Stephann Cotton is CEO of the 26-year old Cotton & Co., a 50-employee Stuart based real estate marketing firm that represents residential and mixed-use communities, destination clubs, marinas, resorts and other tourism-related industries and groups as well as creating marketing reports and materials for corporate investors.
Cotton just returned from the Urban Land Institute’s (ULI) 2009 Fall Meeting & Urban Land Expo in California.
BJ: If you were the ULI spokesperson, what is your elevator speech on behalf of the group?
SC: The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.
BJ: What was an ‘Aha’ moment at the conference?
SC: The phrase “paranoid optimism” came up a lot. The recent economic crisis and real estate meltdown were huge wakeup calls. When I went to the conference in 2008, we thought “OK, now we will learn what is happening from the best economists in the business.” But nobody knew. All the news was bad. And there was no data. This year there were numbers. And 80 percent was good: Everyone is in recovery mode now. But there was paranoid optimism, meaning “I feel optimistic but I’m paranoid that one little thing could bring it all down.
What they can’t do is guarantee what the consumer will do next. That the recovery is slow and methodical stems from the wounded psyche of the buyer-and unemployment concerns of course. Consumer confidence is really hurting.
BJ: If consumers are hurting, who is optimistic?
SC: We’re optimistic because we can wipe off the chalk board and begin again. We can create new business plans that reflect genuine innovation. The overwhelming consensus at ULI was that trends towards sustainability and environmental stewardship will continue to shape projects in major ways. Smart design matters. Health and wellness issues also came up-with quality-of-life questions. Travel time to and from schools, parks.
It won’t be just about owning a house anymore-quality of life, health and overall value are at the forefront of the changes at hand. And it’s not that developers are now going to be the good guys- we are all running for- profit businesses. The role of the developer will be to deliver experiences to consumers that match their values and desires. The developer is following the market.
BJ: But people still want more amenities for their money.
SC: What came out loud and clear was that a major era in American history has passed, the era of conspicuous consumption. This recession will have a profound impact on the American psyche. Now they (homebuyers) want trails, bike paths, beaches; recreation that doesn’t cost much. They are moving to places that offer those amenities. Instead of looking at the cost of a house, they are looking at the cost of ownership. After the hurricanes, people were saying, “My taxes and insurances are higher than my mortgage.” Now they are looking at not only the home’s price but association fees, taxes, and insurance.
BJ: Around here, development means sprawl.
SC: The problem is that people confuse sprawl with development. Development is roads and airports and parks and schools and churches. People who are against development shouldn’t use the roads or schools or parks. Sprawl happens because of problems with planning. Lack of good planning means that, while other communities are re-inventing themselves, we lose out on (companies) that could come here and support the tax base. My hope is that my grandchildren will know Martin County as a thriving community year-round.
BJ: You produce the Cotton Report (http://thecottonsolution.com/) Did you learn anything at the conference that makes you change your predictions about changes in the real estate development market?
SC: It was nice to see that data from the top economists at the conference validated all of the research we did in the Cotton report. There are unprecedented investment opportunities available now.
BJ: Everyone comes back from conferences jazzed. What is something you are determined to use your conference-generated energy to do?
SC: We’re looking at projects that are truly innovative and (that are) making the most of current technology in our marketing analysis and marketing programs. We have unprecedented data sources that we didn’t have five years ago. We have information from tens of thousands of people on information such as when they are planning to buy and where they are planning to buy. If helps our clients with intelligence-based decision processes including how many homes they are going to sell.
BJ: What is your elevator speech as the CEO of Cotton & Company?
SC: We are one of the only companies in the country with 30-plus years representing planned communities doing everything from the initial analysis and business plan to sales planning and sales tracking. We have also been through five business cycles and are aware of what people should be doing in this market.