Shift real estate.

Eve Picker: [00:00:08] Hi there. Thanks for joining me on Re-Think Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad. Rich or poor. Beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. If you haven’t already, check out all of my podcasts at our website Rethinkrealestateforgood.co. Or you can find them at your favorite podcast station. You’ll find lots worth listening to, I’m sure.

Eve: [00:01:00] Jonathan Cohen has made his mark. While he started his professional life as an environmental engineer, his true persona as a restless entrepreneur emerged when he tackled the remake of an historic building in Portland’s Chinatown district. This project might have frightened most people, but Jonathan and his partners turned the building into something shiny and new for the 21st century. They rebuilt it from the foundations up and converted it into a hotel for everyone. The Society Hotel offers bunk beds for weary travelers for as little as $35 and private suites for those of us who like a little privacy. All of this neatly offered in a very hip package. Jonathan and his partners were ahead of their time, and he’s doing it again. Listen in to hear more.

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Eve: [00:02:20] Oh, hello, Jonathan, I’m really delighted to have you on my show today.

Jonathan Cohen: [00:02:26] Thanks for having me here.

Eve: [00:02:28] So your best known as the developer behind the Society Hotel Brand, which launched in Portland, Oregon. But you started your professional career in a very different space. As an aerospace engineer, I read. And you also own an energy company?

Jonathan: [00:02:45] That’s right. Yes, I’ve definitely had a non-traditional career and it’s kind of wandered all over the place, but I promise there is a thread of theme in all of those different career choices.

Eve: [00:02:58] Yeah, that’s what I want to hear about. How do they all fit together?

Jonathan: [00:03:01] Sure. So, as you stated, I started my educational career in aerospace engineering and I studied that for my undergraduate and graduate programs, and I was really interested in aerodynamics and how that could be applied to make the world better specifically in green energy. So that naturally led me to study wind turbines because you take aerodynamics and green energy, and that’s what you get. And so I studied that for a while, but I could never quite find my toe hold in the field at that time, which in the early 2000s era was really just beginning the wind turbine industry in the United States. And I just couldn’t get my foot in the door as a young engineer. So, I ended up trying a bunch of different things. I worked in high tech for a while in Silicon Valley. I came back to Pennsylvania, and I worked in agriculture, small agriculture. I worked in construction, briefly building timber frame homes, also in Pennsylvania. And then when I moved to the West Coast, I wanted to kind of combine these interests in education. And I also forgot to mention it was a fifth-grade teacher there for a little while. So, I loved education. I love green energy, I love green building, and I wanted to kind of combine all of those interests. And when I moved to the west coast of Portland, Oregon, in 2003, and it was kind of in this little mini recession of the post bubble bursting and I couldn’t find a job. So, I decided to start my own job of having an energy company. And our goal was to fundamentally change the way people think about and use energy. And that company was called Imagine Energy. And I started that in 2003 and ran it all the way until last summer when I handed off the reins to a co-worker. I ended up doing that. I ended up being kind of where the rubber meets the road with energy technology. And I was really it was a really good time to be in that field where we brought a lot of technologies to the forefront, including solar for homes and businesses, high efficiency approaches to insulation and air sealing of buildings. And I worked on retrofitting a lot of buildings and really transforming the way that they were. So, you could have this really old building that really had all the modern comforts and efficiencies of brand new buildings. So that’s what really got me hooked. And that idea of transformation was something I became really obsessed with. Of how can we take something that’s old and give it a once over? How can we transform what people think is possible with certain things? And so, a friend approached me some years later in 2013 and said he was interested in developing kind of a boutique hotel/hostel, kind of hip hostel concept in Portland. And I thought it was a great idea, and I made the mistake of telling my wife who told me that we immediately had to do it. And so, I knew that once she got her teeth kind of sunk into it, there would be no going back and that’s what happened. And literally, within a couple of days, we were in contract on a building, which ultimately is the one that houses our hotel currently in the Old Town neighborhood of Portland, Oregon. It’s a beautiful old building built in 1880. Has a cast iron facade like many buildings do in Portland, as well as New York City. Lower Manhattan has a lot of buildings like this as well. And it needed a little bit of everything, so it really fit into my idea of transformation. How could we transform this once sailors’ lodging house into something modern, something new, something exciting? And we gave it the full treatment, including all of the energy goodies that I care about. So, we gave it LEED certification through all of the energy work that we did, and it actually performs about 40 percent better than a modern code built building.

Eve: [00:07:17] Interesting.

Jonathan: [00:07:17] Even though it has no wall insulation. It’s an old brick building, has no wall insulation.

Eve: [00:07:23] And also the neighborhood needed a little help as well. I’ve had the pleasure of staying in your hotel. So, I remember the neighborhood, this was a few years back, still was teetering. It’s a gentle way of putting it.

