Delicious urban soup.

Eve: [00:00:00] Hi there. Thanks so much for joining me today for the latest episode of impact real estate investing.

[00:00:06] My guest today is Emerick Patterson, a developer with a conscience. Emerick is currently entrepreneur in residence at Heritage Equity Partners, but he’s about to launch his own brand Urban Parti. With his latest project, The Bushwick Generator, he focuses on ways in which to find and keep a place for the existing community in the face of gentrification.

[00:00:33] Be sure to go to rethinkrealestateforgood.co to find out more about Emerick on the show notes page for this episode and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small change.

Eve: [00:00:54] Hello, Emerick. Thanks for joining me today.

Emerick: [00:00:56] Hello. It’s nice to talk to you.

Eve: So I reached out to you because I heard about a project that you’re involved in called the Bushwick Generator. And I’ve seen it described as a community oriented and community led innovation lab in Brooklyn, which is pretty intriguing. So I wanted to start by having you tell us a little about that project.

Emerick: [00:01:22] Yes, I will. And for first I want to say thanks for having me on. And I am a big fan of Small Change and the work that you’re doing and just generally of the ecosystem or community that you are creating. So, yes, I’m happy to tell you about the Bushwick Generator. It’s an innovation hub based in Brooklyn, New York, an area called East Williamsburg. So have you been to Williamsburg before?

Eve: [00:01:47] Yeah, it’s been a while, but I have. Yes.

Emerick: [00:01:51] So Williamsburg was basically a manufacturing district on the waterfront. There’s a ton of industry. This is really north of Brooklyn. There was a ton of industry here in the 1900s. And you know, the industry is transformed, moved on in some cases and the waterfront of Williamsburg basically was repositioned into more of a living destination and also a tourist destination. You know, if you look on Netflix now, basically the majority of shows that are filmed are filmed in Brooklyn. So, you know, it has changed dramatically in the last 10 years and the area that I’ve been working in is in East Williamsburg and Bushwick, which is really an up and coming area in north Brooklyn. What’s special about it is that highly [friend] and accessible there. It’s right on the L-train and the L-train is really the main mode of transportation from Brooklyn to Manhattan. Aapproximately two hundred and fifty thousand people take the L-train every day. So this sits right on the L-train, very close to where folks live. That means it really has the potential to be a true live work and play district. And so all my focus over the past two years has been in this area. And Bushwick is generally a very central area, very, very diverse. I’d like to say that Bushwick has all the ingredients for a delicious urban soup because you have a mix of ethnicities. It’s primarily actually, Latino migrants, immigrants, that have been in the area for a long time. And then as well as a large African-American population. We’re also very close to Bedside.

Emerick: [00:03:47] So very interesting, very diverse area. You also have all the young creatives who live along the L-train. Most of them live in Bushwick because the price of housing is lower.

Eve: [00:03:58] Yes. Interesting. So what’s what’s the goal of the Bushwick Generator.

Emerick: [00:04:03] So when I showed up at the Bushwick Generator there wasn’t much going on, but it was always conceived as a place for office tenants and creative tenants, which is really, you know, the standard for a warehouse type development. So basically there was a lot that’s approximately a hundred thousand square feet. There was a warehouse and there was a company there that made tanks. We purchased the site in 2015. And since then, we’ve repositioned the buildings to be from the tank and storage facility to be for creative office, and, you know, in the creative office tenants, essentially. And so we’re now still today the building is a bit under construction because the L-train actually was shut down for a long period of time and really slowed down the progress of the East Williamsburg, Bushwick as far as tenants wanting to move in. Everybody thought that Bushwick and Brooklyn were going to be disconnected from Manhattan. And so it’s still today mostly under construction. However, we’re going through some permitting on a portion of the site.

Emerick: [00:05:26] And we do have a 5000 square foot space that is completed. And that space know is where I do a lot of the neighborhood work. And we also do have a couple of tech tenants in the building. So we have a tenant called Paper Space, which is a machine learning tenant. And we also have a company called Romenesko, which is a Latin American media tenant.

Eve: [00:05:52] So the ultimate goal is to… What is the ultimate goal of this space?

Emerick: [00:05:59] Yes, sure. So I would say that it’s a standard development. We are going through a process to build more than we’re currently building. However, I would say that the goal of the building is this  is a unique opportunity here to kind of offset gentrification, if you will. I mean, there’s clearly a lot of capitalized stakeholders that are moving into this area. Netflix is coming in just a stone’s throw away and they’re building 250,000 square feet of production facilities. Also, a company called [Consensys], which is a large blockchain company, founded Ethereum which is also a stone’s throw away.

