Kellogg World Alumni Magazine, Winter 2003Kellogg School of Management
In DepthIn BriefDepartmentsClass NotesClub NewsArchivesContactKellogg Homepage
Kellogg—Creating leaders who care
Bowling for dollars
Leisure-time leadership
Theory: Gene Lavengood
Practice: David Messick
A place to call home
Making a difference for the majority
Address Update
Alumni Home
Submit News
Internal Site
Northwestern University
Kellogg Search
A place to call home

A growing number of home buyers are seeking a sense of community in their new neighborhoods. Here’s how some Kellogg real-estate experts are addressing that trend

By Rebecca Lindell

Once upon a time in America, that elusive sense of community was as abundant as grass on the prairie.

Smaller neighborhoods meant people knew each other’s names, and often their hopes, dreams and fears. Front porches provided opportunities to socialize with friends and passersby. Town squares were natural gathering places for communities devoid of Internet chat rooms and cell phones.

Much of that has been swept away in the name of progress, replaced by an automobile culture more concerned with reality TV than with the reality next door. But are Americans really better off isolated inside their cars and behind their big screens? A growing cadre of researchers, developers and planners say no. More important, many are doing something to revive that sense of connection.

Live/work buildings, with offices on the first floors and living areas above, in Wilton Manors, Fla.  
Three-story townhomes of Belle Isle in Wilton Manors illustrate New Urbanist design  

“We’re social beings,” says longtime Chicago real estate professional Gary Rosenberg ’62, chairman and CEO of Canterbury Companies and a member of the Kellogg School Alumni Advisory Board. “Everyone likes a sense of community, and everyone wants to have a good feeling about themselves through the community in which they interact. These days there’s a natural orientation toward that with respect to development.”

That trend is bucking a tradition that dates from the end of World War II, says Tim Hernandez ’84, co-founder of a firm in Florida that specializes in building community-friendly developments.

The post-war era bestowed inexpensive mortgages on the home-buying public, along with a “mass-production mentality in home-building,” Hernandez says. The result, according to Hernandez: “shapeless, formless developments without a sense of community.”

“ For a 50-year period we encouraged dependence on the automobile,” Hernandez contends. “We created suburban sprawl with all kinds of negative effects: it polarized society, with the ‘haves’ in the suburbs and the poor people in the city.

“ All the great places you can think of predated that era,” Hernandez adds. “Our predecessors used timeless principles of creating community that have worked for thousands of years.”

A reawakening to the importance of community is occurring among many real-estate professionals who can’t help but notice the success of projects that foster a sense of inclusiveness. Ground-breaking projects like Seaside and Celebration in Florida, both of which were designed to inspire a neighborhood feeling, have paved the way for similar developments around the country.

Such developments are designed to invite neighbors to interact, through features like front porches and public gathering spaces.

Most important, they place many of life’s necessities within easy walking distance. Housing, shops, workplaces, entertainment, schools, parks and other facilities are near to one another. The goal: to avoid the dependence on the automobile that has become a hallmark of suburban life.

That last concern goes beyond aesthetics. Recent research has pointed to the traditional American suburb’s design as a culprit in many of the nation’s health woes, including obesity, hypertension, depression and high blood pressure.

In fact, Americans who live in the most sprawling counties tend to weigh 6 pounds more than their counterparts in the most compact areas, according to a recent study published in the American Journal of Health Promotion. The study shows that, as sprawl increases, so do the chances that residents will be obese or have high blood pressure.

Passing the ‘Popsicle test’
Many in the real-estate field, though certainly not all, are taking that observation to heart. Under the banner of “New Urbanism,” they are urging a return to smaller, more tightly knit communities that emphasize beauty, connection and nature, even in the heart of a city.

Such developments, according to the San Francisco-based Congress for New Urbanism, meet the following criteria:

  • They connect well with surrounding neighborhoods, developments or towns, while also protecting regional open space. Communities with gates, without sidewalks or laid out in a “tree-like” pattern rather than a grid network don’t qualify.
  • They include a variety of uses within their bounds. Developments that are just housing, just retail or just offices don’t fit the bill. Moreover, the various types of buildings should all be “seamlessly integrated,” so that people can move easily between them.
  • They include a neighborhood center that is an easy and safe walk from all dwellings in the development, as well as formal civic spaces and squares.
  • They feature front doors, porches and windows that face the street, so that the neighborhood feels safe and inviting. Rows of garages — a standard feature of suburbia — are disdained.
  • “Finally, there is the ‘Popsicle test,’” says the organization’s Web site. “An eight-year-old in the neighborhood should be able to bike to a store to buy a Popsicle without having to battle highway-size streets and freeway-speed traffic.”