Jonathan: [00:07:36] Yeah, I think that’s a fair way to say it. Yeah, the Old Town neighborhood is kind of, it’s always been a little rough and ready, a little on the fringes. Since its beginnings when people disembarked from ships there and brought all kinds. It was really our Ellis Island for this port city. And it’s always been a rough and tumble place and continues that legacy. Although it had an iteration as Chinatown and Japantown and many other immigrant groups came through. Jews, Roma people, Greek immigrants, all kinds of different people, African Americans called this district home at different periods of time over the last 150 years. And so, it’s been kind of taken ownership by everyone, but by no one at the same time. And it’s been in a long period of decay over the last 40, 50 years as its searched for an identity. And it’s become a home for a lot of social service agencies. Which is not in itself a bad thing, but we’ve become a little bit out of balance. We have only 54 units of market rate housing in the whole district. Which is many city blocks.

Eve: [00:08:51] Oh wow. That’s not a lot. Yeah. Yeah, yeah.

Jonathan: [00:08:52] Not a lot. So we’ve really seen the need for transformation and that’s where my wife comes in. She’s really Jessie Burke. She’s really passionate and has degrees in urban renewal, and she’s done that to our, where we live in North Portland. She’s really revived our neighborhood here through commercial activity and activation. And she’s been the large driving force on reinvigorating our district now. And I’m also helping out with that effort through a new entity that we formed called Equity Development Lab.

Eve: [00:09:32] Let me stay with the hotel for a moment, though, because it’s an unusual hotel, and I’m wondering if the history of the place sort of spoke to what you decided to do with it. Can you explain? It’s not a whole bunch of suites, right?

Jonathan: [00:09:45] Yeah, you’re right. Thank you. And I forget that people may not know that know this is a very unusual hotel, especially in America. It has more analogs in other countries, like in Europe and in Asia, for sure. But we call it kind of a boutique hostel and hotel, if that makes any sense. But we kind of think of it as being between those spaces. So between the hostel and between a higher end boutique hotel. So, we’ve kind of got affordable style kind of place to stay. So, it has three types of rooms. It has a bunk room, which is very unusual. You have to imagine this. Has 18-foot-tall ceilings and we filled those with triple tall bunk beds, and they have steel frames and are clad in beautiful northwest Douglas fir cladding. But so, they’re very, very sturdy. They’re adult bunk beds. They’re not meant for kids. In fact, you can’t be. You have to be over 18 to stay there, but they’re triple tall, so you have to climb a very large, tall ladder to get to that upper bunk. And they’re very unique and they stay. You can stay there for anywhere from 35 to 55 dollars a night, depending on the season. And they’re a fun, affordable way to explore the city because we’re right downtown, right on all of the transit lines in the city so you can get anywhere, including the airport, for about two dollars. So, it’s a really affordable way to explore the city.

Eve: [00:11:07] And how popular has that been? The bunk beds?

Jonathan: [00:11:09] It’s been incredible. I mean, through our history until COVID, those were occupied on an annual basis about 85 percent.

Eve: [00:11:16] Wow.

Jonathan: [00:11:17] So even including the winter, so very, very popular. We have had some new hostel type properties come online, but it really hasn’t diminished our success with those types of rooms. So that’s been a really fun place to stay. And then you can kind of step up from there and go to our what we call European standards, which are a private room. They range from about 10 by 10 to about 10 by 12. They’re pretty small. Their largest dimension is usually the height, actually. The ceilings range from 14 to 16 feet, and they have really large windows that let in tons of light. But the rooms themselves are very compact, so we’ve been very efficient with the space layout. The beds are custom made so you can fit your storage underneath. We have lots of hooks and little storage cubbies on the walls, and then you have a sink in every room so you can brush your teeth, wash your face, and then there’s a private bath across the hall that you share with up to two or three other rooms. And those rooms are again affordable. They go for anywhere from 75 to about 109 dollars a night, depending on season. So again, substantially less expensive than other hotels downtown. Even comparable hotels, we try and be about 30 percent less than them. So again, our goal is like affordable boutique style. And then finally, we have some suites that recently got treatment from some local artists. So, we have some really unique suites that are again, kind of a more traditional size for a hotel room with an ensuite bath and all the things you would expect of a normal hotel room. So, yeah, it’s a unique property.

Eve: [00:12:52] So as a developer, I’m thinking, how do you make that cash flow? You had a what sounds like a fairly big renovation with a lot of care to green environmental sustainable issues, which are expensive up front. And you know, and now you have a variety of rooms that are really at the lower end of the market. How does that? How does that pencil out?

