Don Tishman's Real Estate Development and Investing Solutions

Like the current real estate market, I am out of sorts for a short time. Just had successful back surgery but will be back on my feet and online soon. After my surgery, I was thinking about the architecture of my body and how good design will make it maker. Until then I am recuperating with my rottweiler nurse Teddy.

All the Democratic dancing following Pennsylvania Sen. Arlen Specter’s party switch and the long-overdue seating of Minnesota’s Al Franken was premature.  Even with sixty Democratic senators that can overcome a filibuster,  Obama can NOT get a health care bill passed through the Senate  that contains a public insurance entity. There must be at least 10 Democratic votes that will not support this. Apparently, Obama’s strong support last November is not enough to show  these Democratic Senators the will of the electorate. This is merely further proof that Congress’s basic rule for a yes vote is -will help or hurt my reelection chances.  We need the names of these recalcitrant Democratic Senators  made public. Only then, will these Democrats know how their electorate feels about them vs. President Obama.

Apparently, Obama is no arm twister like LBJ (presidential version). Given the reflexive Republican biting of Obama’s extended hand, perhaps the president should have dispensed from the start with any serious effort to find accommodation with the GOP. The White House could have spoken otherwise for public consumption, but it should have assumed all along that this must be a Democratic-led proposal. Instead of wasting energy on trying to persuade Republicans, the White House must work over the recalcitrant Democrats in the Senate. This will give the President  a better chance of delivering on this promise of health care for every Americans.

Let us assume that with universal  health care coverage millions of American would live a healthier and longer life. This is a strong  moral issue that most will agree to.. Remember, though, times are tough today,many families are just getting by. Their home  budgets are very tight.   These folks believe that anything that costs $$$ will be passed onto them, they can not afford any additional financial burdens. They have health coverage and this new law will not do anything for their family EXCEPT  add ADDITIONAL costs to their already tight budgets

The recent severe loss of value of American’s home, nobody expected, most folks believed their homes would always increase in value.  But it happened, their homes lost value and this affected  not only their home values but many other values including a disastrous drop in stock prices and their loss of  retirement funds.

We can not assume that the insurers of health coverage will always be financially stable as we assumed that our home value would always increase. With health care costs continuing to sky rocket, what will happen to your health care coverage? First, rates will sky rocket.  Then, Health policies will cover less and less. These insurance companies must make a profit for their stockholders  to stay in business. They must not insure families that will make the insurance companies loss money. Many families will become uninsurable. WHAT  WILL THESE AMERICAN FAMILIES  DO THEN? Is there a safety net for them today? If they are over 65 and covered by Social Security , the answer is YES, our government will provide this much needed coverage. But suppose the heads of household are less than 65 , there is NO health care coverage for these families.  The only coverage they could depend on is what President Obama is asking these Democratic Senators to vote for.

Suppose the recession is not over yet, your employer goes bankrupt, where will your family get coverage?

Folks with  coverage must protect themselves against loss of their present coverage  by urging their Senators and Representatives to support the President’s program.

In the recent blog of the significant architectural magazine, Architectural Forum, the editors state that good architecture in architecturally designed buildings in San Francisco and New York City made  the businesses in these buildings do better. Are these well designed buildings exceptions?

First, what is a good design? One definition I have heard is – that after you enter a building, if you feel better about yourself., it is a well designed building.

Another is when  you read the writings of the 20th Century’s great architects- they say that good design includes: much natural light, openness, no “unnecessary” additions to the exterior of the buildings. clean lines throughout , and the building must fit in the neighborhood.  They also  emphasis the importance of the  visual effect when you see a building.

WHAT IS YOUR DEFINITION OF GOOD ARCHITECTURE?

Many years ago, we were competing for a large Redevelopment site in San Francisco. One of the requirements, was to furnish a list of building the team had developed. We submitted over 20 buildings, The Redevelopment Agency asked to look at 5 of these buildings . In all of the chosen buildings we had concentrated on “good design”. Nevertheless when these buildings were completed, the rents charged were the same as their competing buildings. I had not seen many of these buildings in several years. We had sold the buildings and I did not how they were maintained,etc. When we visited these buildings we learned that each building was now getting significantly higher rents than their competition. This convinced me that good design is an important part of value.

