It's the Community, Stupid

Riverview2   The value of community in real estate is usually obvious at the high end.  Some communities command a premium over others, and always will.  But with new development, there often isn’t anything to relate to except in the abstract.  That’s why the notion of community it is often overlooked, except in the abstract – at the peril of the ultimate success.

Rarely do we get a chance to see the opposite end of the value of community, which is what happens when there is absolutely nothing related to at all.  The development at the Upper Landing of Saint Paul shows that without any kind of community, success is bound to be elusive.

The Riverview apartments at 400 Spring Street are the best possibly example.  Finished in 2005, the 434 rental units have just about every amenity you can name – a great view of the Mississippi, access to downtown, indoor parking, a gym, and an “executive business center”.   What could possibly be wrong with this?

Mapimage2 Well, plenty.  They are isolated, on an island cut apart from the rest of the street grid.  While many people also don’t like the design and colors of these units, what is most remarkable about them is how far they are from anything else, separated by a 50 foot tall bluff over most of their length.

How much could that matter in these days of cars and other ways of connecting?  We can’t say for sure what the rental rate is, but the rumor was that this summer, one year after opening, it was only one third full.  What we do know is that they were offering 3 months of free rent for anyone who signed a lease.  All of that after lowering the rent several times with apparently nowhere near enough takers.

This was anticipated, of course.  The planners who thought this was a great development were constantly told by the residents that isolation would be a problem.  But no one was willing to listen.  And now, we have an excellent counter-example of what happens when there is no community at all.

I happen to be following this very closely, as I am always concerned that this will become a “problem property” someday.  I can’t see how they will be able to keep up the investments they made to create a community out of whole cloth, rather than plug into what was already around them.  When that falls apart, we can only assume it won’t be pretty.

Already, I think this stands as a great object lesson that REALTORS already know, but planners and developers don’t always seem to appreciate when approaching the tall order of large developments.  It’s the community, stupid.

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2 Replies to “It's the Community, Stupid”

  1. John Philip Mason says:

    I’ve always said that renters have a far greater tolerance of undesirable factors, when compared to owners. That is, there is a supply of renters willing accept inferior locations, quality of finishes, functional layouts, etc., as a trade off to affordability. Case in point, new construction in emerging markets (as in geographic locations) start out with modest rental complexes, which if well received are followed by luxury rentals, to be followed by moderate rate condominiums, to be followed by luxury condominiums. At least that is what we typically find in the NYC metropolitan area. But clearly there is a limit, and this project seems to have crossed a line. And a big fat line at that. I’m guessing who ever appraised and financed this project blew past too many yield and stop signs. The problem with a failing project of this type is, there is no exit strategy. That is, if it were in an established condominium market, but the timing was wrong, then they could drop the condo plan and turn it into rentals.

    Peace – John

  2. Just curious what anyone thinks of the condos and townhouses adjacent to these apartments. Are these also problems? Anyone know how they are doing? I am referring to the upper landing
    development and condos. Are these selling quickly or is the developer in trouble?

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