Developing Successful & Sustainable Planned Communities With Tom Hoban – RFP 54 Transcript
Tom Hoban (00:00): Convenience has become a pretty important word in the last two decades. With all the technology and innovation on tap, you click it here and it shows up in 24 hours, whether that’s Uber Eats or an Amazon delivery. We’ve all been conditioned to get what we want when we want it and not wait for it. So how do you create a convenient lifestyle for people where they live? Bring in that diversity of products, where I can have a multifamily apartment complex sitting next to a $200,000 townhome community that’s sitting next to a $500,000 single-family neighborhood. If you’re forcing everyone to go off site to get everything they need, you’re not delivering on the promise of sustainability.
Gordon Lamphere (00:42): Hi, I’m Gordon Lamphere, and welcome to The Real Finds Podcast, the podcast that interviews key entrepreneurs, activists, and researchers shaping the real estate industry and, as a result, our world. On today’s podcast, we’ll be speaking with Tom Hoban. Tom is a real estate investor, developer, and president at Kitson & Partners, the team behind Babcock Ranch, a planned community designed around environmental sensitivity and sustainability. On the podcast, we discuss the housing crisis, methods for developing vibrant and profitable planned developments, and how strong but flexible urban planning is the basis for a profitable commercial real estate investment. If you’re interested in this development, or development in general, this is a must-listen podcast. Tom, thanks for hopping on the podcast today.
Tom Hoban (01:34): Thank you, Gordon. Thanks for having me.
How Kitson & Partners Acquired Babcock Ranch
Gordon Lamphere (01:36): So why Babcock Ranch?
Tom Hoban (01:41): Good question. If I step back, before Babcock Ranch, we were looking for opportunities to grow and develop in the state, and the state was on fire. It was ’05 and ’06, and trees were still growing to the sky before the Great Financial Crisis. We were looking a little more creatively at how to get access to deal flow, including the opportunity to buy, or contract to buy, agricultural land and convert it to mixed-use residential and commercial development.
We were looking at a couple of different projects, and Babcock in particular was a deal the State of Florida had been trying to pursue to complete a natural wildlife corridor extending from Lake Okeechobee, in the center of the state, all the way west to the Charlotte Harbor basin, which is basically the Gulf of Mexico. There was one missing piece of land in that stretch, and it was Babcock Ranch. The state was trying to acquire it from the Babcock family. We knew the state was after it, and we knew the family wanted to sell the C corp that owned the land, not the asset. While those two couldn’t quite figure out how to get that done, we stepped in and contracted to buy the Babcock Florida Company, the C corp that owned the 91,000-acre Babcock Ranch. That was our avenue into getting control of the project.
Knowing the state wanted to buy it and wanted to preserve most or all of it if they could, part of our strategy was to step in, contract to buy it, and immediately engage with the state to figure out what they wanted in terms of preservation. The Babcock family had owned the land for about a hundred years, and most of it was very pristine: a lot of wetlands, a lot of great old Florida land. They did have an agricultural operation, a cattle operation, and a mining operation, so parts of the land had been impacted by those businesses. We were able to bring in the environmental community, which is a bit of an odd thing for a developer to do, but we did it up front, and had them help us draw lines on the page showing the sensitive areas to stay out of
Tom Hoban (04:02): and keep pristine, and the areas that had already been impacted by the family’s operations over the years, which we could use for development.
Why Bring the Environmental Community to the Table
Gordon Lamphere (04:10): Why bring them in? So many developers are constantly fighting with environmental groups. Why did you think that was the right idea?
Tom Hoban (04:19): That’s a great question. It was a bit of a counterintuitive idea, and it wasn’t without risk, for exactly the reason you highlighted. There tends to be a more combative relationship between developers and the environmental community. But given the size and scale of the project, and the approvals required to go from agricultural land to residential and commercial land, we knew there was going to be heavy involvement from the environmental community to make sure it was done properly. So rather than guess, swing and miss a bunch of times, and perhaps upset the apple cart, we thought it best to bring in the environmental experts who had strong convictions about where we should and shouldn’t develop, give them a seat at the table, and give them a voice.
It wasn’t without risk, but I’ll tell you, it really paid off. There was a real sense of ownership, and a sense of accountability for us. It led to a very strong relationship with the environmental community that we still have today: the Audubon Society, Florida Fish and Wildlife, the World Wildlife Fund, and ultimately even the Sierra Club all came around and supported the project. By helping shape where we would develop and where we would stay out, they became public advocates for us as a developer who was really trying to do things the right way and bring them into the fold, not cross our arms and keep them out. We created a lot of goodwill and a lot of good relationships that really helped us through the approval process.
Gordon Lamphere (06:01): Speaking of the approval process, was your original intention to build an environmentally focused community, or did bringing folks into the process spur that environmental emphasis?
