In a low-rate environment, developers profited from financial arbitrage. With higher rates, that's impossible. Profitability now depends on creating a genuinely desirable product with strong tenant demand, shifting the focus from spreadsheets to quality and talent.
Instead of seeking established chains, developers can create more exciting and valuable properties by sourcing passionate, independent tenants with a unique vision. This "A24 model" bets on talent and novelty to drive interest, mirroring how the film studio discovers directors.
A developer's attempt to build a crosswalk highlights extreme regulatory friction. The city approved the project but quoted a seven-figure cost and a multi-year timeline, requiring the developer to fund extensive electrical work. This shows how minor public improvements can become prohibitively complex and expensive.
In affluent beach communities, a counterintuitive trend emerged where developers or wealthy individuals would buy multiple adjacent homes, demolish them, and build one large mansion. This practice actively reduced the local housing stock and decreased density, prompting California to enact new regulations to prevent it.
Inspired by Jane Jacobs' "sidewalk ballet," a developer's strategy involves acquiring multiple properties on a single street to curate a whole community ecosystem. This approach creates a vibrant, walkable neighborhood, contrasting with the common practice of cherry-picking scattered, disconnected developments.
Supply chain shortages for items like electrical transformers have forced developers into a new mode of operation. The process involves leveraging personal networks ("a guy who knows a guy"), paying in advance for critical components, and then finding space to store them until they are needed for construction.