A few years ago, I developed a condominium development with a world class architect. We featured this architect in our stories of this development. A good friend of mine was the principal in the largest and most successful U.S. real estate advertising agency. He told me I was nuts to feature the architect in our advertising and marketing. In the next few years, many large and expensive condo developments in New York and other cities featured the architect in their advertising and marketing. The developers of these condos said the name of a well known architect added 15% to the sales price.

Many cities that attract tourists are known for their great architecture.  This architecture helps define these cities. Some cities I have in mind are Barcelona, Chicago, London, Paris, New York, Beijing. Tokyo, and Berlin to mention a few.

In a good real estate market most anything will rent up. But in times like these, there is a marked difference between the occupancy and rental rates of well designed buildings and the others.

Architecture tells the story of a civilization. How do you want your city to be remembered?

In 1965 my 68 year old father had a wonderful recovery  after being  hospitalized for several weeks because of a  severe heart attack.  We were very joyful for my dad’s recovery. Now it was my turn to step up to the plate and pay his hospital bill. With great trepidation, I went to the business office and asked for the bill. My wife and I had saved $$ for the down payment on what was to be our first home.  We agreed that we would forego buying our home to pay his hospital bill.   The bill the business office handed me had a zero balance. I said there must be a mistake. The person in the business office- said:  ” No mistake, the recently passed Medicare paid your Dad’s bill in full.” After getting over the shock- We were  very thankful for Medicare.

It is difficult for me to think of the many folks my dad’s age that had no medical care prior to Medicare. Many died because they did not have the resources for medical care. Now forty-four years later, there are still millions of American families that do not have any medical coverage until they become eligible for Medicare. I was raised to believe that every human life was valuable. It is hard to believe that the cost of this additional medical coverage in the richest country in the world is the reason that millions of folks are denied medical care. Most every other developed country provides medical care to all without limitation.

Retirement age American tourists traveling abroad can be eligible for Medicare all over the world. What about younger Americans left at home? The Obama Administration stresses that most taxpayers will not bear any additional burdens to have all Americans covered for medical care. The opposition says this is not true. The opposition further claims that this will make the government choose who will live and who will die. I believe the opposite is true- without medical coverage, most folks that are sick will not seek medical care they can not pay for. The statistics bare this out. Many critical cases come to emergency rooms when it is too late for treatment.

The argument that only the rich will pay for this extended coverage is deceptive and cynical. It implies that people with medical coverage will only agree to extend medical coverage if they do not have to contribute to the cost of this extension.  Apparently former and present  members of Congress cynically believe they can not survive politically  if they vote to provide medical care for those not presently covered. Since their political survival is their most crucial issue, only medical care that will not effect their constituents pocket book can be considered. Is this what you believe?

Who does your representative to Congress represent? The issue is pretty simple- Is the only criteria for a family member to receive medical care depend on whether the family can afford medical coverage that will pay for the care? Those families without this ability must forego treatment for their loved ones. Is this what you believe?

Look at the records of Bankruptcy Courts at the many Americans that have gone bankrupt because their medical coverage was not enough to pay for the treatment required. This attitude of our Congress affects who the most?  Poor people- for instance 33% 0f all Hispanic families have no medical coverage.

If you agree that every human life is valuable- prove it by acting now- tell your representative and Senator that MUST support medical coverage for all folks.

I want everyone to have the joy I had when I received my father’s hospital bill with a zero balance.

Alvar Aalto(1898-19760

Over the course of his 50-year career, Alvar Aalto, unlike a number of his contemporaries, did not rely on modernism’s fondness for industrialized processes as a compositional technique, but forged an architecture influenced by a broad spectrum of concerns.  Alvar Aalto ‘s is an architecture that manifests an understanding of the psychological needs of modern society, the particular qualities of the Finnish environment, and the historical, technical, and cultural traditions of Scandinavian architecture.  Early works by Alvar Aalto combined neoclassical ideas with the International Style. Later, Aalto’s buildings were characterized by asymmetry, curved walls, and complex textures.  Alvar Aalto received international acclaim with the completion of the Paimio Tuberculosis Sanatorium. The Sanatorium building established Aalto’s dominance of the International style and, more importantly, emphasized Aalto’s attention to the human side of design. The patients’ rooms, with their specially designed heating, lighting and furniture, are models of integrated environmental design. Alvar Aalto’s Paimio chair assisted patient breathing. The term Nordic Classicism has been used to describe some of Alvar Aalto’s work. Many of his buildings combined sleek lines with richly textured natural materials such as stone, teak, and rough-hewn logs. Alvar Aalto was also known for furniture and industrial design. In 1932, he developed a revolutionary type of furniture made of laminated bent plywood.