Jonathan: [00:13:17] That is an amazing question. I love that question, and I love talking to people with the development mindset because that’s exactly where you’re going. You’re like, well, wait a minute, how does that work? And the funny thing is, this model was actually the most effective model because you’re right, in our district, we get lower rents than other areas. And if we wanted to develop this building for office or apartments, we just would not be able to make it work because the building needed everything. It sat vacant for over 75 years. Needed every type of upgrade you can imagine, including dramatic seismic upgrades to protect ourselves against future earthquakes here. So, the way we amortized out those costs was by two means. One we did general contract the construction ourselves, both myself and my partners at the time all had construction backgrounds, so that wasn’t as a big deal for us, as it would be for other people. But that is a big way that we saved money. We probably saved about a million dollars there. The total budget for the whole project, including project, including hard soft costs and acquisition, was about 4.2 million dollars. So we saved a significant chunk by general contracting it. Though I think the project could have survived if we hadn’t done that because the other way we saved money was by operating the hotel ourselves. A lot of people would bring in an operator, but for a hotel this size, relatively small, it has the equivalent of about 50 keys, 50 doors. It’s hard to find an operator to run a building that small. So, it’s kind of in between a mom-and-pop operation and a more traditional hotel that would have an operator. So, we operated it ourselves and we had some experience in both retail, food service. My wife had run a café for several years at this point, and we have done Airbnb in our houses. So, I guess that was something, but we learned the industry and it wasn’t as hard, honestly, as the food service business. Things are a lot steadier; your margins are thicker and there’s just a lot it’s a lot easier to work with. The rooms are less perishable than food, let’s just put it that way. So, it’s a lot easier to manage that. So that made it palatable to run the operation ourselves, and it’s quite successful, with over 25 percent net profit margin sometimes higher. So that was the way we made that work. When we developed our hotel again, we have a lot of shared bath type rooms where there are private baths, but they’re used by several different rooms. So, we’re not building one bathroom for every room. That means that we have more space for more rooms, so our density is very high. So, in 12,000 square feet, we sleep one hundred people, which is quite a lot for that size footprint. Even our café is only about 100 square feet and we do almost a half a million dollars a year of business there.

Eve: [00:16:11] Wow.

Jonathan: [00:16:12] So it’s all about efficiency. So, if you take each of our standard rooms at 100 square feet, four them is 400 square feet and we didn’t have, we only had to build one bathroom for those in addition to that. So, a typical room, let’s say a 400 square foot suite in a regular hotel might go for 250 to 350 dollars a night for that size suite. Well, in that same 400 square feet, which we at a lower build cost for, dollars per square foot of build cost, we actually get more like 400 to 450 dollars of revenue.

Eve: [00:16:49] So the economics are pretty good.

Jonathan: [00:16:50] So we get more revenue per square foot, and we have less build cost per square foot. So actually, our business does quite well through this efficiency model. And our theory was when we built it that we could do well even with suppressed rates, which has come to pass and we’re able to survive or break even with much lower rates than other hotels.

Eve: [00:17:15] That makes sense.

Jonathan: [00:17:15] The downside of our business is that we have relatively low keys, so we still have a same number of desk agents and café agents and all this stuff, despite the fact that we have a lower number of rooms to amortize those out. So, it’d be more ideal to have more rooms for the staffing level we have. But in general, our business model can work because of that efficiency of our space and build.

Eve: [00:17:41] But that’s the story of all smaller projects and that that’s something I think about a lot because, you know, cities are great. Not because you rip down an entire block and fill it with one mega structure. They’re great because there’s all these little interstitial projects just doing different things. And yet they’re very inefficient to build, and they cost a lot more. And I wish someone would solve that.

Jonathan: [00:18:07] Yeah. Well, I mean, it’s it’s what we do a lot in our neighborhood is trying come up with creative ways of finding different types of occupancies that can have that sort of efficiency model. And certainly, co-working is one of those things. It’s just been kind of overdone at this point. So, it’s hard to find niches. But I still think a few unexplored areas that I’m very curious to explore in our city that haven’t been done but have been done in other parts of the world are really the micro loft type model.

Eve: [00:18:38] Oh yes.

Jonathan: [00:18:38] Even with our shared kitchens. This is not a new idea, right? I mean, boarding houses of some depression-era or other immigration areas. Lower Manhattan. In the turn of the century, this has been done many, many times over. It’s essentially a boarding house model. It’s now becoming kind of called like a co-housing model, but these are other things that we have not tried with our housing. And but they’re also good for real estate development because they create that same sort of high efficiency space utilization with lower build out costs.

Eve: [00:19:15] Well, you know, there’s the whole kitchen thing, which I don’t get. American kitchens are huge. And what do most people do in them? They get out their frozen dinner and they stick it in the microwave. I don’t get it.

Jonathan: [00:19:28] We don’t need a bed to be sitting there all day long. Right? Beds can be stored away.

Eve: [00:19:32] Yes. Yes, exactly.

Jonathan: [00:19:35] We’ve had Murphy beds for over a hundred years.

Eve: [00:19:37] I know I have a couple myself. Yeah. And then, I have to ask, financing. When you started this, this didn’t look like a normal hotel. Who’s interested in helping you with financing something like that?

Jonathan: [00:19:50] Yeah, it’s a great question. Luckily, our urban redevelopment agency, Prosper Portland, is right in our neighborhood. Now, I have a lot of choice words to say about them and how they don’t really achieve their mission of improving equity, and that’s part of why I started my own organization. But one of the tools that they have is a subordinate loan and subordinate loan means just they’ll take…

Eve: [00:20:15] I’ve used them often.

Jonathan: [00:20:15] Yeah, they’ll take a security position behind. Sometimes people call it mezzanine financing. So, it’s usually higher interest, but they’ll take a position behind senior debt or a conventional loan from a bank. And so, what we did was we raised money from friends and family, and we raised about $900,000 from friends and family through individual personal loans. And we used that money to buy the building, and we bought the building with cash and the banks like seeing that. They like seeing that we owned this asset outright or it was outright to them because they didn’t have to deal with our personal notes. And then we were able to leverage that equity we had in the building to secure this, this mezzanine financing from the local redevelopment agency. And that was $750,000, including a $50,000 grant that they offer. So now we had roughly 1.6, 1.7 million dollars and of what of what a bank saw as not equity. But they didn’t see it as dead either because it was all behind them. So, we were actually able to secure a commercial loan, although it took calling about 20 banks to find the right bank.