Tom Hoban (06:23): From the jump, we knew this was going to be an environmentally sensitive community. The Babcock Florida Company owned a number of assets, one of which was Babcock Ranch: 91,000 acres, or 143 square miles. That’s a lot of land. The state wanted to buy 73,000 acres of it, so 80 percent was going to be sold to the state for preservation. That left us with 18,000 acres surrounded by 73,000 acres of preserve on our property. And across the street, the Babcock family had gifted about 60,000 acres to the State of Florida back in the ’50s. So you’re truly surrounded by nature on all sides.
We really stepped back and appreciated where we were as a developer and the environment around us, and we put our antennae way up. How do we be incredibly sensitive to the habitat, the species, the flora and fauna, the water, you name it? How do we embrace it and make it part of what differentiates Babcock from its peer group in Southwest Florida? That was probably step one of our strategy: embrace the environmental aspects and highlight them as differentiators, almost as amenities. When you drive through Babcock Ranch, we have incredible wetlands, vistas, and view corridors that most communities don’t have, because we left a lot of it untouched.
A Clean Sheet of Paper: Designing a Multigenerational Town
Gordon Lamphere (07:49): Let’s stay with the idea of something untouched. One of the reasons we brought you on is that so many communities are looking to redevelop and reshape themselves, and there’s no more interesting way to think about what the ideal community should be than to look at one starting completely fresh, which is Babcock Ranch. What was the inspiration behind creating a community, and what did you envision to give it long-term success across what is almost multiple generations of development?
Tom Hoban (08:38): Great question. We’ve been in this business a long time, and for most of our history before Babcock, our master-planned community business was taking over broken communities, ones where the prior owner stumbled and needed to get out, whether through a bank sale or directly from the seller. Syd Kitson and I had joked over the years that it would be great to take a project from the beginning and get it right from the start, rather than fixing broken ones, which is a great way to generate a good return for your investors and your company. This was that, times a thousand, in terms of size and scale.
When the opportunity came along, Syd and I were pretty excited about having a clean sheet of paper, a white canvas, at that size and scale. Even after selling 80 percent to the state, we were left with 18,000 acres, which is bigger than the island of Manhattan. It’s entitled for 19,500 homes and six million square feet of commercial space, and it should be home to about 55,000, maybe even 60,000, people when we’re done. The gravity of that started to hit early on. We had a real responsibility, a real obligation, to do this the right way and really embrace innovation. When you have a project that big, it takes multiple decades and multiple cycles. So how do you future-proof a community like Babcock Ranch?
Don’t Fight Mother Nature: Restoring Wetlands and Flowways
That’s where we started out of the gate. The environment was staring us in the face all around us, and we wanted to embrace that, but we also wanted to embrace what was coming down the pipe, get ahead of the trends, and maintain that position along the way. So the idea was: let’s not fight nature. Let’s lean into it. Mother Nature tends to win. As developers, we often try to fight it, mitigate wetlands, redirect water flows, and spend a lot of money doing it. Then when the storms hit, Mother Nature wins. So we said, let’s prove we can work with Mother Nature responsibly and have a net neutral, if not net positive, effect on the land around us.
We spent a lot of time studying old maps from the early 1900s,
Tom Hoban (11:03): when this land wasn’t farmed, to understand its natural condition and natural flowways. How did rain make its way across the property? The property slopes north to south, so the natural flow runs south. Where do those flowways run, where do the wetlands retain that water, and how do we reconstitute those wetlands and flowways? We actually spent money on the engineering side to redevelop a lot of the old weir systems on the property to help manage water and restore our natural habitat and wetlands. Rather than plowing through our wetlands and mitigating them to create more uplands to sell, we put money into restoring and rehabilitating those wetlands, essentially recreating the ecosystem as it was in the early 1900s for the wildlife corridors within Babcock Ranch. I have some great before-and-after visuals I could share with you.
That’s part of our calling card: going back to how the land used to be. Listen to the land, embrace it, and don’t fight it. Water management in our region is a big deal. We go through a storm season every year that now runs six or even seven months, and you have to be prepared for weather events. It’s not just wind. A lot of it is rain and flooding. We saw that this year with the horrific stories out of the Carolinas when Helene blew through Florida, made its way north into the Southeast, and caused so much damage. How do we anticipate that trend and stay ahead of it by getting innovative in our planning and design, and maybe spending a couple of extra bucks on engineering up front? I have to tell you, the payback on those extra bucks
Tom Hoban (12:58): when storms like Ian, Helene, and Milton hit pays for itself ten times over, if not more.
Hurricane Ian: The Test
Gordon Lamphere (13:07): So how have you fared through the storm cycles over the last decade?
