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Affordable housing

Our client is the planet.

January 18, 2023

Jeremy, the founding Director of Breathe, has built a team of dedicated architects with a reputation for delivering high quality, sustainable design for all scale projects. In particular, Breathe has been focused on sustainable urbanization and exploring ways to deliver more affordable urban housing to Melburnians.

As the instigator of The Commons housing project in Brunswick, Jeremy was the driving force behind the prototype for what is now Nightingale Housing, a not-for-profit organization dedicated to providing sustainable and affordable housing. Jeremy believes that through collaboration, architects can make a real and positive impact in their community.

This belief is exemplified by Breathe’s work with other Melbourne architects to deliver the Nightingale Model, which is intended to be an open source housing model led by architects. According to Jeremy, “if you want to build something that is affordable and sustainable simultaneously, every project manager in Melbourne will tell you you can’t do that.” Instead, Breathe has defined sustainability through reductionism, identifying that what people really want in housing is good, meaningful spaces with light, outlook, and plants, rather than luxurious but unnecessary features.

As Melbourne experiences rapid growth and housing becomes an increasingly expensive commodity, Jeremy’s movement towards affordable and sustainable urban housing through stunning, thoughtfully executed projects is vital for the city’s future.

Read the podcast transcript here

Eve Picker: [00:00:08] Hi there. Thanks for joining me on Rethink 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. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:44] Three years ago, I interviewed the delightful Jeremy McCleod of Breathe Architecture, and today I’m lucky enough to interview him again. Jeremy founded Breathe, an architecture studio in Melbourne, Australia. There he delivers gorgeous and sustainable buildings to his clients. But Jeremy was unhappy with the ever-widening gap between those who have wealth and those who do not. So, he embarked on a second journey to deliver sustainable and affordable housing to everyone. Many told him that this was an impossible goal. But he completed his first project, The Commons, with accolades, three years ago. With a waiting list of over 8000 buyers, Jeremy and his team set about building lots more. This is what a great architect does. Listen in to learn more.

Eve: [00:02:43] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:14] Hi, Jeremy. Thanks for joining me. And I just want to say, whoa, what a difference three years in a pandemic made for your business.

Jeremy McLeod: [00:03:23] Yeah, it’s been pretty wild times. Thanks for having me back on, Eve. It’s good to see you on the other side.

Eve: [00:03:31] It is. It’s the other side. So, since we last talked, your architecture studio Breathe and your brainchild Nightingale seem to have both exploded. And I wanted to give a little background to listeners who hadn’t heard the first podcast, or maybe tell them to go listen to it. But let’s talk about Nightingale first. So, for those listeners who missed our first chat, tell us about Nightingale. What is it and where did it all begin?

Jeremy: [00:04:03] Okay, so. Yeah, Melbourne, where our practice is, is a lot like any capitalist society. Unlike the beautiful Scandinavian countries where they decide to house their people through high taxes and good kind of support networks in a good neo liberal society, our government has been underspending in housing for decades. And so, as an architect, you know, we work, historically, our choice is to do private homes for wealthy Australians or do apartments for property developers where, you know, they’re really following a profit in a complex kind of environment. So, both of those things aren’t very rewarding. And Breathe architecture, our architecture firm, you know, we believe strongly in this idea that our first client is the planet, you know, our second client is the broader community that live on that planet. And then lastly, we have the client that pays us, and we felt like doing property development apartments wasn’t achieving the first two of those three criteria. So, we built a prototype project. We finished that in 2013 and it was called The Commons, and it was an idea to kind of prove to developers that you can make a profit by building sustainable homes and building community. And so, we built this building called the Commons. And the idea was that it would be car free, carbon free, that it would be affordable and that it would be incredible. And a lot of those things came true. I mean, we shot for the stars. We kind of landed on the moon.

Eve: [00:05:50] It is incredible. It’s a beautiful building.

Jeremy: [00:05:52] Yes, Eve you’ve been here. Right. So, you’ve been to it. You’ve been to Australia, you’ve been to Melbourne, you’ve seen it. We couldn’t get the carbon free piece right. So, there was still, we couldn’t afford the non-gas infrastructure back then. But apart from that it’s a very good building. And what was interesting about that was that we then opened it up for tours, brought every developer in the city through and said, look, this is what you can do. And they all saw it as a kind of an aberration rather than a trend and said, oh, well, that’s a nice idea, but thanks very much, we won’t worry about it. But, interestingly for us at Breathe is that people just, you know, every regular day Melburnians that are writing to us saying, if you’re going to do that again, can you please let us know? Because we would like to live in a building like that.

Eve: [00:06:36] But the really important thing is that these units were also affordable, right? They were affordable to civil servants who were really being pushed out into the far nether land.

Jeremy: [00:06:51] Yeah. I mean, the whole premise of building something that was sustainable and affordable simultaneously and still profitable for a developer was really about this idea of, you know, analyzing everything. And it was about a sustainability of reductionism. So, developers view historically has been that sustainability is expensive and it’s hard to get a return on your investment. And so, we just questioned everything. So, the big thing about taking out the cars was that we saved 10% of the build cost by taking out the basement. We reduced every apartment by $40,000. We took out every second bathroom. So, every two-bedroom apartment only has one bathroom. So, we saved $9,000 per apartment. We even took out all of the individual laundries, reduce the price of every apartment by about $6,000. And when you take a second bathroom and a laundry out of an apartment, the living room suddenly gets, you know, nine square meters bigger. You know, in your space, 90 square feet, about 90 square feet bigger, right. So, the living rooms start to be these really great, you know, spaces to be in. The cost comes down in all these apartments and then we start to build really great shared spaces, like a really incredible bike park, a really great rooftop laundry, you know. And rooftop laundry sounds weird, but it’s beautiful, right?

Eve: [00:08:12] It’s absolutely beautiful, yeah.

Jeremy: [00:08:13] Opens up onto the big garden and views to the city. And these become these, kind of, social hubs where people in the building meet each other doing something really ordinary, but it actually works in a kind of safe, nice space where people actually get to break down those barriers to talk to each other. So, anyway, when we finished the Commons, we won the national award for housing with this thing, and it was quite a small building. You know, it was 24 apartments, and we won the National Award for Sustainability, which was incredible because it wasn’t a $100 million university building that was funded by some philanthropic fund. It was, you know, it was actually. Yeah, it was just a market rate apartment. So, then we wanted to get other developers to employ us as architects to do that after two years of bringing them through the building. We couldn’t find anyone that would want us to do that. They wanted to do the same as business as usual. So, we decided that I took four days off work, and I wrote a manifesto and called it the Nightingale model, and we established Nightingale housing. So, the idea was that we would share all of our IP. That we would bring architects together, that architects would lead a housing revolution, that we would democratize capital.

Jeremy: [00:09:31] It’s interesting, Eve, that you and I met and, you know, when I saw Small Change, I was like, oh, this is what I really needed back in 2015. But basically, it was peer to peer funding. Small mom and dad investors putting in like about $100,000 each to kind of crowdfund these projects, equity fund these projects. And we built the first project, Nightingale One, which finished in 2017. And then, you know, by that stage our waiting list, people who had been writing to us had grown from 11 to 57. And so, we balloted those apartments. So, we didn’t sell them through a real estate agent. We took all of the agents out, all of the marketing, all of the display suites, which all reduced the cost of the building. We took out all the gas to make sure it was 100% electric. We shared a lot of the infrastructure inside the building, like the hot water for the hydroponic heating, like the hot water for the showers. So, we got one set of plant that does all of that. It makes it really cheap for everyone living in there. These are all built to sell like market owned apartments. And 57 people entered a ballot and we balloted. We sold all the apartments in one day. And people hadn’t seen that in Melbourne, you know.

Jeremy: [00:10:46] So anyway, you know. So, that was kind of the start of Nightingale. And what’s happened since then is that a couple of projects kind of took that Nightingale model and delivered it. So, we shared that IP with other architects. You know, I actively worked with those other architects to help them deliver those projects. So, Nightingale 2 is a great example of that. And then it kind of faltered, Eve. And the challenge, I think, was that to go and source equity, to go and buy a piece of land, you know, someone needs to sign the directors guarantee on the purchase of the land. To go and secure a debt, someone has to put a director’s guarantee down, you know, to secure whatever it is, $10 Million from the bank. And the bank wants to know that the person delivering the building has done it before and that they’re good at it and that they have a big balance sheet behind them. So, this revolutionary idea for Nightingale housing, like it kind of went bananas, right? So, after Nightingale 1, we balloted Nightingale 2. And you know, we started doing all of these projects, but, you know, our demand grew so that there’s 15,000 people, over 15,000 people on a database now to buy housing.

Eve: [00:12:02] Wow, my heavens.

Jeremy: [00:12:03] But we couldn’t keep up with supply because, you know, there’s fundamental issues around, in a good neoliberal society, around risk, who’s prepared to take the risk and put their home on the line. And, you know, again, I guess risk from a debt point of view and an equity point of view, who’s going to put money into these projects because you know, who’s going to take risk on that? And so, look, the good news is that, you know, we’ve just completed like our 500th apartment and we’ve got another 500 in the pipeline. Last year we balloted $80 million worth of housing where we’ve rolled in a social housing portion so that, you know, trying to really kind of nail the affordable housing piece now means we have 20%, that the first 20% gets balloted to an affordable housing provider. So, that’ll be a charitable organization like Women’s Property Initiatives. The next 20% goes in a priority ballot. So, to you know, key service workers, nurses, teachers or to First Nations Australians or to people with a disability or carers for people with a disability. And the last 60% is balloted to, you know, to the broader waiting list. Everything sold. Now we’ve got a, you know, the new model is kind of evolved into, you know, it’s a Nightingale not for profit, so, there’s no profit in there anymore.

Jeremy: [00:13:33] And we’re now getting institutional funding from what are our superannuation funds, which might be called pension funds in the US. And we’re getting senior debt now from our major banks really through their kind of social impact arm rather than just their commercial finance arm. So, we’re getting good rates and really good engagement like we’ve had the CEO of one of Australia’s biggest banks, you know, come and meet with us, walk through the buildings, ask us what he can do to help personally and like task you know team of six of his heavy hitters to help, you know, build a specific loan product for people who want to buy into Nightingale. So, I think the interesting thing about Nightingale is this idea that it’s got a very clear narrative around it, which is that it’s a triple bottom line housing model. So, it’s about being carbon neutral. It’s about building community, not only in the community within the building, but kind of engaging with the broader community through that whole process. And then lastly, it’s about affordability and how do we get a broader cross-section of the community living there. So, it sounds it sounds pretty easy, but, you know,

Eve: [00:14:43] Well, it’s not easy.

Jeremy: [00:14:46] As you know, Eve. So, you know, and when I started there, it was, you know. Yeah, it was just an idea, right? You know, in a manifesto. And I recently handed over the reins, so I was the founder for a while. I put together a not-for-profit board. Or actually, I got some help to put together a not-for-profit board, which was really great. We put someone on to kind of run the show for a couple of years and then it just didn’t take off. And then I step back in as managing director to try and say, If we’re going to go, let’s do it. I stayed in that acting managing director for over five years, you know, and we saw massive growth and I’ve just stepped down in that role as managing director. So, you know, I’m back on the board now. So, you know, I attend six weekly board meetings. But, you know, as I stepped away, there’s now 17 staff, you know, and 500 apartments in the pipeline. And yeah, so.

Eve: [00:15:44] Is it satisfying to have built that?

Jeremy: [00:15:46] Yeah it is and you know, I was sad to step away. But, you know, I’m also the design director at Breathe Architecture and you know, it’s time that I actually give some love back to Breathe. You know, the organization that founded Nightingale. Now, you know, I feel like I need to spend some time there to go and, you know, see what’s next on the horizon, right?

Eve: [00:16:07] Yes, yeah.

Jeremy: [00:16:08] Building up to do the next thing.

Eve: [00:16:10] So, are other architects involved now? You said you have built 500 units.

Jeremy: [00:16:16] Yes. So, I mean initially it was meant to be this architect led kind of revolution and we got lots of engagement from architects to do that. Lots of challenges around funding and equity raising. And just not.

Eve: [00:16:32] It’s all about money, isn’t it?

Jeremy: [00:16:34] It’s all about money. It’s all about money. Unfortunately. This idealist has become, I’ve become much less, I’m much more pragmatic over time, which is really interesting. I was also quite scathing at the development industry when I started Nightingale, thinking that they were all evil. And now I’m. Yeah, and now, you know, I’m really embarrassed about the things that I said early on, the disparaging things I said about developers, because I just realized how hard it is and how much risk is involved. And you know that the profit margins that developers put in, while they might seem horrifically high from the outside, you know, it only takes one project to go.

Eve: [00:17:17] It’s a huge amount of work.

Jeremy: [00:17:17] Well also, they need a balance sheet to be able to fund the projects and in the event that one project fails, they need to, they need a balance sheet behind them to be able to.

Eve: [00:17:26] Especially in Australia where I really don’t understand how the financing works at all, we’ll have to talk about that. But it seems even harder than here.

Jeremy: [00:17:35] It is.

Eve: [00:17:36] It’s very difficult.

Jeremy: [00:17:37] Yeah, it is very complex. And the banks here, you know, I guess like anywhere are not interested in taking, you know, risk so.

Eve: [00:17:44] Very conservative, yeah.

Jeremy: [00:17:46] Yeah, yeah, yeah. So, you need lots and lots and lots of debt coverage, but it’s really great to be able to get to the point now where I can step away from that. I do worry for the sanity of my replacement, given, you know, it’s probably the same thing that’s happened in the States. You know, we’ve got high inflation here. We’ve got, we have had supply chain issues through COVID. So, we’ve seen massive increases in construction costs in the last two years. In one of the states here, we’ve seen like a 23% increase in construction. So, in the last year, that’s put a lot of projects under pressure. And then we’ve seen, to try and control inflation. The banks have put the interest rates up, so lending is tightening. So, first tome buyers who are our cohort are struggling to get loans. So, you know, it’ll be interesting to see, you know, out of those 15,000 people, how many can actually secure a loan to buy a property. We will see how much demand there still is out of that 15,000 for the next project, when we take the ballot.

Eve: [00:18:48] So then, yeah, I think you’ve answered this question. My question was going to be what did you have to give up on? Like your idealism was thinking, this is going to be like this, but what did you have to give up on to really make this work? Was there anything or have you.

Jeremy: [00:19:02] Yeah, well, I mean, that’s a that’s a really good question. Look, I did think that, you know, that when we first established Nightingale that it was going to be this really light touch thing, right? That there would be a couple of people with a repository of all of the information and they would share it with a Nightingale license to another architect. And that other architect would read through everything diligently. They would understand the risks involved. They would establish a company, go and raise equity, go and secure a debt, and go and buy the site and build the projects. And that it would grow, and it would just go viral. I think that was the that was the dream, right? That the whole thing would kind of happen because it was such light and demand for it. So, the thing that I’ve had to give up on is actually, you know, from being a revolutionary organization, you know, to actually have the impact that we need, we’ve become, yeah, much more mainstream. So, you know, now Nightingale, you know, has a fund it raises, you know, seed fund and equity and debt. Nightingale goes and buys the sites; it engages the architects. So, you know, we still employ.

Eve: [00:20:05] So, you’re really, that nightingale is really making it all happen.

