By Tim Jensen, PE, LEED AP, The Veridus Group
In the past, local governments have viewed real estate in one of two ways; public or private.
Public property includes all the property owned by the local government used to provide community services, including administration, police, fire, public works, etc. Additional public properties, like parks and trails, add to the quality of life for the residents and help connect and build community. But as these properties are tax-exempt, local authorities look to privately-owned parcels for required community funding.
To understand how the role of real estate is changing, it is also important to understand how local government is changing.
Local governments are no longer just responsible for essential services, public works and parks. Reality demands communities become intimately involved in economic development in order to diversify their assessed value, provide jobs for residents, educate the workforce and enhance the “quality of place” for their residents. One local mayor recently estimated that he spends more than 60% of his time negotiating real estate development deals in his community. This is becoming normal for growing communities in Indiana.
So, what is the role of real estate in local government? Real estate is beginning to take on many roles as communities change their approach to real estate. Instead of just providing services or generating income, real estate now plays a key role in public/private partnerships, workforce development, elimination of blight, and true quality of life.
Local officials are beginning to understand how they can affect change within their community by controlling certain parcels of land. If they control the property, through ownership, option or otherwise, they can better control what happens with the property.
Communities are now purchasing property at record rates – and not just for public projects. This property is being used for blight elimination, bargaining tools in public/private partnerships, private for-profit developments, housing initiatives, workforce development projects and quality of place improvements. They are also beginning to sell these properties on the wholesale market to qualified companies with qualified plans for development or improvement.
As local officials engage more with the private market on these developments and improvements, financing and legal methods change as well. Both professionals and local officials are learning to utilize new tools as they discuss real estate projects with their financial advisors and legal counsels. This provides for many more opportunities for the advancement of their respective communities.
So as the roles change, how can real estate professionals assist their communities?
The simplest answer is to get involved with your local government. By engaging, one may be able to help direct decisions affecting the local market instead of just reacting to the market swings and corrections. There are many boards and commissions which are often looking for knowledgeable people to serve. If you are unable to serve in this capacity, just being a sounding board for the local officials can be a tremendous asset for your community. Most communities view the local brokers as a valuable resource for understanding the real estate market in the area. It may be time for you to engage!
I hope you will join me and my panel of experts at the Indiana Commercial Real Estate Conference, Thursday, May 2, to hear more on this topic.