Getting a commercial real estate development across the finish line is no easy feat. The list of challenges is long, with developers battling everything from site selection, entitlements and design to construction costs and supply chain disruptions—but if developers had to choose a single archnemesis, the one impediment that gives even the most experienced players a headache, it would undoubtedly be local development opponents, known as NIMBYs.
An acronym for Not in My Backyard, NIMBYs have been obstructing real estate development since the 1980s. As people move out of big cities and into suburban markets and small towns, new NIMBY groups are emerging to fight growth and stop new construction projects, and it is happening in unexpected cities across the country—places like Missoula, Montana; Nampa City, Idaho; and Plano, Texas.
These unaffiliated local community groups and individuals have been highly successful at delaying, altering and even altogether killing new commercial and multifamily real estate developments—but because they operate at a hyperlocal level, tracking the real impact is difficult. By one estimate in Forbes, anti-development activists had delayed or altogether killed 500 real estate developments from 2005 to 2015 at a cost of more than $1 trillion. But NIMBYs don’t have to be the end of a project. By taking a new approach to the approval process, developers are not only beating opposition but also creating community support.
Community Engagement
It is easy to sympathize with why NIMBYs are fighting; they don’t want their communities to change, and they are concerned about the negative impacts of new development, like traffic and congestion. However, despite the stigma, many so-called NIMBYs also understand the benefits of new development and necessity for community growth. In a survey from coUrbanize, a company that helps developers with community engagement, 84% of respondents said that new development had at least one benefit, and nearly half of respondents claimed that they were pro-development.
While not always true, many NIMBYs are satisfied when a new development reflects the needs and wants of the community. This is an opportunity for developers work alongside residents to build and design projects that are community serving. It’s generally as simple as crowdsourcing ideas and requesting feedback on proposals. Developers also benefit from this strategy by gaining local knowledge and a better understanding of local demand dynamics, which can help to determine the best and highest use for the property.
While the solution seems simple, many developers don’t engage with the community because they are afraid of igniting opposition, according to Jamie Ross, president and CEO of the Florida Housing Coalition. While she believes community engagement is important, she also warns developers to proceed with caution. “The decision about when and how to engage the neighborhood is one that is best done with as much consideration as the development plans themselves. If neighborhood engagement is done well, it can smooth the development process to success,” she wrote last year.
Ross also advocates for general audience education campaigns that use data insights to illustrate the need for affordable housing, the most commonly opposed developments, and how the project will serve the community. Education campaigns can help developers and residents work toward common goals. For example, if a community wants a grocery store, developers might use data to show that most grocers require a certain number of rooftops nearby to warrant the location. This can help generate support for new housing, if it comes with community amenities.
Government Engagement
Residents aren’t alone in approving new development projects. Local governments and municipalities also play a key role in pushing projects forward, and they can also help to rally community support, guide projects that will be met with enthusiasm and, perhaps most critically, create zoning, general plans and other regulations that support growth and new development.
In particular, developers should work with local governments to create standardized regulations and zoning requirements that are reviewed by administrators and elected officials, which would help to reduce the potential for a visceral community response. Luckily, this has already been happening across the country, especially for affordable and low-income housing. Los Angeles changed its code to allow for supportive housing in areas zoned for public uses, skirting the community approval process; Missouri, Oregon and California have all passed legislation to allow for multiple units on a single-family lots; and other states have created exceptions for transit-oriented projects. These practices can create a pathway to new development for categories of real estate in greatest need without denying community feedback.
The Cost of NIMBYism
Opposition to new construction is not a developer issue; it’s a community issue. Communities across the country are suffering from housing shortages, sky-high rent and housing prices and a lack of access to essentials, like grocery stores and pharmacies. In those three unexpected NIMBY markets mentioned earlier, all are seeing negative effects of restrained growth, partially as a result of rising NIMBYism. Plano rents have increased more than 17% year-over-year; Nampa City has 26,000 unhoused students due to a housing shortage; and Missoula housing prices have increased more than 22% this year.
NIMBYs were once seen as crusaders for preserving quality of life and community, but now they are considered a blockade to local growth and essential housing needs. Last month, the New York Times highlighted one woman in Mill Creek, California, that has been successfully stopping a condo development on her street for nearly 20 years due to concerns it would negatively impact her property value.
And value is central to the conversation. Existing homeowners gained about $6 trillion in equity last year alone, but that increase in value is exactly the problem for younger residents seeking to buy a home or live in an affordable apartment. At the same time, affordable developments are the most common projects blocked by NIMBY groups, due to fear that they will deteriorate the neighborhood and, again, decrease property values. Opposition from these groups has fueled a national housing crisis, and YIMBY (Yes in My Backyard) groups are surfacing to counter the opposition and encourage support for new development.
So, yes, it is true that there is no shortage of challenges for developers, but innovative builders are continuing to break ground, not only with new projects but also with new approaches to development. For rising costs and supply chain disruptions, developers are leveraging new technologies like Northspyre that use data and predictive learning to keep projects on time and under budget and to overcome community opposition, developers are leaning into the conversation and working with local residents to reimagine cities and neighborhoods together.
Topping off a development today requires a change to the status quo. New ideas will ensure developments not only move forward but that they will be better, too.
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Real Estate Development