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The Vision - Reurbanist

The Vision

Written by  //  March 13, 2011  //  Retail Feasibility  //  No comments

A vision is a guiding statement or document which vividly illustrates what a location looks like and how it will function in the future.

Far too often vision statements sound like a bunch of  rhetoric which is effectively meaningless. A second issue with many vision statements is that it is formulated before fully understanding their market context and constraints. The wrong upfront vision means you will spend the rest of your efforts trying to mash a square peg into a round hole.

The vision is not just defined by the developer: it is shaped by municipal planning documents and influenced by local public stakeholders. The more people that can identify and buy into a vision, the smoother the development process will be.
Let’s consider a hypothetical vision for a developer wishing to build a community serving retail node by breaking it down into three components: A) Project Goals, B) Steps Required to Reach Goals, and C) Vision Statement.

Project Goals

  • Achieve a minimum internal rate of return of 15%.
  • Minimize market and development risks.
  • Produce a product which boosts the reputation of the company and individuals involved.

Steps Required to Reach Goals

  • Achieve a minimum internal rate of return of 15%.
    • Charge rents at a premium to market rates by creating an environment which attracts affluent shoppers.
  • Minimize market and development risks
    • Reduce risks of backlash from community and government officials by consulting them during the planning process.
    • Create a project which both adheres to basic market principles, while building a destination with both longevity and resilience in the face of future competition.
    • Provide the types of tenants and merchandise appropriate to the demographic profiles of residents living near the project.
  • Produce a product which boosts the reputation of the company and individuals involved.
    • Create a successful destination which is remembered for a true community destination rather than a simple aggregation of retailers.

Vision Statement

To develop an innovative urban destination that resonates with local residents.

Customers will identify with the project as an integral component of the community – as a place to meet friends and conveniently shop for a wide variety of merchandise. Despite growing competition in the region, this project proves resilient due to its loyal customer base. Retailers line up to enter the project, recognizing the successful grocery anchor. Restaurants and cafes capture nearby residents who prefer to shop locally than drive 20 minutes to the closest regional mall. This successful combination of factors produces strong rents, low vacancy rates, and a low cap rate (capitalization rate) – ultimately meaning a high valuation when the project is sold.

A municipality might go through a similar process as a developer in creating a vision statement for a community in need of revitalization. Although at first glance the two vision statements might appear widely divergent, they are less contrasting than might appear. Municipalities must respect the importance of financial performance for developers if they expect the private sector actively to invest their time and resources into a community. Likewise, developers must respect the greater public good or risk tarnishing their reputation and damaging their chances of creating additional projects in the future. Developers are highly dependent on their relationships for success, and public backlash can jeopardize future opportunities.