Tom Hoban (13:16): We bought the property in 2006. Something happened in ’08 and ’09 that rocked the world a bit, including us, and we ended up breaking ground on Babcock almost nine years ago to the day, in November 2015. Since then, we’ve had a couple of storms. Irma came through before anyone was living at Babcock Ranch. We were still in development mode, which was good, because we learned some good lessons from Irma.
Then Ian came through in 2022, about two years ago, and that really put us to the test. We had spent all this time and effort on planning, design, engineering, and visioning. How do we create a really storm-resilient community, with safety, security, reliability, and redundancy? We’re the first solar-powered town. We have almost 900 acres of solar, over 750,000 panels, powering the town with 150 megawatts. Everything is buried underground: all our power and Wi-Fi, and we have fiber to every house and every business. All of this was in place, we’d been talking about it a lot, we’d been getting great press, and people were moving in. And here comes Ian, with a path right over the top of Babcock Ranch. When you look at the Weather Channel and it says the storm is headed to Babcock Ranch, that’s a moment that stops you in your boots and makes you take stock. You’re holding your breath that all this planning is going to pay off.
I’m not sure how much attention you pay to Florida storms, but Ian was a pretty severe storm, a Category 5 approaching shore. It weakened a little to a Category 4 when it hit and absolutely devastated Fort Myers Beach, Captiva, and Sanibel. That whole area was wiped out, and the path from there inland toward Babcock saw largely complete devastation. I wasn’t there; I was over on the east coast of the state. Syd Kitson, my partner, was there for the storm, so he and I were in pretty regular dialogue. As all this mayhem and chaos was going on in Southwest Florida, Babcock really stood tall and passed the test.
Tom Hoban (15:41): We never lost power. We never lost Wi-Fi. We didn’t flood. The water utility we own and operate maintained functionality and never went down. We certainly had a lot of wind and a lot of rain. Some signs came down, and some screen enclosures got blown around a little. But the building structures and the community as a whole were largely intact without much issue.
We were really the only silver lining in Southwest Florida. Everything around us had been devastated, and we became a bit of a beacon that still had power and Wi-Fi. Folks were coming from all over the region to our public shopping center at Babcock, which was still operational, and our storm shelter was occupied by people from the region who had been displaced. It really got our name out there. What’s going on there? How do those guys do this? How do they differ from their peer group in the region? 60 Minutes had come to town to do a story on Ian, kept hearing about Babcock Ranch and how this one place bucked the trend, and we ended up on 60 Minutes that week. That became a global story, and people got very curious about what we did differently.
That was a big test, and we’re really proud of how we performed. At the same time, our hearts were breaking for the region. A lot of our colleagues, friends, and loved ones in Southwest Florida suffered a different fate after that storm, and we did everything we could to help the region through outreach and support.
Fast-forward to the last couple of weeks. Helene blew through a little north of us, so we got some significant rain and wind, but nothing substantial. Milton came through a week later with similar wind and rain. Babcock was fine. We never lost power and never inconvenienced the community. That’s part of the environmental story. When you lean into your wetlands, keep them, and restore and enhance them,
Tom Hoban (18:04): they become incredible water storage facilities. The water follows that natural north-to-south flowway to the wetlands, and if you keep the wetlands, they become big reservoirs, so your roads and houses don’t flood. They become an amenity in times of storm. We also have a really intricate, smart stormwater management system that communicates with NOAA data and can do predictive analytics on storm activity and rainfall, so we can raise and lower the levels of our lakes, within our permits, to mitigate flood risk in the community. All of that combined led to a successful outcome for us.
Insurance: Painting With a Broad Brush
Gordon Lamphere (18:48): Has that general success in weathering storms given you a benefit in Florida? One of the larger issues I consistently hear from developers in Florida, and in the Southeast in general, is rising insurance premiums. Insurance in general is through the roof. Have you seen insurers perceive Babcock Ranch differently from other sites in your area?
Tom Hoban (19:18): That’s a really good question, and unfortunately the answer is not yet. We’re working on it. The insurance industry tends to paint with a broad brush, and we need to get to a fine-toothed comb that looks at the micro data. We’re being treated no differently than a lot of much riskier regions and neighborhoods, which isn’t appropriate given Babcock Ranch’s actual risk profile. We’re 30 miles inland and 30 feet above sea level. There’s a lot of great data on what’s transpired over the last several years of storm activity. Even if you just look at claims data, by and large, claims aren’t coming from Babcock Ranch, because there’s been little to no damage. So we think that’s a big opportunity. We need to do a better job of educating the insurance industry about what we’re doing, why we’re different, and why we should be treated differently from a risk assessment perspective. We think there are options out there, we’re exploring them, and we’ve had some pretty good preliminary conversations with a few groups. We’re going to keep pushing, because it segues into affordability and attainability, whether that’s home price or monthly payment, and insurance premiums are a big part of the affordability story.
