How to determine the highest and best use for a piece of land? What is a new product that is in high demand in certain areas? What systems to put in place to manage a growing company? Amy Johnson, managing partner of Y Street Capital, shares her knowledge.
How to find the highest and best use for a piece of land?
It comes down to vision, individuals will bring us pieces of dirt all the time or ask me, "Amy, I want to bring you a deal. What do I need to look at? And I say "It just depends." People have different visions.
If the piece of land is under 5 acres, I don't want to worry about it because doing something with 3 acres is the same amount of work and headache as it is with 300 acres. I'm in Utah, I have much more land than somebody in Manhattan. In Manhattan, they're not talking acres, they're talking square feet, or they're working with airspace and that's different. We do a lot of our large land development in the Western states and we have acreage to work with. First, I'm going to look at the overview of the market and see what is the need. What is the city's master plan? And just because they have something in their master plan doesn't mean they want to stick with it. What's the city's vision? What's the market's vision? What is the market demanding right now? I am currently not looking for really large lots or humongous houses, attainable housing is a lot more in demand, that means multifamily housing and townhome developments. It is not because I love the look of townhomes, but that's what the market is demanding and what is needed in the community. We have the city's vision, the market conditions vision, and the possibility of what's there. There may be some products that were very successful in other cities that we now take and put in this city.
What is a new product that is in high demand in certain areas?
We’re currently putting 30 units in 5 acres that the city just wanted zoned commercial. Commercial is great if you have a specific tenant. You've to build it specifically for the commercial people like Jack in the Box, or Starbucks, etc. A product that we've done in Brigham City, and I've also seen successful in other cities is a product that we were responding to the market, they were saying, "Okay, we want some commercial but we also need attainable housing, multifamily housing, or townhomes on top". We designed this unit that is one single tax ID. It's an individual townhome, the bottom is a commercial use that they can run a business from, they don't need to get a special license, and the other two floors are the residential housing for it. The maker spaces are usually in high demand. They sell for about $100,000 more than the typical townhome unit.
The homeowner loves it because they can legally run things out of their house anyway. For example, they have an online business, and they have a storefront where they can work downstairs, they can have people come in, or have an esthetician. They have this commercial, professional storefront that they can come into, and they still live in their house, and I can get an FHA loan. It is exciting, in high demand, and the cities love it because this brings in small business owners, and it provides the housing that we need. I like it because they would never approve townhomes there, but they allow me to put townhomes with these maker spaces that are connected.
As far as where it is in a city, the buyer's parcel is here and the neighbor is a Starbucks, Starbucks is on a busy side street, and they are next to that in a lesser busy street. Small business owners, especially with a "For Sale" product, are needed right now so we do the same thing on industrial flex, which is being built all over it, in multiple states. What's not being built on industrial Flex is having small, individual, kind of minimized industrial flex. So, you can get a premium for selling that. If you explain to the city and give them the vision that these are small business owners, that it would take over the strip mall design that they had before that wasn't serving them, and that there's not a large warehouse where you have your products, and you don't have a large man door, you have a garage door. We have to educate and explain to the city these market trends and demands and what's needed and why that's driving it, and then we help explain that as a vision to the city. All of those are based on the highest and best use. When people ask me, "Amy, what do you build? Large land developments, and I've done commercial, mixed-use, and multiple zonings, but that doesn't mean I'm vertical and owning all of those assets, but it makes sense for the master plan.
These owners can have a storefront; they probably have more customers from online first and they have a sign on the front of their building.
What if they need TI? What if they're like a pastry chef for example?
If it's a For Sale product, we only give them the gray shell. They're not TIs, they're the owner so it's their things inside. They do their own building.
Can you share a couple of tips on how you manage your company, and how you keep the company growing from a leader's perspective?
These are important:
1) Delegation and utilizing the actual systems.
2) Being able to say "no" to things that don't serve you.
3) Set expectations, and that can be expectations for vendors, other contractors that we're working with, and civil engineers having a clear scope of work, they have those expectations so you're not spending extra time managing that. They're the ones that are checking.
4) I live and breathe by my calendar, if it's not on my calendar, it doesn't exist. Even if it's a work session, for example if my executive assistant and I need to work on a project, we will time block that, and we'll put it in the calendar. Or even if it's in person, it has to be on my calendar.
When I'm home, I'm home. I work less now than I ever have, so that's fabulous. When I was on high medication, I was a zombie and I really couldn't remember things. That's where my kids said, "I've got to make sure mom remembers by putting us in here." Now I'm better and I can remember more, but why carry around that mental load constantly if you know that it can be in your device, on your calendar? Why not lean on that tool for it? On Sundays, my husband and I go through our week and plan it and say, "What does this week look like? Am I missing anything?"
Is there anything else that you think is important for our audience to know that we haven't covered yet?
If you're listening to this and feel overwhelmed in your journey, give yourself some grace. You'll get to where you want to go, but be intentional.
Amy Johnson
YStreet Capital
amyj@ystreetcapital.com