Jeremy: [00:20:11] Yeah. So, Nightingale does everything now takes all the risks. So, as a director on the board, I still take the risk. So, we’re basically taking the risk out of the hands of the architects and centralized it at Nightingale. But we’ve also centralized the expertise. So, you know, we’ve got a finance director at Nightingale, we’ve got, you know, delivery team of development managers and project managers and that obviously gives the banks and the superannuation funds lots of confidence that this team has done it before, and they can do it again and all that expertise is in-house.

Eve: [00:20:45] That’s a lot, that’s huge.

Jeremy: [00:20:49] Yeah. But you know, yeah. So, it’s much less grassroots and it’s much more boring. Yeah. Hey, I mean, still doing incredible things, right? It’s still setting the agenda like, you know, we build.

Eve: [00:21:05] You’re a starter. You don’t like the maintenance, the maintenance stages.

Jeremy: [00:21:08] 100%. I’m a starter, not a finisher. There are other people that are better at finishing than me. That’s absolutely right. Well, it’s got an incredible inertia.

Eve: [00:21:20] I think we have that in common. I like things, but maintenance can be really boring.

Jeremy: [00:21:25] Yeah, And look, it’s got its own inertia behind it now, so it doesn’t need me, you know, anymore.

Eve: [00:21:31] Pretty fabulous. So, what else about the model has shifted over time? This just.

Jeremy: [00:21:35] Well, look, under the interesting thing for us was that we were delivering housing that was carbon neutral and that was meant to be affordable. But I was actually frustrated by delivering not for profit housing that, you know, the first project was 19% under market. In one of the projects we balloted last year was only 13% under market and it’s not for profit. Right? And so, I think the challenge for us was that when we pushed the environmental credentials and the build quality and the design quality and all of those things, it still wasn’t as cost effective as what we were hoping. You know, we were hoping to kind of shave 25% out of the price of housing and we thought that we would get better at that over time and that as we built bigger projects, and we had an economy of scale that we could keep on reducing prices. Yeah, I guess for us it just, it didn’t get cheaper. Even with big projects like Nightingale Village where there’s six buildings all together and we’re sharing infrastructure, you know, the project got more complex and they got better, but they didn’t get cheaper.

Jeremy: [00:22:43] And so, for us, we had to kind of start to think about how do we have impact on affordability, which is when we kind of wrote our own affordable housing policy, you know, a little bit like, you know, the UK where we just allocate 20% of housing kind of salt and pepper through each of the developments now and then those 20% are held by the community housing provider and cross subsidized by everything else in the project, which actually makes everything else in the project slightly more expensive, right. So, we’ve actually made the other 80% slightly more expensive, but we now have 20% that is truly affordable, you know. And so, and it’s complex and it shouldn’t be up to a small not for profit to be delivering affordable housing. But in a city where there has been so much underspending on housing, then I think that everyone’s got to take some responsibility to try and solve for that.

Eve: [00:23:39] So, has any of this rubbed off on the Australian Government?

Jeremy: [00:23:43] Yeah, I mean it’s been incredible. The impact that Nightingale has had is unbelievable. So, you know, so Nightingale now has, there are a number of other companies doing things that look and smell like Nightingale, but they kind of got their own, you know, their own approach to it. You know, there’s a company here called Assemble, and if you talk to Assemble, you know, they say that they developed all of their all of their things, all of their ideas, all their policies at the same time as us, which may well be the case. And maybe everyone was kind of we just all arrived here at the same time. They kind of came a couple of years after us. But the great thing about assemble is their scale. So, they are funded, you know, they’re 25% owned by a superannuation company, all of their sustainability credentials, they match all of our sustainability credentials. So, we’ve got seven and a half stars, not five stars.

Jeremy: [00:24:44] That’s one of our, you know, energy rating requirements. They’re also 100% electric. They also buy 100% certified green power, so no black power. They also have a car share system in that they also have an embedded network that shares the benefit for the residents. And they also have a 20% affordable housing criteria. You know, the difference is that while we’ve got 500 apartments under development, they’ve got 3000. So, I mean, and also, yeah, it’s incredible. And also, they’ve got some really smart people working with them around tax structuring and finance. And they’ve been able to work really well with government on getting government backed finance, you know. So, yeah, I think that they’ve approached it in a kind of more intelligent and strategic way. But it’s really great, right? So, it’s not just Nightingale now. It’s also a company that has to generate returns for a pension fund which is doing this and showing that this model can be replicated at scale and profitably and still everyone wins on it and most of their model is build-to-rent, but they’re building buildings that are largely…

Eve: [00:25:55] Which is unusual in Australia.

Jeremy: [00:25:58] Yeah, I mean Australia is weird, right? So, most of the apartments here are kind of built to sell. Most of the rental apartments are owned by mum and dad investors, you know. And so, the build to rent market here, you know, the rental market is only just recently turning to kind of, you know, whole buildings being owned by a property companies. So, we’re seeing like Heinz coming out here, Greystar coming out here, so, internationals coming here to build, you know, buildings that will be rented out. So, it’s good to have Assemble here as an Australian, you know, version of that.

Jeremy: [00:26:35] But we’re also seeing boutique developers, Milieu here, who sell beautifully designed. Their whole schtick is beautifully designed buildings, relatively small buildings. There may be only 50 apartments in each building. But what we’ve seen from them is that they engage Breathe architecture to work on a project with them. And basically, they said we want to build all of the sustainability outcomes of Nightingale. We want to add some optionality. So, if our purchasers want to buy a car park or buy an individual laundry, they can. And so, we’ll just offer those as optional extras and then we’ll sell it at a different price point. And we’ll make sure that it’s designed really well and that it’s, you know, that the specification is slightly better. And so, we’ve seen Milieu now become a B Corp certified company delivering buildings that are carbon neutral in operations, meeting all of the Nightingale kind of design standards and then selling to the kind of the next tier up of second or third home buyers, you know, and it’s been really good to see them delivering great quality with those same sustainability and community outcomes.

Jeremy: [00:27:51] And in fact, around here, Eve, you’ve been to this suburb that we’re in, Brunswick, in the north of Melbourne here, it’s kind of a, you know, I guess, let’s call it a Williamsburg of, you know, of Melbourne, right? It can be gritty, and it can be great. And it’s pretty diverse. But what we’ve seen around here now is that no developer builds here now, who is serious. No one here plumbs gas into their building, no one here builds something that’s kind of under seven stars. You know, everyone who’s building here now knows that the purchasers in and around this area expect that their building is going to be energy efficient and there’s going to be 100% electrified. So, it’s been really interesting to watch the market shift. And I think that, you know, the epicenter is here around where we’ve built 14 nightingale buildings in this suburb. And I think that it’s kind of rippling out through the rest of Melbourne and then it’ll kind of ripple up the East coast here and get to Sydney and Brisbane.

Eve: [00:28:54] What about other countries?

Jeremy: [00:28:58] No, no, no, that’s a really good question. I mean, yeah, it’s interesting that lots of people around the world know about Nightingale, and we’ve spoken to people in London, you know, Sweden, Canada.

Eve: [00:29:12] And plenty of students who know about Nightingale and Breathe.

Jeremy: [00:29:16] Yeah, yeah. It’s really interesting. But New Zealand has paid a lot of attention. So, New Zealand is, you know, Australia only has 25 million people. New Zealand only has 5 million. It is the most beautiful place. It’s incredible.

Eve: [00:29:33] It is gorgeous, yeah.

Jeremy: [00:29:34] The New Zealand central government has a housing crisis on its hand that the cost of housing in New Zealand is like, you know, I think it’s like know third after, you know, Paris and Hong Kong or something like it’s crazy how expensive housing is in Auckland. The central government from New Zealand sent a delegation of about ten senior planners, planners, urban designers out to come through, and economists, to come and walk through the commons and look at Nightingale One. They’ve recently announced a new housing policy under their incredible Prime Minister, Jacinda Ardern.

Eve: [00:30:12] I know. She’s amazing.

Jeremy: [00:30:13] She’s amazing. Yeah, she’s like, Oh, there’s a problem with housing. Let’s write a housing policy and let’s actually change planning policy to solve that. And basically, when that delegation met with me, they said, what is the biggest barrier to building affordable housing? And I said, it is, in Melbourne, it’s actually third-party objection. Right? So, it’s.

Eve: [00:30:36] Yeah, I was going to say the same thing. Zoning. Well, it’s, yeah, objection rights are really strong there, but definitely zoning impacts what you can do.

Jeremy: [00:30:44] Yeah. So, one person living, you know, 500 meters away, you know, or half a mile away can put in an objection and delay the entire project and cost the project hundreds of thousands of dollars. Absolutely, and it’s alive and well here. And the thing that they complain about is lack of car parking, despite the fact that our road network is absolutely at capacity and that the City of Melbourne has 30,000 available car spaces in existing buildings. And all we need is an app called Parkhound or Spacer to link people up to those things. So, we don’t have a car parking problem, we’ve just got a management issue about where those people being able to find those car spaces, so car parking and height and so basically anything over two stories, everyone in Melbourne is up in arms. And so, basically what they did in New Zealand is that they heard that, and they’ve got a new policy which says that anything up to five story, there’s no third-party objection rights, even if it’s got zero car parking. So, they’re happy to waive the car parking to zero because construction of basement is, like labour costs are very high, really high in Australia and New Zealand. We’re literally saving like 15, sometimes 20% of the housing cost out by taking out basement car parking.

Jeremy: [00:32:08] So, so New Zealand has changed their planning rules and Breathe have been working with the with the kind of community-based developer, believe it or not, with an incredible constitution out of Hamilton and New Zealand and a local architect called Edwards White in New Zealand. And we’ve been working with them to build their version of Nightingale. You know, that’s specific to New Zealand. And so, we’re working on a project with them. But the first project isn’t like Nightingale One, like 20 apartments. It’s like Nightingale Village. So, it’s, you know, it’s eight buildings by eight different architects, all carbon neutral in a village. And we’re working really closely to make sure that we knocked that out of the park and we’re building the infrastructure around that. It’s called Project Korimako. Korimako is a New Zealand bird, you know, as opposed to, you know, the Nightingale. Anyway, I’m really looking forward to. So, the Breathe team kind are working with them and we’ve taken all the learnings from our time at Nightingale over there to kind of try and, you know, just leapfrog kind of five years of R&D. So yeah, it’s, it’s definitely it’s definitely spreading.

Eve: [00:33:16] Interesting. So, in the meantime, what’s happening with Breathe? I know a little bit because, full disclosure, Jeremy is my architect on a project in Australia which has suffered through the pandemic and objection rights. Right?

Jeremy: [00:33:33] Well, I mean you saw that there was one objector on your project, which was a really aspirational project, not an overdevelopment. And we had to spend a lot of time with that one objector, you know, to kind of work through that was painful. And now our big challenge is funding, right? Funding and finance.

Eve: [00:33:53] Well, also the contractor, it’s a very, very dense urban site. The contractor is really concerned about how he’s going to build there. And so, you’re not going to like this but he says, you know, they need the whole road. That objector went away because we gave them an accessible parking spot, which the contractor says he now needs. It is really, I mean, I’ve never seen, I mean, I’m in a small town. I know that entitlements and zoning moves very slowly in places like San Francisco, but I’ve really never been through anything quite like it. Especially with the pandemic. And everyone disappeared and there were no phones, and no one responded to email.

Jeremy: [00:34:40] Yeah, it was challenging, wasn’t it? Anyway, we’ll get there, Eve. So, what was the question again?

Eve: [00:34:47] So, like, what’s happening in your architecture studio?

Jeremy: [00:34:53] Yeah, okay. Okay. Right. So, you know, we’ve kind of specialized in sustainability for a long time. And when I say specialized, it’s just been something that we’ve always done. I think the big change for us in the last couple of years is that one of our great architects, Bonnie Herring, was the director of architecture here, we’ve now made her a director of sustainability. We’re now doing lifecycle assessment on all of our buildings. So, we’re one of three firms in the country that are kind of measuring carbon and trying to deal with whole of life carbon or embodied carbon, which has been interesting. And, you know, everyone says to us, you know, it’s funny that you guys tend to focus on narrow your focus down and doesn’t that cost you work? But interestingly, by narrowing our focus, we’ve got clients like ANZ Bank. So, you know, we’re a relatively small practice. You know, I think there’s 27 staff here and ANZ Bank are again one of the big four banks here, and they’ve been working with us in the last couple of years about changing their branch rollouts to being, you know, instead of constructing branches, basically working on a system where we build, you know, a carbon neutral, like kit of parts or furniture installation basically that can be installed and then removed at the end of each lease and taken to other branches and, and all the parts can be used. There’s a barcode on all of the parts so you know.

Eve: [00:36:23] It’s like knock down furniture for ANZ Bank.

Jeremy: [00:36:25] Exactly, exactly. So basically, kind of, and the incredible thing about that is, you know, just in the 21st century, being able to design everything in 3D, you know, prototype everything, build a prototype branch, test everything, and then start to roll out, you know, branches. And so, we basically built this kit of parts, a 3D model, a handbook, basically like an IKEA catalogue showing how it all goes together. A little YouTube tutorial to future architects working on these branches.

Eve: [00:37:02] A phone number.

Jeremy: [00:37:04] No phone number, but, you know, so we designed that. We rolled out the first three branches together with ANZ and then we worked with their three other architects to then take them through it and then we worked with another three. And so, we’ve kind of been spreading how to do that, you know? Yeah, like a tutorial, but you know, they’ve just finished their 60th branch and they’re rolling out across the country, so they’ll roll out hundreds of these things. So, these carbon neutral branches in operation with a massive reduction in embodied carbon, that’ll be totally circular. So, there’s no glue in these things, Everything’s screwed together or bolted together. So, at the end of a component’s life, it can all be, you know, broken down to its kit of parts and reused. I mean, that’s been pretty interesting.

Eve: [00:37:48] For people listening, they’re wondering, is this really what an architect does? So, you know, is this the role of an architect?

Jeremy: [00:37:58] Well, that’s a really good question, right? Because what is an architect in the 21st century? You know, I’m on the National Council of the Institute of Architects in Australia. And, you know, a lot of architects think their job is to draw buildings. You know, and I would say to any architects listening that that is absolutely not our job, that, you know, 39% of all carbon emissions on this planet come from the built environment. And that, you know, we’re in a time of massive climate crisis and that we as a profession need to be asking ourselves big questions like, eh, should we be drawing a building at all? Or should or should we be finding a different solution? So as architects, we’re trained as systems thinkers, you know, Eve, you’re trained as an architect, and you know.

Eve: [00:38:46] It’s a great training, it’s creative, and it’s systematic and it’s, you train to be a problem solver and make something from nothing. Yeah.

Jeremy: [00:38:55] Yeah. Correct. And so what I would say to architects is to use that thinking to say, what is the answer to this solution? Is it building more basement car parks or is it actually just introducing the council to apps that already exist, or is it building an app? You know, like what is the answer to the problem? And it’s not always drawing a building, you know? So, yeah, I think that where, you know, yeah, we probably approach architecture a little bit differently to traditional firms. I’m not a big fan of single, you know, residential family houses, you know, or the inequity in that that so many architects focus on this fetish-ization of you know I want to do this big luxurious house, you know, and I want to get it photographed and put in a magazine.