Eve: [00:21:26] Wow.

Jonathan: [00:21:27] But we did find a bank that was willing to lend us the other roughly 2.5 million dollars that we needed. And we had a commercial loan. And we refinanced that several years later with a little bit better one when we built our second hotel. But we were able to do it in a reasonably traditional way. So, a little bit of grant, a little bit of friends and family financing and some mezzanine financing and a commercial loan.

Eve: [00:21:53] Yes, that sounds, the friends and family sounds like crowdfunding before it started.

Jonathan: [00:21:59] I think that’s accurate. I would say that’s accurate. Yeah.

Eve: [00:22:02] Yes. Yes. Interesting. And you’ve got a second hotel. Where is that located?

Jonathan: [00:22:07] So our second hotel is in a scenic area called the Columbia River Gorge. It’s a really beautiful area just east of Portland. The Columbia River runs just north of Portland and cuts through the Cascade Mountains, and when it does, it creates this dramatic river gorge with 4,000-foot cliffs on either side. It’s really a beautiful area for hiking, biking, skiing. Every outdoor activity you can possibly imagine. And it’s truly the kind of backyard for Portlanders, so everybody from Portland goes to the gorge at some point or other to look at waterfalls or do whatever do it any million number of different activities there are through the seasons. So nestled in that, so that whole region is a protected area, and it stretches for about 60 miles or about an hour’s drive. But at the kind of end of that is a small town called Hood River, which is also known as the windsurfing capital of the world because the wind whipped through that gorge. And so, it’s where wind surfers and kite boarders and everybody interested in wind sport goes. There’s also amazing river kayaking there, just anything you could want to do. And so in that little area, there’s a few small towns, Hood River one of them. That’s about 7,000 people. And then a couple of other small towns Bingen, Washington and White Salmon. Bingen has 700 people, and that is where we found our little Old Bingen Schoolhouse, which had been used as a hostel up until we bought it, but needed a lot of love, and we re-imagine that as a sort of adult summer camp getaway for Portlanders. And that’s what it’s become. We turned the schoolhouse into lodging and a cafe. We have a gym for events and parties, and then we built on the old ball field a ring of cabins in a very sort of Asian inspired design motif with a beautiful spa and bath house in the middle of it that has soaking pools warm, hot, and cold soaking pools, a sauna and massage services. So, it’s a nice getaway from Portland, or to make a ski weekend of it or just get out of town and enjoy the outdoors.

Eve: [00:24:20] So is this the last one?

Jonathan: [00:24:22] Oh, I don’t know. You never say never, you know, but you know, it’s been a challenging pandemic for us in the hospitality industry.

Eve: [00:24:29] I was going to say, I was going to ask you how you made it through the pandemic. Well, it’s not over, but it’s. at least we know what we have to do now. Yes.

Jonathan: [00:24:38] We’re past the worst of it, we believe. Yeah, I think that you said it exactly right. We know what we have to do. I think that’s the right way to think about it. It’s been challenging for sure. Our Gorge Hotel, which has been a getaway for locals, has fared a little bit better. But as you know, most travel within the United States and international travel, which is just opening today, has been shut off.

Eve: [00:25:04] That’s right.

Jonathan: [00:25:05] So we haven’t seen anybody from even from Canada in 20 months. And so that’s really hurt the Portland hotel, which is more of a destination for people from outside of the area. And Portland’s undergone a lot of challenges, with its downtown being largely abandoned during this time. So, the Portland hotel has had a harder time and been closed for in total about six months during the last almost two years, a year and a half to two years. But we’re recovering, and the Gorge Hotel has done better and recovered faster but has never closed. So, it’s been challenging like it has for many hospitality properties and restaurants across America. But we’re surviving,

Eve: [00:25:48] So I’m going to move on to your next business because we reconnected. I met you a few years back at your hotel. And we reconnected recently through a new business that you’ve started. I wanted to talk about that. Remind me what it’s called. It’s called the…

Jonathan: [00:26:05] Equity Development Lab.

Eve: [00:26:06] Equity Development Lab, and it’s a very mysterious website. It does not have a lot on it.

Jonathan: [00:26:11] That’s true.

Eve: [00:26:13] I really wanted to figure out what you’re doing and there’s nothing there. So tell me what that’s about.

