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Back to wood construction.

As the creation of affordable and sustainable housing becomes increasingly urgent, focus has shifted to innovative ways to meet these goals. I found one such example in Amsterdam where Marc Koehler and his design team develop creative solutions for urban living through their Superlofts Project. Broadly speaking, a Superlofts project starts with the bare structural frame of the building. Each future resident designs her own home, which is then inserted into that framework, making a vertical village. This interactive process is a rather wonderful flexible and community-centric model for the creation of urban co-living.

Not satisfied with creating just a flexible living model, Marc’s team also strives to improve the sustainability of each of their projects. One way they are considering this it to move towards heavy timber construction. Their first timber project is already under development – a six-story building in the Netherlands. This push highlights the growing awareness of the benefits of engineered wood materials even for large-scale projects.

The benefit of using timber

For Marc, the two primary benefits of building with timber are flexibility and sustainability. The Superlofts vision is intended to offer flexibility in the design and configurations of buildings. Using timber adds to that goal, since timber construction makes it far easier to alter the configuration of a building. Wood is easily adaptable and can be reconfigured with minimal costs.

By contrast, concrete structures limit changes in unit and building configurations, making it more difficult to offer changes to living arrangements as families grow (or contract). By transitioning from concrete to timber, Marc believes his projects will become more like a Tetris game, with living spaces that can easily be connected and reconnected in a multitude of ways. This flexibility reduces waste and makes future adjustments far more efficient.

Simply put, building with timber is a sustainable practice. First, unlike many building materials, wood is organic – a natural material. This means that it is non-toxic and ages naturally. Second, it’s a renewable building material. As long as more trees are planted to replace those that are used, it serves as a renewable resource. Third, wood stores carbon dioxide, which otherwise would be released into the atmosphere. This means that as long as the timber is being used, it’s retaining that carbon dioxide, stopping it from being added to the atmosphere. Lastly, because wood is a good insulator, using it leads to more energy efficient buildings.

How tall can timber buildings be?

It has long been imagined that wood construction was limited to just a few stories. It’s so light and flexible that it’s generally not considered for taller buildings, which are more typically constructed of steel and concrete. However, engineering innovations are quickly producing wood products that have greater structural integrity, leading to a wave of new, tall heavy timber designs.

On the other side of the world, in Toronto, Sidewalk Labs has developed a digital proof-of-concept for a 35-story all-wood building. The design incorporates cross-brace frames, a technique often used in high-rise construction, along with cross-laminated timber beams. By using structural, diamond-shaped supports on the exterior, additional space is freed up on the interior. To keep the building from rocking, the design does have a steel mass damper, but this is the only non-wood component used in the structure.

Superlofts’ vision for mass timber is all-embracing.  Marc and his team realize that timber today not only has the structural integrity needed to build larger structures along with its important sustainability features, but it also provides the potential to easily adapt a building during its lifetime.  And that is something they are interested in exploring.

To learn more about why and how Marc is using timber in his new project, listen to our podcast interview here.

Image by PIRO4D from Pixabay

The importance of community.

When we think about housing, especially in urban areas, we’re not just thinking about a place to rest our head. Instead, housing must include some broader amenities, such as access to transportation, services and jobs. And even more importantly, as more and more people move back from the suburbs to urban neighborhoods, there is an increased focus on finding community. Today, city planners, developers and architects are paying attention to the role of community in the planning and building of urban spaces.

One notable example which goes even further, by creating spaces fully centered on the people who will occupy them, is the Superlofts project.

Background

Superlofts was founded and grew out of the architectural studio Marc Koehler Architects by Marc Koehler. Superlofts combine some extraordinary features to create amazing and unique buildings, with flexible housing layouts, carbon neutral living and curated communities.

The vision behind Superlofts is rooted in a process that Marc and his team developed in Amsterdam. Fifteen years ago, the studio was a boutique design agency, primarily focused on designing houses and renovating apartments. They learned the importance of listening to what people wanted in a home.

The ideal day

Over time Marc’s team developed methodology known as “The Ideal Day.” Rather than asking clients what about their physical space needs, they asked them to describe their daily routine. Their clients scripted out an ideal day in their life, how they imagined an ideal day, from waking until bedtime. Using these scripts, Marc and his team designed spaces that responded to the way their clients wanted to live, not to the spaces they thought they should have.

This exercise helped people to imagine the possibilities for themselves, and for change and improvement in their lives. Marc believes this is the fundamental purpose of his work – to find ways that architecture and design “can really change your life if you take the opportunity and really think of what you want to achieve in your new space.”

The business of bringing people together

Marc describes Marc Koehler Architects as being “in the business of bringing people together.”  This is a unique role for an architect to assume. They are generally focused on buildings and spaces, not on people. Superlofts is the culmination of this idea. Superlofts is “a system for living that puts people in control with a flexible, modular, co-creation approach to the ultimate urban space: the loft.”

