Sustainable Land Development Today - March 2009 - (Page 30)

SLDT THE LAST WORD My Observations at the IBS By Skip Preble Last month I traveled to Las Vegas to attend the International Builders’ Show (IBS). I hadn’t attended for the past two years, and was fully expecting to be surrounded by gloom and doom for the entire week. Attendance was reported to be just a little more than 60,000 this year, which was far less than the 105,000 in attendance the last time I had attended. This year, I wanted to visit with clients and to promote the idea that it was a really good time to revisit the business plans for those projects that had been mothballed due to market conditions. Rick Harrison (of Rick Harrison Site design Studios) had asked me to work with him in his booth and talk to his clients about the benefits and feasibility of re-designing those old gridstyle subdivisions into something that the market will actually want to buy when homebuilding returns. The dominant theme for the show was clearly “green” products – although in my opinion some of the green benefits to these products were clearer to the ad wizards who developed the marketing pitches than they were to me. There were some pretty cool ideas though, and it is clear that the building industry is determined to offer more and better solutions with regard to energy savings, resource utilization and construction efficiency. I think that the most interesting thing about this IBS was the prevailing mood of the attendees I spoke to. Instead of gloom and doom, I saw and heard something different. Not that I didn’t hear some sad tales – I did. What I noticed was that there was a steady stream of people coming to talk to us about their new projects, and that they fell generally into two groups. The first group was composed of builders and developers that one or more of us had spoken with in recent years, but who had dropped out of sight for the past three or four years. As we spoke, we realized that these were people who had either gotten nervous about the market in 2004/2005 and didn’t pull the trigger on their new project, or who had just gotten “lucky” and had their deal fall apart before they could really get into trouble. Now they were re-visiting these projects with an eye toward being ready to develop when the market recovers. The second group was a mix of builders, developers and investors who were in a position to benefit from bargains in their markets. Several we spoke with had recently been able to purchase properties they had been trying to buy for years. One gentleman told us he had just closed on a fully entitled tract of land for less than 20 percent of what it had sold for in 2005 as an unentitled parcel. Of course, the problem is that somebody had to take a loss on that transaction for this gentleman to benefit. And for those of us who have been in the real estate business for awhile, these “somebodies” are our friends, clients – and maybe even ourselves. Even so, this process is a good thing. There is no denying there were excesses present in many markets, and that those excesses have to be purged for recovery to begin. Therefore, the question for many of us has been where is the bottom? And how long will we stay at the bottom once we get there? Given what I saw at the show, I’d say that we are at or near a bottom – prices are low enough that enterprising individuals are beginning to sniff around their markets and find deals that are attractive to enough to pursue. However, it is clear to me that we will be bumping along this bottom for a while – this market has taken a long, hard fall, and it will take time and some success stories before there is any notable improvement in the number of transactions. Also, given the supply overhang of both finished lots and houses, there probably won’t be any meaningful improvement in pricing in many markets for some time. However, for deals that have little entitlement risk, are well located, and small enough that they represent just one or two years of product for the buyer, there is a market – at the right price. This really wasn’t true even a year ago, and that is an encouraging start. SLDT About the author: Skip Preble is member of the SLDI Executive Board and is president of Land Analytics, which provides targeted analysis and planning for builders and real estate development firms, including restructuring evaluations. He can be contacted at skip@landanalytics.com. 30 March 2009 Sustainable Land Development Today

Table of Contents Feed for the Digital Edition of Sustainable Land Development Today - March 2009

Sustainable Land Development Today - March 2009 Contents Our Voice: Energy Savings Accounts Mining the Sewers for On-site Reuse Modern Flood Disasters The Financial Challenge of Leed® Technology: Opportunities Exist to Buy in Now SLDI In Focus: A Look Inside Calendar of Events Energy: Solar Power on Rails Industry News Products & Services The Bottom Line: Green Lending – Class G Advertiser Index Editorial Board SLDT Resources Last Word: Not All Gloom & Doom

Sustainable Land Development Today - March 2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.