Land and building assets make up a large chunk of government portfolios. Experts claim it is the largest source of public wealth, far exceeding cash in treasury. These assets also constitute a tremendous financial opportunity for economically strapped governments. Reports estimate that OECD governments may be sitting on up to 9 trillion dollars in saleable real estate, much of which is under- or un-utilized.
Alex Kapur, co-founder of the technology startup OpportunitySpace, said most urban areas have a large amount of real estate that isn’t being used productively. “This has several negative impacts,” he said. “For starters, it directly erodes the tax base on which towns and cities rely for revenue, and it further decreases surrounding property values.” Neglected properties can also degrade the quality of life in a neighborhood, as when blighted buildings result in higher crime and public safety hazards, like fires and contamination.
OpportunitySpace is the 2013 winner of the Harvard Public Sector Innovation Award*, which addresses this problem by creating a wider, more dynamic market for publicly owned and controlled properties. The company works with municipal governments to aggregate dispersed parcels of real estate, along with all the relevant data about them, into a public online database that is easily accessed and understood by town administrators, private developers, and community members alike.
“Historically, the knowledge set for how to invest in and develop publicly owned property has been artificially constrained to a select group of people,” Kapur said. A public, user-friendly database can help governments better leverage their assets and reach a broader audience of real estate developers and investors, including those traditionally left out of public-private transactions. By making this information accessible and transparent, OpportunitySpace invites greater competition and stronger, more creative solutions for urban redevelopment and revitalization.
In Massachusetts, for example, the town of Swampscott was preparing to offer an historic, former school building for redevelopment. Administrators wanted to expand their reach beyond the immediate geographical area in order to find talented developers who could leverage the school’s unique “adaptive reuse” potential while working within the town’s particular development guidelines. They also wanted to ensure that the process was transparent and visible to the broader community.
By listing their Request-for-Interest on the OpportunitySpace platform, Swampscott was able to attract thirty developers from across the metro-Boston area for an in-person walkthrough in just a few weeks. Afterward, five developers submitted robust proposals now under consideration. By empowering administrators to invite more ideas into the process, OpportunitySpace is helping administrators maximize the school’s benefit to the community. Kapur said, “It’s a great example of the potential for better development outcomes when information is more visible and liquid, even in a viable real estate market.”
The OpportunitySpace team used their time in Harvard’s incubation lab to pilot their concept in five municipal markets. They’ve since expanded to over twenty markets across the country by leveraging partnerships with various city and state entities, such as World Business Chicago and the Philadelphia Land Bank. Extending beyond an online marketplace, the team is also launching a new analytic product for their government clients that will help decision-makers better target their precious resources in order to address blight and problem properties, for which they often become responsible.
Kapur pointed out that while OpportunitySpace is growing nationally, the process is slow. “The fast-growth expectations for a tech startup are generally out of sync with the gradual, risk-averse process of decision-making in government." To meet this long-term challenge, they are experimenting to find a sustainable balance between short-term revenue (via upfront technology services like the analytics package) and longer-term, transaction-based revenue that accompanies public-private property sales. "We're also refining how we educate potential investors in order to illustrate that, despite the slow process, we're creating an opportunity for stable and lucrative returns."
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*The annual Public Sector Innovation Award, launched by Leadership for a Networked World, Harvard University, and Accenture, encourages Harvard students to apply their creative energy to help solve pressing public-sector challenges and to foster the next generation of government leaders. Each year’s winner receives $10,000 in grant funding, access to Harvard and Accenture thought leaders, and incubation space to develop their project proposal. Learn more and apply at http://tech.seas.harvard.edu/harvardi3/.
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Leadership for a Networked World’s applied research, student innovation challenge, and on-campus summit programs are an initiative of Dr. Antonio M. Oftelie, Innovation Fellow at the Technology and Entrepreneurship Center at Harvard (TECH), part of the Harvard John A. Paulson School of Engineering and Applied Sciences. TECH is a hub for students, faculty, alumni, and government and industry leaders to learn together, collaborate, and innovate. LNW accelerates these efforts by connecting leaders across sectors and developing cutting-edge thought leadership on innovation and organizational transformation.