Jonathan: [00:26:20] Yeah, thank you. In March 2020, you know, we really, the world was in flux and we didn’t know what was going to happen with our hotel businesses. And of course, that summer, many protests were sparked across the country and in Portland as well after the death of George Floyd. And it really brought light once again to the gross injustices that are experienced by many people of color in the United States and other parts of the world, too, but in particular in the United States. And with these two things happening of our business being in flux and seeing this happening, we really were thinking a lot about the experience of minorities in America, in particular Black Americans. And it reminded us of, we went to an MLK Day breakfast some years ago, which is led by the Black community here in Portland. And this was years ago, and they talked about business ownership in the Black community and that even though there’s a high rate of business ownership and entrepreneurship in that community, the average number of employees is like less than two. So, the point is there are really a lot of sole proprietors and they’re not able to grow those businesses successfully for many different reasons. But access to capital is a big one. And, also, real estate ownership is almost the lowest among all groups in America, and it really reminded me of that last year and how the path to generational wealth has been cut off for most of these communities. And it was something that we’ve learned a lot about through real estate development and we wanted to share our knowledge. So, we started this organization, which is it’s just easier to pop up an LLC, but we’re going to apply to become a non-profit here very soon. And our goal is to really teach other communities about real estate development and assist entrepreneurs, particularly people of color in starting businesses, building their businesses, leasing retail space, or buying buildings and developing those buildings. And so, the way that that happens, we offer many different services. Currently, all of these services are free. We don’t charge for any of them. Eventually, we’ll support them internally with grant funding, but we help with negotiating leases. My wife is a commercial broker, so she helps negotiate commercial leases. We help negotiate purchase of commercial property and residential property. And I help a lot with business plan development, business plan financials, finding, financing, and presenting that information to financing organizations like yours and working through that process really in tandem with you and helping through construction. With my 17 years in the construction industry and developing my own properties. I also built the Second Gorge Hotel by myself, as well as a general contractor. So, applying all of those lessons to help people navigate the process. Because entrepreneurs a lot of times have a lot of knowledge and passion and expertise in their particular area, whatever that may be. But there’s all these other things you have to do to open a brick-and-mortar shop, right? Or even an online presence.

Eve: [00:29:52] That’s right.

Jonathan: [00:29:53] And the reason our website is fairly naked…

Eve: [00:29:59] Mysterious?

Jonathan: [00:30:00] Mysterious. It’s intentional for now because we’re really just trying to build support through because we’re one still trying to recover our own businesses. So, we have a limited amount of time and we really don’t want word to get out too fast. And we want to be able to help people kind of one at a time. So that’s what we’re doing is we’re kind of building a portfolio and we’ve helped about seven different clients so far and they’re in different stages. So, we have one guy that’s just about to start construction on his retail tenant improvement for a high-end menswear shop in our neighborhood in Old Town. And that’s going to open this winter. He’s almost there. We have another set of gentlemen who were helping. We’re working with you to to acquire a commercial property, 16,000 square feet in our neighborhood and redevelop it. And they’re in contract right now to do that, to close at the end of the year. Just had our first kind of fundraiser for that on Friday night. And so, we’re working with a variety of people in different stages of their businesses, and we’re going to put up some case studies to explain more of what we do. Probably this winter, once those property projects are all further along.

Eve: [00:31:13] It’s a very big idea. It’s something I’ve heard other people talk about. How do you take the vast knowledge? Let’s just talk about the real estate industry, in the very white real estate industry and start sharing, sharing that knowledge. I mean, most of us who are developers have a lot of fun thinking those sorts of projects through. You can count on me being a volunteer for you.

Jonathan: [00:31:38] Thank you.

Eve: [00:31:38] I mean, it’s, I think you would find a room full of people in no time at all who would say, Yeah, I can spend a little time helping someone else find capital, build a business, figure out how to renovate a building. It’s almost like, you know, in the legal world, aren’t lawyers supposed to do some pro-bono work? I feel like we should be. We should be required to as well.

Jonathan: [00:32:04] Yeah.

Eve: [00:32:04] It’s a fabulous idea. So, I have to ask the obvious question. Two things you talked about the redevelopment authority letting you down, and that’s in part why you started this business. And the second is, well, how is this going to pencil out for you eventually?

Jonathan: [00:32:19] Yeah, thanks. Yeah. Well, so one area, I’ll answer the revenue question first. So, one area that we have revenue is real estate commissions. So, our clients aren’t paying the commissions, but the sellers are or the property owners who are leasing the space. So that’s one way we can support ourselves. But eventually we believe we’ll be able to get substantial grant funding once we’re a non-profit, the 51c3. So, I don’t think that’s really going to be a problem. And for now, it’s really just kind of done in our spare time and once our properties are more stabilized, I’ll have even more, more free time because I am not looking for more development opportunities right now. This is kind of where I’m funnelling my development energy into our own neighborhood, our own community, by helping other people do it. And honestly, I don’t really have more to learn. I’m not interested in learning too much more about developing another property myself. I’m more interested in learning what I learn by helping somebody else develop a property. So that’s for my personal growth. My personal…

Eve: [00:33:26] Teacher’s bubbling up now, right?

Jonathan: [00:33:27] Yeah, that’s a good, good point. So, when I was when I was teaching fifth grade, Eve, you’re really good at this, I’ll tell you. When I was teaching fifth grade, I was just exhausted. It was so much energy to give to teach children all day long. I loved it. I mean, I love working with kids. I have three children of my own now and I love working with children. I love teaching. But it was exhausting, and I felt like I wanted to learn so much on my own. I wanted to do. I wanted to achieve. At that point when I was 22 years old or whatever. So, I wasn’t ready to give. And that’s what teaching is, is really giving. But now, so now I’m bringing that energy back, as you rightly said, and I’m just I just love it. I love it and I’m learning so much. I’m learning so much through the process. It’s fascinating. And I think back to myself in earlier years of what I knew and what I didn’t know. It’s like I had all these bits of knowledge that helped me in doing development, about finance or about just about construction or just all these little bits, you know? But like, you need it all filled in with different mentors. And I would see those different mentors, or I learned it myself because, you know, I became a self-starter and I learned how to I learned how to learn really well. But I got a lot of help from other mentors, too that filled in those gaps of knowledge. So, I’m just doing the same thing for these entrepreneurs.