The movement’s converts include Hernandez, a former urban planner who five years ago launched New Urban Communities with Kevin Rickard in Delray Beach, Florida. Since then, the company has built about a dozen developments throughout south Florida that adhere to the principles of New Urbanism.

The company’s growth has been exponential. From zero closings in 2000 and 40 in 2001, New Urban Communities closed 124 units in 2002. This year, the Kellogg School grad expects to close about 160 units, all valued at several hundred thousand dollars. “We’ve exceeded our expectations,” he says.

Earlier this year, Professional Builder magazine named the company to its short list of “giant killers” — one of five small-volume home builders that compete successfully against the largest developers in their market.
Driven as much by a desire to improve community life as to see his venture succeed, Hernandez is passionate when discussing his work.

“ I don’t see how you can build a development and then say that you don’t have a responsibility to the community,” he says. “What we do is not disposable. It has to stand the test of time.”

Hernandez’s convictions grow out of his experience. While working as an urban planner in suburban Chicago in the early 1980s, he grew frustrated by much of the development he was asked to oversee. He witnessed “major design faux pas, a lack of sensitivity to the community, and poor execution of landscaping, architecture and site plans.”

“ Some people never get this, but you have to put yourself in the position of the occupant of what you’re building,” Hernandez says. “You have to ask yourself: ‘If I had to live in this house, would it be a good experience? What could make it better?’ I got tired of seeing people coming in and doing things that could have been improved upon.”

If you build it, they will come
Determined to do it differently, Hernandez enrolled in The Managers’ Program to gain the business skills to open his own firm. During the day, he continued to work as an urban planner, taking note of the good, the bad and the ugly. “Every day that went by, I felt more and more that this was what I was meant to do — design and develop communities,” he says.

Upon graduation, Hernandez joined national builder Pulte Home Corp., where he spent 16 years learning the development trade from the ground up. Hernandez gained experience in marketing, land acquisition and development, first in Illinois and then in Florida.

In 1998, a mutual acquaintance put him in touch with Rickard, a custom home builder in Palm Beach County who shared his philosophy. Together they launched New Urban Communities with a project that transformed a former bank drive-through in Florida’s Delray Beach into 32 town houses steps away from shops, entertainment, dining and recreation. The project sold quickly and inspired several similar developments nearby by other local builders.

The project set the tone for New Urban Communities and embodied its emphasis on “infill” development — small urban sites that have been overlooked by larger developers. Building on such sites results in less of the environmental damage and traffic congestion caused by urban sprawl, Hernandez says. It also helps revitalize downtown areas, placing the amenities of urban life within walking distance of residents.

“ We’re huge on trying to become part of the community, instead of walling ourselves off from the community,” says Hernandez, whose firm is now seeking to build similar developments in Chicago. “We’re trying to make the entire area around us better, instead of just our own little area.”

That approach seems to be striking a chord with a growing number of homebuyers, according to the Congress for New Urbanism.

Surveys cited by the group suggest that at least 15 percent of all buyers prefer walkable, compact neighborhoods rather than large homes on large lots. Those numbers have recently risen to near 30 percent, as empty nesters and retirees seek to trade their suburban abodes for smaller homes with foot access to shopping, the CNU says.

And buyers are willing to pay for the experience of living in such an area. The organization has documented that homes in New Urbanist neighborhoods typically sell for 25 percent more than their counterparts in other areas.

The effects of the appreciation tend to spill over into surrounding areas as well. Hernandez cites his company’s second project, in Lantana, Florida, which placed 43 townhouses and 16 single-family homes in a stagnant neighborhood. The project sold out quickly, and other new development in the area soon followed.

“ There had been nothing going on in that area for at least 20 years,” he says. “When we went in there, you could buy a one-story concrete block home for less than $90,000. Now, housing prices in that area are up by about 50 percent.”

