change. More lasting, though, is that their priorities are shifting, he said, from material to meaning as they seek personal fulfillment.

Hence, the major conclusion that developers must also become anthropologists. Or, as discussion leader Heid said, the “messy people stuff is critical to building real communities instead of just roads and houses.”

“We’re not just stewards of the land; we’re also stewards of people’s lives,” California developer Randall Lewis said during a panel session on the future of planned communities at ULI’s recent 2011 Fall Meeting in Los Angeles.

The conversation about the future of planned communities is far from over. After one advisory panel, one think tank, a national survey, and a host of individual interviews, “we’re still looking at how we can get our ‘mojo’ back,” said the panel’s moderator, Po-Sun Chen of the ValleyCrest Design Group, the landscape architecture practice of Calabasas, California–based ValleyCrest.

But the experts agreed that developers need to be far more innovative. Otherwise, they won’t be selling. “We’ve got to spend a lot more time on finding out what buyers want,” said Debra Dremann of the Wellyn Land Co. in Orlando, Florida. “If they don’t need it, they won’t help you build it.”

To be sure, planned communities—especially on the new-town scale that incorporates thousands of acres on the outer edges—have suffered mightily during the housing downturn as developers struggle to hold their properties together in the face of lackluster demand.

At the same time, though, the discussion’s 150-some participants believe that a comprehensive approach to planning, design, and development remains at the heart of building wonderful places to live, work, and play. They just have to adapt to the times, according to Heid, who heads UrbanGreen, a San Francisco advisory firm on sustainable communities.

“While we did not find one radical idea that singularly defined the future,” the consultant said, “we did find a series of ideas and definitional shifts that present an increasingly diverse and hopeful future for the planned community concept.”

Initially, said Tom Donnelly, president of the ValleyCrest Landscape Cos., which participated in and helped lead and underwrite the study, the objective was “to unearth the next big idea to ignite the industry and shape planned communities for the coming decade.”

But as the process moved forward, participants quickly realized they were discussing leading-edge concepts while gaining a better understanding of best practices learned from the pioneers of the planned community concept, according to Donnelly.

Right now, the leading edge of thinking is that the lessons learned by the industry’s greenfield pioneers over the years can be brought to bear on smaller, denser, and more complex projects in the urban core and inner ring. The new, the participants maintain, can be made better with the tried and true.

At the same time, however, they realize that going forward, they need to change the way they deal with the public.

Historically, a private owner sold land to a developer who designed and planned a community while the public sat on the sidelines until it reviewed the plan and gave its blessings. As time rolled on, however, the public role expanded to ensure that public benefits were included. But for the most part, from conception to realization, planned communities reached fruition with this linear approach.

Nowadays, the development of a planned community calls for a complex set of partnerships that include the community at large, government agencies, nonprofit organizations and civic groups, lenders, and possibly even the initial landowner. As a result, the developer must evolve from a sole entrepreneur to an enlightened facilitator who invites conversation, coordinates aspirations, and manages expectations, all while bringing bold solutions to the table.

Developers aren’t the only ones who need to change, though, according to the discussion’s participants. For one thing, they said, lenders need to take a more realistic approach. For another, government must become more enlightened.

Developers would love to have long-term capital partners who don’t demand a high return. “Capital doesn’t understand our business,” said Charles Teal of Saussy Burbank, a North Carolina homebuilder.

Long-term loans aren’t in the cards. But more sustainable capital is a possibility, something constructed along timed phases of development. Perhaps something with big rewards at the beginning of the cycle when approvals are uncertain, then shifting to lower returns when construction begins and the risk is lower.

But no issue evoked as much emotion during the discussion, according to leader Heid, as the often Herculean task of winning government approval. “The public sector is the biggest problem,” said Susan Watts of MeadWestvaco, a large landholder in West Virginia.

The reasons for the heartache and unproductive spending of capital varied, but all agreed that planned communities, because of their size and makeup, tended to garner a disproportionate share of the organized opposition.

“Why is it easier to obtain approvals for ten 100-unit subdivisions than one 1,000-unit planned community?” the group wanted to know.

For some, it is a capacity issue. Others argued that the approval process is broken. Either way, though, they want communities to have more vision, to move beyond administering processes and become enlightened partners who know what they want long before a single developer comes forward with a specific proposal.

That way, these industry leaders believe, everyone can move forward more effectively and efficiently, and capital can be spent on improvements that benefit the public rather than on long, drawn-out legal battles.