Last May, Lyneir Richardson told us about his audacious goal to help 1,000 urban entrepreneurs grow their businesses, through a nine-month program run by the Center for Urban Entrepreneurship & Economic Development (CUEED) at Rutgers University in Newark, NJ. This year we are talking to him again about his latest project, implemented through The Chicago TREND Corporation, where Lyneir is co-founder and CEO, to buy 100 community shopping centers with 100 community members. The first one will be Walbrook Junction, in Baltimore, MD.
The Chicago TREND Corporation is a social enterprise that was initially funded by the John D. and Catherine T. MacArthur Foundation and Chicago Community Trust. It was created as a centralized resource, for real estate developers, retailers and community development organizations wanting to invest in and understand Chicago’s neighborhoods, that can drive transformative change. Describing himself as an urban entrepreneur who is interested in strengthening economic conditions in underserved areas, Lyneir says he likes to work on bringing together private, public and philanthropic funds to support these kinds of projects. And he does that with incredible energy.
Lyneir was also formerly the CEO of Brick City Development Corporation, where he had responsibility for real estate development, small business services and business attraction in Newark, N.J. He is an experienced commercial and residential real estate developer with almost two decades of experience in urban retail development.
Insights and Inspirations
- Wealth is generated by owning assets that generate revenue and appreciate over time.
- Retail can be catalytic.
- Lyneir started his career as a bank lawyer, but found his passion in smaller loans that made a serious impact.
- His big hairy audacious goal is to buy 100 community shopping centers with 100 community members.
- Lyneir’s first offering on Small Change, Walbrook Junction, can be found here!
Read the podcast transcript here
Eve Picker: [00:00:10] Hi there! Thanks so much for joining me today for the latest episode of Impact Real Estate Investment. Wealth is created by owning assets that generate revenue and appreciate over time. And today, I’m talking to Lyneir Richardson, the CEO of The Chicago Trend Corporation, about his wealth creation strategy, a strategy that he is sharing with those who have missed out on wealth generation opportunities before. Lyneir is planning to buy 100 community shopping centers. He and his team have developed a rigorous set of criteria for finding and buying shopping centers that have solid cash flow and also added value over time. He wants to empower Black entrepreneurs and community residents to have a meaningful ownership stake in the revitalization and continued vibrancy of commercial corridors and Black shopping districts. And now he’s onto the next phase of his plan with a crowdfunding campaign for a shopping center he wants to purchase in Baltimore, which everyone over the age of 18 can invest in. You’ll want to hear more. Be sure to go to EvePicker.com, to find out more about Lyneir 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: [00:01:54] Hello, Lyneir, thanks so much for joining me today.
Lyneir Richardson: [00:01:57] Thank you for having me.
Eve: [00:01:59] So, you’ve lived a life in economic development and I’m just wondering how you got there from your initial career choice of the law.
Lyneir: [00:02:08] I tell people all the time that hopefully life is long and the world is big. I started my career as a bank lawyer. I worked in a law department of 90 lawyers and every day we’d work on transactions where we were making loans of 50 million or a 100 million dollars to some big corporate institution. Every day in the afternoon, around two o’clock, I started to fall asleep on the loan documents. The work was boring. It wasn’t until I had an opportunity to do a pro-bono assignment, which was making a 100,000 dollar loan to a local business on the west side of Chicago, and it was at that point that the work came alive. It was the same loan documents and, you know, mortgage and guarantee, and it was a 100,000 dollar loan as opposed to a 100 million dollar loan. But it was a lot of fun. And, you know, giving resources to people and places, that other people overlooked or undervalued, became my mantra. So, I’ve had a lot of fun with that. I left the bank shortly thereafter.
Eve: [00:03:17] Yeah. And what did you do after that?
Lyneir: [00:03:19] So, I went to a homebuilder who was building houses in on the south side of Chicago. I worked for him for a couple of years and really saved up some money. I was 27. I’d saved about 70,000 dollars of my own money. And I jumped out and I started my own little business. The first year I developed, built and sold, and I want to come back to ‘and sold’, six single-family homes in Chicago. I grew that business over the next maybe six and a half, seven years to about nine million dollars of annual revenue, building 80 to 100 homes every year.