The first Superlofts project began with a simple concrete frame structure. Future homeowners were able to build their dream space in a “vertical village.” The process involved co-creation sessions which brought together the future residents of the building and provided them with the opportunity to plan how they wanted to live together. This filled an important need for many people by introducing them to the community of people they would be living with and providing them with the powerful opportunity of developing shared spaces. Ultimately, Superlofts aims to create urban villages with buildings where people’s daily lives intersect, allowing them to be responsible for one another.

The Superlofts concept flips the normal planning and design process on its head. Rather than starting with the building, planning and design starts with the people. The resulting spaces are functional and sustainable, communities with happy people that are well-connected and supported. This a new way of thinking about how to create ideal living environments in cities.

Listen to the full interview with Marc Koehler to learn more about Superlofts and the business he has built himself, bringing people together.

Image courtesy of John D Norton

Big change.

Ommeed Sathe is a Vice President and head of the Impact Investment unit in the Office of Corporate Social Responsibility at Prudential. He grew up in a family who felt public service, through work or volunteerism, “was fundamental.” And that rubbed off.

Just out of Harvard Law School, Ommeed was in New Orleans after Katrina and decided to put his background in urban planning to use to help the city recover. For four years he worked with the New Orleans Redevelopment Authority (NORA), working on properties around the city. It was with NORA that he began working with Prudential, and became impressed with their willingness to stay working in the community for more than twice as long as other corporations. 

Ommeed joined Prudential’s Office of Corporate Social Responsibility in 2011. His unit manages a portfolio of over $1 billion in impact investments.

The investment work he oversees at Prudential is about 80 percent stable, predictable credits with established sponsors, while 20 percent “are far more risky and untested but have the potential to create significant social impact and to pioneer new markets.” Much of their recent work has been in Newark, such as with the 1901 Hahne & Company department store, and as of 2016, his portfolio had supported the creation of over 1,000 housing units, 250 hotel rooms and 300,000 s.f of retail space in the city, where Prudential is based.

Previously Ommeed was director of real estate development for the New Orleans Redevelopment Authority, and a real estate and land use attorney with Fried, Frank, Harris, Shriver & Jacobson in NYC.

Insights and Inspirations

  • For Ommeed, investing is more than a way to make money.
  • For Ommeed, three key things define impact – the physical characteristics of a project, community engagement and whether or not the project is catalytic in nature.
  • Is bigger better? While other funds aspire to reach 10 billion dollars when the 1 billion dollar hurdle has passed, Ommeed’s aspirations differ. Rather than go bigger he’d like go riskier – with untested developers and untested ideas in untested neighborhoods.

Information and Links

  • Read about Ommeed and the business of doing good at Prudential.
  • Prudential has focused some of their impact investing in Newark, a city that has suffered through 140 years of disinvestment. They helped to restore the iconic Hahne’s Department Store in Newark. Now it’s a vibrant mixed-use center.
Read the podcast transcript here

Eve: [00:00:14] Hi there, thanks so much for joining me today for the latest episode of Impact Real Estate Investing. 

My guest today is Ommeed Sathe. Ommeed is Vice President of Impact Investments in Prudential Financial’s Office of Corporate Social Responsibility.  His unit manages a portfolio of $1 billion in impact investments.

That’s a big number and it doesn’t seem like Ommeed is slowing down.

Ommeed grew up in a family who felt public service, through work or volunteerism, “was fundamental.” And that has clearly rubbed off.

Be sure to go to rethinkrealestateforgood.co to find out more about Ommeed on the show notes page for this episode. And be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, SmallChange.

Eve: [00:01:42] Well hello Ommeed, thanks for taking the time to talk to me today.

Ommeed Sathe: Absolutely, Eve, it’s a real pleasure to be with you.

Eve: Well, that’s great. So I wanted to start with your title, Vice President of Impact Investments at Prudential. What does that mean?

Ommeed: [00:01:59] Yeah, so I head up the company’s impact investing activities, and that’s obviously one of those terms that kind of sounds OK, but it doesn’t really necessarily clearly translate. But what it is, for us, is it’s a portfolio of investments we’ve made that are trying to have both a financial and a social impact. And so they are genuine investments that try to make money, but we invest them exclusively in projects that we think have outsize social investments and in particular in the types of projects that our company and traditional capital markets wouldn’t do otherwise.

So, they’re really meant not to be sort of a subset of what the company was doing already, but to be a portfolio, to be used to be catalytic and differentiated and to invest in places we wouldn’t be investing otherwise and in projects we wouldn’t be looking at otherwise.

Eve: [00:02:51] So how big is the portfolio?

Ommeed: [00:02:53] At the moment, it’s, it’s about a billion dollars.