Jeremy: [00:39:48] But if you think about the impact that you can have, you know, spending all that time with a pedantic, wealthy client to build their one dream house as opposed to you could be working with Aboriginal Housing Victoria, you know, and building housing for First Nations Australians who have been, you know, pushed off their own land in this country, you know, or you could be working with ANZ to say, well you’re about to roll out 400 branches, how do we pull out thousands and thousands of tonnes of carbon out of that and how do you improve the working experience for all of your staff through that, by, you know, introducing Biophilic design and flooding the place with plants and pink UV grow lights so that at night time when the branch closes, it glows pink, you know. So, yeah, I think that we have to ask ourselves. You know, this is post, we are we exist post peak oil. We exist post, you know, the debate on climate change. There is no debate now. And we have to choose who we want to be in the profession and what we want to be doing, but it shouldn’t be adding to that 39% of carbon emissions. It shouldn’t be adding to social injustice. You know, we get to be change makers and we should, you know, focus our time and our energy on that.

Eve: [00:41:14] Yes, I totally agree. For me, it’s also that buildings make better cities for everyone. And I get.

Jeremy: [00:41:25] Absolutely.

Eve: [00:41:26] Really upset when all the focus is on that special Italian marble finish inside, when really, it’s the external walls of the building that are going to make a street or a place or a square, really a wonderful, really place to be, you know.

Jeremy: [00:41:43] I had an architect at Breathe the other day, quote, a famous quote to me, and he said, Jeremy, God is in the detail. And I banged my fist on the table and I said, absolutely not. Not in this place. You know, it’s in the big idea and it’s in the ethic of what you’re doing, you know?

Eve: [00:42:02] But on the other hand, your details are gorgeous. So…

Jeremy: [00:42:05] Yeah, absolutely. I mean, but those two things have to coexist, right? You know, you can’t just obsess about a detail without actually if you think about Bonnie in the way that she worked and designed the commons, you know, every detail is about a reduction. How do I take things out? And so, it’s so reductive that it’s really, really beautiful. But there was a reason for that, right? A sustainability reason, a cost reason. So yeah, but also Eve, interesting that you studied architecture, but you saw that what actually needed to happen in the built environment was funding for the right type of projects. So, Small Change is an example of I teach at Melbourne University, I teach Nightingale night school to thesis students, you know, every second semester at Melbourne University. And I become incredibly proud when I hear about one of my graduates going out and they might work for Lend Lease in and become the head of their sustainability, you know, or they might go and work for a property developer and become a development manager there, or they might go and work for the public housing team in Singapore, you know. But I get really inspired when I hear that architects understand that sometimes the most impact they can have is not drawing buildings but using their systems thinking to actually make massive change. So, I think the key is getting up upstream, right? Architects are always downstream. You’ve got to get up to the source to be able to kind of change be outcomes.

Eve: [00:43:45] I think that’s right. And I don’t know if it’s changing, but I taught in architecture school for a while and I found it incredibly myopic that students were taught to design just buildings and very little time was spent on everything else they could do with their education.

Jeremy: [00:44:05] I think it depends a lot on what university, you know, like I was at the Royal College of the Arts a couple of years ago, you know, with a woman, Tash, there seeing what she was doing. And she was there really trying to get, you know, these architects in London thinking really about systems, big things, you know, how do we, you know, how do we as a profession have, massive impact which leads to massive change.

Eve: [00:44:32] Yes. So, I’m going to ask you one more question. When are we going to build a Nightingale project together in the US? That’s what I really want to do.

Jeremy: [00:44:43] Well I mean, if you think of if you think about what the barriers are. So, can we get a great architect in the US? Absolutely. You know. Can we find a site with lots of opportunity in the US? Like, absolutely. You know, I mean, often, you know, we’ll try and align strategic planning support with community support. You know, and you can imagine that there would be states or cities within the US. I mean, it’s obviously quite divided at the moment, but we but we would need to go to the right place to do it. And then the biggest piece of the puzzle is funding, you know. So, and I think that…

Eve: [00:45:22] It always is. Yeah.

Jeremy: [00:45:23] And I think that, you know, that you could solve that. So, and well, actually the last piece of the puzzle is that the Nightingale Housing Board has said absolutely no to any, the reason that Breathe are working with the New Zealand crew is that the Nightingale Housing Board have said Jeremy No we’re, we’ve got a sole, let’s just solve Melbourne, you know, and I’ve kind of pushed them to, you know, Adelaide to the next state to the west of us and I’ll push them north into, into New South Wales. So, we’re kind of in a few states here. But yeah, I think that, you know, we could call it the Eagle.

Eve: [00:46:07] I love this idea of sustainability through reductionism. Like I worked in this Pittsburgh market, which is a really soft market when I was doing real estate development. And I had to reduce everything down to the bare minimum for different reasons, just because the market couldn’t support anything else. But there are now places here where it can support, it can support more. But I mean, you know, my own apartment has polished concrete floors because we really couldn’t afford to cover it. And I’ve got, you know, concrete, raw concrete block walls because painting it just wasn’t part of the budget. I think that’s beautiful. You know, I think that it’s exposing that, you know.

Jeremy: [00:46:50] But if you detail it well, I mean, the fascinating thing is if you think about the Commons, you know, Bonnie being so reductive that even the surfaces. So, all of the tap ware that we used to specify in Melbourne was cast in brass and it made it made in Melbourne, cast in brass sent off to the chrome platers so to be electro plated with chrome. And then it would come back to the manufacturers that would brush the chrome, that would repackage it, they would send it out. And chrome plating is a very toxic process, anyway. It’s very, very energy intensive and it requires all of this transport between the brass caster and the chrome platter and back again. So, Bonnie pulls all of the chrome plating off, you know, talks to the manufacturer, gets them to agree to give us basically the rough cast brass, you know, just buff off.

Eve: [00:47:40] Which are beautiful, right.

Jeremy: [00:47:42] Absolutely beautiful. And now in Melbourne, you know, find me a building you know, whatever, ten years on that doesn’t have bar store furniture and brass tap you know. So, it’s actually, it’s become an aesthetic and I’m not saying that again, maybe it was just the time, but you know, it’s become an aesthetic in its own right in this city. But it’s really come out of, you know, Bonnie Herring pushing this, just really pushing the reductionist agenda. So, yeah, I mean, it’s interesting. And then if you think that all of the apartments around here, we pull all the ceilings out to give us, you know, taller ceiling heights and to not put all of the, you know, embodied carbon in those ceilings and to expose all the thermal mass to give us really stable temperatures. You know, we’ve been pulling the ceilings out since 2014 and now no apartments around here, you know, like they’ve all got exposed concrete ceilings, you know.

Eve: [00:48:52] So, there was this language in construction and building homes that wasn’t really there for good purpose, right. And you’ve stripped it away and it’s really quite a beautiful aesthetic and people are adopting it, it’s a great thing.

Jeremy: [00:49:07] It’s interesting. Eve, I better run because I’ve got to go and talk to someone. So good to speak with you.

Eve: [00:49:15] And I want to, I’ll want to know in two or three years where you are then, because this was enormous progress, especially given that there was a pandemic during all of this.

Jeremy: [00:49:25] Yeah, but I think that I’m sure it was the same in the States. We were expecting the sky to fall, and everything was upside down. So, you know, housing prices went up, construction prices went up, yet demand went up like nothing made any sense. So, yeah, you know, I am still expecting the sky to fall, Eve.

Eve: [00:49:49] I’m hoping to come to Melbourne sooner and we’re going to catch up again then. Thank you very much.

Jeremy: [00:49:56] Thanks, Eve. Thank you.

Eve: [00:49:58] You too. Bye.

Eve: [00:50:16] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange, where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big 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.

Image courtesy of Jeremy McLeod

Flat is the new normal.

January 10, 2023

“Mass-market production and the commodification of housing has led to a ‘flattening’ of design into a limited set of bland, homogeneous options” writes Diana Ionescu for Planetizen.

Once upon a time, houses used to have unique features. Today, if you drive around any American city, you’ll see neighborhoods full of cookie cutter homes and rows of surprisingly similar, cheaply constructed apartment blocks. Architecture critic Mark Lamster, from Dallas Morning News, writes: “To call this ‘architecture’ is an insult to the art. Rather, think of these buildings as spreadsheets bumped up to three dimensions.” He calls this “The Flattening, a gradual draining of character from just about every corner of our lives.”

How did this happen? Cookie cutter suburbs are not new, but the trend seems to have accelerated. The status of houses has changed from family home to commodity. This has led to their design being driven purely by economics. Builders who want to appeal to a wide range of buyers, to embrace the demand for greater efficiency and to use the cheapest materials available, now favour quantity over quality and character.  

Will this shift be kind to us in the long run?  We think not.

For economic and sustainable reasons, we need to shift our focus to long-term growth of cities. This means designing and building a variety of housing types for the ever-increasing variety of family types.  And it also means designing and building to improve our cities, making them delightful places to live, not flattening them.

Read the Planetizen article here or the original Dallas Morning News article here.

Image by BrianScantlebury licensed by Canva

Counting on Crowdfunding.

October 26, 2022

Jamison Manwaring is the co-founder and CEO of Neighborhood Ventures, a remarkable Arizona-based real estate crowdfunding company, focused on value-add multi-family properties.

It’s a real estate company, for sure – they buy, hold and sell property. But the capital plan is innovative, with a growing pool of state residents who are permitted to invest through Arizona intrastate securities law. Nine successful projects later, Jamison is now taking his plan to the national stage with their latest project, a short-stay hotel he wants to repurpose into affordable housing. And he’s raising funds on SmallChange.co, not just once, but a second time now.

Jamison attended business school at the University of Utah where he graduated with a BS in Finance. He was always interested in finance. He loved it enough to become president of the finance club. Even at a young age Jamison’s determination shone through. He wanted to work in New York, at a top finance firm. But those companies have their pick of Ivy league school graduates, which he was not. So, every Thursday night he flew the red eye to New York to network.

You’ll have to listen in to hear the rest of the story.

Read the podcast transcript here

Eve Picker: [00:00:06] Eve Picker: Hi there. Thanks for joining me on Rethink 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. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:39] Today I’m talking with Jamison Manwaring, for a second time. Jamison is enjoying success as the co-founder and CEO of Neighborhood Ventures, an Arizona based real estate crowdfunding company focused on value-add multifamily properties. Always interested in finance, Jamison went to business school and studied finance. He loved it enough to become president of the finance club. Even at a young age, Jamison’s determination shone through. He wanted to work in New York at a top finance firm, but those companies have their pick of Ivy League school graduates, which he was not. So, every Thursday night he flew the redeye to New York to network. But wait, if I tell you what happened next, I’d be a spoiler. So, listen in to hear the rest of the story.

Eve: [00:02:39] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or head over to rethinkrealestateforgood.co and subscribe. You’ll be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:02] Hi, Jamison. It’s great to have you back on my show.

Jamison Manwaring: [00:03:05] Hey, Eve. Good to be back. As I was mentioning in the intro, I’d much rather be in Pittsburgh right now. You’re 80 degrees. We’re supposed to get 99 degrees and it’s still mid-September. So, we’re ready for the cooler weather here in Phoenix. But real estate is hot as well.

Eve: [00:03:23] As hot as the weather. That’s right. So, I want to go back to your background, which is solidly in finance, all the way back to college when you majored in finance. And I’m wondering what led you to launch Neighborhood Ventures and focus on real estate?

Jamison: [00:03:39] I didn’t know what I was going to study when I got to college, not unlike many people. And started in accounting, did some accounting classes, ended up landing with finance because what I knew I wanted to learn was how to analyze a business. And I kind of look at finance as the language of business. You know, if you are a good entrepreneur and you can start a business at some point, you’re going to need to understand what’s happening in the business. And I had actually started a small business right out of high school that was like a for sale by owner service. At one point we had a couple hundred listings and we charged people a flat fee, like $1,000 fee to list their home and would market it for them. And the business was great at times and then at times it wasn’t great, and I really didn’t understand why, what was driving that, what was beneath the results.

Jamison: [00:04:40] So, I ended up knowing that I wanted to go to college to be able to learn how to analyze a business and ended up in finance, which is where trying to understand a business for either investment purposes, if you’re from the, looking at the company kind of outside in or if you’re inside the company learning how to manage the business properly, where to spend money, where to pull back capital, where to reinvest more capital. And so, that was a very useful skill that I’m really happy I ended up sticking with that major.

Eve: [00:05:14] That’s where you started with finance. So, take me on the journey from there to Neighborhood Ventures.

Jamison: [00:05:20] Out of college, well, my junior year of college, I decided I wanted to go to Wall Street and I don’t know if I had seen a movie. I’m trying to think back at the time it was after the great financial crisis. So, some of those movies were out, the Big Short was out. And I was definitely intrigued by everything that was done by the investment banks, the importance of that in our economy and the importance of the work they do. And so, I determined that I wanted to go get to Wall Street. And I was from University of Utah, which is not a school that the investment banks recruit at. They don’t really consider.

Eve: [00:06:02] Not Ivy League, right?

Jamison: [00:06:04] Yeah, they really focus on those Ivy League schools. So, I had to go in what I call the side door and I started flying out on a Thursday night redeye after class, I didn’t have class on Friday. I’d fly out to New York Thursday night, redeye. I would arrive at about 6:30 a.m. in JFK, JetBlue flight. And I would start reaching out to folks. I would try to have a few meetings, set up an advance, just an info session. So, I would ask, I would tell folks, hey, if I can have 15 minutes of your time, I’m just trying to, I’m a college student. Which kind of opens people, opens doors. And these were alumni from either University of Utah or BYU, which there’s a lot of close ties there. And I’m here in New York for the day, I would love to be able to come by and meet. What I also found is Friday afternoons, a lot of people on Wall Street, it’s a little bit of downtime. They kind of have to be in the office, but they don’t mind having, spending some time with somebody to get off of their desk. And so, I did that for a couple of months. I probably did a half a dozen trips.

Eve: [00:07:19] That’s exhausting!

Jamison: [00:07:19] It was, and I spent the night at the beginning in a hostel with eight other people. And that was a new experience for me. I was like, I got to get out of here.

Eve: [00:07:32] At least it wasn’t a park bench, right?

Jamison: [00:07:34] Yeah, it was close. It was about, I think it was 25 bucks a night. And then even the cheapest hotel was like 125, which I couldn’t afford. So, I ended up meeting a lot of great people who even to this day are I’m connected with and view them as mentors through that process. So, it was kind of one of my experiences that was really hard. But you look back and you’re like, I’m very glad I did that, and I don’t know if I could do it again.

Eve: [00:08:05] It’s pretty gutsy. I don’t know how many people would take that on. You know, that’s.

Jamison: [00:08:10] Well, and being from Utah, the people who know say you have to do it that way if you want to get there.

Eve: [00:08:16] Interesting.

Jamison: [00:08:18] You got to go hustle. I ended up meeting an alumni who, I didn’t ask him for an internship, but we connected a few times and he said, Hey, would you be interested in doing an internship with us? He was at Barclays Capital, which had bought Lehman Brothers. He was a senior person there. And I said, Yeah, I’d love an internship. And now that you ask, I would love one. And he got me an interview, phone interview. And then when I passed that, they flew me out and did a super day. I didn’t know what would happen. I didn’t have any other options for that, that internship. But they ended up giving me an offer. And I think they paid pretty decent, enough that I could move to there for the summer, live in New York.

Eve: [00:09:08] Not have to stay in the hostel, right?

Jamison: [00:09:10] Not have to stay in a hostel, which was very exciting. And I worked on a sales and trading floor there. Selling equities and talking about equities that. Basically, what we did was we would promote the research of the firm. Hey, this is a stock that we like. This is stock we don’t like. Talk to clients about their thoughts on it. And it was a great experience. I ended up moving from the sales floor to the actual research floor, which I’m very happy I did. That’s where you can really do deep dive financial analysis on companies. And I worked on a few IPOs and ended up moving to Goldman Sachs in their technology team and working with software stocks.