Building Attainable Housing Into the Plan
Gordon Lamphere (20:33): Let’s talk about that. We talk about the housing crisis a lot on this podcast. People want to live in affordable, attainable communities where they can live and work. How did Babcock address those issues in developing a multigenerational community?
Tom Hoban (20:57): This is probably one of the top issues in housing globally: affordability. Coming off the heels of the inflationary environment we’ve all been living in, it’s gotten even worse, so it’s something we all need to focus on. Our experience predates that, since we bought Babcock back in ’06. Even then, we recognized we wanted to be a multigenerational town. We didn’t want to be just a retirement community. We wanted a town with families, everything from young twentysomethings up through retirees and beyond. To do that, you need jobs, and to have jobs, you need a service industry, and those service workers need a place to live as well.
So back in ’06, before anyone was really talking about affordable housing, we committed to providing 10 percent of our product as attainably priced housing. That’s roughly 1,900 units; call it 2,000 units offered as affordably priced product at Babcock Ranch. We’ve been working on that for the last decade. We have some creative rental product we think satisfies a big part of that need. We’re working on a 340-unit workforce housing project at Babcock Ranch right now. We also built our first purpose-built build-to-rent neighborhood, all single-family three-, four-, and five-bedroom homes, and we’ve earmarked 10 percent of those homes for police officers, firefighters, and teachers, who qualify for a special rate to live in The Flatwoods, which is the name of that neighborhood.
So we’re very aware of it, and we think it’s a huge opportunity to further differentiate ourselves from our peer group if we can get creative on the product. A lot of it comes down to density, and sometimes a little smaller product to make the math work. There’s a lot you can do, and with a project the size and scale of Babcock Ranch, we have a bit more optionality and flexibility in how we skin the cat.
Gordon Lamphere (23:07): A lot of communities are trying to put affordable product in. What ultimately drove the equation for you? Was it primarily community interest? What drove your focus on bringing affordability to Babcock Ranch?
Tom Hoban (23:34): In general, we want to satisfy the entire community, not just the high end, but all the folks who live in a town. A town has socioeconomic strata throughout it. We’re trying to be a very sustainable town, and rather than having folks live thirty minutes away because they can’t afford to live in your town, part of sustainability is being able to live where you work and work where you live, without a thirty-, forty-, or forty-five-minute commute. Being sustainable forces you to address that question. Where is this product going to sit? How will it coexist alongside market-rate product? How do you avoid creating a haves-and-have-nots environment within your community, so that it blends in with everything else? When you drive through any given town, there’s quite a bit of affordable and rental product, and often you don’t even know it’s there. It blends in with the market-rate product. So it’s about the ethos that if you work at Babcock Ranch, you should be able to live there without a thirty- to forty-five-minute commute.
Why Physical Design Matters: Ranch Architecture Meets Modern
Gordon Lamphere (24:48): Why was physical design so important in driving the community? Something I’ve seen overwhelmingly with your product is that it seems to be very high quality compared with what you’d see in a typical planned development.
Tom Hoban (25:15): I appreciate you saying that. As a developer, our job is really to create the place: master planning, permits, approvals, entitlements, design, amenities, and lifestyle. That’s the developer’s responsibility. We’re not a home builder, so we need to bring in the right home builders who buy into our vision, believe in what we’re trying to do, and mirror it in the homes they build. We’ve been incredibly fortunate to have great builders at Babcock Ranch. Five of the top ten public builders in the country are building there, and they’re all building to the Florida Green Building Coalition standard. These homes are built to last, to a very stringent code for our region’s storm activity, and we’re very proud of the product.
We’re also building a lot of the commercial on our own behalf: shopping centers, mixed use, apartments, and build-to-rent neighborhoods. In that product, we’re adopting the same Florida Green Building Coalition standard to make sure it’s built to last and won’t create issues for us down the road. On the architecture side, we take great pride in it. Just as we paid homage to the past with the land and the environment, we looked back at the architecture the Babcock family had on the property, like their old hunting lodge and the old commissary. We try to borrow from that ranch architecture, ranch chic, or whatever you want to call it, and blend it with modern design into a new, unique architectural style. If you drive through Babcock and get to Founders Square, you can see it and feel it. It’s different, and it feels of the place, not foreign or contrived, because there’s a throwback to the past in the architecture.
Why Mixed Use: Bringing the Urban to the Suburbs
Gordon Lamphere (27:11): You mentioned sustainability as important for the live-work environment, but why do diverse neighborhoods matter beyond that? Why can’t people just live in one place and work in another? What’s the philosophy behind creating diverse, mixed-use neighborhoods?