Eve: [00:02:57] Wow, that’s pretty big. Can you give us some examples of the things you’ve invested in?

Ommeed: [00:03:02] We have sort of two halves of the portfolio. One is around very physical types of projects, affordable housing. We’ve made a lot of investments in our hometown of Newark in big transformative developments and redevelopments. And then we also do some interesting work around new ways of doing agriculture, new ways of sort of growing and feeding the planet. And that’s sort of on the physical side of the work. And on the other side of the portfolio is investments in really interesting social purpose businesses. And those have been largely focused on financial inclusion. And then on education and how do we re-skill and retrain the labor force?

Eve: [00:03:42] That’s pretty great. How would you define impact in real estate? How does Prudential define it? Like, both of you?

Ommeed: [00:03:50] Yes. So, this is actually a really fascinating question. So, I think there’s probably three ways to think about it. You can think about it just sort of on the the most, I’d say, straightforward which is, you know, units of affordable housing, square feet of redevelopment, square feet of the building, and if it’s a LEED platinum. Your, sort of, the physical characteristics of the development very much sort of very clear outputs of sort of what the real estate is. I think the second way to think about it is what’s sort of the community level and at the residents’ level. And so how are residents’ lives being impacted and living in certain places? How are services? What’s the quality and satisfaction of tenants? So very sort of a consumer impact as well as in looking at sort of the communities in which this real estate is. So, are these places where investment wasn’t being made and after you make these investments, does more investment come in? Are those investments leading to good outcomes or is it just catalyzing sort of unhealthy gentrification? Those are a couple of dimensions. And then I think the third and both, sort of, most qualitative and trickiest maybe to sort of measure, but something that really drives us is, is this work in any way catalytic? Does it change the trajectory of what a market is going towards? Does it prove that a new way or a new type of housing or new type of sort of investment strategy that could work thing be replicated in other places?

Eve: [00:05:18] That last one must be more of a hope than a metric that you can measure.

Ommeed: [00:05:23] That’s right, it’s true that it’s nothing than more of a hope. But I’ll give you some examples, maybe that last one, because I think it kind of brings it to life.

So, you know, one of the things that we’ve been looking at and I think we’ve done with the great sort of sort of architectural firms is how do you say we take lots that have been deemed substandard, often sort of ineligible even for development and develop really creative structures and housing and building models that can sort of create value on land that is otherwise essentially worthless. And are there ways to sort of replicate that and make that go to other places? Because it’s interesting, right? Like, you know, with land getting so expensive and all the prime development sites gone. If you’re trying to get more affordable housing into sort of affluent markets, sometimes figuring out really creative design solutions for substandard or non-standard lots is one way to do that. Another thing that we’ve done sort of I think has been really catalytic. We worked with some colleagues down in Washington, D.C. They had recently passed a new ordinance that required much higher levels of stormwater retention. And a lot of our city’s stormwater is actually a sort of surprisingly under-appreciated problem. Enormous source of pollution, flooding. And so, cities are starting to try to grapple with how they do this better.

[00:06:37] And so D.C. passed this ordinance requiring much higher levels of stormwater capture. You know, one of the few ways you can do that on a development is you can either sort of build in essentially bladders in the basement to capture water or green roofs on the roof. But what DC did that was really interesting was they permitted people to fill some of their obligation by making improvements to green infrastructure in other parts of the city. And so we helped fund a bunch of improvements to green infrastructure and you got essentially tradeable stormwater credits. And so this was a version of sort of what people talk about wanting to try to do with carbon by creating tax and trade mechanisms and, but done at the local level around a whole novel problem with stormwater. And so that’s sort of an example of something that I think we helped build the first green infrastructure products and create the first tradable stormwater credits. And we think that solution is really interesting. And we also think other cities will see that, and potentially try re-create a similar solution.

Eve: [00:07:35] That is catalytic. So, you know, when you were talking about unusable lots, I was thinking about an article I read recently about the downsizing of some freeways and the land that that might free up. For, you know, development use. I think that’s a really interesting thesis in this time when we’re starting to see autonomous vehicles and a lot of people who don’t want to own cars. It’s really interesting to think about where land is available, right?

Ommeed: [00:08:04] I think it is. And it’s still strange to me, actually, because there’s a sort of funny meme, right, that what will happen in Silicon Valley finally invents a technology that allows us to build the second story. And, you know, I think that spirit is kind of true even in New York City. You go around and see so many easy and obvious potential sites that you could build on. Sites that are being used for car dealerships, parking lots, abandoned, your public assets, you know, right of ways. And it’s amazing just how much of that land is there when you start to look. And it does feel like some of the lowest hanging fruit, in terms of how do we find opportunities to create more affordable products. Again, it may not be the best location in the city, but it’s certainly habitable and buildable and safe. And I think it’s been really interesting. We worked with this great architecture firm down in New Orleans the Office of John Tate, and they’ve done really interesting stuff thinking about how to do that.