Eve: [00:34:53] But that’s what’s interesting. You’re a white man. Your mentors were probably white men.

Jonathan: [00:34:58] Yeah.

Eve: [00:34:59] Yep. And so the Black community doesn’t really have that wealth of knowledge and therefore no mentors, right? So, I know capital is the thing that’s talked about most, but it’s also the whole educational experience is somehow missing.

Jonathan: [00:35:16] Yeah, the institutional knowledge has not been passed down because I mentioned there are not very many large Black owned businesses. There’s not a lot of commercial real estate owned by Black individuals.

Eve: [00:35:29] Right.

Jonathan: [00:35:30] So there’s not a lot of that experience to pass down through the community. And rightly so, the community is very slow to trust people from the outside for very, very good reasons.

Eve: [00:35:44] Yes.

Jonathan: [00:35:45] That’s another reason our website is sort of incognito because we want to build trust slowly. And that’s why word of mouth is the best referral because it means that people felt like they had a good experience from with us and they could trust us. And so, we are trying to kind of take that slowly as we go.

Eve: [00:36:02] Yes. This is really fabulous, so what’s your big, hairy, audacious goal?

Jonathan: [00:36:08] Hmm. Well, our goal, right now… So, with different stakeholders in our neighborhood in Old Town, we have a lively kind of nightlife district. We have a large social service agency with a lot of affordable housing, and we have a smattering of independent businesses and restaurants and other, kind of, and we have some education and cultural institutions. We have this fabulous Lan Su Chinese Gardens, this world class Chinese gardens, a block away from us. It’s just incredible. And many other cultural institutions, educational institutions. So, we have this really, really diverse group of stakeholders in our neighborhood. But some of those stakeholders pulled out during the pandemic. And what that meant was that there was opportunities for new stakeholders to come in. So, our goal is really to get as much commercial real estate in the hands of people of color as possible in the next five years in our neighborhood and to activate those spaces and that wealth building process to go 100 percent to those communities. That’s what we want. We don’t want. I’ve seen other models where people do what we’re doing and they often take a stake in these properties that they’re working on, and we don’t want to do that at all. We don’t want, if we’re taking a stake, it’s only ever going to be, and this has never happened yet, this is just an idea, but we would potentially partner only to help people secure financing that they need, but with the express goal of exiting as soon as possible so that the equity is 100 percent belonging to the communities that are developing these properties. So, we really want to transfer this knowledge and this wealth building potential to these communities and so that they can have generational wealth and generational knowledge to pass on to their community and their family and friends.

Eve: [00:38:05] That’s a pretty great goal. So, what would you change in the real estate industry? Aside from what you’re doing to make it a more equitable place. I know that’s a very big question.

Jonathan: [00:38:17] Yeah.

Eve: [00:38:18] It’s one of the toughest industries, I think. You know, I was the only female developer in Pittsburgh for a long time.

Jonathan: [00:38:25] Yeah.

Eve: [00:38:25] Which is like, are you kidding me?

Jonathan: [00:38:28] Yeah, no. I’m sure you faced a big uphill challenge of that.

Eve: [00:38:31] Well, not as big as Black people.

Jonathan: [00:38:34] Yeah.

Eve: [00:38:34] But still, you know, anyone’s really been excluded except white men. So that is a seismic shift that you have to…

Jonathan: [00:38:47] It’s, there’s a story I want to tell you, but I feel like I’ll to save it for a repeat visit once this transaction is complete.

Eve: [00:38:54] Okay.

Jonathan: [00:38:54] That’s really germane to this question, but I’ll certainly share it with you privately. And then maybe on another time we can talk about on air once the time has passed that it would matter. But, you know, I think the answer is just standing alongside people, fighting alongside people, calling out when you see it. My wife is extremely good at this. I’m learning and becoming better at it. But once you get tuned in to the experience, and that’s honestly the biggest gift for me doing this work, I’m Jewish and which is not a handicap in the development world at all. In fact, it might be a benefit because our community is pretty well embedded in real estate development and banking and other places. So, I actually find more friendly faces than not. But I also have had the experience of discrimination outwardly and more covertly in my lifetime and obviously in every generation before. So, there’s a lens from which I can understand the experience that particularly Black Americans feel. And now that I’m kind of alongside a lot of my clients whom most are Black, not all. But I see what they experience, and it is shocking and fascinating and horrifying. And you just watch the ease with which people dole out discrimination and they maybe they have no idea they’re doing it, but you just, when you’re standing alongside, you’re like, there it is. Boy, wow. There it is. You know, in small ways and big ways. And so, my job is to call it out. To call it out for what it is because I’m sort of like a translator. Like I can understand, I can see it happening. But because the way I look, people don’t expect me to call it out, but I call it out.