Tom Hoban (27:34): It’s interesting. If you look at the math, something like 73 percent of the US population lives outside the urban core, and about 27 percent lives inside a city. When you look at city living, what’s the draw? A lot of it is jobs, culture, amenities, convenience, the arts. So how do you replicate the attractive qualities of urban living and bring them into the suburbs? You’ll hear a term in our business, “surban,” which means bringing some of the urban into the suburbs so I don’t need to commute into the city to get what I need, whether that’s my job, a ball game, a theater, or a great restaurant. Having nodes of commercial activity within the suburbs creates the lifestyle people are looking for. Most people don’t want to commute more than thirty to forty-five minutes to get what they need.
That’s part of the sustainability story. It’s not just about living there. It’s also about bringing in the services people need: healthcare, shopping, dining, entertainment. The closer to home those things are, the more convenient it is for the homeowner. And convenience has become a pretty important word in the last two decades. With all the technology and innovation on tap, you click it here and it shows up in 24 hours, whether that’s Uber Eats or an Amazon delivery. We’ve all been conditioned to get what we want when we want it. So how do you create a convenient lifestyle where people live? Part of it is bringing those services to the community, and bringing a diversity of product where a multifamily apartment complex sits next to a $200,000 townhome community that sits next to a $500,000 single-family neighborhood. All those folks want to go out to eat. All those folks occasionally need urgent care. And a lot of them need to go somewhere to work, so how do we create the office environment for that too? Without that, you’re not providing a sustainable outcome for everybody. If you’re forcing everyone to go off site to get everything they need, you’re not delivering on the promise of sustainability, in our opinion.
Seeding the Town: Founders Square and the Retail Bell Cows
Gordon Lamphere (30:02): That’s great, but how did you actually get those cultural and service businesses into your community? I get it when a developer wants to put a retail development, a restaurant, or a grocery store in Houston, Chicago, or New York, where thousands or millions of people already live. How did you bring businesses to your community? Was it a field of dreams, “if you build it, they will come”? What was the thought process?
Tom Hoban (30:47): That’s a really good question. Historically, in our business, developers try to create places that outperform the competition. That might be a golf community, a ski-in, ski-out community depending on the region, or a great lakefront community. We said, let’s forget all the historical, check-the-box communities. We’re building a town, so we need to create a town experience out of the gate. Instead of investing our money in a golf course and a clubhouse, we built 65,000 square feet of town.
What do I mean? We have a 300-acre lake in the center of town, which is a real natural heartbeat of activity. People gravitate to the water, and there’s a big walking trail around the lake. We built a restaurant on the lake, a great public green space that fronts it, and an incredible band shell at the head of the lake, right where the green space meets the water. Around that horseshoe of green space, we put in mixed-use buildings: the restaurant; our office building, a two-story building with the sales center below; a general store called Slater’s; an ice cream shop with coworking space above it; the first phase of our school; and a 27,000-square-foot health and wellness building for fitness and primary care. That was our initial downtown, called Founders Square. We were the initial operators, both landlord and tenant, running those businesses to create that vibrancy.
The challenge, to your question, is that you really can’t convince a third party to come in until you have enough population density to support the business. Most companies won’t take a loss leader to help you out. So you need really robust growth. We’ve been fortunate. We had our first homebuyer at Babcock Ranch in 2018, and we went from not being anywhere on the national top 50 list for master-planned community sales to being ranked number five in the country by 2022.
Tom Hoban (33:07): We went from zero to fifth in the country in four years based on the place we had created, so it was working and resonating with the public. As those rooftops filled in, we got to about 10,000 people living at Babcock Ranch today. That’s zero people nine years ago, when we broke ground, to roughly 10,000 people, and it’s roughly six years from the first home being occupied. That’s a lot of growth.
Retailers pay attention to that growth. Publix came in and said, “We want to be at Babcock Ranch,” and Publix is a bit of a bellwether, a bell cow, in the retail space. Other tenants follow their lead. Starbucks followed. It’s a smaller tenant, but people pay attention to Starbucks because they do their homework and pick robust locations with lots of growth. Then Marshalls came in, which is a TJX company, and TJX is regarded as one of the stronger credits and one of the smarter retailers. You get a couple of those bell cows in, the dominoes start to fall, and the rest of the retailers follow suit.
We were fortunate that we could seed our downtown ourselves, as Kitson, with storefronts for the community to enjoy: the general store, the health and wellness center, the restaurant, and so on. That led to robust population growth, and retail and commercial tend to follow rooftops. We now have enough rooftops that these are truly arm’s-length tenant-landlord deals, with leases and rents as you’d expect in the marketplace. Our rents have been phenomenal. The tenant demand to be at Babcock Ranch has surprised us. It’s incredibly healthy.
Remote Work, The Hatchery, and Six Million Square Feet of Flexibility
Gordon Lamphere (34:45): You mentioned retail, but not everybody works a retail job. How have you incorporated other businesses into the community, particularly in the crazy post-2020 world, with much more flexible work versus a traditional office-oriented economy?