Eve: [00:09:02] Yes. Yeah, I know Jonathan really well. He was, he actually did the first crowdfunding offering with us.

Ommeed: Oh, there you go, it’s a small world.

Eve: It was one of his Starter Homes on an odd lot. Pretty fascinating times. Do you have metrics that you’ve developed to test against projects that come to you?

Ommeed: [00:09:23] We do. There’s a couple of ways, and I think goes back to sort of thinking about the different impacts, you’re capturing metrics for things like the number of affordable housing units, the square feet of, extra, square feet of Y that’s fairly straightforward to capture. You know, I heard this quote the other day. I thought it sort of kind of interesting. We can grind to a fine dust that we can easily ascertain. And yet sometimes in doing that, we don’t really measure what’s most important. And I think the things that are most important are somewhat, by their nature, more ambiguous. And so some of this is actually the process of asking those questions. So, I’ll give you an example with affordable housing. You know, we know it’s desperately needed and in many affluent communities. And yet a lot of times where affordable housing gets built isn’t necessarily the, you know, the most affluent areas. Is that a good or a bad thing? Right. You know, it’s not a question that can be answered with a single metric, because it matters in terms of looking at the public education system and saying, OK, you know, are there good education resources or are there community resources? You know, there’s research by Raj Chetty that sort of speaks to just how relevant place really is the social and economic mobility.

[00:10:27] And that data is not. It’s really interesting and compelling, but it’s certainly not black or white, in terms of its implications. And so one of the things I do think we’re trying to do a better job and actually think is something that’s so under-appreciated in real estate is really to survey tenant residents and try to get data from the people who live in buildings,  about their lives getting better, what’s happening actually as a result of being in this complex here, because I think some of these questions are important questions, but they’re not solvable with the data we have. And yet, you know, every other sector of our economy, it’s you know, if you could buy shoes from Zappos, every one of those companies is has a net promoter score and wonders what it is and as careful about it and uses that as a leading indicator of telling you whether something’s working. And yet in real estate and I don’t know about you, but no landlord has ever, no only one I should say, has ever asked me, like, was I happy.

Eve: Yeah, yeah, interesting.

Ommeed: And it’s striking, the one landlord that did ask me that question was absolutely, no surprise, the single best landlord I ever had.

Eve: Often landlords are pretty scared of the tenants.

Ommeed: [00:11:32] And it’s funny, I do think one of the trends we’re seeing that I think is a really interesting trend, is that as far as people I see and real estate are really moving in this direction, that so much of real estate development used to be about the physical development of the assets, actually getting the things built and getting it through entitlements and through reviews and all of that. And so, the field really focused on the physical construction and not the management and hospitality.

But you just look at sort of food halls or even kind of we-work and co-working spaces. All of those models are fundamental, about taking spaces that exist and thinking about how do we manage them better, how do we program them better? How do we get more stuff out of the same space? More and more, I think real estate is actually moving to hospitality. That if you think about hotels, right, with hotels, you think about brands and you think about your experience. You don’t really think about hotels and associate them with the physical structure. To some extent, everything you see and experience is on the inside.

Eve: [00:12:31] Yes. So, you know, I interviewed someone a couple of weeks ago you might be interested in them in Amsterdam. He has a spin-off, an architect who spun off a company called Superlofts. You can find it on my website.

And it’s very interesting because he creates a community before he, before they even start designing the building. They start meeting with groups of people who want to buy these little condominiums and talk to them about the needs, the dreams. Almost, he said like a video – what would you like a day in your life to look like? And when they have a group of like-minded people together they will start to kind of design the physical space around them. It was fascinating.

Ommeed: That sounds amazing.

Eve: Really fascinating, beautiful architecture as well. So I think there’s a lot of really interesting innovation going on. So, why Prudential? That might be surprising to some people.

Ommeed: [00:13:25] Yeah, it is, I mean, it’s sometimes surprising to me as well. My connection to Prudential’s at a couple of levels. One, before I joined the company, I was in New Orleans working after Hurricane Katrina. And in that role, I led redevelopment for the New Orleans Redevelopment Authority. And we were tasked with trying to really catalyze neighborhood-based redevelopment in the wake of the storm. And in doing that, in that role, got to work with just about every kind of capital source around the country, philanthropic, government, private sector. And we were trying to coalesce all of that capital around really important, really transformative projects. And Pru is just one of the best people we worked with. And in that experience, and it really shaped for me how different the access to capital is by place. So I’d come from working in New York largely in the boom times ahead of the financial crisis, working on often quite foolish projects with unimaginably easy access to capital. And even if they’d worked, relatively low returns and then going to New Orleans and having really vital projects with great returns, but just in a place where there was almost no capital available. And seeing how important it was to have sort of, you know, investments and capital to try to move away from a very limited set of places which have kind of capital they need for reinvestment.