Eve: [00:40:53] Can you give us an example?

Jonathan: [00:40:56] Yeah. So, we’ll go to a lender or a seller and they’ll say, Well, we’re really interested in leasing this to anybody. We’re really desperate. We don’t have any tenants. We’re really interested in leasing this to anybody. And they said, oh yeah, this woman was here, and she had an idea, and we were just really willing to do anything. And so we said OK, well, we’ll put together a proposal with our clients. And our clients, put together a really beautiful business plan. And I’m saying this because I vetted it and I know I’ve written and I’m not patting myself on the back here.

Eve: [00:41:33] It was a good business plan.

Jonathan: [00:41:34] I’ve written many business plans and I know what a good business plan needs to look like, and it doesn’t have to be a white paper. Doesn’t have to be complicated. It can be…

Eve: [00:41:42] Just thorough, right?

Jonathan: [00:41:43] Thorough. It covers all the bases, looks great. The financials look great. We’ve done analysis. Best case, worst. We’ve kind of pressure tested the financials. We know that they can survive even if it doesn’t go as well as we think. We present conservative estimates, and it still looks great. And then we put these guys pictures in there. And all of a sudden, there’s extra questions, all of a sudden there’s oh, well, we just don’t know if their business can attract that type of customer. We just don’t know if that type of customer exists.

Eve: [00:42:20] That’s just heartbreaking.

Jonathan: [00:42:21] It’s like, oh well, because that’s not the kind of customer you would be. Then you don’t believe that they can attract that type of customer. And it’s subtle things like that. It’s little things like that. It’s like, oh well, these aren’t high net individuals. Oh well, neither was I.

Eve: [00:42:40] Right.

Jonathan: [00:42:40] Any time I’ve been under bank scrutiny, I’m still not particularly a high net worth individual without my hotels. And those are very subjective to their performance right now. So, it’s just funny the questions I’ve gotten versus the questions that they get.

Eve: [00:42:57] Yes.

Jonathan: [00:42:57] And it’s like you think about things like redlining, right? And we think now with this lens of like, oh, redlining was this, you know, horrible, pernicious, intentional action where evil real estate agents and mortgage brokers and banks carved up these cities and said, here’s where Black people have to live, and here’s where you can’t. Well, you look to the actual maps from those days, which you literally had red lines on them. And it wasn’t quite as evil as you might think. It was kind of like, well, here’s where Black people live. So, we’re considering these higher risk loans, right? But I’m not saying it wasn’t overtly racist. I’m sure it was. I mean, this is the era of Jim Crow. This is definitely overtly racist. But the things that are happening now that I watch and experience, I think in 20 years we’re going to look back at those with the same lens and be like, this was overtly racist. And yet today, when I do say it to people, they’re like, Oh, no, no, I wasn’t saying that. And it’s like, well, what are you saying then, right? Why are you saying that when you wouldn’t say that to someone who looks like me? And so, I think we might be surprised at how our viewpoints on how people act now will change over time. And we’ll see some of the actions that people take right now as being much more overtly racist than they’re perceived as currently.

Eve: [00:44:25] I hope in 20 years. I’ve been waiting all my life for people to treat women differently, so it’s been a lot longer than 20 years.

Jonathan: [00:44:34] Yeah.

Eve: [00:44:35] So, no, I don’t know what my next question is, because that’s so fascinating. Ok, so let me just ask you, look, are there any. this is just a real estate question after these much more difficult questions, but are there any current trends in real estate that you find really interesting that are worth watching? I mean, especially now, you know, this pandemic has really shifted things the way we do things. I don’t want to put on the same clothes anymore. I don’t know about you, but in real estate, you know everyone debating what’s going to happen to Main Street, what’s going to happen to this? Have you seen anything emerging that might provide an answer?

Jonathan: [00:45:19] It’s a good question. I mean, you know, it’s sort of the question I ask myself every single day, right?

Eve: [00:45:24] So we can ask it together.

Jonathan: [00:45:25] Yeah, because I’m in my job specifically within our own company is forecasting people’s behavior. And it’s been that way throughout the whole pandemic as we’ve tried to stay open and make our staff feel comfortable and make our guests feel comfortable with the varying regulations and health concerns around the pandemic. So it is a challenging question and I do scan, you know, I’m watching for trends all the time, both in our city and across the country. Gosh, a lot of things are happening, right?

Eve: [00:46:01] People have moved online so rapidly. It’s kind of head spinning. I was pulling some numbers together for a deck to explain our business and this statistic really floored me. It took about 12 years for 70 percent of Americans to use social media in their everyday lives. Mm hmm. It took one year from last year to this for the adoption of fintech to go from 60 percent to 90 percent.

Jonathan: [00:46:29] Wow.

Eve: [00:46:30] So, you know, now depositing a check. You do everything online. Everything to do with finance is just moving online rapidly.

