Why communities succeed or fail
It’s impossible to solve a problem as complicated as community development without a full understanding of what makes communities succeed or fail. When most investors look at a neighborhood, they check standard metrics like employment rates, crime prevalence, school district numbers, etc. These numbers provide a picture- but not the full picture.
Underutilized metrics like childcare affordability, access to community services, presence of full grocery stores, community leadership and others can help investors gauge the health of an area in a more precise manner. Instead of taking a neighborhood at face value, make sure you are “peeling the onion” and looking at the layers beneath the layers.
Why they fail
Let’s get the bad stuff out of the way. Communities fail for many reasons, sometimes due to macroeconomic factors out of their control. Think of the coal industry dying, or the hollowing out of the manufacturing base in the rust belt. Other times they are mismanaged into oblivion. Underserved areas typically share several similarities, including low employment, high crime, poor school performance, and flat or negative population growth.
These problems often feed on each other- when schools are bad, employers can’t find skilled employees and move elsewhere. The tax base dries up, schools get worse, and the cycle continues. It is easy to lay blame at the feet of elected officials, but in reality, it is a combined failure of government officials, the local business community, and yes, fly-by-night developers.
Why they succeed
Communities succeed when the stakeholders- developers, residents, and local government- embrace innovation and new ways of thinking to solve the challenges they’ve always had, and challenges down the line. This often takes the form of changing how cities build housing and commercial space. With housing, it comes down to building for the needs of a community. Different regions require a different touch. Before entering any new market, a developer should “peel the onion” to understand how their future tenants or buyers will use their property.
In parts of Arizona and the Southwest, apartment complexes often have three, or even four bedrooms, which is a deviation from the national norm. The areas contain a large Latino population, and they tend to have larger, intergenerational families. This has led developers to respond to that particular need in their market. And this is prime evidence that developers and investors need to consider what the market wants- not what it can bear.
The ability of people to work, live, and play in their immediate surroundings is what differentiates good communities from great communities. For a long time, we have expected people to fit their lives to the way we build cities. While it might make economic sense to developers on the front end, it results in stagnant areas that act as warehouses for workers, who then commute to more vibrant areas.
The role of small business
Local businesses play a tremendous role in fostering a healthy community. They give locals a place to congregate and circulate money through the neighborhood. Thriving commercial centers increase an area’s walkability score and can help increase the value of nearby property. Developers can encourage the growth of small business by including mixed-use commercial spaces in or near housing plots. It is possible to further incentivize local business ownership by granting special commercial lease terms to residents or even reserving commercial spaces for residents only.
In cities across the country, from Portland to Phoenix, developments are popping up where the focus is on blending entrepreneurship and community. If developers, communities, and residents are all stakeholders in the success or failure of a community, it stands a much better shot of sustainable growth over the long haul.
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