OFFERINGS OF PROPERTY FOR SALE CONTAIN A DISCLAIMER
LIKE THE FOLLOWING:
“Any prospective purchaser should independently determine, to its satisfaction, whether or not the property is satisfactory. The prospective purchaser should conduct or obtain such market analyses, utility studies, zoning determinations, rental surveys, title examinations, review of applicable laws and ordinances or studies or information relevant to purchase analysis as are appropriate for a prudent investor.”
A similar admonition applies to buildings being developed, particularly complex, multi-story, multi-use facilities with public space interfaces.
BEFORE YOU COMMIT
There are three kinds of problem property: those that don’t require large sums to rehabilitate; those that do require large sums to rehabilitate; those that can’t be rehabilitated no matter how much you spend. Avoid having a problem property.
Traditional due diligence for buildings and related improvements focuses on the asset’s cost side to identify problems or potential defects in materials, finishes and systems – structural, mechanical, electrical, safety, security, vertical movement, and others.
But these essential elements and systems don't generate operating revenue. The revenue generator is space: especially how its configuration encourages pedestrian movement. But many real estate and design professionals don’t understand pedestrian movement and miss latent defects. And, as behavioral economics research has shown, investor bias can result in overlooking a design problem.
Black's Law Dictionary distinguishes due diligence, special diligence, great diligence and extraordinary diligence. Extraordinary diligence is “That extreme measure of care and caution which persons of prudence and circumspection use for securing and preserving their own property and rights.”
We have used shape-network™ models to test and evaluate designs and redesigns of dozens of urban and suburban shopping centers, shopping streets, healthcare facilities, office and other buildings in the United States and Europe. “Autopsy of a Shopping Center” in the September 1994 issue of Urban Land compares a failed luxury mall with a successful one.
WE CAN DO AN AUDIT IN LESS THAN A DAY OR A TEST. TESTS TAKE LITTLE TIME, COSTS ARE REASONABLE AND HAVE A VERY HIGH COST-BENEFIT RATIO. WE BREAK THE ANALYSIS INTO:
- The area from public property such as the street system to the site:
- The area from the site entrance to the building entrance:
- The area from the building entrance to as far as pedestrians can walk in the building.
The owner of a portfolio of community and regional malls believed an attractive 900,000 SF, three-level urban mall they acquired in a recent multi-property transaction had pedestrian circulation problems causing diminished sales revenues of line tenants.
Our analysis showed most stores with weak revenues were located along spatial-visual gaps, discontinuities and odd transitions in spatial patterns affecting pedestrian movement. These were linked to the locations of the vertical circulation systems and to a large and visually attractive but spatially segregating atrium. We worked with the client and architects to show how a redesign would reconnect pedestrians with shops. After a major redesign that addressed these problems and updated the image, the mall now thrives.
As many shopping centers continue to depart, more multi-use buildings continue to arrive. Multi-use, especially multi-story, buildings have more complex spatial configurations including interfaces with public space.
Trump International Hotel & Tower in Chicago
The top inset shows an “event space” and the inset below shows the location of these and other mostly vacant spaces in the recessed area behind the columns and below it along the Chicago River. The large image shows the walkways. Few pedestrians walk there because of the way these spaces connect to the adjacent public walkways.
Chicago’s Block 37
Known as the city’s as “the city’s cursed retail block” for so many problems with developers, the 290,000 SF retail portion of block 37 is a functional failure. With direct access to Chicago’s pedway and CTA red and blue lines.
The images don’t tell the real story. The street entrances are not inviting, elevators and escalators block visibility in the atrium and routes to leasable spaces are cul-de-sacs. The retail space recently rose to 65% occupied after several years of just 30% occupancy.
The Detroit architecture, planning and interiors firm that designed the retail area erroneously claimed the mall is filled with heavy daily pedestrian traffic.
A two-mile segment of one of the longest commercial streets in the United States was directly next to urban neighborhoods with some of the finest, most vibrant early 20th century single-family dwellings. But commercial property values on this street had fallen far behind the values of residential properties just around the corner. Though they could easily walk there, nearby residents rarely frequented the street’s merchants.
We showed how problematic uses, crossing street discontinuities, transit stop locations and spatial-visual configurations, and ownership patterns limiting assemblage limited the intelligibility of the street and diverted middle-class pedestrians from it. We developed materials illustrating how redevelopment could proceed and, within five years, average values of properties on the street increased by almost 250 percent.