Jonathan: [00:46:41] I just got a request from my insurance company to do an inspection of our property, which the insurance company normally does, by myself. They want me to send them the pictures. I’m like, oh, for commercial insurance it just seems bizarre. Yeah, I think so many things have been found to be cheaper and more efficient by doing online or outsourcing so that people don’t have to travel places to do it. I think that will stick in a lot of different ways. You know, even before the pandemic, using social media so much, people were feeling isolated from each other. You know, you’ve maybe read the book Bowling Alone, which was written 20 years ago, and talking about how people become more and more lonely and depressed from lack of community. So, I feel like the pandemic has only accelerated those feelings. So, on one hand, we are definitely going to do more business by ourselves and separated and through this medium where we’re remote. On the other hand, I think the need has never been higher for people to feel connected to each other.

Eve: [00:47:54] Um hmm.

Jonathan: [00:47:54] And I’m curious of how that’s going to sort itself. Our hotel model is all about creating communal spaces and we’re like, Oh God, this is not a good pandemic for us, right?

Eve: [00:48:06] No, no.

Jonathan: [00:48:06] Like, it’s not good, you know, between our bunk rooms and our bunk rooms have been slowest to recover of all of our room types, for sure, because of those health concerns. Rightly so. But on the same hand, people meet each other, people need. There’s a difference between seeing someone virtually and embracing someone, shaking their hand.

Eve: [00:48:28] That’s right.

Jonathan: [00:48:28] You know, there’s, you’re not going to change that biochemistry need for people to be physically near each other. It’s exhausting being on Zoom meetings all day where your eyes are darting around the screen because you rely on your peripheral vision to get a lot of data input, and it’s exhausting to have to look everywhere. So I don’t know what’ll happen, but I do know that people need each other. And I think that there are certainly people who are going to be last to come back to that world of greeting each other. And there will be people like our clientele. It seems that boutique hotels are recovering fastest, not chain hotels. And I’m a little bit surprised by that on one hand. But on the other hand, I’m not because our travelers are, who want our kind of unique type of hospitality, are more adventurous travelers. That’s why our tagline is serving adventurous travelers since 1881. That’s when our building was built. And so we feel that those are the type of people who want to come out in the world first. So that’s who’s out there right now. But as things recover and more people are willing to travel, they have those needs and those needs are going to be pent up of connecting with people having real experiences together. So, I don’t know. I think a lot of things will change permanently, and this is something that you can’t change. But where is the trend? Man, I haven’t seen anything that’s even like a trend lit yet.

Eve: [00:49:55] No. Well…

Jonathan: [00:49:56] I haven’t seen anything.

Eve: [00:49:58] I do know that the restaurant industry is just decimated, and it’s not just people coming to eat, but I have a friend who has four bars and he said he can’t hire people. He’s paying extraordinary prices for line cooks. He says that a complete restaurant crisis, so that whole industry. Oh, it’s pretty heartbreaking.

Jonathan: [00:50:24] It is. It’s really hard. It’s already one of the hardest industries.

Eve: [00:50:28] Yes.

Jonathan: [00:50:29] And to add the staffing crisis that we have right now is even harder. So, we’re struggling with it too. It’s just been hard through the pandemic of people’s emotional level. And hospitality requires a positivity, and that positivity has been hard to find at times during this time.

Eve: [00:50:48] So that’s been the hard stuff. But look what’s come out of it, your Equity Development Lab, and that’s the upside of it all, right? That’s a pretty amazing thing to give birth to in the middle of a pandemic.

Jonathan: [00:51:03] I would guess I would say I’m bullish on humanity, you know?

Eve: [00:51:07] Yes.

Jonathan: [00:51:07] You know, I’ve always been I’m a scientist first, you know, and I’m just a true believer in humanity’s ability to solve problems. And so, I’m always positive even about climate change and big, big, big issues. I believe in our ability to solve problems. If you want another fabulous podcast is The Secret History of the Future. Have you ever listened to that one?

Eve: [00:51:33] No, no.

Jonathan: [00:51:34] And it’s all about problems that we’re facing now. I think they only have one or two seasons. Supposedly, they’re coming out with another one. But they talk about, here’s a problem we’re dealing with now. Here’s how we already dealt with that problem 100 or 200 years ago. It’s similar but different, and I like it because it gives me hope about how we always find a way. We have gone from a billion people on Earth in 1900 to eight billion people in 2000, give or take. And that’s dramatic, and that doesn’t happen without solving a lot of problems. So, I’m not saying that growth rate is sustainable, but I also believe that we will solve those problems of sustainability in the next hundred years. So, I believe in our society to solve these problems, and I think the pandemic showed our resilience, even if it was not easy for everyone, myself included.

Eve: [00:52:32] Well, Jonathan, this has been a fascinating conversation. I can’t wait to see what happens with your Equity Development Lab and I’m expecting to be included.

Jonathan: [00:52:40] You are.

Eve: [00:52:42] Thank you very much for joining me.

Jonathan: [00:52:45] Thank you so much for having me. It was a pleasure.

Eve: [00:53:03] That was Jonathan Cohen. In everything he does, Jonathan is focused on the underdog. He’s out to level the playing field and we’ll be eagerly watching him. You can find out more about this episode or others you might have missed on the show notes page at our website. Rethinkrealestateforgood.co. There’s lots to listen to there. A special thanks to David Allardice for his excellent editing of this podcast and original music. And thanks to you for spending your time with me today. We’ll talk again soon, but for now, this is Eve Picker signing off to go make some change.