[00:14:45] You know, I think a lot of people who are urbanists, I’m sure this will sort of resonate, you know they’ve grown up in New York, San Francisco, D.C., Boston, you know real estate we call the sexy 7, right, The 7 kind of big, urban markets where capital is unbelievably plentiful. And that’s not really reflective of what it’s like to work in most urban communities around this country. You know, in most urban communities, even good projects have a hard time finding financing. And it’s even harder for projects that are really sort of aspirational at a social level because a lot of those projects are often coming from entrepreneurs or untested, who have limited ability to manage pre-development. The work that you described in terms of sort of crowdfunding and some of that I think is a really interesting angle to bringing capital into those markets. But another is sort of getting institutional money like Prudential to have dedicated programs that really start to look in these non-traditional markets and opportunities.

Eve: [00:15:41] Right. So I’ve done a lot of real estate development like that in Pittsburgh, which is a city that was in pretty bad shape when I started doing the work I did and I relied heavily on public funds and the mayor’s office and the Urban Redevelopment Authority to fill that role. But I imagine that many cities don’t have those sorts of resources for developers. And I also think those funds have dried up a little. So that makes Prudential’s role perhaps even more important.

[00:16:07] Yeah. No, it does. And I think we’re trying to push ourselves to get even more early stage with our investments. You know, I think some of the stuff we’ve done in Newark has actually been very large projects and in some other markets we’ve been able to do projects which are 50 to 100 million dollar kind of projects where we’ll be investing 10 or 20 million at a time. But where I think the real need is to have, you know, institutions like us really push to do more in pre-development to do more with sort of, you know, young and minority development firms and to really try to continue to push earlier, because the earlier you get, the more you see that acute lack of capital. You know, when you really get into the machinery of real estate, you see why and how access to capital is such a profound differentiator. It’s not really the project economics that blow things up. You know, what we see is people get stuck in pre-development.

Eve: Yes.

Ommeed: [00:16:57] You know, they get stuck having, you know, bought land and thinking it would take them a year to get permits. And now it’s two years and they don’t have money to make the payment on an acquisition loan or they’ve got to pay for another X, Y, Z of permitting or entitlement costs. And they just can’t get the project to the finish line. Typically, you know, the most underserved markets are often also the ones that are actually most difficult to operate in because they don’t have some of the robust public sectors like you saw, even saw in Pittsburgh, right, and so you couple those challenges and we really do see it as being a pretty acute need to solve.

Eve: [00:17:32] Prudential would actually go in at such an early stage of pre-development stage? That’s pretty unusual.

Ommeed: [00:17:38] I want to be clear we haven’t done it yet, and I think it’s sort of where we want to get to. You know, as we see it, adding a part of this is just the evolution of the real estate market. When we started this program seven or eight years ago, I’d say, it was really just not a lot of capital flowing in. Like, take a town like Newark, there was almost no equity capital to support redevelopment. And it really felt like even our financing at the project level was pretty transformative. Fast forward to where we are today, I’d say, if you can get a project to being at a closing even in Newark, there’s a lot of sources that’ll provide equity capital now, but it’s the money to support the pre-development and planning, entitlement, that stage of the work that’s really very, very scarce. Because that money’s so scarce, it means that the people who do big projects are going to look can be and have a certain set of values and approaches and people with new ideas and real creativity won’t be able to be even having a seat at the table.

Eve: [00:18:36] So a billion dollars now. What’s what’s the goal for this portfolio?

Ommeed: [00:18:40] There’s a couple of ways you can go, right? Like most people in financial services, you get to a billion and then you want to get to 10 billion. And bigger is just better. Actually, I think given sort of our mandate to be catalytic and creative, we’re trying to actually push to some extent to the opposite. So, not to necessarily get the portfolio bigger, but actually try to push earlier down the risk spectrum and really push ourselves to be more catalytic and more transformative and more creative rather than build to be bigger. Because I actually think this is sort of in my experience, once something gets bigger, it actually gets more vanilla, more predictable and usually if it makes sense, there will be lots of people who’d be willing to invest.

Eve: [00:19:23] Got it. That’s really fascinating. What percentage of the total Prudential portfolio is the impact portfolio?

Ommeed: [00:19:32] Good question. I’d say there’s two ways to think about that. Right, so when you’re an insurance company, you have a tremendous amount of assets. But somewhere in the neighborhood for Prudential, you know, five hundred billion dollars of assets, let’s say. But that’s not really a very accurate measure because the way insurance companies are regulated, ninety five percent of what they do has to be in very safe, predictable bonds and rated kind of loans. And so, the portfolio we manage is essentially 5 percent of the company’s risk appetite.