Emerick: [00:06:42] There’s other tech and media tenants in the area. So tech is definitely moving into a neighborhood. But at the same time, as I mentioned, Bushwick and East Williamsburg is a highly diverse area. And so there’s a huge opportunity to really align some of the effects that a new capitalized stakeholders will create by coming into the areas. That could mean job training and job readiness. It could just mean space equity to convene for some of the residents in the neighborhood now. But in the end, it’s really about taking the steps to really have the neighborhood influence what what could be in the building. And I think that’s the most important part.

Emerick: [00:07:23] How did you take those steps and how do they have a say?

Emerick: [00:07:27] Yeah. So community work is not easy. Exactly. So we have space.and the Bushwick Generator really is its ethos. I mean, for lack of a better word at the moment, we have 5000 square feet, we have an open door policy for people in the neighborhood to come in. And we also encourage them to come in. And we do a lot of outreach to make sure that they get in the door. So when we do an event, for example, you know, we do a lot of outreach. We have a local nonprofit that works out of the space called Sustainable United Neighborhoods. And we do a lot of outreach to make sure that the people who show up in the generator, or virtually any event, make up a kind of representative sample of what the neighborhood actually is.

Emerick: [00:08:13] It’s very easy to throw a tech event, but it’s not as easy to get local young adults from, say, major housing into the building. So we really tried to bring together the normal events that would happen in the tech hub with kind of the young adults who are in the area who really want access to the possibilities that are happening now in the space and also will happen in the future. And we really work to bring these two things together.

Eve: [00:08:41] So what’s what’s the best outcome for this project? Do you think, for the neighborhood?

Emerick: [00:08:45] Well, there’s a lot of unknowns. I would say the absolute best outcome here is that there’s a shift in the status quo of creating a tech hub. You know, I mean, I think that this is a well-positioned development in an urban area that is outside the core district. And it’s really very close, within walking distance to a lot of people who could really use training without the cost of getting into the city every day. And they could use kind of the [augeration effect], frankly, that, you know, has happened in the city or has happened in Manhattan and in their own neighborhood. So I think that the scenario here is where the young adults that live in this neighborhood feel like this is also their home and they feel confident enough to be a part of this community and and really, you know, ask for help.

Emerick: [00:09:45] And I think the other side of that, of course, is that people coming into the area, into this tech hub, really understand what this neighborhood is all about. And that they offer, you know, their time and mentorship to make sure that the young adults of the neighborhood really have have access.

Eve: [00:10:03] I know how hard it is to make something like this happen in the face of, you know, wealthy development. So it’s commendable, ethical, and I hope you’re successful. I’ve also noticed that there’s a wiki page that the community keeps for the lab or incubator, which is really interesting.

Emerick: [00:10:33] Yes. The Wiki page. Yes. We’ve done a lot of work around open source technology and really looking at what is it that really makes it create trust in neighborhoods. And I think that I just don’t believe that the future is that people are going to shove technology down the throats of people who live in neighborhoods. So we’ve done a lot of work to consider what does it look like if for basically tech to be in the neighborhood. I feel like it’s something that the people in the neighborhood created or have access to to change or control themselves.

Eve: [00:11:11] Right. Interesting. What’s your background and what led you to this point? Working on projects like this?

Emerick: [00:11:21] My background is, I mean, just before even getting into real estate, I was very young, so I graduated with an engineering degree when I was twenty four. I got a crazy idea that the stock market crashed two thousand eight, that commodities were going to do very well, so I dreamt up a very crazy idea to move to Brazil and tried [to turn my farmland]. It didn’t work out and years paying people back for that mistake. And, you know, friends and family and so forth. And from there, I’ve gotten to investment banking.

Eve: [00:11:59] Hold on a sec. I wouldn’t call that a mistake. I would call that a pretty bold experiment.

Emerick: [00:12:07] It was a it was a grand journey. But, you know, when you’re young and naive, you know, you don’t you don’t think it’s easy to gloss over it.

Eve: [00:12:17] That’s how you learn, right?

Emerick: [00:12:19] I definitely learned. So I went into investment banking for a bit down in Miami where I was doing Latin American receivables financing. Eventually I made my way to New York and I worked for a few tech companies for a bit, doing fiber optic cable.

