Gentrification

14. The restoration and upgrading of deteriorated urban property by middle-class or affluent people, often resulting in displacement of lower-income people.

Recently my business partner and I for Order Experts moved our office to the “Eastside” of Austin, Texas. This traditionally lower income area of town is undergoing a renaissance of sorts bringing the artistic community, new development, and retail to an area that can hardly afford to keep the streets safe. Why did we move there? It was close to downtown, and affordable.

Like all instances of gentrification, the area is mixed with recently renovated or entirely new development, with other existing buildings that range from condemned to being perfectly suitable for a family or small business. However, this mixture of middle and lower income populations rarely coexist without friction.

At my office, our frontage is all glass and faces East Cesar Chavez Street in Austin, Texas. We are greeted daily with large snot filled collections of saliva on the glass, shouts from cars ranging from “Fuck you Yuppies!” to “Die white boy”. Last week there was a new “posting” on the light pole at the intersection of our office.

Since I have employees, I had to call it in to the Police. I was met by two officers who found the situation unremarkable, but were at least impressed that they didn’t have to explain to me the local situation. I was a little surprised when I found that both Police Officers were excited about the spread of gentrification, but I guess for them the result has a direct impact on lowered crime.

As I sit in my office tomorrow, and I watch the large collection of middle and high school aged students walk by when school lets out, I will again notice that they are all wearing either black or white because their school is too worried about gang colors to allow the personal freedom of expression. I will again notice that not a single one of them is Caucasian. And I will again watch as one of them spits on the window, or throws a rock at the sign outside our office.

While I have made no points or amazing conclusions in this post, I will say this: Gentrification brings out many problems with our communities. And while the result may improve the local area, the reason is not the new buildings, or the improved services. It’s the literal change in the local population. And that is about the worst possible solution I could envision.

Beware Big Business, Big City

Remember when Intel was coming to downtown Austin? How about the other large employers drawn to Austin with tax incentives such as AMD? Well some of them made it, and others… well others left us with concrete scaffolds perfect for Lapis Light (http://www.bluelapislight.org) show.

What about Computer Sciences Corporation? Well, take a look at our beloved “green” City Hall. Built partly with money from CSC, it is now flanked by two buildings that CSC never fully took over. But fear not, recently, Silicon Labs took up residency in one of the buildings. This, after Microsoft pulled the plug on another CSC building tenant, Digital Anvil. Ever wonder how all the small shops along the new 2nd street district can make it? That’s an easy one: Tax incentives. But at least there is something there, and the City leadership realized it needed to act.

Sometimes Big Business can leave a city with an eyesore that only creative minds like Lapis can do anything with. Thankfully the City has decided to erect a new building on this city block, the new Federal Courthouse. But on the other hand, sometimes Big Business can leave us with improved infrastructure like CSC did. I think a lot of this has to do with the leadership of the City, and how well they interact and negotiate with large businesses.

I wonder, now that Google has secured space in the Scarborough building at 6^th and Congress, what did the City get out of this deal? Probably nothing since they are leasing existing space. My point is… the city should be leveraging these businesses towards responsible growth for Austin. Consider, what objectives can the city achieve with the W, or with The Austonian? Large footprint developments like this can really shape a city the size of Austin.

Vacant Land and New Construction

Working with a lot of investors and builders gives me ample experience in dealing with vacant land. Recently, I was discussing ways that buyers could reduce the cost of purchasing a newly constructed home with a co-worker of mine. We came up with a lot of the typical incentives that builders use to lure buyers such as: Rebates, Home Warranties, Preferred Lenders, Free Appliances, and even Golf Memberships. While all of these things are nice, if the bottom dollar is a concern for you, there is an obvious way to save money that a lot of buyers seem to miss; purchasing the land yourself.

One area where a builder makes their money is finding a plot of land to build on, cheap. I see a lot of builders spending considerable amounts of time finding that special lot. But I ask myself, why can’t a buyer do the same thing? The simple answer is they can, it’s really just a matter of knowing what to look for, and having the time do it. While it does take away some of the profit, I have found that very few builders will shy away from an opportunity to build a home for a buyer that brings their own plot of land.

There are many important considerations when buying a plot of land to build on. This is one area that a buyer does not have to worry about when using a full service home builder. For example, certain trees can be restricted and may not be able to be removed. Another problem that builders face is the flood plain. And finally, City code for set back and easements can really restrict your building potential.

Building a home can be a lot of fun, but it can easily turn into a nightmare. If there is a time you value the expected, it would be when building a home. If you are going to purchase land for the purpose of building on it make sure you do your homework, and make sure you are working with a Realtor that has done it before.

Office Space

Today, two of my business partners and I from Order Experts LLC, (http://www.orderexperts.com) looked at new office space. We are about to double the company in terms of personnel (not really that big of a deal when we are currently at 5) so we need more space. Additionally, our current office space isn’t really anything to brag about (operated by PS Business Parks: http://www.psbusinessparks.com). I have had office space in the North Lamar Austin complex for one of my businesses, or one of my associate’s businesses since 2000. Strangely, as my lease expiration approaches, my landlord has made no effort to discuss our future plans for tenancy.

My business partners and I are all about density. When I say “density”, I mean lots of people and “living spaces”. A lot of fun buzz words flying around many metro areas trying to describe the idea of living downtown. The idea isn’t anything new, but with gas prices, being able to talk to the places to want to hang out at, and the idea of walking to work all in the same place, everyone seems to be on the band wagon. This of course has created a high demand for downtown living and many changes to the Austin feel (http://www.ci.austin.tx.us/planning).

We looked at some interesting commercial spaces at the new Brazos Place development (http://www.brazosplacecondos.com) on 8^th and Brazos in the former Commodore Hotel Building (circa 1950). The pricing was pretty decent at $199/sq. ft. on the 5^th floor, but going up a floor priced at $219/sq. ft. allowed for a large improvement to the view. Here is a quick view of the Brazos Place Condos in case you refused to click on the link above:

Moving downtown is a great idea for corporate culture, but be prepared to pay for it. There is a reason that downtown city centers seem to gather bankers and lawyers; they’re the only one’s that can afford to pay for it.