Eve: [00:09:53] That’s pretty impressive from Utah.

Jamison: [00:09:56] Yeah, and it’s, kind of, back to your question. One of the things that I learned through this time was I loved investing, but I didn’t like equities in particular, tech equities. They’re very volatile. They have big swings, daily swings, sometimes especially software stocks up 15, 20% after earnings down 15 to 20% after earnings if they miss. And it did not suit me when it came to my kind of temperament.

Eve: [00:10:33] Yeah, I get that. It doesn’t suit me either. Maybe it’s a control thing. You kind of got to understand what’s making those swings happen, right? And it’s pretty hard to get that.

Jamison: [00:10:46] And there’s a lot of factors in public equities that are outside of our knowledge and our control. There’s a lot of quant funds that are just trading on the algorithm, and they don’t make sense, but they move the market. I was certainly turned off by any impact I could have. Right. You’re just one person in such a large pool of people. So, I learned a lot there, but I began looking for my next option and knew that I wouldn’t be there forever. One of the companies I worked on their IPO was LifeLock. They’re based in Tempe, Arizona, and had grown a business to several million subscribers around identity protection. I worked on their IPO, and I got to know the CEO and the CFO, and through that process I kind of let them know, Hey, if anything comes up, I would be interested in getting out of New York and getting back west and ended up moving out here in 2015. When I joined the company, our stock was $8 a share. And I knew it had a long way to go, and that’s why I wanted to join. I saw it as a real opportunity. We ended up selling to another company 18 months later for $24 a share, 3x.

Eve: [00:12:02] That’s pretty good. Yeah.

Jamison: [00:12:04] So, that was great. At that point, I didn’t have a job because we got acquired by a bigger company, but I had bought a property when I was in New York, a ten-unit building, in my home, near my hometown of Idaho. And just kind of going back to what we were talking about before, Eve, how much I didn’t like software stocks and equities, public equities. I really liked, for about a year and a half, that I had had this little ten unit building on the side. I don’t know, there was just something about that it was physical that I could see it, that we could improve the operations, we could enhance what the property looked like from the street, all those little things. And then we would see big improvements in our revenue. And I really love that experience. And I was kind of just doing it for investment. I didn’t expect that I would go into that now, looking back. But I could clearly see that I like that a lot better. And I think you have to enjoy what you do. And so, that was one thing that, it was pretty clear to me. I wanted to do more of that and less of public equities.

Eve: [00:13:16] So then, tell us about Neighborhood Ventures, because that’s what grew out of that love, right?

Jamison: [00:13:22] Yeah. So, I had actually followed you and some other folks in the industry in the mid 2000, 2014, 2015, 2016. My company got, Lifelock got bought out in 2017, and a lot was happening in the crowdfunding space. And I wanted to figure out how could I raise more capital to do more projects. I had done this one project of my own on the side, and I really saw crowdfunding as a unique way to do that. I didn’t want to do the old-fashioned country club route where you go out and get a few wealthy people to raise, to write checks. That didn’t seem very interesting to me. And I wanted to do something new and different and creative and kind of a new challenge. And I was looking at a building to potentially buy and try to crowdfund. And my broker, I told him what I was looking to do, and my broker said, well, you know, my boss talks about real estate crowdfunding all the time. And I said, well, what’s his name? He said, John Kobierowski.

Jamison: [00:14:27] And I ended up emailing him and he had been an apartment veteran for 30 years in Phoenix and was very interested in launching a real estate crowdfunding company as well. And he brought a lot of industry knowledge and over 30 years in the Phoenix market. It was kind of an instant match where I said, well, let me focus on the capital raising, the crowdfunding, the technology side, and you could really focus on the real estate side. So, we realized that we had a good match. We’re very different in the skills that we bring and what we like to do, but that’s when we launched the company. And the name Neighborhood Ventures, he had already bought and already had the domain name. And so, we, I love the name and we launched in, basically 2018 was our first offering.

Eve: [00:15:22] So, let’s talk about that a little bit. Like, what are you trying to accomplish with Neighborhood Ventures? What is it? What does it look like? What’s the business?

Jamison: [00:15:30] I was talking about this yesterday in a team meeting with our team at work, at Neighborhood Ventures. And I think it’s important to go to your why. Why you do what you do? Your motivation. I think that’s very, it’s important to me to understand why am I doing what I’m doing? And I also look at that in other people. If somebody is being very friendly to me because they’re trying to sell me a pair of shoes at the mall, I kind of question that. I’m like, well, they’re just being, you know, they’re just buttering me up so they can sell me something. So, I think motivation matters a lot. And I don’t like it when, in that situation I can see real quick, okay, they’re just trying, they have an angle here, right? So what Neighborhood Ventures are, it’s very simple.

Jamison: [00:16:22] With John and I, we want to get more people involved in the opportunity to invest in commercial real estate. That is, has been our mission from day one. It’s always been a really good asset to own. That’s what drew me to it. It’s very stable relative to other assets. It goes up in value, it produces cash flow. There’s all these things about it that are really appealing, but it’s only been available to a small group of people. So, what our mission is and our reason why we started this is we want to get a lot more people involved. And we have big ambitions, we think we can grow that to a lot of folks nationally, there’s a big pool, about 40 million people nationally who have funds they want to invest, but they don’t reach that accredited status, which most people have to reach to invest in most projects on on crowdfunding platforms.

Eve: [00:17:20] So that’s 97% of the population, right? Approximately, yeah.

Jamison: [00:17:24] Yeah, yeah. And young folks right now who want to start putting money away. I think commercial real estate is very appealing, if they can invest in smaller increments. For us, it’s $1,000 minimum, and then they can start putting even $100 increments after that or whatever it might be. But you can start with small amounts and start to build that nest egg. And then we do have larger investors who like to do more than that, too. But our goal is to broaden that group, to allow a lot of people to own this asset. And I think we’re in the second inning so far and we think the next few years are going to be really interesting for us.

Eve: [00:18:08] So the buildings you focus on, what are they like?

Jamison: [00:18:13] John’s an expert in multifamily, so we’ve largely focused on multifamily projects in the Arizona market, both in Phoenix and then Flagstaff, which if you’re not from Arizona, Flagstaff is about 2 hours north of Phoenix. And when it’s 110 in Phoenix, it’s 90 or 85 in Flagstaff.

Eve: [00:18:36] Balmy.

Jamison: [00:18:38] And it’s 2 hours away. So, it’s pretty amazing. The elevation is pretty, is a big factor in that. But if you’re in Phoenix and you can get up to Flagstaff, it’s an amazing place. It’s kind of almost like a a Jackson Hole or an Aspen or a Park City. One of these cities, it’s mountain town, but it’s great for Phoenix. So, we have two projects in Flagstaff. It’s an area that’s landlocked. So, there’s not much development going to happen there, and if you can get a piece of property, it’s a good property to hold on to. And so, we largely focus on finding properties that are in these core areas that have good trends happening there, but they need to be repositioned. The assets are underperforming for some reason. A lot of times it’s because the amenities aren’t up to date. There’s been deferred maintenance, there’s poor property management, and we can look at the other properties in the neighborhood and see that the rents are much higher in those properties than in this property. And that’s when we act. We say, look, we know we can go purchase that property.

Eve: [00:19:46] So really, value add.

Jamison: [00:19:48] Yeah.

Eve: [00:19:49] And that’s smart because you can probably offer a return much earlier because the building continues to cash flow or starts to cash flow pretty quickly, right?

Jamison: [00:20:00] That’s right, yeah. We typically don’t pay distributions for the first year, but it cash flows earlier. Sometimes it’s been four or five months. We’re paying distributions to investors.

Eve: [00:20:12] That’s pretty amazing. So, you know, you actually did an offering, it was a three-way offering, and one part of it was on my funding portal Small Change. And that was a pretty big repositioning of a rather worn-out looking hotel. Do you want to talk about how that went?

Jamison: [00:20:34] Yeah, we still, we own the asset. It’s performing well. This was a, as I think the way you put it, worn out hotel in a neighborhood in Mesa, which is a bedroom community to Phoenix. Originally a very good property, well built, beautiful pool courtyard all of the units were suite, so they all had kitchens. But the manager who had owned it for ten years really ran it into the ground and there was illegal activity going on at the property. The Mesa police were, and the fire department were locked out of the property. The owner was very antagonistic to them for a lot of interesting reasons. And it was the blight of the neighborhood.

Eve: [00:21:21] How many units was it? It was pretty big.

Jamison: [00:21:23] 120.

Eve: [00:21:24] Right right. It’s a big blight.

Jamison: [00:21:27] And here it sits in a really, an up-and-coming neighborhood. But it was pulling the neighborhood back. There had been a Starbucks that popped up 100 yards from the property. There’s a Costco a quarter of a mile away. It was on the up and coming, but this place just continued to drag it down. And it was the place that bad people came to do bad things, frankly. And I’m sure there was other people there that were just looking for a cheap place and that’s where they stayed. So, when we saw it, we saw the potential. And ultimately, we are planning to get it rezoned to multifamily. We’ve been working with the city of Mesa on that, and that does take some time. But until then we operate it as a vacation rental and it’s doing very well. And ultimately.

Eve: [00:22:20] I gather you made improvements to it, right?

Jamison: [00:22:23] Yeah, that’s right. So, we went in and new carpet, new flooring, new fixtures, new cabinetry, new paint. And you know what? This didn’t take a lot. It wasn’t a gut. It was kind of a they call it lipstick and eyeshadow. You know, the bones were good, right? So, we just went in and made it look good, made it look like it’s a place that you’d want to stay, freshen it up, make it contemporary. And people love staying there. And we do want to add it as a multifamily, as an apartment building, because there’s a shortage of affordable housing across the board and definitely in Phoenix. And these units, I think the city will be able to get this rezoning and folks will, for example, a normal two-bedroom, one bath in Phoenix is about 1800. And I think ours is going to be more like 1500. So, to be able to add 120 units onto that will help.

Eve: [00:23:23] How many buildings have you raised funds for now through Neighborhood Ventures?

Jamison: [00:23:27] We’ve done 13 projects so far. 12 of them have been multifamily, and then we did do one retail project. We brought on a retail expert. And that’s a project in Tempe that’s three buildings. One’s a fast-food restaurant, one’s a Dunkin Donuts, which we’re in the process of building right now. And then we have a third vacant that we’re going to start leasing up soon, once the Dunkin Donuts comes in and their sign goes up, then we’re going to lease that out. So, that’s been a really fun reposition, very similar idea. This was before a cannabis shop, kind of a rundown mattress shop. And, you know, not a place that, not well maintained. There hadn’t been a capital investment. The parking was weird. The dumpster was right in the middle of the property, that kind of thing.

Eve: [00:24:19] Now you have your retail legs, right?

Jamison: [00:24:22] Yeah, yeah. And the city was very excited. We were going to come in and help revamp that part of town. But we believe you need to have deep expertise in whatever you’re doing. So, we took that on once we brought out a retail expert. Chris My mind is blanking his last name, but.

Eve: [00:24:47] He’ll forgive you.

Jamison: [00:24:48] Yeah, maybe we’ll see. He’s a retail expert, so he’s led that for us. And it’s been a great project.

Eve: [00:24:57] Great. So, your current project, full disclosure, is also raising funds on Small Change, which we’re delighted about. And you want to tell us about that? Where is it? What is it?

Jamison: [00:25:08] Yeah. So, this is in again one of these up-and-coming areas. This one is in central Phoenix. It’s near my home where I live in central Phoenix. I live right off the light rail and love this area. But this area has seen a lot of revitalization in the last decade. Downtown kind of used to be a place in Phoenix where you didn’t want to go. And this is uptown, which means it’s about two, two and a half miles north of downtown. It’s a highly desirable area because you’re in the middle of everything. You don’t have to commute to work if you’re working downtown. We’ve seen more of the young folks who are moving to the area want to live in these areas that have a bit more culture, they have more activities they don’t want, they’re not going out to the suburbs. And so that’s really exciting. And so, this area, this project fits right into that. It’s 30 units and as we went and did the tour, it was very clear that they haven’t done anything on this property for probably 25 years, except the minimum amount. But it’s sitting right here around all of these new build projects that are six, seven stories, and they’re great, two-bedroom, one bath townhouses and stacked apartments. And so, we saw the opportunity immediately to go in and bring this up to the standard of today’s renter, and we’ll see a really good return on that.

Eve: [00:26:39] What are your plans for the project? I think it’s actually six little buildings, right?

Jamison: [00:26:43] It’s six separate buildings. But one of the things that you don’t know when you do value add, sometimes you dig in there and you open a wall, so to speak, and you realize you’re going to have to do more plumbing, you’re going to have to do some electrical work. The part of the flooring needs to be repaired, you know, those are the sorts of things you don’t know going in. So, we always build a contingency around that. But the plan here is, the units were laid out really nicely, so we don’t have, we don’t have to get permits to build anything different or to move walls. We avoid moving walls, but we’re going to go in and update it. New flooring, new paint, new fixtures, new cabinetry. We’re going to rethink the outside area. The outside area is kind of weird, kind of felt like a prison yard for whatever reason. It’s all blocked off and the pool has a really weird, big fence around it that you can’t see. So, that’s actually going to be one of the big value-adds is kind of rethinking how the outside space is used, which is really important in Arizona, especially in the winter when people just want to spend time outside. So, rethinking the outside, updating the inside and then the location, because of where it’s at, people will be really excited to live in that area in a brand new newly renovated unit.

Eve: [00:28:05] So, then what’s the total development cost, including the building? And tell us about how you’re financing it.

Jamison: [00:28:13] Yeah, so it’s 30 units. The purchase price is 222 per unit. And so, I like to look at it on a per unit basis, but 222 per units what we’re buying it at and then we’re going to end up spending about 35,000 to renovate it. So, our cost basis is 260, 265,000 and some of that includes contingencies. So, if we can shave some of that off, might be closer to 260 on the high side 265, that’s our cost basis. And then when we look at what the value of that building is going to be, it will depend on what the rents are going to be. And we’re expecting the rents will be around the average of that neighborhood, which is about 1800 for two bed, one bath. And that would put the value of that unit around three 325 to 340.

Eve: [00:29:11] What are the rents now for that unit?

Jamison: [00:29:16] They’re in rough shape so they’re renting for under 1000.

Eve: [00:29:19] So, it’s a pretty big shift.

Jamison: [00:29:21] It’s a big jump. They’re all over the place. There’s one that’s 100 and there’s one that’s 800, which is kind of strange that, and they’re the exact same unit. But the neighborhood comps are real right now, are 18 to 1900.

Eve: [00:29:40] That sounds like a great project. So, just generally, what are some of the challenges that you’ve been confronted with this business? Because it’s different. I mean, the product is pretty normal, but the way you’re tackling it is different.

Jamison: [00:29:53] Yeah. I think one of the, our goals is to make it a frictionless experience for our investors. But we know how difficult this is to get from purchasing a property, getting, securing debt and capital to buy it, do the renovations. All of those steps perform the renovations, which we have a crew in house that does all our renovations, which helps us a lot. Then leasing up the property to qualified tenants who are going to pay the rent. That’s a big process in and of itself and then continue to collect the rent and manage that. And for our investors, we want it to feel like they’re involved, that they get to see what’s happening, but they don’t have to worry about all of that stress. For them, it’s easy. It’s almost like when you’re on Amazon and you just three clicks, you get some you order something, and it shows up at your doorstep a few hours later. That type of experience is what we really aim for our investors, even though there’s a lot of complications to get there. So, I think the biggest thing that is a challenge is ensuring that you don’t go over budget in the renovation. It’s really easy to do.