Emerick: [00:12:41] And then I had a friend call me up and say, Hey, man, I’m starting this real estate business. Will you help me build it? So I helped to build a real estate business. And then I went back to Columbia to do a degree in master’s in real estate development. It was at that point that I really committed myself to the urban environment. And I said, you know, this is what I’m going to focus on, basically the rest of my life. So whatever happens, it happens within the context of of the built environment or urban. And from there I went to work with a large developer in Brooklyn, really a pioneering developer. It’s called Heritage Equity Partners, led by Toby Moskovitz. And I went there to do acquisitions. But eventually I changed my my title to entrepreneur in residence and went to work on this property.

Eve: [00:13:46] That’s a nice journey. So shifting gears a bit. You know, this is a risk,  socially responsible work that you’re doing. So, you know, do you think socially responsible real estate is necessary in today’s development landscape?

Emerick: [00:14:02] Yes, absolutely. Absolutely. More than necessary. It’s almost it’s almost critical. I mean, because we’re really talking about know we’re really talking about equity. And we’re also talking about, you know, real estate is a political endeavor almost always, unless you’re building as of right. And you know that it’s really a negotiation oftentimes with the city as to what’s being built and why and for whom. And so I would say that it’s definitely critical that there’s more people in this conversation, essentially.

Eve: [00:14:45] All right. Yeah, I mean, I agree. But is there enough of it is the question. I’m not convinced that many developers think this way yet.

Emerick: [00:14:54] Yeah, I definitely don’t think there’s enough of it. And I would say that I don’t think enough developers have the capacity to think this way. I think until we see, you know, the capital markets really transformed for, you know, that we’re not going to see real change. And the reality is, is that, you know, with highly debt and debt driven investments and development, you’re going to continue to push rents.

Emerick: [00:15:19] And I’m not even speaking about the residential market. That’s just that’s its own animal. But even in the commercial market, you know that debt-driven investments are going to push rents into neighborhoods. And that is definitely going to a force displacement. So I agree that it’s very. It is also very tough for a developer to fully think through and to fully act on what would take to be a good developer, I mean, Brian, from Shift Capital, I think like one of the best examples of a developer who is really committed and, you know. I don’t know what his capital stack is. But I think that his capital stack is aligned with you know, the work that he wants to really do in the neighborhood. So, yeah, I don’t think we’re there yet.

Emerick: [00:16:16] Certainly on small change, we’ve helped raise homes for a number of developers who I think are really thinking hard about this and working hard on it. So I think they’re, um, there are more. But it’s a capital problem is huge because if you have to provide a return to keep hungry investors happy, it’s not always possible to do something that’s socially responsible. So they’re really at odds with each other, right?

Emerick: [00:16:44] Yes, exactly. Yes. Yes.

Emerick: [00:16:47] And just get put in a situation where you have to basically push rents. It’s a vicious cycle. Right. You know, and if you’re pushing rents, if you’re pushing rents in communities, I mean, you’re really, it really becomes a problem because if people don’t have the space to convene and to grow, you know, then the question is where do they really go for that? And it all plays, a lot of it plays into the structural transformation around mobility and, you know, just the cost on time and resources that it takes to get somebody from … As people move farther and farther out into neighborhoods, you can’t have them all coming all the way into the core area to get some sort of training. So there’s definitely, there’s definitely like a space shift that’s happening.

Eve: [00:17:46] Yeah. You know, if you if you get a moment and take a listen to the podcast interview I did with Jeremy McCleod in Australia. He’s building affordable, sustainable buildings in a country that really doesn’t have an affordable housing policy. But one of the things that is fascinating is they have like eighty five hundred people lined up for the units that they’re building, but they’re putting civil servants, teachers, firefighters, people who are necessary to keep the city going, at the top of the list. They are always the first to get an option to buy.Yes, because that group of people are not paid enough and pushed further and further out. It’s a really, it’s an interesting thesis, a different take on the problem. I just find it fascinating.

Emerick: [00:18:33] That’s how the affordable housing structure is kind of set up in New York, just to some extent was to make sure that the first responders always had a place to be close to the core area.

Emerick: [00:18:47] Yeah, is he in architecture, Jeremy?

Eve: [00:18:50] Jeremy, he’s an architect. Yeah, but he’s really stretching his role as an architect and has spun off a non-profit to build more buildings like this. And that’s really sort of taken on the role of developer in many ways. It’s fascinating. People are tackling the problem all over the world and in different ways, which I find really hopeful actually. It’s a really huge problem.

Eve: [00:19:18] Are there any other tenant trends in real estate development that interest you the most or that you think are important for the future of our cities.