Tom Hoban (35:10): That’s a tricky one. I think everyone is still trying to figure out where that will land. I can tell you that about 22 percent of the working residents at Babcock Ranch work from home. We have fiber to every home and business, at a minimum of one gig, and you can buy up to ten gigs if you want it, so it’s a very convenient place to work from home.
Also, among the mixed-use offerings in Founders Square, one is called The Hatchery. It’s collaborative office space. We created it as an amenity on the second floor above our market, for folks to work out of, like a WeWork-style space. It’s proven to be a big hit. When people touring Babcock Ranch go into the market, head upstairs, and see The Hatchery, their eyes light up. It’s great, well-designed space. There are hot desks you can plug into, and perimeter offices, which are all taken at this point, with a lot of desks in the middle where folks collaborate and work. Activity in that space has grown dramatically in just the last two or three years.
So to your question, we’re not necessarily here to predict where the office sector will land long term. We think remote work is here to stay at some level. It’s not binary, in the office or out, but some hybrid version of remote work is likely here to stay, and it seems more prevalent in certain climates. Southwest Florida tends to be a pretty attractive place for remote work. But we have six million square feet of commercial entitlements and really great flexibility in our master plan. We can pivot and call an audible as we go. We anticipate a lot of that six million square feet will be retail and mixed use, and there will certainly be office as well at the right time. We think medical office is probably viable sooner rather than later. We’ve been contacted by several companies in the sustainability or storm resilience space that read about Babcock Ranch or saw the 60 Minutes piece and are curious whether they could put a headquarters there. We haven’t landed those yet,
Tom Hoban (37:35): but there’s a lot of inquiry from companies saying, “You didn’t lose power, you didn’t flood, you stayed operational, and we’ve been looking for a secondary office location. Why not Babcock?”
E-Commerce, Click-Resistant Retail, and Controlling Supply
Gordon Lamphere (37:49): Speaking of secondary things, one big shift has been the move away from traditional retail toward experiential retail and e-commerce. How has Babcock navigated that change in how it approaches retail and last-mile delivery?
Tom Hoban (38:11): I 100 percent subscribe to your perspective on this. E-commerce is an incredibly high-growth segment. I think from 2010 to 2020 it grew over seven times in volume globally, from roughly $500 billion to $4.1 trillion. It’s a huge business, and we think it will keep growing as technology and innovation improve and AI becomes more prevalent, making it more convenient and easier. Our eyes are wide open to it.
But if you look at certain sectors, like grocery, the adoption rate is much lower. It’s there, and if you peel the onion, it’s much more pronounced in urban environments than suburban ones. In general, people still seem to like to touch their fruit, vegetables, and produce, and go to the grocery store to get it. Even Publix, which I think is one of the best private grocery operators in the country, partnered with folks like Instacart for delivery, but they’d tell you the adoption rate among their customers isn’t what they thought it would be.
Gordon Lamphere (39:31): They never pick out fruit as well as you do on your own.
Tom Hoban (39:36): They don’t. You’re right. But it’s happening, and I think the format is changing a bit. Boxes are getting smaller, especially how you think about big-box space. Grocery-anchored neighborhood centers with daily needs, which are heavily service-oriented and experiential by nature, are the sweet spot. That’s the least risky, most attractive asset class, and quite frankly, it’s probably the most desired by the customer. When you have a grocery store with a couple of restaurants and quick-serve restaurants, your dry cleaner, your nail salon, and your hair salon, you have to go there to get it. You can’t do that virtually. So being thoughtful about your merchandising mix goes a long way.
We also have a unique risk mitigant in that we own all the land. We own the town, so we effectively have a monopoly on commercial in the town. We control the supply. We won’t be surprised one day because someone across the street put in a competing shopping center and now we’re competing for tenants. It’s really a chess game where we look at our entire commercial footprint and say, “We want the next Publix here. We’d love another grocery down there. Do we want a pharmacy over here? If so, which one?” We can be very curated in our commercial retail strategy and target tenants that are more click-resistant. We think there’s still a huge desire to get out of the house and experience a thoughtfully planned and designed retail environment.
We’re getting ready to break ground on a really cool mixed-use commercial zone called B Street. It’s basically a two-and-a-half-block extension of Founders Square, right off the lake I talked about, with restaurants, bars, entertainment, and retail. It will be a pedestrian-friendly environment with parking around the exterior, so the interior corridor is safe and walkable for everyone who visits B Street. We’re also building a 255,000-square-foot industrial flex site right now, which will combine light manufacturing,
Tom Hoban (41:55): some of the services the town needs, like space for the plumber and electrician to keep their equipment, and some more retail-style storefronts, maybe indoor pickleball, a gymnastics studio, or a karate studio. We’re excited. We’re building a town of 55,000 to 60,000 people, and those people need services. Some will come virtually and some physically. We’re not looking to flood our supply with excess retail. We want to give residents enough of what they need without oversupplying the market and cannibalizing ourselves.