Eve: [00:31:05] That’s for sure.

Jamison: [00:31:06] When you get into one, a project, you say, oh, let’s do that, let’s do that, let’s do that. And then you kind of realize, look, you have to have an ROI at the end of this, so you can’t do everything you want to do. You have to be strategic about that and you have to hit deadlines. If one thing gets pushed back, then it pushes everything back. So, that’s the biggest challenge.

Eve: [00:31:30] And that must have been super big the last couple of years because the construction industry got really weird there.

Jamison: [00:31:38] Yeah, yeah, prices went up. It was harder to get materials. So, we were, we tried to be ahead of that. We tried to order stuff well in advance, so that helped us. Still, there were some things that we just couldn’t get for a long time, right? But we think about that. We try to get ahead of the game. You know, and then the other big challenge is finding good deals. And we are very picky about the deals that we do because we don’t have to do deals, meaning we’re going to only do deals that we really believe we can achieve, and we have a high level of confidence. Some of the ones on the fence we’ll look at and we’ll pass on. Other people might move on it because they need to deploy capital, or they need to keep their investors happy or whatever. For us, we’re not going to do deal unless we really have a high level of confidence. We believe in it, and that means we pass on a lot of deals, we see a lot of them, and we just say, look, we’ll let somebody else take that. We’re going to go after something that we think has a better opportunity. Which, we want to keep the risk as low as we can.

Jamison: [00:32:48] So, finding deals is hard in this market. And my co-founder, John, he runs day to day. He’s the CEO of ABI Multifamily, they’re the largest broker in Arizona that sells apartments. They sold 125 apartments so far this year. And that’s where we get our deal flow. A lot of times old clients call him and say, hey, look at this. Here’s a project that I’m looking at selling, and we buy it off market. So, figuring out where those deals are going to come from, especially in a market where it’s tight, has been really important for us and we have a big advantage there. But it can be really challenging to find those deals and, that really have a good amount of juice left in them.

Eve: [00:33:36] So, are you thinking about expanding operations beyond Flagstaff and Phoenix and maybe even beyond Arizona?

Jamison: [00:33:45] Yeah, yeah. So, working with Small Change is kind of our first step into that, where we can now raise capital from investors nationally. Prior to that, we’ve only raised capital from Arizona investors through the Arizona crowdfunding laws. So, we’re excited to begin to raise capital and to begin building in our investor base nationally and over the next 18 months, I think they’ll be, actually sooner than that, probably six months, I think we’ll have some exciting announcements, more things we’re doing nationally to meet our mission. We want to, we have about 5000 investors in Arizona so far, and we’re just in Arizona. So, we want to go nationally and offer what we are doing to the whole country. And we’re really excited about that. And so, I think it’s going to be an exciting time for us. We’ve been building towards this. Our momentum just kind of keeps carrying us through to this next step.

Eve: [00:34:41] Well, thank you very much for joining me. I’m really looking forward to seeing the next exciting announcements.

Jamison: [00:34:47] Yes.

Eve: [00:34:48] Thanks, Jamison.

Jamison: [00:34:49] We’re excited, thanks again for having us. We love everything Small Change is doing and love to partner with you guys and you guys are great to work with. So, thanks for having us on.

Eve: [00:35:00] Appreciate that. I appreciate that.

Eve: [00:35:10] That was Jamison Manwaring, CEO of Neighborhood Ventures. Jamison is putting his determination to work building his innovative company in Arizona. It’s a real estate company for sure. They buy, hold and sell property, but the capital plan is innovative, with the growing pool of Arizona residents permitted to invest through Arizona intrastate securities law. He’s seen early success, and he’s taken his plan to the national stage, raising funds, for a second time now, on my crowdfunding platform, SmallChange.co. We can’t wait to see how it turns out.

Eve: [00:36:00] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange, where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big 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.

Image courtesy of Jamison Manwaring

Not a Snowflake.

October 12, 2022

Elizabeth Timme is one of four co-founders of a brand spanking new design and planning office based in Los Angeles: Office of: Office. Elizabeth, a third generation architect, born in Texas and raised in LA, is best known for her work as founding co-director of LA-Más, a small but notable non-profit, “designing and building initiatives that promote neighborhood resilience and elevate the agency of working class communities of color.”

In its early days, LA-Más worked with the Northeast LA Community Plan Riverfront Collaborative. Their work ranged from affordable housing to storefronts for small business owners, shining a much needed spotlight on homelessness, housing shortages, and how to stabilize communities ahead of gentrification. Projects included ADUs (Backyard Homes Project), the Watts Community Studio project, the Reseda Boulevard Great Streets Initiative, and Backyard Basics, a proposal for affordable housing in Elysian Valley.

Elizabeth loves the field of architecture, but she is cognizant of the industry’s warts, including lack of diversity and accessibility in both the industry and its clients. She has said “I fundamentally challenge the layers of bureaucracy that strangle our ability to service environments that don’t have the resources to challenge, or to lobby, or to invest in something better than the status quo.” At Office of: Office the mantra is always community first.

LA-Más was named as an 2018 Emerging Voice by the Architecture League, and Elizabeth has been on the Women of the Year list by Los Angeles Magazine, a Curbed’s Young Gun of the Year, and recipient of the Vanguard Big Idea Challenge in 2019. She has written for Manifest Journal, Log 48, and Tablula Plena. Before LA-Más she served as project manager and development officer at MASS Design.

Read the podcast transcript here

Eve Picker: [00:00:05] Hi there. Thanks for joining me on Rethink 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.

Eve: [00:00:40] Elizabeth Timme is no snowflake. Strong and outspoken with degrees in architecture under her belt, she’s building an alternative career on the strong beliefs she holds. That great design should be a right, not a privilege. A third generation architect born in Texas with childhood years spent in Italy and West Indies, Elizabeth has made roots in L.A.. First, she co-founded La Mas in northeast L.A. and now Office of Office, a nonprofit focused on designing joyful and careful places in collaboration with communities. You’ll want to hear more.

Eve: [00:01:23] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:01:48] Hello, Elizabeth. It’s really nice to have you here today.

Elizabeth Timme: [00:01:51] It’s wonderful to be here.

Eve: [00:01:53] So, you’re an architect by training, but you launched LA-Más now office of: Office, which are really not typical architecture firms. And you’ve been heard to say great design should be a right, not a privilege. So, how does that all come together?

Elizabeth: [00:02:11] Well, I think it really starts from having the perspective of being a third generation architect. And also, my father really came from a blue collar family, household, and so did my mother. In Texas doing industry trades, working for Howard Hughes oil and, on both sides of the family. And for me, I saw how far and how hard my father worked to be able to kind of become middle class. And so, it’s always really been important to me that architecture was broadened and widened to include individuals perspective and voice who didn’t have the privilege that I had to come into an upper middle class family where a college education was assumed. And I think there’s so much really profound substance to the dialogue of architecture in city making and place keeping that is not a part of the table when people who have challenges, who don’t have safety nets and have a lot of pain associated with living in modern cities or anywhere, their perspective isn’t represented and their perspective doesn’t fundamentally shape how we go about building cities and keeping cities. Right. So, I think that my perspective around these two different practices and even going back from the naissance of my professional career, is that architecture should and can be of service and really wanting for there to be more diversity in the field and the conversation.

Eve: [00:04:05] So then you launched LA Más and now Office of: Office. And how, how do they, take me on that journey.

Elizabeth: [00:04:12] Well, I think it really began in 2008 when I went into my graduate career and, as a graduate student. And that was the beginning of the Great Recession. And that was very different than my undergraduate education, where in 2005 I was being offered 401Ks and really cushy things and architecture seemed.

Eve: [00:04:43] Yeah, ofcourse.

Elizabeth: [00:04:44] And my friends were negotiating for that. They were like, Where are you picking? Like, Who has the best 401K and what is your health insurance? And it was so wild and so different and architecture seemed like a very stable place to have a professional, lifelong career. And then when I went back into graduate school, it was because I was really frustrated with the lack of innovation and curiosity that was present in the architecture firms that I was working in. And I graduated in 2010, and there was no career opportunities. The architecture profession and, neck and neck with law, was the most unemployed professional discipline in the United States.

Eve: [00:05:32] But it makes sense, right? Like all of those developers went out of business and boom, everyone else attached to them went out of business.

Elizabeth: [00:05:41] Absolutely. And I think that also the schools, and I’ve been witness to this, they churn out tons of kids who really have a lot of strong ideals about shaping the world and supporting a better future. And there’s not a real clear professional conduit for getting a job.

Eve: [00:06:02] I think that’s right. Yeah. I think architecture has been treated as a really precious career. And yet architects are so well trained to do so many things, right?

Elizabeth: [00:06:14] Absolutely. And also the numbers and the NCARB AIA and the licensing process has gotten better. But if you look at how many architects graduate school every year versus how many, and we’re I’m a little off topic, but how many licensed architects are active in our profession? I want to say it’s in the thousands of licensed architects, whereas it’s like hundreds of thousands of architects graduate.

Eve: [00:06:43] Interesting.

Elizabeth: [00:06:43] And so, we have a really impoverished process that supports really curious young perspectives, being able to call themselves architects. And so, I graduated in 2010, and the career that I knew and the career that I had watched my father had, for instance, was not an option for me. And it wasn’t just not an option for me. It wasn’t an option for any of my peers. It wasn’t an option for people who I had gone to undergrad with and they had lost their jobs. And so, it was really a. Paul Nakazawa, who was one of my mentors in grad school. He was a business, he got his major in business and architecture. He always said the recession was the most valuable time for him to retool and recalibrate about why he was doing anything.

Elizabeth: [00:07:39] And so, to graduate in that climate, it made me really question what the value of the architectural practice was and why I would be a part of it. And so, this was radical for me, where the values in which I grew up in, in the household I grew up in, instead of going to playgrounds, I was going to Roman ruins, right? So, it was very hard to unlink that from some core identity that I had. And so, there, you know, I worked at another kind of nonprofit architecture firm, really saw the kind of inner workings of that. And I founded LA Más, three months pregnant with kind of coming back from grad school in 2012 and seeing a conversation happening with urban planners and landscape architects around the future of the city, and about the kind of early underpinnings of gentrification and displacement and really, really being curious about what that meant, but also wanting to add value and support that conversation and not see it being had in the discipline of development and architecture.

Eve: [00:08:52] So what sort of projects did you work on in LA Más when you launched?

Elizabeth: [00:08:55] So when I launched, we started working on the Northeast L.A. Community Plan River Riverfront Collaborative, and this was kind of early. So the CRA also, the Community Redevelopment Agency, had been dissolved by Jerry Brown to balance the budget in maybe 2010, or between 2010 and 2012. And there were the early seedlings of all of that lack of investment in the state of California and in specifically Los Angeles. So what that meant is new library sites were not being identified and developed, storefronts and small businesses weren’t being supported. The public realm and the public right of way didn’t have a clear conduit for investment. There were all of these ways in which there wasn’t an agency that was proactively developing and supporting existing communities and neighborhoods. And so, we were starting parallel with the mayor at the time, Eric Garcetti, who was doing a lot of urban planning initiatives like Great Streets and Parklet work.We were starting a critical conversation in parallel to that about how are we going to be stabilizing communities ahead of gentrification.

Elizabeth: [00:10:13] And so, the neighborhood plan for northeast L.A. was about identifying sites where there was community power and community stakeholders and the built environment didn’t match the kind of thriving residents and thriving cultural activity that was happening there. And so, from there, we went into doing some of the great streets work where there were 15 boulevards identified by 15 councilmen in the 15 council districts that were kind of these quasi vanity projects around, let’s do something cool to really make L.A. Streets great. And we started off by saying, listen, the the metrics that you all have for success don’t match the ways in which you should make it accessible to invest in communities. Why are you talking about $100,000 of steel furniture when we could do something out of marine grade plywood with a certain type of finish and it would cost us 10,000. Why aren’t you doing it in coalition with community members and non-profits? Why are you doing it in a silo and a political process? Why are you not considering the small business adjacent to the public realm and their right to expand their operating and stabilize their income through being able to access the sidewalk?

Elizabeth: [00:11:37] And so, we did a lot of work that was design plus in that period where we were doing community engagement, but we were really partnering with the small business owners to redefine what it meant to invest in the public right of way. That the storefront and the small business owners right didn’t end at the store, at the beginning of the sidewalk, that it extended to the middle of the street. And that the pedestrian needed to really have a visible imprint in the city and that a pedestrian oriented public space was more important than a car oriented one. And so, it’s all these “duh” things that were very easy for us to establish in those first half of our existence, to be able to have a conversation in parallel with the political one where we’re actually implementing projects with very different short term time frames, in partnership with community members and with drastically more accessible budgets.

Eve: [00:12:39] Sounds like really hard work.

Elizabeth: [00:12:41] It was. Yes, it was. And in tandem with that, I was building my family. I have three kids and I was pregnant every two years, and in not a strategic way at all, while we were doing the majority of that.

Eve: [00:12:58] Just makes you work harder. Being a mother makes you very focused, doesn’t it?

Elizabeth: [00:13:03] Yeah. And for me, it was a huge amount of creative energy that came from that process, kind of birthing some very early seedlings of ideas as well as birthing children. It was pretty powerful and I don’t hear women talking about that very much. And I’m guessing it’s probably because there’s not clear avenues by women led conversations, but it felt very organic to be creative personally and professionally at the same time.

Eve: [00:13:35] You know, for me as a mother, I think what fell away was everything else I was wasting my time on. I had to be ultra focused on the family and the work, and the rest of it was like, poof, you know, no time for that, you know?

Elizabeth: [00:13:49] And it is interesting because I have had periods where I’m not the best mentor because I’m at home doing that work.

Eve: [00:14:00] Yes.

Elizabeth: [00:14:00] And I think that there’s a real backlash professionally if women aren’t willing to do the work of mentorship.

Eve: [00:14:07] Oh, really?

Elizabeth: [00:14:08] Yeah. I think that, you know, and I kind of battled that in my office. And I think I’ve been able to walk a middle line. But the idea that you wouldn’t come to the table to nurture other people in a in a professional environment, I think in some ways you don’t realize it’s expected of you until you graduate into a profession that is so reliant on mentorship. And yet you see people who are excelling, not giving any of it, not offering any of it. And that was one of the biggest challenges with me having working in a traditional, quote unquote architecture practice is there was no conduit for me to be mentored by anyone in a position of power. I had to find it myself.

Eve: [00:14:50] Yeah, I think that’s true, yes.

Elizabeth: [00:14:53] Across the board, you know. I think the kind of boomer mentality is that everyone’s a special snowflake. And I don’t think that that really extends to, how do we mentor a younger group in some of these kind of hard skills.

Eve: [00:15:07] Right.

Elizabeth: [00:15:08] So anyhow, I think the expectation was that you have to do that, offer that mentorship in a kind of nurturing environment. And I think that that was a real limitation that I had early in this career that I’m talking about, because I didn’t have that creative ability.

Elizabeth: [00:15:28] Interesting. So let me ask you about the very playful and bold architectural language you use and how you arrived at that. How does that fit into the story?