Eve: [00:03:54] Wow.
Lyneir: [00:03:55] And it was, it was a wild ride. I was a ‘Young Entrepreneur of the Year.’ And I always tell people I’d won what we would call today a pitch competition. I won a business plan competition and I won a 100,000 dollar prize. And what they said was the 100,000 dollars was rocket fuel, but no one ever told me that rocket fuel is highly flammable. So, I had all the highs and lows. Couple of claims, the need to sell that business, in like, a fire sale. But luckily, I was able to keep my reputation and sort of figure out what my next move is, would be. And now it’s sort of fun to talk about failure, and failure is necessary. And you learn it’s only lessons that failure can teach. But I’m telling you, at that point, it was hard for me.
Eve: [00:04:41] Yeah, I’m sure.
Lyneir: [00:04:44] But I got lucky. I met a guy at an Urban Land Institute meeting who was being honored, you know, for real, in the real estate industry, a guy named Matthew Bucksbaum and who was the founder and CEO of General Growth Properties. He ultimately gave me an opportunity. I send him a letter and said, I’m trying to figure out what to do next. And it worked. I got an opportunity to work at General Growth and and work directly with the CEO to formulate an urban development group. Again, back at passion work. How do you get retail development in ethnic, urban and underserved areas was the charge. The CEO had a personal interest there. I formed a national group and I got the resources in General Growth to do projects in Baltimore, in New York, in Detroit and Birmingham, Alabama. Worked on projects in Milwaukee. It just was a lot of fun. So, you know, step two, I always tell people the career is long and winding road. In 2007, General Growth experiences the financial, was the poster child for financial, financial sort of illiquidity, had great assets, but couldn’t refinance. It was the recession. And so, I left General Growth. Same way, trying to figure out what do I do next? And I moved to Newark and found this great opportunity working for Cory Booker and heading the Economic Development Corporation in Newark, New Jersey. And when the recession thawed out, we did two billion dollars of new projects, hotels, grocery stores, office towers for Panasonic and others. It just was a lot of fun. And then, when he became Senator Booker is when I started my current sort of career path. I lead an entrepreneurship center at Rutgers Business School and I am CEO of a social enterprise, again, focusing on development and getting capital to underserved, changing ethnic neighborhoods. So, it’s been a lot of fun.
Eve: [00:06:44] That’s really what we’re going to talk about today. So, you founded and lead The Chicago TREND Corporation?
Lyneir: [00:06:50] Yes.
Eve: [00:06:51] And what does TREND do?
Lyneir: [00:06:53] So, TREND aims to empower entrepreneurs and strengthen neighborhoods. That’s really our mission. We were formed out of a research assignment from the MacArthur Foundation and the Chicago Community Trust that really aimed to determine how retail impacted neighborhood change. And so, it was what every community kind of wanted, a grocery store or a coffee shop or sit-down restaurant. And the foundation at the time was trying to determine where to put its resources. They didn’t want to put grant and investment in neighborhoods that didn’t need it, that would act on it, would have that development on its own market forces. It also didn’t want to do grants in neighborhoods where the project would fail. And so my co-founder and I, Bob Weisbord, worked on a process, a data analytic tool, leveraging our retail relationships and then ultimately getting capital. We launched in 2016 with about seven million dollars of support from philanthropically motivated impact investors: MacArthur Foundation, Chicago Community Trust. We subsequently raised another 10 million dollars from Fifth Third Bank and something called Benefit Chicago, and the American Baptist Home Mission Society, and a host of other, again, philanthropic impact investors. Really excited.
Eve: [00:08:20] What do you do with that money?