Eve: [00:20:06] OK. Well, I know a little bit about the work in Newark through Jonathan Tate. I’d love to hear a little bit more about that. I think what you’re doing there is tackling quite a big problem and quite a big project by the sounds of it.

Ommeed: [00:20:19] Yes. You know, so Prudential’s been headquartered here in Newark for the better part of a hundred and forty years, and obviously, the city of Newark has gone through many, sort of evolutions during that time. I think what’s interesting, right, is that you can sort of contrast what we’re doing now with maybe what people did 30 or 40 years ago. There was obviously a fairly disruptive and difficult period of urban unrest, and the riots and a lot of people fled the city, a lot of companies left the city and there was sort of a cycle of disinvestment for many, many years. And we’ve done this really interesting research, actually, you know, Newark, pre the civil unrest had more urban renewal than anywhere in the country.

[00:20:58] And you can watch these videos and they are just heart wrenching because the helicopter shots of the city. And it looks like Berlin after World War Two. And yet the voice-over on the video is so proud of what they’ve done.

Eve: Ooh.

[00:21:14] They state literally there’s been more, you know, more of urban renewal per person in New York than anywhere else in the country. And this was Newark 1950, and you see actually sort of the devastating impact of that cycle in the community. But you can really see some of that and that’s sort of just a random aside. But in the sort of reaction after the civil unrest, a lot of the investment that was made, was made and things like if you’ve ever been to Newark there’s something called the Gateway Center, which is like the Renaissance Center in Detroit. Towers, skybridges connected to transit, you know, kind of fortress style orientation to the urban environment. Instead of doing that, what we decided to try to do sort in this most recent cycle and look, you know, Pru had a role in building those gateway complexes in the 70s and so this is by no means, you know, a story that doesn’t sort of involve us.

[00:23:02] But in the most recent sort of time when a company had a choice around building a new tower, rather than build it near any of the train stations or in any of the sort of locations that would have been most accessible to commuters, we built that tower literally in sort of the heart of the city. Now it’s on Broad Street, which was aptly named, it’s the broadest street in downtown. It’s on the side of what used to be a sort of a former shopping strip. So, it’s a center where all the department stores and movie theaters used to be in downtown. In building that tower, we also made, I think, a really critical decision with the team I run, to not only just build something for ourselves but to start to invest in all of the sort of transformative developments in and around that location. And the most important of those was an old department store called the Hanes Department Store, which during its heyday was a department store that would have competed with Saks. It had a four-story grand atrium like the Grand Magasin in Paris. People would come up and have these amazing memories of putting on white gloves and dressing up and going to this department store.

[00:23:08] There was the Maple Room and the Pine Room and, you know, we just, it was this incredible legacy experience and actually even had a really interesting role as one of the first places where integration happened in the city. Shopping was actually one of those areas where integration was sort of, one of the first places to happen. So, really a pretty legendary history, but had been closed for 25 years and the building itself had completely fallen apart and we made it sort of our passion project to redevelop that building. And we were able to do it in this incredibly complicated, mixed use way. So, the first floor is retail, which is both big box retail and neighborhood retail. The second floor is offices. Third and fourth floors are housing. 40 percent of the housing was set aside for affordable housing. The retail mix is everything from fintech companies and co-working to really cutting-edge nonprofits. And then, maybe the sort of cherry that made it both the most difficult project I’ve ever worked on but also the best, was Rutgers University brought in all of their arts and design program into that building and did it in this way that I think is really unprecedented where, first of all there’s no separate entrance for the university, the public can go into those spaces. But even intermixed in the Rutgers space are private galleries and a rotating space, right in the front of their space for, you know, kind of community serviing arts nonprofits. They essentially have like six month displays where they can come in and sort of gain visibility and access to resources. And so it’s been a real labor of love. And it’s physically, that building, plus the Prudential Tower plus Military Park, plus some other things we were doing, started to re-knit together parts of the downtown. So we followed that up with another half a dozen investments that I think are sort of all, again trying to sort of replicate that playbook of mixed income, mixed use development with a mix of both sort of national needed amenities and community serving retail and office tenants that both sort of try to draw exciting new things, but also, you know, cater to some of our legacy businesses.

Eve: [00:25:13] Yeah, so common theme I’m hearing from a lot of people now is that part of the process of keeping a community whole is to provide space, a community hub, space in some way or another for a community to feel that it belongs while improvements are going on around them. Does that make sense?

Ommeed: [00:25:32] Yeah, absolutely. One of the things that we had in that building is we, we sort of restored this grand atrium and the grand atrium is actually sort of open to the public year around. And so it becomes this place where you see people, especially in winter here right like, it serves almost like, you know, the function of a town town commons and we sort of made it kind of connect both sides of the building so this is a really kind of interesting passageway.

