The real estate development industry contains many examples of outstanding buildings and entire community creations that proved financially successful because of beautiful design and/or great timing. Thus, the familiar phrase: “Build it and they will come!”—an adaptation from the script of the 1989 movie, “Field of Dreams”, about an Iowa farmer who builds a baseball field in his cornfield based on a dream in which he heard a voice promising to revive a deceased Chicago baseball star by the phrase “If you build it, he will come.” The movie produced the fantasy revival of the former baseball star and his team, followed by crowds of mythical fans to support the dream. But, with notable exceptions, few real estate developers have been so fortunate with dream creations.
Successful developers today rely upon extensive market research prerequisite to beginning a new project to support its feasibility. Their financial backers insist upon such research prior to pledging financial support. However, a great deal of this research is based upon completed projects comparable to the proposed project—historic “proof” that a similar project can be successful if it replicates cost and pricing parameters of these completed projects. Despite many examples to the contrary, this principle of past success continues to be the primary determinant for developing new projects.
Clearly, new real estate projects require extensive periods of time to be designed and constructed, time in which socio-economic factors and public tastes change from the historic parameters guiding project plans. Although some historic trends remain constant over several years, most incur changes that affect consumer needs and preferences—changes that often are quite different from the parameters that guided development planning. The result may prove disastrous for the new project, or, more likely, sales absorption, and resultant return on investment, at a slower pace and price than planned. The missing ingredient from the planning is strategic foresight of consumer trends and socio-economic factors. The project must be tuned to responsibly projected future states in addition to historic facts.
There is little doubt that the real estate industry includes many visionary developers who have the foresight to overcome the shortcomings of historic research and adapt their creations to changing consumer interests in balance with conservative financing parameters. However, for the rest, futures research is required to ensure a high probability of consumer demand for the launch of a new project. Recognition and implementation of this axiom has become increasingly relevant in the rapidly-changing post-recession world. The new guideline may well be better stated as “Build it right and they will come.”