The Evolution of Masterplanned Communities
July 22, 2016
Founder and President, Arizona Strategies
One thing is certain since the advent of masterplanned communities (MPCs) decades ago – what they look like and who wants to live there is constantly evolving. Today is no different from past decades ago, except for the speed of change that is occurring in this market. The primary factors leading to this rapid evolution include:
Increased challenges faced by developers as the government’s willingness and ability to fund major infrastructure wane. For example, the federal government’s ability to fund major transportation projects is constrained by diminishing resources in the Highway Trust Fund.
The cost of regulations on development continues to increase. The EPA’s recently promulgated rules regarding federal jurisdiction over “Waters of the United States” (WOTUS) and ozone emissions – both of which disproportionately impact western states adding financial burdens, time delays and uncertainty when developing large-scale MPCs.
The diminishing supply of large, private land holdings. In the Western U.S., much of the land mass is owned by the government leaving precious little in the private sector for development. In Arizona, 83 percent of all land is held in public ownership leaving only 17 percent in the private sector. So, in growth states like Arizona, large private land-holdings available for development have become few and far between. The last major MPC to open in the Phoenix metropolitan area was DMB’s Eastmark in Mesa.
Evolving consumer preferences.
While MPC developers continue to adjust business plans to the realities of infrastructure costs and government regulation, adjusting to consumer preferences is more art than science. In today’s fast-paced world with everyone racing to keep up with technology and demographic shifts, pinpointing what motivates new home buyers can be difficult and troubling for MPC developers – mainly due to the long lead time necessary to bring large-scale developments to the marketplace.
The Arizona State Land Department is the largest major land owner left in the urbanized areas of the state. Given the constitutional and statutory constraints on its disposition, new MPCs on State Trust Land will take time to happen and will likely be a limiting factor on the development of significant new MPCs in our market
Home buyers today want connectivity and different amenities than previous MPCs. Gone, for the most part, are new golf courses once seen as a “must have” amenity for every master plan. The typical home buyer now wants to be part of a destination-based community full of cultural events, farmer’s markets, healthy living options including multiple exercise opportunities and community gardens. Home buyers want cultural opportunities within their community and they are serious about live, work and play options. No longer is the “live, work, play” mantra a marketing gimmick – technology allows, even requires, the modern MPC to foster and facilitate these opportunities.
Optionality and diversity is essential in the current MPC market. The most successful MPCs offer a wide variety of housing options for first-time buyers, move-up buyers, executives and active adult buyers. All of these buyers also want to live in close proximity to one another – such market segmentation provides sought-after diversity (both age and income) leading to a richer sense of community.
There will likely be fewer large-scale MPCs coming to the Arizona market in the near future – those that do will have to be better. It is essential that new developments continue to evolve to meet increasing infrastructure and regulatory challenges while being able to respond to the ever-changing consumer demands.
Karrin Taylor focuses on land use, zoning entitlements, regulatory affairs and public policy issues. She has served on several boards and commissions, including Foundation for Environmental and Economic Progress (FEEP); State Bar of Arizona – U.S. District Court for Arizona; Maricopa County Bar Association; Maricopa Association of Governments and Arizona State Land Department; Karrin can be reached at firstname.lastname@example.org.
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