Eve: [00:25:56] That sounds lovely, I’d love to see it. Perhaps this question is redundant, but I’m going to ask it anyway. Do you think socially responsible real estate is necessary in today’s development landscape?

Ommeed: [00:26:07] I do. And it’s got a place to play at a lot of different levels. So I think if you look at sort of the institutional level, I think given some interesting things where people are starting to sort of demand that portfolios be LEED certified and have certain environmental obligations, and I think that’s something that sort of very both important and do-able at the very sort of macro level for real estate. But then I also think, with what we’re facing as a country between the challenges around affordable housing, just radical inequity, and then honestly, we haven’t built a lot of housing in this current boom. It’s one of the most sort of striking things that’s happened is that we haven’t built enough housing, we haven’t created enough units, and that’s driving up the price for everyone. And I do think we, we need capital to be creative and thoughtful about how do you get more going on in places where it’s not and get it to a density in a scale that actually starts to bend the cost curve?

Eve: Yes.

Ommeed: [00:26:59] You know, one of the things that, you know, we get asked a lot is sort of, you know, this gentrification question.

Eve: That’s a big one.

Ommeed: [00:27:06] And again, I think that that question, it’s so much shaped by people’s experience in cities like D.C., Boston, New York, cities that are going through these incredible economic booms but have also hardly permitted any housing. If you look at New York, New York City I think last year permitted as much housing as Jersey City. That’s one city of eight million people, another three hundred thousand during, you know, year 10 of an economic boom. And so, you know, historically, when we’ve had economic booms, we’ve been able to produce a lot of housing. And the thing that’s really striking right now, we’re just not doing that as a country. And so what’s happening is because there’s no real housing production and because we’ve really reduced, for reasons that no one really quite fully understands, geographic mobility, so people aren’t moving like they used to, the jobs that are being created and the wealth that’s being created in certain places in many cases is all being swallowed back up by people’s rent.

Eve: [00:27:59] Interesting.

Ommeed: [00:28:00] The cost of living. And so, you know, I think we are really as a society, not doing what we need to do in terms of connecting people to economic growth.

Eve: [00:28:09] Do you have any ideas about that? I talked to an architect in Australia who’s kind of plugging away building affordable, sustainable buildings and making sure that the first buyers are city-serving civil servants who need to be close in. People are taking it from every angle.

Ommeed: [00:28:29] There’s no silver bullet. Sure, I do think one of the things that we have to rethink from a design perspective is density.

You go to a city like Vancouver, I mean, I think there’s really different ways in which density can be expressed at the street level. And people’s experience, you know, people are very poor at actually gauging how dense something is. So, one of those things is I think actually becoming comfortable saying like, you know, we do want to sort of start to think about infill and densification and how do we do that? I do think some of the stuff that’s happening on the West Coast about accessory dwelling units and trying to come up not with sort of solutions that, you know, are project solutions, but are actually these kind of decentralized solutions, making it much more easy for people to add a unit, or what Minneapolis did with eliminating single family zoning.

Eve: Yeah.

[00:29:19] I think it’s really, really interesting. A few other things we’ve seen that we’re really excited by – in Texas and Colorado and a few other places, we’ve seen this interesting move to take assets that were built in say the 1970s and 80s as large market-rate rental and kind of reverse convert those to affordable housing. And the way that works is that basically in exchange for really substantial tax abatements, buyers go ahead and dedicate a portion of those units to being affordable and they end up working out roughly the same to what it would be if they bought those buildings and invested lots into to aesthetic renovations and tried to remarket them as luxury. So, these are essentially perfectly lovely units built except with carpet and cherry wood that rather than ripping all that out and trying to convert them into luxury housing, you leave them like they are and convert them into good quality, you know, mixed income developments.

Eve: Yeah, yeah, yeah.

Ommeed: [00:30:16] I think some of the reverse conversions are really interesting too, as another theme as to how we can get affordability on scale.

Eve: [00:30:22] You know, in Melbourne, Australia, years ago, I was really fascinated, there was, the zoning department implemented densification along major roads where there was infrastructure. It’s actually a really sprawly city. And so, what they permitted was much higher density buildings, housing, along roads that had bus and train tram. It’s been really interesting watching it unfold, you know you can really see the physical spaces changing. But it’s a really smart move to take existing infrastructure in a very big city, which is going to be very expensive to increase, and find a way to create density around it. I thought that was pretty smart.

Ommeed: [00:31:06] Yeah, it does sound like a really elegant solution.

Eve: [00:31:09] There’s another neighborhood there that I know has now put an overlay district in place where they are not permitting anymore parking spaces moving forward. They’re really trying to eliminate them completely. It’s a very dense, mixed-use neighborhood, very close to the central business district. So, they’re making some pretty bold moves with zoning to try and handle what is sort of a rapid sprawl.