Lyneir: [00:08:22] We find projects. We’ve now invested about nine million dollars in projects really largely led by the Black entrepreneurs or nonprofit organizations. Initially, all of our work has been in Chicago. We’re just starting to expand outside of Chicago. We invested in everything from, our first project was an urgent care and health care center, urgent care and a daycare center right next door to each other. A second project was relocating a historic restaurant in Southside neighborhood, literally across the street in a new building; a new restaurant in there. I think the restaurant was more than 70 years, 80 years old. And we brought in additional retail and African American UPS store franchisee, Military Veterans Doing Great Work. We’ve invested in land with the developer, two million dollars to buy land for a mixed-use project. We invested in a performing arts center. So, it’s that type of work. The theory is retail can be catalytic and can either stem the neighborhood’s decline or strengthen the neighborhood. That your first impression of a community is the commercial corridor, right? You drive in there, you see it. And so we try to use data and analytic tools to identify strategic commercial corridors where investment could happen. We then use a whole host of, we call it deal facilitation, relationships with URI, our relationship that ICSE, going to the shopping center convention and talking to the retailers, leveraging my old relationships at General Growth, but then ultimately finding projects and developers and investing 200,000 dollars to two million dollars on projects that have been our work up until the start of 2020.
Eve: [00:10:18] What are some of the challenges that you’ve been confronted with with this work?
Lyneir: [00:10:23] Well, this work again, I’ve been doing this since my time at General Growth in 2004. It is about perception, in some instances, that still redlining, retail redlining of neighborhoods. That’s been a challenge in communicating that it really is income and market viability to sites and finding the right location that has components that will work for retail. Accessible and visible, and finding projects that work and assembling land. So, just the nature of real estate development and getting tenants attracted is a challenge. Of course, retail, the industry is changing. So, right now there’s this thought about everything is Amazon, and Amazon sells everything. And so what retail is still necessary to communities are: restaurants, entertainment, necessity-type goods, health services and other things of that sort. And then finally, I always say it’s the narrative in the numbers. It’s sort of making sure that the project works, the project proforma works. There’s clearly often a narrative around communities. Maybe it’s a food desert, or a community doesn’t have a sit down restaurant. But you got to find a place where the numbers work, both from a development standpoint as well as for the retailer or the entrepreneurs operating the business. So, intelligently identifying, structuring, using data to identify opportunity and invest in it, all of that’s the challenge. Then just communicating and building relationships to get people to take a look at the projects.
Eve: [00:12:05] It sounds like up until now, in Chicago, transferral hasn’t really been as development, but more investment in development projects.
Lyneir: [00:12:13] That’s correct. That is correct.
Eve: [00:12:14] And so, now you’re shifting gears a little bit because you’ve listed a project on Small Change.
Lyneir: [00:12:20] Yes.
Eve: [00:12:21] And it seems you shifted into development mode. And why is that?
Lyneir: [00:12:27] Yes, I’m really excited about it. So, you know, 2020, we all know it was the year of pandemic, of protests and a political pandemonium. That’s what I call it, the PPP. And in Chicago, right after the murder of George Floyd, there was looting in commercial corridors. And as I, as I watched the news and sort of talked to friends who were on the ground, and community, people were lamenting the fact that we just got these stores open. We fought for everywhere to get a Wal-Mart open or Walgreens open in the community. And there was looting even to some of the Black-owned business. There was looting. I’ve just observed that, that my thought was a very few people of color-owned commercial real estate. People of color didn’t have opportunities, sufficient opportunities to be commercial real estate agents or commercial property managers. And so, my thought was we should own assets. And as you remember, I talked about my initial business of developing, building and selling homes. Then, when I got to General Growth and met, you know, the Bucksbaums, when I got to Newark, I met a guy named Jerry Gottesman where they said, you know, we don’t sell. That wealth is created by owning assets that generate revenue and appreciate over time. So, my thought was, why don’t I start to buy assets? Commercial, small strip centers that generate revenue, have the potential to appreciate over time, are important to the community and provide services. And so, we bought our first shopping mall. It literally was our Chicago TREND business. You know, it was a pilot. So, literally, the first project, my wife and I put our own money alongside of our philanthropic capital. And one of the industry icons invest with us. And we bought the first center. And what we found is even during the tough part of the pandemic, the first center had non-Amazonable retail tenants. It had an MRI center, a carry-out chicken restaurant, State Farm dealer, Dunkin Donuts, a beauty salon. Right? So, those tenants, there were entrepreneurs. They were fighting and finding ways and finding grants to stay open. They paid their rent. They continued to provide services to the community. I say, essential services, and again, essential in the context of the pandemic is taking on different meanings. But these are places that people still went to that are, quote unquote, not Amazonable. And so, we bought our first one in the early part of 2020. We bought a second one in October of 2020. The second one we bought in partnership intentionally with local entrepreneurs and we decided that we could do that more. And so, that’s the project we’ve listed on Small Change and we’re really excited about continuing to grow this business line.