In 1937 at the International Exhibition in Paris, Aalto built the Finnish Pavillion, an eloquent antidote to pomposity. The modest scale of the building, shaded with high trees, was restful to the visitor. Instead of crushing the visitor with bombastic exhibits . it offers the visitor a helping hand and puts him at ease. In Finland, the work of Aalto showed a huge advance on then current modern architectural thinking.

Le Corbusier(1885-1965)

Le Corbusier pioneered modernism in architecture and laid the foundation for the International Style. During his long life, Le Corbusier designed buildings in Europe, India, and Russia. Le Corbusier also designed one building in the United States and one in South America. Le Corbusier individuality can be understood only if one accepts his buildings not as isolated phenomena, but against the background of comprehensive architectural philosophy. He became better known for his writings of the future rather than what he built. The earlier buildings by Le Corbusier were smooth, white concrete and glass structures elevated above the ground. He called these works “pure prisms.” In the late 1940s, Le Corbusier turned to a style known as “New Brutalism,” which used rough, heavy forms of stone, concrete, stucco, and glass. The same modernist ideas found in Le Corbusier’s architecture were also expressed in his designs for simple, streamlined furniture. Imitations of Le Corbusier’s chrome-plated tubular steel chairs are still made today. Le Corbusier is perhaps best known for his innovations in urban planning and his solutions for low income housing. Le Corbusier believed that the stark, unornamented buildings he designed would contribute to clean, bright, healthy cities. Le Corbusier’s urban ideals were realized in the Unité d’Habitation or the “Radiant City,” in Marseilles, France. The Unite incorporated shops, meeting rooms, and living quarters for 1,600 people in a 17-story structure. Today, visitors can stay at the Unite in the historic Hotel Le Corbu

His philosophy was:

1. The separation of load bearing construction from space- enclosing walls. Free standing columns lift the first floor off the ground.  ” The house is suspended in the air, away from the ground, while the garden spreads under the house.  Le Corbusier differentiates between the house and its surroundings, at the same time establishing a new relationship with nature by bringing green spaces under the building.

2. The flat roof, appropriate to the idea of a house as a cube, since pitched roof would spoil the desired unity of its rectangular shape. He uses the roof as a terrace garden.

3. Freedom in planning the interior made possible by frame construction- orientating the structural system in the same direction: two main girders placed longitudinally carry the suspended ceiling of the hall. BY this penetrating interpretation of function, structure  and form, a new and original type of hall emerges , which is can have a stimulating effect on the design of large concert halls and auditoriums.

Walter Gropius(1879-1964)

Walter Gropius was a German architect and art educator who founded the Bauhaus school of design, which became a dominant force in architecture and the applied arts in the 20th century. Bauhaus combined art, sculpture and architecture as one.  Gropius taught that all design should be functional as well as aesthetically pleasing. The architect’s personality is subordinated to his work. The Bauhaus school pioneered a functional, severely simple architectural style, featuring the elimination of surface decoration and extensive use of glass.  He started with the famous industrial architect, Peter Behrens. Although Gropius is best known for the Bauhaus style, his architectural reputation was first established when, working with Adolph Meyer, he designed the Fagus Works (1910-1911) and the office building for the Werkbund exhibition in Cologne (1914). The Fagus building appears to be a glass curtain wall building. There is no change in the conventional structural building except steel beams are used for the floors. Masonry columns are offset from the corners allowing the corners to be glass.  is only used Walter Gropius opposed the Nazi regime and left Germany secretly in 1934. After several years in England, Gropius began teaching architecture at Harvard University. As a Harvard professor, Gropius introduced Bauhaus concepts and design principles – teamwork standardization, and prefabrication – to a generation of American architects at the Harvard Graduate Design Center where he taught architecture foe many years.  Between 1938 to 1941, Gropius worked on several houses with Marcel Breuer. They formed the Architects Collaborative in 1945. Among their commissions were the Harvard Graduate Center (1946), the U.S. Embassy in Athens and the University of Baghdad. One of Gropius’s later designs, in collaboration with Pietro Belluschi, was the Pam Am Building (now the Metropolitan Life Building) in New York City