The Biggest Change: Families, Schools, and Health
Gordon Lamphere (42:36): Speaking of things that have changed, what’s probably the biggest change you’ve seen in how people live since you broke ground?
Tom Hoban (42:52): Wow. So many things have changed. One thing, maybe not the biggest surprise, is this. Painting with a broad brush again, Southwest Florida as a region is largely retiree-driven if you just look at the demographics. We led with a school, putting one in the first phase, and it sold out literally overnight. That led us to build a permanent K-12 school that currently has over a thousand students. So we’ve seen a shift from what might be a 75-25 retiree-to-family split across Southwest Florida to a true 50-50 split at Babcock, where half of our buyers are families and working folks with children at home. Back to design principles: if we hadn’t led with a school, that wouldn’t be the case. We’ve influenced a lot of change at Babcock Ranch through thoughtful design principles like bringing in a school early.
Listen, we didn’t anticipate COVID. We didn’t know what that was. But we designed a community with really great outdoor lifestyle options, over a hundred miles of biking and hiking trails, living in nature, with wellness as a primary theme. We’ve seen a lot of people focused on a healthy environment. Where they live matters. At no point was your home or community more important to you than during COVID, because you were stuck in them. People started to really look at their four walls, their roof, their neighbors, and their yard, and ask, “Gosh, am I living in the right place? Is there something better out there for me?” So I think we’ve seen a shift in mindset where health and wellness is a much more prominent selling point today. And it’s interesting. If I asked you, Gordon, what’s the number one determinant of your health, what would you guess?
Gordon Lamphere (45:07): I’d say living in a walkable community. But I’m in real estate, so that would be my argument.
Tom Hoban (45:14): Most people would say maybe your genetic code, or your diet and exercise. Certainly that’s all part of it, but your zip code is the number one determinant of your health. Where you live dictates your access to food, community, relationships, healthcare, and so on. We’re building a zip code, so we have a real opportunity to influence a healthy lifestyle through how we design the community, from materials to wider sidewalks, more street lighting to make it safer, and wider bike lanes so people feel comfortable hopping on a bike. There are little things you can do on the design side to make homeowners feel good about their health and wellness options.
Gordon Lamphere (46:00): What do you think was the most important thing in developing a healthy environment? Was it bikes, was it sidewalks? What drives health and wellness the most at Babcock Ranch?
Tom Hoban (46:17): That’s a hard question to answer, because we have such a diverse demographic, from young families to the elderly, and they’d probably all give you a different answer. But if I had to give an overarching answer, it’s peace of mind. There’s a certain peace of mind in living somewhere in Florida that’s storm resilient. Maybe that’s not what you think of with health and wellness, but think about mental health, anxiety, and stress. If you live at Babcock Ranch, you know that when these storms blow through, your power and lights stay on, your air conditioning stays on, your house won’t flood, and your Wi-Fi is on so you can communicate with your loved ones. That peace of mind gives you a great sense of security and safety.
You can get out and tap into a hundred miles of trails, whether for a hike, a walk, or a bike ride. You can take a stroller down a wider sidewalk with your spouse and your kids into Founders Square. And the number of kids who ride their bikes to school at Babcock Ranch would blow your mind. I’m not sure if I’m older than you, but growing up, we were always on our bikes or walking places, and that seems to have been lost a bit in society. We made it a point in our design that kids should be comfortable biking to school, and parents should be comfortable letting them, in a safe setting. All of those things are important, and I can’t point to one as more important than another. Having the 27,000-square-foot health and wellness facility where people can work out, a restaurant with healthy options, and a community garden where residents can take control of their own destiny with microgreens and whatever else they grow: all of that speaks to health and wellness.
The Final Four: Physical and Virtual Accessibility
Gordon Lamphere (48:05): I live in a walkable, bikeable community. I grew up being able to bike to school, and I came back to that community with my wife because I think it’s important for our family to live somewhere we can do that, so I fully understand how you’re structuring things. Sadly, we’re getting to the end of the podcast. At the end of every episode, we do something called the Final Four. It’s a nice wrap-up and a way to learn a little more about how you see the world going and who we should bring on next. The first question, and one of my favorites: where do you see planned development, and real estate development in general, going over the next ten years?
Tom Hoban (49:03): We’ve touched on it a bit here. One thing we’ve been studying is the idea of accessibility: the difference between physical access and virtual access, and how that’s affecting how we live. Think about the lives we lived before COVID and after. Even what you and I are doing right now wasn’t as easily done pre-COVID: getting online for a podcast, Zoom and Teams meetings, remote work, e-commerce, telehealth, virtual healthcare at home. Those lines seem to be converging, and the ability to live your life through the two streams of physical and virtual access will continue to drive human behavior.
