Water’s Role in Real Estate & the Economy
We sat down with Randall Lewis of the Lewis Group of Companies, which is one of the nation’s largest real estate development companies, to talk about the role that water plays in the building industry. Since 1955, the Lewis Group has built over 56,000 homes and currently owns 8,000 apartment homes and 30 shopping centers.
SoCalTap: What role does water supply play in getting housing developments built?
Randall Lewis: Before you can develop land, you have to have a “Will Serve” letter from the district that supplies water to that area. The State of California requires that we ensure there is a supply of water before homes can be built.
In the real estate business, water is key. We cannot develop without a steady supply of water. With the other materials we need, we can always find a replacement. Say, we couldn’t get carpet flooring – we could substitute hardwood. But there is no replacement for water. That’s why the real estate industry is so committed to conservation and reclamation.
SCT: What is the real estate industry doing to stretch Southern California’s water supply?
RL: Well, there are two types of people at work in this equation: developers and builders. Sometimes a company does both, but not always.
Developers are the first people involved. They get a land ready to be built. They get permission for building, ensure there is a water supply, lay the pipes for water, electricity, and sewer, and sometimes do the master landscaping. If they are doing master landscaping, they might look at how to use less water, which means reducing the amount of turf grass that is put into the landscape.
Builders actually construct the houses, so they are looking at what goes into the inside of the buildings – are the appliances efficient? Are we using low-flow toilets? Does the dishwasher use as little water as possible?
Then we look at consumer education – we tell occupants how to save water in their new homes. A few years ago, we partnered with the Metropolitan Water District to do an education program to show residents how to save water.
I’ve changed by personal habits after working on these programs. When I shave and brush my teeth, I turn off the water. Through all this education and through what I’ve read, I came to realize how truly important it is to conserve what we have.
SCT: Have you made any other changes?
RL: I’ll tell you a funny story. My wife and I went to see a demonstration garden at the IEUA. That’s where they show you what kinds of plants are appropriate for our climate. We really liked the look of it. That weekend, I went on a business trip, and when I came home, our lawn was gone! I thought, ‘What kind of weird practical joke is this?’ But when I asked my wife what had happened, she said she liked the garden so much, she decided to redo our yard. She did a beautiful job. I think it looks way better – like a Tuscan or Mediterranean landscape.
SCT: What has the Lewis Group of Companies done in the properties it manages?
RL: We’ve worked to eliminate or minimize turf in all our new developments. We only plant grass where people will walk or children will play, it’s no longer decorative. We work to select the right plants, ones that are water efficient. We don’t do exclusively native plants because there are a lot of beautiful plants from all over the world that use very little water.
We also make sure to put in appliances that use less water. That’s particularly important for our apartment homes, because it helps the renters save money on their bills.
We’ve changed the way we maintain properties as well. We ask employees to use brooms for sweeping sidewalks rather than hoses. We have 8,000 apartment homes, 30 shopping centers, and several planned communities, so we try to be among the leaders in the industry.
SCL: Why have you worked so hard to change the way you do business?
RL: Our reasons for doing these things are both altruistic and also in our self interest. It’s altruistic because I think it’s the right thing to do, but it’s in our self interest because we need a reliable water supply for the future of our business. Between climate change reducing our supply and California’s growing population creating more demand, we need to do something to ensure that stable supply so that we can continue to grow and we want to do our part to address the problem.
SCL: We’ve talked about how water is key to the building industry, but how does the building industry influence Southern California’s overall economy?
RL: The building industry has been a significant driver of the overall economy. It has a double whammy effect. During construction, we’re creating jobs, but after people buy homes there is a very predictable impact on the economy. When they buy homes, they will buy furniture, they will fix up the home a bit, plant trees, improve the landscape, and then a few years down the road they will do more repairs and improvements – all of this puts money into the economy.
Unfortunately, the business is cyclical and the housing industry magnifies the business cycle for good or bad. However, California is experiencing a growth in population, which requires a growth in housing.
SCT: In your opinion, how does water supply have in impact on the overall economy?
RL: The water industry has the potential for an enormous impact on the economy. There are water uses we don’t even think about where water is connected to jobs – especially in industry. And in the water industry itself, there is an aging workforce, so it is crucial they build a pipeline for people to enter those jobs as people retire. Real estate people know how crucial water is not only for our business, but for the economy as a whole.
SCT: Thank you so much for your time!
RL: It’s been a pleasure.