Commercial real estate is one of the largest industries in the country, and the impact it can have on economies is measured in billions of dollars and thousands of jobs. Bringing in enormous sums of taxable income to a community can have a direct impact on the services and infrastructure available to residents.
I sat down with Todd Mitchell, Director of Property Management with Bridge Commercial Real Estate, to continue our discussion on the community impact of CRE, and how those in the industry can positively affect their communities.
“And one of the things that means to the community is Gramma gets her trash picked up and Uncle Joe gets his potholes filled on his street. There is police presence, there is fire and rescue services.” Mitchell continued. “All those basic services, that any community, any municipality, no matter how small or large a metro area, all rely on those very basic services and many of which are supported by the projects we own and operate. And would have serious budget constraints if we did not operate in a successful manner and our contribution to the tax revenue roles wasn’t what it is.”
“The local community would have a lot less streets paved, a whole lot less trash picked up and whole lot less fire and police protection. And those are some of the basics. I think for a starter, we need to be more aware of that and more creative in our approach.”
“Now, fast forward going beyond the basics what could a community, an elected official, and zoning people expect? I think more and more the discussions and modern real estate economics have pivoted to an environmental, social and governance (ESG), an adjacent concept to diversity, equity and inclusion. And I think all operators, especially large ones, feel pressure from how investment capital markets world views these concepts vis a vie any project that a given operator might be involved in. So, right off the bat, large scale developers are going into developments eyes wide open having early and ongoing conversations with elected officials and local community members.” Explained Mitchell.
“One of the things within the city proper of Atlanta that is sort of a tangential concept is an NPU. (Neighborhood Planning Unit) These are the people inside any given local community that come together and want to understand how a development is going to affect their real estate.”
“That is a concept that is specific to the city proper of Atlanta, but I would imagine it’s replicated out in suburban communities and other large markets in the southeast and other large markets throughout the US. These organizations come together to talk about the office building, the hotel, the neighborhood grocery anchored center that is coming to their neighborhood. What they want, what they feel it ought to look like, and certainly back to the concept of equity in development.”
“Many communities across the country and in metro Atlanta in particular, you see a bifurcation of investment. In Atlanta it is at almost a perfect line at Interstate 20 that runs east and west cutting Atlanta in half. North of I-20, you see the parks look greener, the buildings stand taller, the grocery stores actually exist.”
“South of I-20, I double dog dare you to go find a Publix until you get to McDonough or Peachtree City which are two cities well south of Atlanta. Well, that is all beginning to change now because large developers and operators of commercial real estate know that is a long-standing request of the local communities.” Explained Mitchell.
“Now, it doesn’t mean they didn’t have a vision of how they anticipated the overarching development to turn out. They still ensured it worked for their pro forma, their investment thesis. But they did take the time to engage the community and ask what they needed.” Explained Mitchell.
“They asked, what’s missing here? I think there is a bank branch going up the corner opposite of the Publix. A bank that community has never had. You see improved housing in that area. You also see some blight, but you see services the community really needs that many of us take for granted.”
“I, personally, know my family, where we live, if I go three to five miles in any direction, I will hit a Kroger, a Publix, a Target, a Walmart. The basic things that have become building blocks for family operations these days. And in some communities that is not true.”
“You see in some cases the community engagement and involvement get down to bringing basic services that haven’t been present. One of the things we talk about on the “S” part of ESG is Social. The idea of decent housing and food chains. You’ve heard the term “food desert”?”
“There are some communities and neighborhoods that don’t have any grocery stores, maybe have a glorified convenience mart that the freshest vegetable you will find is a 6-month-old potato chip. When you talk about equality and community building, and urban development and regional development, the idea of health comes in to play. Is there a trail, is there a park?” Asked Mitchell.
“Can you get to reasonably healthy foods? When you talk about the “S” and the social and the equality piece, sort of wealth building and basic financial framework. Is there even a banking institution available, you can get to, in a reasonably short order or do you have to drive 20-30 minutes to get to one? A lot of people experience a 30-minute drive to anything, so a lot of real estate development now revolves around not just our world where you and I have built our careers in the office world.”
The growing importance of ESG in CRE has shown that positive community impact must be a major driver as commercial real estate grows. A tall tree cannot exist without roots, and CRE developers must continue to consider how and where those roots can be developed to positively impact and grow the communities they reside in. Addressing food deserts, developing infrastructure, bringing in banks so that small businesses can develop, these are some of the keys to positively impacting the communities we are part of.
It takes a village to support a commercial building, and helping that village grow will show enormous dividends, both in our industry and beyond. Ask yourself, what does your neighborhood, your village, your city, need to thrive?
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