MIES VAN DER ROHE (1886-1969)

Mies van der Rohe succeeded  Some say that he stripped architecture of all humanity, creating cold, sterile and unlivable environments. Others praise his work, saying he created architecture in its most pure form. Ludwig Mies van der Rohe began his career in his family stone-carving business in Germany. He never received any formal architectural training, but when he was a teenager he worked as a draftsman for several architects. Moving to Berlin, he found work in the offices of architect and furniture designer Bruno Paul and industrial architect Peter Behrens. Early in his life, Mies van der Rohe began experimenting with steel frames and glass walls. He was director of the Bauhaus School of Design from 1930 until it disbanded in 1933. He moved to the United States in 1937 and for twenty years (1938-1958) he was Director of Architecture at the Illinois Institute of Technology. Mies van der Rohe taught his taught students at IIT to build first with wood, then stone, and then brick before progressing to concrete and steel. He believed that architects must completely understand their materials before they can design. Mies van der Rohe was not the first architect to practice simplicity in design, but he carried the ideals of rationalism and minimalism to new levels. His glass-walled Farnsworth House near Chicago stirred controversy and legal battles. His bronze and glass Seagram Building in New York City (designed in collaboration with Philip Johnson) is considered America’s first glass skyscraper. And, his philosophy that “less is more” became a guiding principle for architects in the mid-twentieth century. Skyscrapers around the world are modeled after designs by Mies van der Rohe.

Louis Kahn(1901-1974)

Louis I. Kahn competed only a few buildings, yet he is widely considered one of the great architects of the twentieth century. His training at the Pennsylvania School of Fine Arts grounded Kahn in the elaborate  approach to architectural design. As a young man, he became fascinated with the heavy, massive architecture of medieval Europe and Great Britain. Struggling to build his career during the Depression, Kahn designed low-income public housing. Inspired by the Bauhaus Movement and the Modern-Architecture/International, Kahn became a champion of Functionalism. Using simple materials like brick and concrete, Kahn arranged building elements to maximize daylight. The commissions that Kahn received from Yale gave him the chance to explore ideas he’d admired in ancient and medieval architecture. He used simple forms to create monumental shapes. Kahn was in his 50s before he found what he felt to be his true architectural voice. Many critics praise Kahn for moving beyond the International Style to express unique ideas.

Last weekend we visited Mountain House. It is located in the south  east part of the San Francisco Bay Area. This planned communiy has plans for about 15,000 homes. Many of the nation’s leading home builders acquired sites for homes to develop new urbanist communities  The master plan includes many parks, many are designed to meet the recreational specific needs of specific demographic groups.= goal recreation for all age groups. – The developers showed their good faith by the sterling quality of the site improvements. 

Moutain House started with a bang  The strong demand for homes at Mountain House  required a lottery to choose the new home owners.

After the collspse of the home market, 90% of the new Mountain hpme buyers found themselves with a home that was worth less than their mortgage. The area sudddenly had the highest

rate of foreclosures in the US.  It is now coming back.

Many of the proposed improvements are not in place. Most noticeable are convenience stores,  Some of the proposed public improvements are not yet in place- town center, schools etc,  

Nevertheless- Shea Homes, Pulte, Lennar are still building for what they think are under served markets. These quality houses are selling for as low as $100 per sf. Where else in the Bay Area can you match these prices and quality of life style?

My first reaction  was depression for the developers who created such a wonderful product.

How will these fantastic recreation facilities by funded?  What will be the quality pf the schools?

My son in law and daughter love Mountain house- I am asking them to be a little cautious.

Keep uour ideas open- the w2orm is turning