At home in the city
Even in the heart of a city like Chicago, developments that seek to enhance a feeling of community — even if not overtly identified as New Urbanist in design — are meeting with success. The Grand Plaza, a two-tower apartment complex, opened recently in Chicago’s Loop. In addition to 764 apartments, it features a health club, a business center, outdoor and indoor pools, a running track and ample landscaping, among other amenities.

The developers also chose to locate a houseware store and a major grocery store in the complex not only for the convenience of residents, but for the use of the greater community, says Alan Schachtman, a senior vice president at developer U.S. Equities, Inc. and a Kellogg School adjunct professor of real estate.

Doing so not only makes good business sense, says Schachtman. It also increases the vitality of the surrounding area.

“ Any development that’s worth its salt will try to find out what people in the community want and need,” he says. “That doesn’t mean that everyone from the community will use it, but you do have to take the needs of the larger population into account.”

A licensed architect, Schachtman has worked on many public facilities, including the Evanston Public Library and the United Airlines terminal at Chicago’s O’Hare Airport. Both bring an element of the outdoors into the facility — an approach that he knew would bode well for Grand Plaza as well.

“ Our goal was to make Grand Plaza as popular and attractive a place as we could,” says Schachtman. “It wasn’t just a pure profit motive — it was what was going to give us the best success all around. If we were only interested in maximizing our profits, we wouldn’t have done as much landscaping as we did. As it turns out, when we put the landscaping in, we started renting units faster than after anything else we’d done.

“ As of Nov. 1, we’re 85 percent leased, so I guess we got at least some of it right.”

So if developments that promote a sense of community are proving so popular, what’s standing in the way of creating more?

First, there is the entrenched design of the American suburb, coupled with cities that are already built to capacity. Rosenberg notes that “master-planned communities” that provide a host of amenities for residents thrive in areas such as Arizona, where miles of open land have made such developments possible.

Second, and just as powerful, are zoning requirements that date from the “post World War-II era that dictate what makes a good, homogenous community, not necessarily an interesting, vibrant place,” says Hernandez.
Such requirements often prohibit alleys, which means garages, rather than porches and sidewalks, dominate neighborhood streets. They also tend to bar businesses from operating in the same areas residents live. Segregating businesses from homes almost requires people to drive rather than walk while running errands.

Other laws mandate that buildings be set back deeply from the street, further reducing the likelihood that neighbors will interact. And many areas practically encourage residents to keep their distance from each other by sharply limiting the number of buildings that can be built on a parcel of land.

It may well be up to zoning boards to restore the sense of community that many Americans feel they lack. In fact, that’s where the responsibility most appropriately lies, contends Thomas Lys, director of the Kellogg School Real Estate program and the Guthrie Center for Real Estate Research.

Read the related story on the Kellogg Real Estate Program

Lys argues that values that define “community” are subjective, and hence are better put to public bodies such as planning commissions and zoning boards.

“ If this is really important and you entrust it to individuals, what if you get the wrong individuals?” he asks. “It’s my preferences versus your preferences. People have very strong views, and there’s no right answer. If you don’t let the market decide, then you need to appoint a king of taste — a czar who decides whether you can paint your house pink.

“ The society needs to determine what’s acceptable,” Lys concludes. “Zoning in many respects decides the rules of the game. Let them play.”

Others say the responsibility for creating more liveable communities rests primarily with those who build them.

“ My experience is that it isn’t zoning that creates a sense of community, it’s the thought and sensitivity of the developer as to the dynamics of the facilities and how they meet people’s needs,” says Rosenberg. “It’s a private sector thing, very highly integrated with the work of public bodies.”

Developers, public officials and home buyers are likely to be persuaded by the success of what’s gone before. In that regard, Hernandez believes his record speaks for itself.

“ We’ve proven that we can do these projects, and that they’re not that far-out,” Hernandez says. “People like living in these places, and property values are not going down.

“ We have to ask ourselves: are we giving buyers what they want, or do they just want what we’ve given them?” he adds. “Sometimes people say they prefer something because they have a very limited number of choices. But if they’re offered other choices, they might choose them and like them.”

©2002 Kellogg School of Management, Northwestern University