August 2024
Trusted partners to public and private sectors, Community Development Financial Institutions (CDFIs) have grown, becoming a key part of the financial infrastructure of many communities nationwide. They foster sustainable growth in underserved communities, supporting and funding projects that create vibrant neighborhoods.
Real estate development is a critical component of community revitalization. While there has been success with development strategies based on a single real estate asset approach, using this singular focus can short-change the community as a whole. While the approach may bring immediate improvements, focusing on a singular asset may fail to address broader community needs. A holistic development strategy, addressing several community needs simultaneously, can result in more far-reaching benefits, providing an opportunity to create synergies between different community elements.
A holistic, or universal, strategy builds upon a process of leveraging all community elements to create change. Imagine it as multiple lines of dominoes falling in sync, instead of a singular line. One real estate project works hand in hand with other projects, influencing neighborhood change. As the neighborhood dynamic evolves, it prepares for the next development project. Ultimately a continuous plan is created, showing an ongoing record of improvement instead of the development of a single spot.
This strategy of concurrently considering residential, commercial, and public space needs, encourages inclusivity and diversity, and ultimately the creation of vibrant and sustainable neighborhoods. CDFIs can play an important role in supporting this approach to seeking community-wide solutions.
Market Analysis, which is the backbone of a real estate appraisal and a market study, is the fundamental part of getting all the dominoes moving at the same time, providing information that is critical and necessary in fulfilling the development strategy. Appraisals provide an understanding of property values, to ensure projects are economically feasible and in line with market conditions. These appraisals assist in making decisions related to risks and funding.
Identifying the most needed type of development in a particular area is the benefit of market studies. They offer insights into demographic shifts, economic conditions, and demand trends. The greatest benefit of the studies is information that assists developers and CDFIs in avoiding situations such as misallocating resources, over-building, or under-building.
Other components of a successful universal real estate development strategy are:
Community Input: The importance of engaging residents and stakeholders in identifying their needs and goals.
Environmental Considerations: Considering the long-term sustainability of projects.
Mixed-Use Development: Seeking to combine residential, commercial, and public spaces into a dynamic community.
Economic Resilience: Working to ultimately build a self-sustaining local economy, by supporting and providing programming for entrepreneurship and small business growth.
Utilizing a universal real estate development strategy can help connect the various assets in a community and maximize community growth. By following these suggested guidelines, CDFIs, developers, and stakeholders can all contribute to building strong, long-lasting, and vibrant communities.