Elizabeth: [00:15:39] Well, it really did begin, I lost both of my parents when I was 23, the year that I was graduating from college, four months apart from completely preventable. And my my father had lung cancer that could have been prevented if caught earlier and my mom had a stroke that could have been treated if it hadn’t been misdiagnosed. And so, I’m an only child and my parents were very work focused, so I didn’t have a strong relationship at the time with our extended family, and I felt very alone. And very placeless. And I really immersed myself in the different communities of Los Angeles. In Little Tokyo, and my favorite restaurant or in Little Ethiopia. Having a conversation with some store owners about how they kind of weathered the civil unrest or the earthquake and the kind of network of community members that they relied on over coffee. Ethiopian coffee we were having together, or even going up to Northridge and working in a clothing store. And so for me, through small business owners, mainly, I developed this kind of extended network of understanding and being connected to people’s oral history. And every instance everyone was a person of color or a black individual, right? Kind of bringing me into something that felt larger.

Elizabeth: [00:17:20] And I went from feeling so alone and empty to so full and full of joy. And I think I got to move through that grieving process because I was able to connect and share a kind of much richer collective community experience that doesn’t exist within the white framework. And I felt so much, and I continue to feel so much gratitude and joy about what it means to live in Los Angeles, and joy when I connect to others and I am kind of brought into community that I want to celebrate that and I want to kind of have the world reflect all of that incredible exuberance that exists. And it makes me upset when people move from New York and they come to Los Angeles and they talk so much shit about the city. And it makes me really mad because I know moving from Houston when I was 13 and then losing my parents ten years later how much play, how much fun, how much vibrancy exists in this city. And it’s because of a bunch of dead male planners that existed nearly 100 years ago that the city looks the way it does. It has nothing to do with the people who live here.

Eve: [00:18:45] Yeah, it’s going to take a lot to change it.

Elizabeth: [00:18:48] If we could all remember that it was made by a handful of people, if not less, over a very short period of time. And we’re just kind of playing that out rather than challenging it.

Eve: [00:19:00] So then it was really top down, and what you’re doing is this bubbling bottom up stuff that we hope is going to seep through to everything.

Elizabeth: [00:19:09] I think that if you present a parallel world that is the one that people could choose and you show them how, then you build in where they have the agency to choose it and the ability for their identity and their lived experience to shape it. I think that that’s far more sustainable and powerful than whatever these kind of starchitect solutions are that are pretty boring and age terribly and look dated so quickly. I mean, you know, our culture moves so rapidly now and thanks to the Internet and technology that people finish construction on these projects and they’re already getting made fun of, and it’s because they’re just not very resilient systems in which we could put forward civic investment and institutional investment in the city.

Eve: [00:20:03] So tell me, like Office of: Office, how is that different as a practice and is it for profit or nonprofit? was LA Más non-profit?

Elizabeth: [00:20:13] Yeah, we were a non-profit. And so, what happened is during the beginnings of the pandemic, we were already looking at restructuring so that we could be place based. And this is a strange bucket to think about, because outside of Los Angeles, we are place based in Los Angeles. Inside Los Angeles, you understand the city to be a region. The county of Los Angeles includes 88 cities. And the city of Los Angeles is a kind of gerrymandered, strange object that touches all of these different 15 council districts that in and of themselves are different cities. And we really wanted to look at what it meant to be doing community led community development. And so we began that process. And when you say that what we’re doing is grassroots, I wouldn’t say, or bottom up. I would say that the process of making LA Más something that was truly bottom up was a really deep education in what that line is between where you are from outside a community, regardless of your identity, and what your place should be in supporting community members in their agency to shape the world they live in. And so, we switched to mutual aid efforts. We switch, we paused, all of our storefront work, all of our small business support, our public realm work, our Section eight ADUs, all of that thinking, to have and support community members leading the thinking. And after two years, it became clear that that was just going to be the best place for LA Más to be. And it also became clear that those of us who had been leading the programs around small business and public realm and affordable housing alternatives wanted to continue to do that work at a larger scale and really understand that mechanism between supporting and being in partnership and coalition with community based organizations, right? So it was going through that process of becoming a community based organization that really got us a very deep amount of insight into what that sweet spot is for a group of policy weirdos and architecture dorks and graphic design geeks to really be able to stand in our power and be of greatest assistance, right?

Eve: [00:22:59] One of my questions was going to be, what does meaningful community engagement look like? And I think you’ve answered it. That’s a really big struggle, right?

Elizabeth: [00:23:07] I think that the thing is, is if you are doing it, you are of it, right? You don’t, it’s not a pop in, pop out, check off the box thing. It’s something where, you are a community based organization, you were led, and you are a community member and it’s not the community, it’s your community. And so, the best possible situation would be, you know, you’re from a different community in L.A. or you’re from a different city or you’re a city agency or a council office and you want to support that community based organization, those community members, and you let them continue to do that work and you further that work, and you let them lead that conversation, right? And you’re all in the same space together. There’s no bullshit table where there’s flawed negotiations. And so, the community engagement process is kind of a fiction because it’s an organic, living, ongoing, continuous thing that others can be invited into or not. And we shouldn’t pretend certain projects are for communities when they’re really not. And I think being able to be transparent about those distinctions is half of it, because so many communities have been told something is for them when it’s clearly not. And so, it’s kind of a little bit of a complicated thing to answer, but I hope I’ve.

Eve: [00:24:34] It is. What is it the new practice focuses on then?

Elizabeth: [00:24:37] So the new practice is really, although we’re based in LA, it’s really centering the kind of community knowledge and leadership in being foundational to the built environment and that we are and we have always been great collaborators and we have all of these tools that we are very clear about being tools that we are using to be at the service of a community conversation. Right. And that we’re really not centering those tools in the conversation, but using them to be in service of the conversation. And so, I think that’s an important distinction. And we’re a nonprofit and we have these programs that we had at LA Más. But I think the big difference is the way that we are talking with and in coalition with community based organizations. From the outset, all of that is something that we are in deep partnership with our community based partners rather than in a perfunctory or kind of transactional one.

Eve: [00:25:43] So, can you tell us about a project you’re working on and how it works?

Elizabeth: [00:25:48] We are working with the city of Southgate and we are helping to inform how they roll out all of their ADU policy and programming, but also how they are building affordable housing units and meeting their housing goals. So, that is an example where we are very purposefully reflecting back to the city of Southgate, what it looks like to have a contextual ADU approach that really matches a lot of the unpermitted and informally created affordable housing and thinking about a network strategy so that as we upgrade that housing, we’re not displacing any existing residents that are benefiting. And we’re not putting any residents in a precarious economic situation by getting into the big unknown of permitting something that’s unpermitted. So, that’s one example. I think there’s some others, kind of continuing this affordable ADU work as a program. And a lot of that is kind of really understanding the expanded voucher system that exists now and didn’t exist when we started the program. And being able to understand the nuances between these different housing providers and where they link up and match with the residents. And I think we’re now in a place where at this current phase of our work, we’re expanding the tent and partnering with groups like the Casino Coalition so that we’re capacity building these different nonprofits, rather than just ourselves, to have an affordable housing program. So for us, that kind of 2.0 is expanding the tent and bringing in others to do this work and having a kind of nurturing network where everyone’s benefiting from each other’s kind of hard knocks rather than everyone doing it in silo and us kind of supporting that conversation based on our ten years of experience.

Eve: [00:27:54] So going back to architects, should architects be trained differently? What’s missing?

Elizabeth: [00:28:00] I think that the training of architecture. How do you think about prioritizing and organizing discretely different buckets of technical information and having those result in something ephemeral and perceptual like rooms or space? It was one of the most impactful experiences I’ve had as a human, is to be a part of that educational process. It was also one of the most traumatizing. And the room for me as an individual didn’t exist. The way in which I came into that program with some cognitive differences, there wasn’t room for that, and there wasn’t room for the people that I felt had the ability to shape the profession the most, which is my friends who were black and my friends who were Latino or Pacific Islander, you know, kind of backgrounds, Filipina. Like that wasn’t really on the table. And so, I think also watching my friends and with those different identities and backgrounds, struggle was really traumatizing and scary. And it sent a clear message to me that as a woman, I didn’t have a place. And my place was best guaranteed in the profession if I could support men or if I could be masculine myself. And so, I think that the education of architecture has a lot of really powerful things and a lot of potential, but the culture of architecture is profoundly toxic.

Eve: [00:29:46] Well, that would be true of the whole real estate industry, I think, on the whole. So, that’s definitely where the power is held. And I think it’s shifting, but maybe not fast enough, right?

Elizabeth: [00:29:58] Absolutely. However, it was very clearly told to me when I entered school as a young architect that it was going to be as hard as becoming a doctor. And if I wanted to opt out of that, I should as soon as possible so I didn’t waste anyone else’s time. And being in that process, you get really brainwashed over those five years or let’s say four, and then you go on to do a three year post professional degree. I don’t know, I think that the challenge is, is that you kind of get enculturated and you get, and if you don’t fit into that model, you’re not even in the peripheral edges of the conversation around what things like beauty and identity and context or culture and community, you don’t even get to bring that to the table. And so, you see all these terrible white projects, these terrible quasi pseudo organic things, because there is no reference point anymore to the conversation. It is an art without subject.

Eve: [00:31:13] Yes. I mean, I love architecture. It’s pretty hard to damn it all. But, you know, I hear what you’re saying that certainly, you know, I go back a few years earlier than you do. And certainly women had a very precarious place in architecture then. And it’s just profoundly depressing that it hasn’t changed a lot. I suppose that’s my takeaway. I can only imagine what it’s like for someone who’s of a different culture. It’s just got to be much worse. But that’s true of real estate, like across the board construction, real estate development. It is just heavily dominated by white men. It’s going to change. It has to change, right?

Elizabeth: [00:31:59] Yeah. It’s very hard without banks lending in different ways, without lenders kind of. And I think it will change because there is more diversity inside banks. But the kind of racist underpinnings of the redlining and the kind of, then that period of time still exist.

Eve: [00:32:22] Yes.

Elizabeth: [00:32:24] There’s all these other things that exist that are barriers to people being able to get into the profession or become developers because they’re able to seem like a sure bet when in reality, 90% of Angelinos are living $400 away from being completely bankrupt? Yeah, homeless. And so, how do you have there be development models that reflect the kind of incredible resilience and vibrancy to which people are surviving in that context in a way that’s far more sustainable than these Rick Caruso terrible, displacing, unsustainable foam and marshmallow projects that are.

Eve: [00:33:14] Foam and marshmallow. I’m writing that down.

Elizabeth: [00:33:17] They’re just like terror, like Italianate, Mediterranean esque, you know, terrible things that are going to be so impossible to make work in 10 to 15 years when we have a different climate and a different kind of world, they’re going to become wastelands. And I think the idea that we’re not lending and we’re not allowing, there’s not more room for communities of color to be developers or to have resident led development is just such an oversight. The banks took huge risks in building suburbs and malls, and they can take those same risks in allowing for resident led development in communities of color.

Eve: [00:34:05] Do you think they can or they won’t?

Elizabeth: [00:34:07] Well, they won’t.

Eve: [00:34:08] Well, they should.

Elizabeth: [00:34:10] They should. They can. They’re not.

Eve: [00:34:13] Yes. Yeah.

Elizabeth: [00:34:15] And so, I can say anecdotally, we were talking about architecture and diversity and women. And I think the hardest conversation to have is that white women do not structurally change the profession of architecture. And if they did, we would be seeing a different kind of context and climate and conversation.

Eve: [00:34:35] What do you mean by that?

Elizabeth: [00:34:36] I think that our proximity to power makes it really hard for us to challenge it. I think that you know what I have seen.

Eve: [00:34:46] But then there’s you and there’s me. So some of us challenge it.

Elizabeth: [00:34:51] I’m challenging. I’m not changing. And I.

Eve: [00:34:54] That’s true.

Elizabeth: [00:34:55] I can speak to the ways that these constructs are racist, but I can’t talk to the lived experience of someone who’s black and terrorized. And so, if we’re not having black women, if we’re not having people of color being able to inform that conversation and also be at the helm of structurally changing it, you know, as a white woman, I’m not capable of structurally changing something that’s racist without perpetuating it. And so, all I can do is just kind of unveil and expose, but I don’t have the ability to offer sustainable models for the future. And so, I think that that is the kind of crux of it, is for there to be a return to white women being in that supportive environment so that we’re really clear that we’re accomplices, but we’re not foundational underpinnings of diversity and change.

Eve: [00:35:50] I’m feeling really depressed now.

Elizabeth: [00:35:53] I know it’s rough, but then it’s like you sit on that for a while and then you realize how powerful it is to support there being radical change and that you know, that we don’t have a legacy of talking about white women and how they’re doing that rather than co-opting that work. You know, and they exist, I know so many white women that are great accomplices. And so, it’s just being really clear about what our role is. And so, I felt like it was a misstep to not kind of say that because I don’t want it to be confused that somehow I’m structurally changing anything. I think that it’s more so just trying to offer a kind of parallel conversation so that there’s more room for there to be a bit more depth in how we do development and architecture.

Eve: [00:36:41] What I like is that you’ve taken this really extraordinary education in architecture, which is, you know, a problem solving education that makes you really think about how to take nothing and turn it into something. And you’ve shifted away from, you know, those glamour buildings into an area where you can really use exactly the same skills to make something out of nothing. Right. And I really think that architecture is a very unique education in that way. It’s pretty powerful. It’s pretty rare to find someone who has those creative problem solving skills from any other profession. I think so. I think it behooves the architecture. It’s just not my, I shouldn’t be saying this, it’s not my interview. But I think it behooves the architecture profession and architecture schools to think really hard about what else those students can do with these skills because they could really change the world. Right.

Elizabeth: [00:37:43] Absolutely. And I think it does really begin with your education and those who are leading that process, but also the ways in which people have access to it and their exclusive, notoriously known expensive schools like USC, University of Southern California in Los Angeles. They do a really good job of offering scholarships and being diverse and inclusive. But the, and the planning school and there are other schools that do a really great job of including the identity and the kind of pathway for there to be a USC alumni network at the disposal of these young graduates. And it does not exist in the school of architecture. And I think that’s not happenstance. I think that there’s no economic or professional, how do you call that limitation or what is it when you do something bad.

Elizabeth: [00:38:39] Consequence.

Elizabeth: [00:38:40] Consequence, thank you! There’s no consequence at this point for the architectural education to not structurally be rethought because it is a machine, an economic machine.

Eve: [00:38:53] Well, that’s true of universities and schools across the board, right?

Elizabeth: [00:38:57] Well, potentially. But I think that with planners, planners that don’t represent the communities they’re in, it’s very hard to get those projects done. Architects that are doing projects for developers, you know, we have, I think, the consequences the architects and the architectural profession is getting smaller and smaller. And the amount of things that architects do is getting kind of whittled down into something quite impoverished.

Eve: [00:39:22] Yes. So the planners also don’t think about the built environment. Right. So, I mean, have a masters in urban design because because at the time I really wanted to think bigger than buildings, how the buildings shape cities. But, surely there’s got to be something that’s, you know, a masters in something else that thinks about the physicality of architecture and how it can improve places. A master of community design, community place building. I don’t know, maybe urban design just has to change.

Elizabeth: [00:39:57] Yeah, it is. The other thing about it is that the amount of things you have to be an expert in is so wide. When you touch architecture, it’s green building design, environment, anthropology, context, politics, permitting, building construction, space, aesthetics, color that is very hard to pretend that you’re going to be good at all of it.

Elizabeth: [00:40:25] No, I think that’s true. That’s really true. I’m working on a project in Australia and actually this is really interesting because I’ve been wondering about the way architects perform there and they use a lot more consultants than I’ve ever seen in the States. They have consultants for every corner of accessibility and sustainability. Exactly, I think because I think they’re remaining focused on design and place. Maybe it’s harder there. I don’t know. But I was sort of, I’ve been fascinated by that. Very different.

