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For Love of Money Part II

Build, flip, and who cares what happens once you're out has always been part of the developer mentality. But in recent years a combination of the wave of Wall Street and institutional money, the rise of equity REITs, the decline of local banks, and the emergence of national development companies rips...

By Jonathan D. Miller | Updated on May 06, 2008

Build, flip, and who cares what happens once you’re out has always been part of the developer mentality. But in recent years a combination of the wave of Wall Street and institutional money, the rise of equity REITs, the decline of local banks, and the emergence of national development companies rips at the fabric of local developer-owner-citizens, who were more likely to build and manage real estate with the long-term interest of their communities in mind. Developers, investors and lenders today often have limited or no local roots — projects pencil out entirely for their IRRs, not furthering any particular civic good.

If local government fails to provide sound vision for land planning, these outside business players certainly have little incentive to fill the void even at the margins. And if a project goes bad, they may be more likely to bail out, cut their losses, and leave the locals hanging. If property values take a hit as a result, hey it’s not their problem.  Their responsibility is to clients and shareholders, not the community. And they are out of there.

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