Eve: [00:15:41] Tell us about that particular offering that you have on Small Change. What does the building look like?
Lyneir: [00:15:46] So, we’ve put under contract a 47,000 square foot shopping center in West Baltimore. West Baltimore is a largely African American community, densely populated, median household income of a little over fifty thousand dollars a year. And we found a community essential services shopping center. Now, I want to brand the name. I want to call it SOCS, Service Oriented Community Shopping. Right, everybody needs SOCS. Everybody needs black socks, right? Service Oriented Community Shopping. You know, it’s a small shopping center, nothing glamorous. But even during the pandemic, it continued to perform. It has a Save-a-lot grocery, RiteAid Drugstore, carryout pizza, Papa John’s, a laundromat, a liquor store, all of those things, as you can imagine, even though the pandemic were still needed services for the community.
Eve: [00:16:50] Right.
Lyneir: [00:16:50] And over time, we’re going to own it. We put a contract. We’re going to invest. Initially, our plan was let’s buy it. Let’s talk to the city of Baltimore. But we intentionally have created this structure where we want to co-own with local residents and entrepreneurs and people that have some connection to the community. And so we create we create an opportunity. We’re investing half of the money, up to 70, 80 percent of the money if necessary. With our Small Change offering, we’re providing an opportunity for people with a little amount of money, anyone over the age 18 to invest with us and to co-own the asset with us.
Eve: [00:17:36] That’s pretty great. What’s the overall strategy? So, this is shopping center, number two, right?
Lyneir: [00:17:42] It would be number three, actually.
Eve: [00:17:44] OK, number three, what’s the overall strategy?
Lyneir: [00:17:47] So, our goal, it depends on who you’re talking to. Right? So some people only get excited by the big numbers and some people say, oh, big numbers are too, too aggressive, why be greedy? Our initial goal is we want to own 10 more shopping centers in partnership with local residents and impact investors, and sort of structuring these deals. We want 10 more of these in 2021. And the big business … could we own 100? Could we form the first urban shopping center that’s owned by people of color and have local investment? Can we make these assets better over time? So, imagine the conversation with the city is not just Lyneir and Chicago TREND saying to the city of Baltimore, you know, let’s help us make the center better. But it’s the community. It’s sort of the crowd. There’s power in the crowd. I believe in that. And then over time, just lastly, just measuring impact. Imagine if the neighborhood continues to get stronger. Imagine if more entrepreneurs found opportunity in the center. Imagine if the center becomes more profitable. The neighborhood becomes safer because there’s ownership here. All of those big, old, dreamy impact goals really excite me.
Eve: [00:19:00] Yeah, it is very exciting. Wow. Who do you hope the investors will be? What what do you hope they will look like? Do you have some avatars in mind?
Lyneir: [00:19:12] Yes. But, I mean, literally, we started with the thought of could we find more people of color? Right? That right now there’s a real conversation going on around racial justice investing and racial wealth gap closing. I firmly believe it can. I woke up one day with this sentence in my head, ‘that wealth is created by owning assets that generate revenue and hopefully appreciate over time.’ And by owning those assets over the long term and having a long term perspective, you have different opportunities. Maybe it’s a redevelopment, maybe it’s new tenant, maybe it’s a new program that provides capital. So, I really would love to have a whole lot of local community residents .. open a shopping center in Baltimore, have some Baltimore residents own it with me, open a center in Cleveland or Pittsburgh or Greensboro or Columbus, Ohio, or more shopping centers in Chicago. That there’s a place in our offering for local Black entrepreneurs so that they’re learning about commercial real estate development and ownership and also benefiting from the appreciation of the income that might be generated from the asset. But then lastly, I’m hoping that impact investors, not just them, I’m hoping that people who want a good return, want to strengthen neighborhoods, want a project that has the narrative, what we’re strengthening neighborhoods and bridging the racial wealth gap, but also has a return. So it doesn’t just have to be Black entrepreneurs. It doesn’t just have to be Baltimore residents or Columbus, Ohio residents or Chicago residents. It’s impact investors who want to believe that a commercial asset, community owned, well managed, managed from an advantage point of social impact as well as profitability. People want to invest and get a return. So foundation programming officers, impact investors, small people around the country, outside of the country. Anyone who wants to help neighborhoods get better. That’s my passion. I always tell you this this thing, you know, I have a younger brother who is financially much wealthier than I am, much more financially. But my goal was not to be because I never wanted to be the poor nonprofit executive. But I wasn’t, I didn’t want to be the billionaire either. Right. That was my first objective.