Elizabeth: [00:40:57] It is very different. I mean, I think that that’s a far more collaborative model than the one that tends to happen here in the US, where all of that stuff can get done in a very half assed way, if not completely ignored around the kind of, just supporting the aims of a developer and being able to check off the boxes of the things that the city requires you to do.

Eve: [00:41:24] Yeah.

Elizabeth: [00:41:24] And also just regurgitating the plans that you did before because it’s a terrible business model to be an architect because you have to do too much stuff. Right.

Eve: [00:41:33] Right, right.

Elizabeth: [00:41:34] Is a really hard business model. And so, I think we would be in a better place if we had power over capital and or we were comfortable being intermediaries and negotiators and facilitators instead of centering our really cute, the really precious creative idea. Which is a kind of absurd pretext right now when we have such a diverse, kind of multifaceted conversation that’s happening across so many different technology and communication platforms. So, I think architects would do better to de-center themselves from the conversation. But I think that’s very hard with the kind of Frank Lloyd Wright, Rem Koolhaas precedent for what it should look like to be an architect.

Eve: [00:42:24] A starchitect, right.

Elizabeth: [00:42:26] Yeah a jerk.

Eve: [00:42:29] So, what excites you most about the work you’re doing and what potential do you think Office of: Office has? Where do you want to be in five years? Horrible question, but I’m going to ask it. What’s your hope?

Elizabeth: [00:42:42] Someone asked me that. What was it? It was like, I don’t know. I’ve never been able to plan, and this isn’t a good thing, beyond a day. I do get a little depressed, and I guess we all do, if I don’t have anything I’m looking forward to. But, it’s never been work for me that I look forward to. It’s always been spending time with my friends or we have a trip planned for me and a couple friends to go to Guadalajara and some other places. I’m looking forward to that. I am looking forward to being surprised by the growth of the people I work with and I’m partnering with for Office of: Office. I’m looking forward to, when you have children, I don’t know what they’re going to be like. It’s so wild. And the same thing with LA Más, when I created LA Más, or now that I’m a part of creating Office of: Office with my partners. I think I just love that potential of, you don’t know what’s going to happen and you don’t, you’re kind of surprised by that. And so, every day it’s better than what you could imagine. I love, what I love is working with our partners like Tom DeSimone, who you had on. They’re just so cool. Like, they’re just so, I’m not proud of the projects I’m proud of the people that are crazy enough to want to work with us and that are okay with this level of transparency in our conversation. Because the conversation you and I are having is the conversation we have with our partners.

Eve: [00:44:22] I love it. So this is almost like a child that’s going to grow up and you’re going to be surprised along the way, right?

Elizabeth: [00:44:30] Yeah. Like if I had an idea, like, oh, I’m going to have three kids, I’m going to get married, I’m going to, you know, I, ugh. I don’t know. I was probably voted least likely to get married or least likely to have kids in high school. I don’t have any landmarks really.

Eve: [00:44:48] Well, I have one more question. You probably are not going to have an answer for this, but what keeps you up at night, if anything?

Elizabeth: [00:44:56] Oh my God. So many things.

Eve: [00:44:57] Oh, really? I’m surprised.

Elizabeth: [00:44:58] Like Anne wakes me up in the middle. So many things. Like I think about this crazy. I’m going to think about this conversation and all the stupid shit I said and all that. I’m absolutely going to think, oh, I should have said that.

Eve: [00:45:14] And I’ll probably get a ton of emails from people saying, I love that conversation you had with Elizabeth.

Elizabeth: [00:45:19] Well, I’m going to think about little things. I’m going to think about like I canceled a dentist appointment. I’m going to think about like the people that were inconvenienced by that. I obsess about the ways in which I was not thoughtful enough when I spoke or interacted with people usually. I also think about the commitments I make professionally that I can’t follow through on because I overcommit myself, because I’m excited about everything.

Eve: [00:45:47] That’s scary. I do that a lot.

Elizabeth: [00:45:49] So much. I don’t think as much about not doing the things that I should, or not being the person that I thought I would be. And that used to happen more. I would say, at the beginning of my career. I used to stay up at night thinking, how am I going to become, how am I going to be in a position where I can become the person I’d like to grow into?

Eve: [00:46:16] That’s interesting. Well, as you get older, you just tend to not care anymore.

Elizabeth: [00:46:20] Yeah. And just like, okay, well, if I can’t go, you know, I don’t know. Like, if I can’t go do that, then I’m going to go do something else.

Eve: [00:46:31] Well, Elizabeth, on that note, I’m going to end this. I’m going to be really interested to see who you become, because I’m sure it’s going to be someone you’re already someone pretty fabulous. But I’m building on that. So, can’t wait to see what else you do. Thank you very much for joining me.

Elizabeth: [00:46:47] Thank you so much. I’m so honored to be a part of your prestigious list of interviewees.

Eve: [00:46:51] Oh, for heaven’s sake, not prestigious, but thank you.

Elizabeth: [00:46:55] Very much so. I was very proud to have you extend the invitation. Thank you so much.

Eve: [00:47:00] Okay. Well, thank you.

Eve: [00:47:12] I hope you enjoyed today’s guest and our deep dive together. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media, or leaving a rating and review to catch all the latest from me follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big 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.

Image courtesy Elizabeth Timme

The Great Real Estate Reset.

September 21, 2022

Dr. Tracy Hadden Loh is a Fellow with the Anne T. and Robert M. Bass Center for Transformative Placemaking at Brookings Metro. Her research focuses on commercial real estate and how place-level assets interact and affect the prospects and resilience of the people and enterprises that call a place home in urban, suburban, and rural settings.

Tracy has recently written about the need for reform of the real estate sector, including who benefits from new development, and the governance challenges that exacerbate the extreme and growing spatialization of inequality in U.S. metropolitan regions.

Prior to joining Brookings, Tracy was senior data scientist at the Center for Real Estate & Urban Analysis at the George Washington University School of Business where she was the lead author of “Foot Traffic Ahead 2019.” This study ranked the 30 largest US metros based on percentage of office, retail, and rental multi-family space each area had in their walkable urban space. She also worked on the creation of a strategic plan to bring inclusive and equitable economic development to the area around the former Charity Hospital in New Orleans. In 2022, Tulane University announced plans to redevelop the building into a mixed use complex including research and educational facilities. Prior to her role at GWU, Tracy was the director of research at the Rails-to-Trails Conservancy.

Tracy is a graduate of DC public schools and holds a Ph.D. in city and regional planning from the University of North Carolina at Chapel Hill. In addition to her research interest in placemaking, Dr. Loh served two years representing Ward 1 on the Mount Rainier City Council in Prince George’s County, Md. She is currently a member of the board of directors of Greater Greater Washington.

Read the podcast transcript here

Eve Picker: [00:00:03] Hi there. Thanks for joining me on Rethink 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.

Eve: [00:00:38] Tracy Hadden Loh is biracial and has experienced inequity firsthand. Even as a young child, she knew something was wrong. Her career has been a purposeful exploration of how to fix things. These days Tracy is a Fellow with the Center for Transformative Placemaking at Brookings Metro, a branch within the Brookings Institution. There, Tracy focuses on what interests her the most. She is an advocate for cities with a focus on downtown metropolitan areas in the U.S. She writes about placemaking, diversity in cities and reinventing cities post-pandemic. And she’s advocating for the great real estate reset. You’ll want to hear more. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do, share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:01:53] Hello Tracy, it’s really great to have you on my show.

Tracy Hadden Loh: [00:01:56] Hi Eve. Thank you so much. I’m thrilled to be here.

Eve: [00:01:59] So you’ve researched and written on so much that interests me. Like what’s next for downtowns? The devaluation of assets in black neighborhoods, diverse neighborhoods, the office re-imagined lots of stuff around cities that I think is really important. But can you tell me a little bit about your background and how you came to be researching these issues at the Brookings Institute?

Tracy: [00:02:22] Sure. Well, I was born and raised in Washington, D.C. I grew up in the city in the eighties, which was a time when the city’s population was still declining, and it was very segregated. I am biracial myself and I was raised by two working parents and my mom is an immigrant to the United States. So, when I was growing up in the eighties, I felt, even just as a child, I could sense how segregated everything was and that it wasn’t right. But I didn’t know why or what to do about it. And now, DC’s population is growing again, and the trajectory of the city is really different. But that raises a different set of questions about who is winning and losing when there’s change. So, that is that kind of big question about who’s winning and losing and who decides the rules by which that happens. That’s really sort of the motivating question of my life. And I went from being a D.C. public school student and living it as a child to wanting to work on it and help solve it as an adult.

Eve: [00:03:51] That’s a great goal. I love what you said, winning and losing. Who’s winning and losing? Because I think that’s a really big question. So, I’m really interested. You’ve done a lot of different things, but I’m really interested in your work around what you call the great real estate reset initiative. Can you tell me what that is, what that means?

Tracy: [00:04:13] Sure. So, during 2020, after COVID had arrived in the United States and then that summer, after George Floyd was murdered, I was really kind of feeling the moment and feeling like it was a good time to try to say something big and systemic about the way things work. And I was talking to a friend, his name’s Christopher Coes, and at that time, he ran an organization called Locus that is a group of smart growth real estate developers. He was like full time staff on that at Smart Growth America. And so Christopher and I were just kind of talking about the big picture and how to frame what’s going on and who’s needed to be part of the solution. And we really wanted to explain to a broad audience why government alone is not going to be able to address the way things work in the United States and the big trends that are shaping our society. It’s going to take every sector. But we wanted to write a piece that really kind of specifically highlighted the role of the private sector in driving how things work through the lens of real estate. So that’s what motivated us, this project was really a collaboration between myself and Christopher Coes and my colleague at Brookings, Jennifer Vey.

Eve: [00:06:03] So, but why is real estate so important?

Tracy: [00:06:06] Well, you know, the built environment determines so much of our lives. I think we hear people say all the time this phrase: place matters. So, digging in, what does that kind of little shortcut mean exactly? The physical condition and location of our neighborhoods is something that determines a lot of a child’s access to health, opportunity, their odds of being incarcerated, their earning potential. You know, the conditions of your neighborhood determine a lot about your life. It’s not just the conditions of your family and you as an individual. And so, we have to ask these questions about real estate and then just kind of looking at real estate as a sector. It’s a huge piece of the American economy. If we understand real estate as an asset class, these are not small potatoes. It’s not as big as the stock market. But it is, this is a huge asset class and it’s the second most common asset class that touches people’s lives. And, you know, the only thing more common than real estate is cash.

Eve: [00:07:23] How big is it?

Tracy: [00:07:25] Let’s see. I have an exact estimate for you. So, if you combine commercial and residential real estate, you’re going to be looking at about 45% of assets in the United States. And that makes it the single biggest asset class. If you separate commercial and residential, then of course it’s smaller, but on its own real estate is the single biggest investment asset class in the United States by far.

Eve: [00:07:54] I think I read in another article, and this is how I found you, that no one will be surprised by this, but a very small percentage of minorities actually own the commercial assets in this larger group of real estate assets, right?

Tracy: [00:08:11] Yeah, that’s right. With my collaborator Jonathan Rothwell and my colleague Andre Perry, we did an analysis of consumer finances and what the most recent version of that survey found is that only 3% of black households own any commercial real estate, and that’s compared to over 8% of white households. So, these are small percentages. Most people don’t own commercial real estate, but we can see that even within this sector, there’s tremendous inequity.

Eve: [00:08:41] A very big difference. Yeah. So, what else did you notice in your research?

Tracy: [00:08:46] With my most recent research project, what I was digging into is what’s going on with retail real estate right now, because I spent the first couple of years of the pandemic seeing these huge impacts to the leisure and hospitality sector and a really rapid evolution of retail business models and kind of the scale of the crisis and then the speed of adaptation. It’s been fascinating to watch, but the built environment itself doesn’t change like that. So, these are new retail business models that are still trying to locate themselves in the same old retail landscape. And I wanted to just kind of take a look at how that was playing out in terms of operating income and tax assessments for different jurisdictions. Because I know from my own service and local government in the past that commercial real estate is such an important part of a jurisdiction’s tax base. And so, the health of commercial real estate is something that we all have to be very concerned about.

Eve: [00:09:53] I’m fascinated by how it’s playing out physically, because recently I was somewhere in the suburbs, which is unusual for me, but still. I landed in this little medium sized strip mall, and I noticed there were many, many storefronts vacant. And at one end of it, I noticed that a storage facility was starting to occupy the storefronts. I mean, I’ve really never seen a storage facility like that. They had pods in the parking area and one storefront after the other was being converted into storage, which is at least a use, but it’s kind of a sad use.

Tracy: [00:10:30] It’s extremely marginal.

Eve: [00:10:34] Yes.

Tracy: [00:10:35] So, what I found in my most recent research project is that what’s happening with commercial real estate in the retail subsector of it is that even after controlling for every single variable that we could think of that is related to real estate valuation, we found that commercial real estate in zip codes that are majority black in terms of their residential population, we found that race explains an across the board 7% devaluation of that property. And so, and previous research found extensive, much bigger, like three times as big levels of devaluation of residential real estate in black neighborhoods. So, we had reason to suspect that we would find this on the commercial side, too, but I wanted to just estimate a parameter around it, try to get a sense of what the size of the devaluation effect was so that I could start exploring the implications to tax basis to neighborhoods and think through the dynamics of what devaluation on the commercial side means and what it does.

Eve: [00:11:47] Okay so, I’m going to go back to something that you said which caught my attention and that the American real estate industry can create communities of opportunity or face a future, both figuratively and literally underwater. What do you mean by that?

Tracy: [00:12:03] So, climate change is another one of these really big generational trends that is going to totally reshape real estate in the United States. But we are really only just at the beginning of the days of seeing how and where that’s going to be priced in and how we’re going to respond. And so, for an industry that is hyper interested in trends, I think that real estate as a sector has been very, very slow to understand the implications of climate change and to figure out how to approach it. There should literally be a fire under the entire sectors butt about it. And so, I wanted to sound the alarm on the fact that right now the bulk of the real estate industry is still very busily building the wrong stuff in the wrong places.

Eve: [00:13:05] Yeah, I think you’re right. The world is moving very fast and real estate doesn’t. And much of the real estate that we have now will be 80% of the real estate that we have in 2040. So.

Tracy: [00:13:18] That’s right.

Eve: [00:13:18] It’s also about reconfiguring it, right?

Tracy: [00:13:22] Yeah.

Eve: [00:13:23] In that great real estate reset initiative, you focused on five key trends, which I found really interesting. The first was separate and unequal. The second was modernizing family. The third was risky housing business. The fourth was the office reimagined. And the fifth, as you’ve mentioned, the retail revolution. I’d really like to talk about each of them. Like, I suppose we’ve talked about the persistent segregation in the country. What about modernizing family? What does that mean?

Tracy: [00:13:55] So, this is another one of these big macro trends that’s going to change everything about real estate that it seems like we haven’t woken up to yet, which is that the types of households that young people in the US are forming today are radically different than what they were one generation ago. So, in that piece I present just a very simple analysis of the census. And what we found is that if you look at young adults, so Americans age 23 to 38. Right now, we would call those people millennials. But if we look at that same age bracket, but back in 1968, so this is my parents, at that time, almost 70% of young adults in that age bracket were married with at least one child. So, that’s pretty much just the vast bulk of people. We’re forming one type of household and there’s one type of housing that is highly desirable to accommodate that type of household. So, as far as housing goes, real estate was pretty simple back then in terms of what the demand was. But today, less than 30% of young adults are married with at least one child.

