For the last few years, the National Association of Home Builders has been suggesting that, in the face of growing opposition to development by both government and the public, its member builders should begin considering remodeling – or at least establishing a remodeling component in their business.

The NAHB has taken a growing interest in its Remodelers Council, which has grown in importance as well as membership in the last couple of years. After many years of trying, the builders’ organization finally succeeded in convincing government numbers-crunchers that their assessment of the annual value of remodeling has off by millions of dollars for almost two decades, and the revised figures show that Americans are spending an ever-increasing amount on home improvements each year.

Whether or not builders want to acknowledge that there is likely to be a major shift from development to redevelopment by 2025, there seems to be growing evidence that such a transition will occur.

Storm Cunningham, a real estate industry analyst, calls this alternative to new development “restorative development,” suggesting that such a model, which “restores value to a piece of property, a neighborhood or a community,” will become the dominant industry activity in the 21st century.

Cunningham, chief executive officer of RestorAbility in Alexandria, Va., and author of The Restoration Economy, discussed the shift at recent Urban Land Institute conference in Pasadena, Calif.

There are three basic forms of development, according to Cunningham. The first is new development, which he described as any development that destroys an asset, whether it is undeveloped land or a historically significant building, to create something new.

The second is maintenance and conservation of the built and natural environments. The third, restorative development, suggests that construction or redevelopment can be used to return value to property. For example, a downtown of an older community, such as Bethesda, Md., is redeveloped and becomes a destination for all residents of the city and home – townhouses and apartments – for some of them.

Cunningham said that restorative development accounts for more than $1 trillion in development activity worldwide, representing the “fastest-growing economic development opportunity for businesses and communities.”

“We’ve had two centuries of the industrial and post-industrial revolution, in which we developed the world like crazy,” he said. “And now, the world – not just America – is becoming more resistant to sprawl and geographic growth.

“New development is shrinking, in terms of its slice of the development pie,” he said.

There are two parts to restorative development. The part that affects the natural environment includes reclaiming rivers from pollution, acquiring farmland as open space and turning to landfills into green areas.

Restoring the “built” environment includes renovating and rehabbing residential buildings, adaptive reuse – turning factories and warehouses into housing and urban malls – and replacement, which is called infill, because it involves filling space between existing buildings – space once occupied by a house or a business.

There are global reasons for the change from development to redevelopment, Cunningham said. “We are out of room…We’ve reached a point at which if we want to build more, we have to destroy some other value a property already has, whether it’s a green field, a park, land used for agriculture, or another purpose, and someone is going to fight protect that property,” he said.

In addition, infrastructure that serves the “built” environment is deteriorating rapidly. The American Society of Civil Engineers estimates that the United States has a $1.3 trillion backlog in infrastructure restoration.

Finally, there is enormous stress being placed on ecosystems worldwide, he said. Development can no longer occur in a vacuum, but should integrate restoration, preservation and maintenance of both the built and natural environments, he said.

“It makes no sense to revitalize an old industrial waterfront, put a Starbucks there, and have people sucking down their lattes, watching raccoons float by in a cesspool of a river.”

The cities that will be the most successful in attracting restorative development will be the ones that lift barriers restricting innovative reuse, create incentives for renovation or reinvention, and encourage public-private coalitions, he said.

The most successful developers will be those with the ability to put together fully integrated “mega-projects” and provide long-term management of those projects, Cunningham said.

The scale of restorative development, which can involve any combination of environmental clean-up, historic preservation, new construction, or renovation, is only for developers with a long-range commitment, Cunningham said.

Published: October 10, 2002

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Al Heavens writes about real estate and home repair and improvement. He is the author of What No One Ever Tells You About Renovating Your Home: Real-Life Advice For Hassle-free, Cost-Effective Remodeling.