Eve: [00:21:53] Right. That’s pretty clear when the 100,000 dollar deal excited you, right.
Lyneir: [00:21:58] Exactly. I never want to be the poor nonprofit executive, but I wasn’t profit maximizing either. Right. So, it’s about impact. It’s about strength in the neighborhood. It’s about the small deal that again, seeing value where other people say that’s too small. You know, people will tell me all the time is just as easy to do a 60 million dollar deal or a 100 million dollar deal as it is to do a six million dollar deal.
Eve: [00:22:22] But do you feel as good about it?
Lyneir: [00:22:24] I don’t feel as good about it.
Eve: [00:22:26] No, you and I are alike.
Lyneir: [00:22:26] So, I’m hoping that some of those people want to do the big deals, but know that it’s important to do the little deals will also invest with us.
Eve: [00:22:34] Yeah.
Lyneir: [00:22:34] They’ll say, all right, I see he’s doing good work. I see that they’re intelligent about it. They understand how to operate it. Again, this is not just about imaginary goals or, you know, we’re going to close the laundromat and tomorrow we’re going to bring in Starbucks and Cheesecake Factory. We’re going to see opportunities. We’re going to find things that can also work with the municipality, we’re going to hopefully continue to own and improve the project in a way that both makes money and makes sense and is valued and appreciated by the community and by our investors.
Eve: [00:23:12] Yeah, it’s a really exciting strategy. And I think sometimes these little projects are harder to pull off than being one so big is not necessarily better.
Lyneir: [00:23:22] Yeah, I want to do this 100 times. I don’t know what you call that. I want to just bang my head against the wall. But I believe that local ownership, that if I can use the MacArthur Foundation, and Chicago Community Trust, and Fifth Third Bank, and Rockefeller Foundation, and Child Care Foundation and others … Farash Foundation, I don’t want to leave anyone out. They all invested in our little social enterprise to create capacity. And so, I’m hoping to use that capacity in other places around the country and further working in Chicago and in Baltimore and in Rochester, New York and other places to really make communities better to, you know, again, get resources to places that are overlooked and to help create wealth for people who, you know, who just haven’t had as many opportunities as some other communities.
Eve: [00:24:13] One of the things I find most exciting about this is that, I don’t want to call them unsophisticated investors, but investors who’ve never had an opportunity to invest in real estate before can invest right alongside people who do know what they’re doing. And it’s an educational enterprise as well.
Lyneir: [00:24:32] Yeah.
Eve: [00:24:33] Embarking on this idea of, put a little bit of money in and see where it takes you. And it’s the beginning of a journey to create wealth. You know, along the way you can learn from the other people around you. I think it’s an amazing opportunity.
Lyneir: [00:24:49] I started out, I went to law school, a great law school, but no one ever told me, hey, you know, you hold some assets, you try to let them appreciate.
Eve: [00:25:01] Right.
Lyneir: [00:25:02] You know, there’s value in compounding, you know, you know, all those things. You know what really goes into the discussion with the retailer? So, it’s not just Starbucks is not coming to our community or it’s how do we create a structure that makes it attractive, the win/win for the community. And maybe it’s not Starbucks, maybe it’s a local entrepreneur. How do we get resources, but also shop there and patronize in a way that allows the entrepreneur to make money and stay open and continue to grow. So all of those things are byproducts. But first, it makes money, right? At first, it pencils.
Eve: [00:25:41] Right.
Lyneir: [00:25:42] Because of it doesn’t pencil, what I learned in my early period of entrepreneurship, is while you can do passion work if you’re not doing it in a way that’s profitable, it becomes exasperating, you run out of energy. So, I want to do passion work profitably.
Eve: [00:25:58] Yes, yep.