Eve: [00:15:17] That would be two of my children.

Tracy: [00:15:19] There we go.

Eve: [00:15:20] They fit right into that group.

Tracy: [00:15:22] And so, it’s less than 30%. And every other kind of household has increased in terms of how common it is. So that’s living alone, living with roommates, being a single parent. So having a child but no spouse or having a spouse but no child or still living with your parents. Right. Like all these things are more common now. And so, the issue is that we’ve gone from one kind of household that needs one kind of housing to many kinds of households that need many kinds of housing. And we don’t have that kind of flexibility in our housing inventory. If we look at housing inventory change since 1980, the only type of inventory that has grown in terms of its share of US housing inventory is houses with four or more bedrooms.

Eve: [00:16:14] Oh.

Tracy: [00:16:17] Which is literally the opposite of what’s happening demographically.

Eve: [00:16:23] So the rise of the ADU hasn’t been fast enough.

Tracy: [00:16:28] Not nearly fast enough.

Eve: [00:16:30] And that is because probably if zoning laws and…

Tracy: [00:16:33] That’s right.

Eve: [00:16:33] …financial restrictions, banks don’t really want to lend, all of those.

Tracy: [00:16:37] And builders don’t know how to build them and ADUs require subordinate electricity from a main house. Pretty much like most American houses would need a heavy up to support an ADU. There’s a billion barriers to ADU production.

Eve: [00:16:52] You know, we talked about retail and there’s also the office.

Tracy: [00:16:57] Yeah.

Eve: [00:16:58] The nature of office work is really shifting.

Tracy: [00:17:01] Yeah, that’s right.

Eve: [00:17:02] And I don’t know where the percentages lie right now, but I love the freedom of remote working. I mean, I’ve always worked that way, but the pandemic I think normalized.

Tracy: [00:17:12] Yeah. So, the big picture is that a majority of Americans don’t work in offices. So just slightly more than half of the United States is, they’re working in schools or hospitals or on the road or in a kitchen. They’re working somewhere that’s not an office. But in cities, in metro areas, it’s a majority of the workforce that does work in offices. And where we are right now is that at the beginning of the pandemic, the vast majority of office workers immediately pivoted to full time remote work. That has gradually decreased. And so, at this point, it’s only 25% of the office workforce that is fully remote. But that means that a lot of people are back, but back less than they were before. So, hybrid work is becoming the new normal for office workers. So, this has a bigger impact in cities because it’s in cities where a majority of the workforce is in office using occupations and it’s also in cities where you find central business districts that are heavily dominated by office real estate. And so, those labor markets and then these particular neighborhoods within those labor markets feel very different now than they did prior to the pandemic, because they’ve experienced a massive structural shift that’s now looking pretty sticky.

Eve: [00:18:48] Right. Yes, I live in downtown. It feels very different. It’s very emptied out. And there’s lots of adaptive reuse going on in office buildings.

Tracy: [00:19:00] Yeah, I think the right thing is for the owners of office real estate to conclude that this shift is permanent and to stop waiting for a time machine to take them back to February of 2019 and to instead adopt forward looking strategies that will lead to productive adaptation.

Eve: [00:19:25] I’m going to go back to something you said about the real estate industry moving very, very slowly, which is true. Part of that is because when you want to build a building, you have to design it and you have to get entitlements and permitting and a budget and build it. And by the time you’re done, if you’re in a market that’s shifting, if it’s a larger building, it’s three years later and it may no longer be completely relevant. How do we tackle all of this? How do we incentivize the right sort of practices?

Tracy: [00:19:54] The problem that real estate has right now is that, given how huge the sector is and how it touches all of us and is so important to everyone’s life and entire communities, there’s just a really astounding lack of dynamism in the sector. There’s a lack of innovation. There’s a lack of growth and productivity, a lack of change. And that is, I think, because of a complicated and toxic set of factors, but that we have the ability to do something about. So, first is that the sector is overregulated. And a really complex regulatory environment makes it higher, it slows things down and makes it more complex so, that favors established and big firms. This sort of classic like giant evil developer that seems to live rent free in a lot of people’s heads. So, I think there’s a lot that communities can do with the way that they regulate both zoning and building codes in order to streamline the kinds of development that they want to see. So, you mentioned ADUs earlier. There are multiple communities in the United States that have made it incredibly easy to build an ADU. Pre-approved floor plans and permits.

Eve: [00:21:23] Yeah, I know. Portland, Oregon.

Tracy: [00:21:25] Apply one day, have permission to build an ADU the next day. So, streamline and make super easy the kinds of buildings that you want to see. Which requires that first initial consensus building about what we want and what we need. But do that work, and then enact the necessary reforms. This is something that communities have been very slow to do. It is incredibly stimulating to the economy and to communities to promote the right kinds of dynamism in real estate, and ADUs is an example of that on the residential side. But the same thing applies on the commercial side, that we know that retail business models are rapidly evolving. And yet, we are expecting this retail vibrancy to figure out how to locate itself in yesterday’s retail building stock. So, I think it’s even more complicated on the commercial side than just the regulatory environment. I think what’s going on the commercial side is also that it’s very difficult to obtain financing and access capital to do commercial real estate projects. And banks want projects that feel familiar, that they understand. And the problem is that what’s familiar is obsolete.

Eve: [00:22:52] I’m so with you on that.

Tracy: [00:22:55] So, there is a huge opportunity to make a ton of money in commercial real estate by leaning in even just a little bit more to innovation and inclusion, because it’s a sector that’s desperately in need of new ideas. And so, that means that we need to see new faces.

Eve: [00:23:15] If you were a developer, what would you focus on first?

Tracy: [00:23:18] To be honest with you, I think that the lowest hanging fruit is still housing, just because there is so much pent up demand, we have under built for so long. It’s just not rocket science to make money building housing if you can find your submarket niche and if you have access to capital. So, I think that the low hanging fruit is in ADU and missing middle housing production in US cities of all sizes at this point.

Eve: [00:23:48] But that goes back to something you said before about the racial divide. So, who has access to capital, and will that capital be deployed in disinvested neighborhoods that need the housing the most? I mean, you know, we’re back into this whole cycle of what sort of housing gets built and who does it serve and who does it make money for.

Tracy: [00:24:09] Yeah, and the money to build real estate largely comes from banks. People typically don’t have huge amounts of personal wealth. The people who do have that kind of money aren’t doing neighborhood real estate. So, I think that there is a systematic problem with the kinds of projects that it’s easy to get a loan for and with who can get them. And, I wrote the great real estate reset, wanting to connect with lenders and with lending institutions. It’s been a tough row to hoe. It’s an insular world, and I am not an economist. And so, I think that there’s a need right now for thought leaders with a lot of credibility in the sector to start talking about these ideas. I earlier this year did a fireside chat with the folks at Capital One. It was so wonderful to be invited to do that and to be able to share these ideas in that kind of space. And I think that I plan to just keep knocking on every door and window and trying to have these conversations, because I think it’s clear that capital flows, that’s something that has to change. If we want to start responding in a way that’s smarter, that’s more dynamic to things like these demographic trends, to climate change, to the persistence of white supremacy in the United States.

Eve: [00:25:41] You could also talk about incentivizing innovative projects through city government. I mean, if, as you said, if you take the pain out of building ADUS or you take the pain out of taking an empty strip mall and converting it to housing, that’s a way to provide a very powerful incentive to make things happen.

Tracy: [00:26:03] Yes, I definitely think that there’s a huge role for government in streamlining, making the right thing easy, legal and easy. And then there’s also a role for philanthropy, right? Philanthropy is a huge sector in the United States that in addition to the dollars that they’re legally obligated to spend, there is a huge opportunity for impact investing with their seed corn. Philanthropy has been very hesitant to embrace the opportunity that American real estate presents for impact investing. I don’t know why. This is another one of these conversations I want to have, like, why not? And what would it take to make it happen?

Eve: [00:26:49] Oh, can I join you on that one? So, do you have any examples of people doing some things that you think are great and moving in the right direction?

Tracy: [00:26:59] Oh, sure there are. So first off, Eve, you are an incredibly inspirational innovator in real estate, and you embody the exact opposite of the problems that I’m talking about. You are real. And I just want to validate the incredible work that you do. And Small Change as a platform also is lifting up so many other innovators in real estate. I mean, if someone wants to just like browse, what are the fresh ideas in real estate right now? They can just go to your website and look at so many projects that have been made possible through your platform. So, I think that you are a repository for those examples. But yes, there’s also I think that.

Eve: [00:27:46] But let me tell you where the problem lies for me. Okay. We’ll go back to the systemic problem. So, VCs have on average invested 2 to 3% of their funds in women. So, I am a woman founder of a company, which makes it incredibly difficult for me to raise money and grow. And as well as that, those holders of money are looking for rapid growth and an exit. And when you build something that’s really going to build change over a long time, you have to expect it to take a long time. So, now we’re talking about a whole system of making money on companies that expects immediate gratification. And I know as a developer working in disinvested neighborhoods, that’s not how it works. It’s not Sesame Street. It’s a long hold. You’ve got to be patient and building towards something. We don’t seem to have enough people that understand that.

Tracy: [00:28:52] Yeah. And I think that you will not find that from institutional capital and that we should save our breath from trying to find it. I think that the most innovative projects that I’ve seen that that have been able to do big things, they have a source of patient capital, whether that is like a single extraordinary high net worth individual or whether it’s a foundation or whether it’s a public institution. So, you start with a source of patient capital like that, and then you build a capital stack on top of that. That does include, frankly, it could be majority conventional debt. But you need that patient, you need that big fat patient slice at the bottom to be the foundation of your stack. So, you’re right that the types of projects that we’re talking about, especially at scale, they’re not going to happen without this patient capital piece. And so, that is the piece that I am most focused on motivating, educating, finding and turning out.

Eve: [00:30:03] Sorry I stopped your other train of thought. What were the other great things you’ve seen happen? You said you had other.

Tracy: [00:30:11] Yeah. So, I did a set of six case studies a couple of years ago. This is right before the pandemic on what myself and my collaborator Chris Leinberger call catalytic development projects.

Eve: [00:30:24] Chris, well, he’s the patient capital man.

Tracy: [00:30:27] A lot of what I know about real estate, I learned from that guy.

Eve: [00:30:31] I’ve watched him for years, yes.

Tracy: [00:30:33] I read “The Option of Urbanism” years ago. It’s a life changing kind of book. And then I was incredibly lucky and privileged to have the opportunity to work for Chris for a few years. And we did a paper together where we looked at six case studies from across the US, each with a different source of patient capital and a different source of fairly large parcel assemblies, something between 20 and 100 acres. And in all six of these case studies, we found that they were able to build really enormous at scale transformative neighborhoods that were also, by the way, like extremely financially successful. Very, very financial, very lucrative for their investors. The keys were not just access to patient capital, but that employers were a part, were either the source of the patient capital or part of it from the get-go. These are actually residentially driven projects, although they include a lot of residential. It has to start with something that’s tenant driven in terms of commercial real estate.

Tracy: [00:31:46] And then the final key being that all of these places, the impetus to assemble the capital, to assemble the parcels, it all comes from some kind of crisis. This kind of innovation and real estate doesn’t happen when things feel okay and and things are going well. And that sense of crisis has to be felt outside of the disinvested neighborhoods that are held in an artificial state of crisis all the time. It has to become something that’s felt more citywide, and then these kinds of transformations start to be possible.

Eve: [00:32:21] So, like Pittsburgh losing more than half of its population, that was a crisis.

Tracy: [00:32:25] Yes.

Eve: [00:32:26] And I think the Urban Redevelopment Authority in Pittsburgh really kind of found a whole, I mean, I really admire what they did. They found a whole range of tools to deal with it, as did Mayor Tom Murphy. He really kind of stepped up to fill that patient money gap, right?

Tracy: [00:32:43] Yes. So, I think Pittsburgh is the OG like citywide case study of this. And then Steve Leeper left Pittsburgh and went to Cincinnati and did it again. And that, it’s another incredible story, but this is the model.

Eve: [00:33:02] Yes.

Tracy: [00:33:05] That’s 3CDC in Cincinnati. And I think that the crisis in Cincinnati was multiple days of riots that happened in 2001 after a black teenager was shot and killed by Cincinnati police. And people understood that things needed to change after that tragedy. And, you know, from that moment of crisis, 3CDC was born. And that’s what motivated the private sector in Cincinnati to capitalize 3CDC to the tune of $50 million.

Eve: [00:33:42] Okay. So, I’m sort of speechless. It’s a really big hairy problem, isn’t it?

Tracy: [00:33:53] It’s a big, hairy problem, but it is solvable. To me, the biggest challenge is getting all of the sectoral players to agree that there is a problem and to agree and co-invest in a solution. In places where whatever crisis has provided the extra motivation for that to happen, I have seen extraordinary transformations. The question is just, how can we learn how to do this without the crisis? Because climate change is more like the frog in a bucket of water that’s gradually getting warmer and warmer. It doesn’t create that day-to-day sense of crisis in the same way.

Eve: [00:34:47] No. Yeah. But the pandemic did.

Tracy: [00:34:53] Yeah.

Eve: [00:34:54] The Black Lives Matter.

Tracy: [00:34:56] That’s right. And so, I hope that we can learn the lesson of the pandemic. And it is hard after a time of isolation and great division to emerge and come together, around solutions, but that’s what we need to do right now.

Eve: [00:35:18] So, what excites you most about the work you’re doing?

Tracy: [00:35:24] You know, real estate is fascinating because it affects all our lives. And what excites me most about it is the transformative potential for the fruits of growth to benefit everybody. I envision a world where there are just more great places that work for more people, and I’ve seen it happen many times, so I know that it’s possible and I just wish it at scale for everyone.

Eve: [00:35:56] Yes. And what keeps you up at night?

Tracy: [00:36:02] Segregation. Right. The same thing, and I don’t just mean racial segregation. I mean that kind of these same, like silos between sectors, between jurisdictions. We are right now in our country at every spatial scale, like nationally and in each of our neighborhoods, we are more divided than ever. But we have to build unity in order to confront these big problems like demographic change, climate change, the structural changes that are happening to our economy. It can’t just be everyone for themselves. You know, I am a fundamentally prosocial person that wants to get all hands on deck. I’m not in a particularly extraordinary position of power, but I hope that if I speak this truth that some powerful people might hear.

Eve: [00:37:01] Well, I’ve really enjoyed talking to you, and I would love to stay in touch and learn more about what you’re researching, because it’s fascinating and incredibly important, I think. I’ve learned a lot. So, thank you very much.

Tracy: [00:37:14] Eve I’d love to stay in touch. You’re a personal hero. And you’ve had so many people on your podcast that have, like, greatly shaped my thinking around these things.

Eve: [00:37:24] Well, that’s great. That’s really great to hear. We really, I try to pull together people who I consider, I suppose, instigators. People are thinking a little bit out of the box and pushing the edges of that very traditional.

Eve: [00:37:37] That’s exactly what you do.

Eve: [00:37:39] Yeah. Thank you very much.

Tracy: [00:37:43] Let’s stay in touch.

Eve: [00:37:57] I hope you enjoyed today’s guest and our deep dive together. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media, or leaving a rating and review to catch all the latest from me follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big 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.

Image courtesy of Tracy Hadden Loh

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