Getting ahead of that trend as you think about planning, design, product, and location creates a lot more optionality and flexibility if you embrace it. You asked earlier how you convince a business to come in early, and we talked about the pragmatic need for rooftops. Virtual is a way to bridge that gap. I don’t need to live within walking distance of the mall or shopping center if Amazon can get to me in 24 hours. I don’t need to live two blocks from the train depot to get to my job if I can work remotely from home. I may not need to live in an assisted living facility if I have access to virtual health through my technology, my internet, and my fiber. So when you think about how to plan and design a town or community of any size, embracing accessibility, designing for both physical and virtual access, creates a superior lifestyle for the people living there. A lot of that comes back to peace of mind, security, safety, convenience, pricing, and affordability. I think that trend will continue, and you’ll see more of it in development design principles.
Advice for Young Professionals: Proactively Seek Feedback
Gordon Lamphere (51:22): One of the things we look at, besides development, is developing ourselves. We have a lot of younger listeners. If you could step back in time and give your younger self one piece of advice, what would it be?
Tom Hoban (51:41): Wow, that’s a really good one too. I spent my first eight years out of college in New York on Wall Street, a very fast-paced setting. The easy answer would be to take a breath and look around, because it’s moving so fast. But with more thought, for the young folks listening, I’d say proactively seek feedback. Don’t wait for it. Ask a mentor, a boss, or a trusted relationship: “How am I doing? What can I do better? How can I improve?” Thinking back on my early days, you got your one annual sit-down review, but not a lot of feedback throughout the year. In your later years, you appreciate more that feedback is a gift. It’s not something to be afraid of or threatened by. It’s a way to help you grow. Be proactive and ask for it, and it’ll help you advance faster in your career. I would have appreciated more of that in my early days.
Book Recommendation: Leading from the Second Chair
Gordon Lamphere (52:54): One of the ways we love to advance our careers is through books. Not everybody can get a great mentor or great feedback, but anyone can reach up to the shelf and pick up a book. If there’s one book you’d recommend, what would it be?
Tom Hoban (53:16): I tend to be more of a history guy, World War II especially, and I could recommend a lot of books there. On the business side, it’s a book that’s probably not well known: Leading from the Second Chair by Mike Bonem and Roger Patterson. I came down here from New York in 2003, twenty-one years ago, to join Syd Kitson at Kitson & Partners, and I’ve been in the second chair for that run. That book has had a lot of meaning for me on how to support the first chair while also leading the rest of the troops, how to think about the big picture and the vision while also getting into the weeds, and how to be content where you are while still having aspirations to get somewhere else. Those are the book’s themes, and I’ve found it personally very gratifying.
Who Should Be Our Next Guest?
Gordon Lamphere (54:15): That’s phenomenal advice. Everybody needs an operator out there. One of the things we love to do is reach out to people operating at the forefront of the real estate community. The whole reason for the podcast is to reach voices that maybe people haven’t heard of who are doing something amazing. If you know of somebody, who should we reach out to next?
Tom Hoban (54:49): It’s funny. Our industry is so fragmented and so local. You know this, Gordon, you’re in it. We don’t have an Elon Musk, a Steve Jobs, or a Bill Gates of the industry, because it’s such a fragmented, local business. There are lots of great things happening out there. Obviously, my partner Syd Kitson is a pretty phenomenal innovator and leader. He was named TIME’s Dreamer of the Year last year. But you’re getting your fill of Babcock on this one. I’d say look in your local market. Sometimes it’s where you least expect it, and smaller shops are doing pretty creative things.
There’s a group called the Housing Innovation Alliance, led by Dennis Steigerwalt. Their mission is to convene innovators in housing: developers, builders, architects, and engineers doing things differently for better sustainability outcomes, net-zero home building, lower carbon footprints, and healthier materials. He might be an interesting guy to talk to, because he has his fingers in a lot of those pies across multiple markets and players. I have a lot of respect for him. He’s done a great job with that organization.
How to Reach Tom Hoban
Gordon Lamphere (56:15): We’d love to have him on. But before you go, there’s one final question we have to ask: if somebody wants to reach out, what’s the best way to get in contact?
Tom Hoban (56:26): Email is probably the best way to reach me: [email protected]. That’s T-H-O-B-A-N at K-I-T-S-O-N partners dot com.
Gordon Lamphere (56:48): Tom, thank you so much for hopping on the podcast today. We really appreciate it, and we have to have you on again in the future.
Tom Hoban (56:54): Great. Gordon, it was a pleasure. Really enjoyed it. Thanks for having me.
Gordon Lamphere (56:56): Thanks again to Tom. We appreciate his insights. If you enjoyed the podcast, please give us a like, a five-star rating, and a review. Your comments, interactions, and subscriptions truly matter and help us continue to bring on quality guests. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with The Real Finds Podcast. Thank you for listening.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.