Lyneir: [00:26:00] That’s what this is about.
Eve: [00:26:01] So, there’s one other thing we haven’t touched on, and that is how you’re planning to staff and fill these shopping centers. I know that’s sort of an added value for the communities. Talk about that?
Lyneir: [00:26:13] So, literally the shopping centers that we are acquiring, first a shopping center we acquired, it was a little less than 70 percent occupied. And we initially identified an African American restaurant and signed a lease with them. It was a State Farm office, it’s an African American State Farm owner. We signed a lease with them. So we would love to find other ways to have local and people of color becoming tenants in our centers. We love to have people of color leasing, doing property management at our centers. There are these opportunities again, that by owning and being able to lead the decision making, you know, you’ll find opportunities, you’ll deal with a more diverse tenants. Over time, Baltimore has a center that has some tenants that people might turn their nose up to, or can make the case that they’re extractive, you know, things like check cashing and stuff, things like that.
Eve: [00:27:10] Right.
Lyneir: [00:27:10] Over time, we’ll find new opportunities. So, you don’t go in there tomorrow and say, OK, Mr. Tenant, we don’t like, that’s been paying rent that’s been operating here for 10 years, that obviously is serving a customer, you don’t go in there and want to say, you’re out.
Eve: [00:27:25] Yeah.
Lyneir: [00:27:26] You go on there and say, is there a way to improve the operation in some way or can we make the case with another potential operator that may not pay as much rent as the extractive tenant?
Eve: [00:27:37] I’ve done that myself in a neighborhood where I had what I suppose you would call an extractive operator. And it really took me 10 years to be in a position to replace them with someone who paid less rent but added much more value at the street. And it’s it’s a really long haul. It can take a long time because you’ve got to stabilize the entire building to really kind of get to the point where you can afford to do that and not lose investor’s money, you know.
Lyneir: [00:28:03] So that, again, that’s the advantage, I believe, of our expertise and experience.
Eve: [00:28:08] Yes.
Lyneir: [00:28:09] So, from an economic development standpoint. So, my objective is how could I make the case to the city to, you know, the foundation community, to, you know, other government support sources, though, say, all right, we do want this tenant who we think would offer more goods and services and be, you know, a better asset or benefit to the community, but they’ll pay 40 percent less than the tenant is there that we are not as happy with.
Eve: [00:28:37] Right.
Lyneir: [00:28:38] Can we find resources to structure that? The other thing is, again, this is long term work. All of the work, I’ve been doing this work now for, in June, I’ll call it 28 years.
Eve: [00:28:51] Wow.
Lyneir: [00:28:52] This is evolution, not revolution. Right. That things get better progressively. We’re trying to have long term ownership not going in here, buying the center, flipping. Our goal is can we create wealth by a pool of shopping centers. This is the third, the first outside of Chicago. I’ve had great conversations about other markets. I’m very optimistic about how we will grow. And I’m hoping that we’ll do more with this crowdfunding approach of really democratizing investor interest and making opportunities locally, but also making opportunities available for people who are, you know, any place but want to have an impact. I’m really, this is our pilot test with this. And if it works, maybe we’ll do it 98 more times, Eve. Let’s do it ninety eight more times.
Eve: [00:29:40] I sure hope so. Well, thank you very, very much. I’ve really enjoyed getting to know you, Lyneir, and I’m just dying to see what happens with your offering. So, thank you. Thank you very much for everything you do.
Lyneir: [00:29:54] Great. Thank you again.
Eve: [00:30:17] That was Lyneir Richardson. Not only has Lyneir crafted a wealth creation strategy that could empower Black communities, he’s also being purposeful about driving inclusively in other ways. He plans to assemble a team of Black experts to provide hands on property management, stay on top of issues, retain existing tenants and attract new ones to improve financial performance of each shopping center. This culturally informed team will have a positive community impact by employing black people and cultivating and incubating Black-owned businesses in these shopping centers. If you want to know more, check out Walbrook Junction at SmallChange.co. You can find out more about Impact Real Estate Investing and access the show notes for today’s episode at my website EvePicker.com. 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 Lyneir for sharing your thoughts. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.
Image courtesy of Lyneir Richardson/The Chicago TREND