Emerick: [00:19:27] Yeah, I mean, I believe. I believe governance, the governance dynamic is changing and the political, like the hyper local political landscape is changing. I think that cities generally and municipalities they’re stretched kind of to the limit. And I think that it’s going to be difficult for them to to really have the resources where their mouth is. And so I think that that is something that developers or intermediaries are going to have to really take on, which there’s an opportunity as well. You know, and really manage some of the hyper local type of coordination that’s needed to be sustainable. So, you know, I believe that sustainability includes both the social fabric and the physical fabric. I believe that they go hand in hand and I believe it is incumbent on people to understand what is it involved, you know, with some degree of creating, you know, neighborhood or cities. They understand the dynamics or understand what capacity they have to actually make a difference, do something in neighborhoods and what the mechanisms are to do that. You know, that is what’s needed for people to feel confident enough to change and to participate. I think the shift is that people actually want to co-create their neighborhoods and cities and you know, the mechanisms mechanisms to do so aren’t exactly there. And it’s not so much about a product or, you know, a short term goal, as it is about the long term process of education, of empathy and of feeling, also of innovation.

Eve: [00:21:39] So you talked about you know, we talked about how difficult it is to engage community members. What engagement tools have you seen or used that you think work best?

Emerick: [00:21:51] I think that space is very important. Having a space where people can access. The tool is really not an app, you know. I mean, you know, these are these are things that definitely complement the work. But I think that in the end, you have to meet people where they are and where they want to go in life. You know, not everybody is interested in real estate development. Not everybody is interested in local urbanist type stuff. You know, we are because that’s what we like. But that doesn’t mean that a young kid from Florida who lives in a housing project or you know around the neighborhood, cares at all about that. So they may want to go find a shoe or they may want to make a business or they may want to learn something and get a job. So I think that there’s this infinite complexity in neighborhoods. And to say that there’s one or one idea that’s really going to fix everything. It’s an approach that’s not necessarily my approach. So I think the tool is the process itself. The tool is in deep relationships. And also programming. So I would say programming is critical and everything else is secondary.

Eve: [00:23:12] So in other words, it’s a lot of hard work, right?

Emerick: [00:23:15] Yes. I think it’s a great because I think there’s a ton of opportunity in that. I mean, you know, every time you speak to somebody more in the neighborhood, you really you learn something new. And that is part of innovation. I mean, I don’t I frankly don’t see how innovation works in any other way. So I you know, I know what all the tech companies are doing, you know. But I think there’s tremendous opportunity in learning about people in dense urban areas.

Eve: [00:23:48] Where do you think ultimately the future of real estate impact investing lives? What do you think real estate in the US needs to look like in the future?

Emerick: [00:24:00] I think you started with your Small Change index, you know, in attempting to quantify impact. I think that is definitely important and that is that is the direction it’s headed. And I mean, I think that ultimately the capital markets have to change. There really has to be a new kind of return on investment that we’re getting to a point where debt capital for speculative development, at least in the commercial office space, for example, is not really the right way to fund a development, but it could be. That make sense?

Eve: [00:24:44] Yeah. It makes lot of sense. So with that, I’m gonna sign off. And thank you very much for taking the time to talk to me today. It’s been really fascinating. Oh, you know, I have one more question. I’m gonna I’m gonna ask you and that is what’s next for you? That’s the most important question.

Emerick: [00:25:01] Yeah. Thank you. For now, I’m still working with the generator property in Brooklyn. I do have launching a brand which is Urban Parti. You can see information at urbanparti.com that you know, which is really all the work I’ve done here in Brooklyn just to put a form to what I’ve done, which is really about creating local access points for urban innovation. And so the next step is really building up the partnerships around, you know, in this community, really, of people who care about real estate development. And I believe that it needs to be changed and I’m growing that brand.

Eve: [00:25:48] That sounds fabulous. I can’t wait to see what you do next.

Emerick: [00:25:51] Great. Thank you very much for the time. I appreciate it. Thank you. Bye.

Eve: [00:25:59] That was Emerick Patterson. Emerick believes that in order for socially responsible development really to take hold, the capital markets must change. We need to move away from debt and equity. That essentially requires developers to squeeze out more and more rent, displacing more and more people. And Emerick also believes that when there is a shift in status in a neighborhood, it is incumbent on developers to build a relationship with neighborhood residents and provide a space for them to stay and grow. You can find out more about impact real estate investing and access the show notes for today’s episode at my web site rethinkrealestateforgood.co. While you’re there. Sign up for my newsletter to find out more about how to make money in real estate, while building better cities. Thank you so much for spending your time with me today. And thank you, Emerick, for sharing your thoughts with me. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.