July 25, 2012
In an era when traditional suburban development has become difficult due to transportation costs, environmental concerns and market shifts, in-city waterfront brownfields have often shown themselves as significant opportunities. While there have been outstanding projects completed over time, the challenge is to provide a framework so waterfront revitalization can be facilitated and expedited, says a new report commissioned by the NAIOP Research Foundation.
The redevelopment of formerly contaminated waterfronts into mixed-use areas has become an important part of urban revitalization. This study, The Complexity of Urban Waterfront Redevelopment, looks at the challenges of redeveloping waterfront brownfields from the developer’s perspective and analyzes several cases, as well as previous research, to suggest specific strategies for dealing with the process of remediating and revitalizing waterfront brownfields. It concludes by providing strategies for successful urban waterfront redevelopment.
Read the full study, including detailed maps, graphic models and case studies.
Key Factors in Success or Failure
- Developer Preparation and Building a Team – Numerous projects have failed, at least in part, because the developer had not done sufficient strategic planning, was spread too thin, lacked capabilities or was too far removed from the project. Waterfront brownfield projects require multiple skills and lots of hands-on attention. Each of the successful case studies in the report features a strong development leadership team. While each development team is different, it is important to ensure the skill level necessary in all of the specialties involved. The developer also needs confidence in the team and must be able to communicate with its members to assure coordination.
- Project Size – Harbor Point, Stamford, Conn., is a mega-project, as are some earlier successes such as Atlantic Station in Atlanta, Ga. and Mare Island in Vallejo, Calif., started before the financial crisis. These mega-projects now seem the exception rather than the rule. It takes an extraordinary location, deep pockets, and sometimes more than one developer for such large projects to proceed. At the other end of the scale, very small projects are sometimes not worth the time and costs. In the aftermath of the real estate bubble, it appears that projects in the middle range of $10-$250 million, like those in Trenton, Portland and elsewhere, seem to now have a greater likelihood of success. Large projects are often accomplished in phases, reducing capital requirements and building towards an area-wide revitalization.
- Meeting the Market – All development projects must satisfy market demand and attract end users. Waterfront redevelopment must utilize the water as an asset, rather than an access barrier. The mix of uses, attractive design and events that bring a community back to its waterfront have been key to successful projects.
- Role of Government – As cited many times, waterfront brownfields involve multiple government agencies at all levels, especially as regulators. Most successful waterfront brownfields also include government as a partner. While there are relatively few direct government grants (brownfield assessments are an exception), there are often government loans, guarantees, financial mechanisms, land and infrastructure improvements.
- Multiple Financing Streams – Municipalities typically make use of not just conventional equity and debt, but also government grants and loans, and specialized project funds such as those for waterfront amenities. Managing such financing – having sufficient funds at the necessary moments, especially from government sources – is clearly a significant challenge.
- Municipal Capacity – Cities with functional, timely approval processes are more likely to be successful. Certainly leadership committed to redeveloping waterfronts and brownfields, including having the right personnel in the planning and economic development departments, was an important factor.
- Design Quality – A waterfront brownfield redevelopment requires a highly sophisticated, multi-talented design team. The design team needs to be fully cognizant of environmental constraints; waterfront visual, access and ecological opportunities; community context, as well as all normal market and cost considerations. The developer must select and support a unique design and a shared vision, which will maximize return on investment.
To accomplish successful projects requires developers to think strategically and use techniques that reflect the unique nature of these projects, maximizing financial, aesthetic and community benefits. There remain many waterfront brownfield opportunities and enormous potential, awaiting the developer with the right skills, strengths, perseverance and a little bit of luck.
To access the full report, please visit the NAIOP Research Foundation at www.naiop.org or contact Denise Sena at 703-904-7100 / firstname.lastname@example.org.
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About NAIOP: NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial and mixed-use real estate. NAIOP comprises 15,500 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit www.naiop.org.
About the NAIOP Research Foundation: The NAIOP Research Foundation was established in 2000 as a 501(c)(3) organization to support the work of individuals and organizations engaged in real estate development, investment and operations. The Foundation’s core purpose is to provide these individuals and organizations with the highest level of research information on how real properties, especially office, industrial, retail and mixed-use properties, impact and benefit communities throughout North America. For more information on how to contribute or for complimentary research reports, visit www.naiop.org.
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