And of course, that means if you can live close in and you can have a smaller unit and you don’t need a car because you’ve got access to infrastructure and it’s more affordable. Right.

Ommeed: [00:31:42] Right. You know, it’s interesting, I question required parking. Most of the development we’ve done has has either had minimal or no parking associated with it because the zoning codes here were permissive and it’s a real driver of, as you said, you know, you can create more units, you can reduce the cost. Parking minimums are, I think, a hidden and really destructive part of many zoning codes.

Eve: [00:32:05] They’ve been very destructive, not just for housing, but even when you think about retail strip malls with seas of parking in front of them which are really all about parking minimums.

So are there any other current trends in real estate development that you think are important?

Ommeed: [00:32:19] We’ve talked about a lot and it’s not so much a real estate trend, but this decline in human mobility and our declining mobility rates, I think is just one of those fascinating social trends that I think has implications for place and how we do things that I don’t think we fully quite grapple with. I do also think that, you know, we’re entering an increasingly dark age for retail.

Eve: Yes, we are.

Ommeed: [00:32:44] You know, there’s aesthetic implications to that but it’s hard to imagine true vibrant urban places without vibrant retail corridors. And so trying to figure out sort of what else can we do on ground floors? We see this problem in Newark, almost every square foot of retail we’ve had has had to be filled by a food and beverages. And even then, after a while, you reach saturation. So, what can you do with spaces that actually are interesting and inviting, and, you know, if you are pessimistic on the future retail?

Eve: [00:33:14] This is a dilemma, because other countries we’re not really, not really seeing the demise of retail in the same way. It’s really a shame for us. Right. It’s very difficult.

Ommeed: Very difficult.

Eve: You also engage the community, right, in your work in Newark?

Ommeed: [00:33:30] We do. One of the things that’s been interesting in Newark is that I think there’s this big cadre of, you know, of what people would call sort of anchor institutions, and that have been a nice kind of vehicle to sort of get all of those different institutions to really try to, sort of, really think differently about this community engagement and not sort of recreate what happened in the 1950s and 60s in terms of just sort of having this kind of urban renewal from the top down.I think part of what we’ve tried to do in insurance in the beginning is, in finding a way to sort of help smaller infill neighborhood based projects, you actually get to interact with people in community and get just an insight, at a much more human level, into what’s sort of driving people and what needs there are felt. I think wherever you can, trying to sort of really, I think encourage transparency.

[00:34:21] We’ve, you know, we’ve been really fortunate, I think, to have good leadership at the Mayoral level in Newark and I think they have really forced and encouraged that same kind of community convening, but also done it in a way that, I think, you know, too often those meetings are either sort of lip service or not willing to sort of push back on these issues, let’s say, around gentrification. And what I think the Mayor has done a really good job of here is both coming up with good policies around inclusion and local hiring, but also signing up for the fact that, look, inclusive growth also means we have to be able to grow and do things the right way and that if you look at a city like Newark, almost everything we’ve built has been vacant buildings are vacant lots.

[00:35:04] You know, there’s still a long arch before you get into displacement. And actually, if you’re adding units of affordability and doing that, you can be constructive in taking the edge off of those pressures.And so I think there’s been a really good set of conversations that aren’t trying to sort of demonize either side, but trying to get to a pretty reasonable resolution. So, we’ve been fortunate here.

Eve: [00:35:28] So I’m going to just ask a wrap-up question. Where do you think the future of real estate impact investing lies for the country? It’s really just a little blip right now. Right?

Ommeed: [00:35:39] Hmm. I think it can be two things at the same time. I do think there’s a real role for institutional capital in pushing more investment into things like affordable housing preservation and sustainable large scale development and I think that’s largely about sort of preserving existing assets and upgrading existing assets and I think that’s one scenario that impact real estate can do. And then I think there’s a need for the kind of catalytic capital that we have to really push money into the places where there’s just very little capital availability. I think you could see two, sort of very different approaches, depending on sort of the type of capital of the scale and the places they go, but both are needed.

Eve: [00:36:23] Well, it sounds like a fascinating job you have and probably most people listening to this, are very surprised that Prudential is kind of taking a lead in this and I’m looking forward to seeing what else you invest in. It sounds pretty fabulous.

Ommeed: [00:37:37] Well, thank you. I’m so excited to go look at sort of some of the examples you mentioned.

Eve: Ok, we’ll talk again soon, OK?

Ommeed: Thanks.

Eve: That was Ommeed Sathe. For Ommeed, investing is more than a way to make money. It’s a way to make a difference. His portfolio at Prudential has already supported the creation of well over 1,000 housing, 250 hotel rooms and plenty of retail space in Newark.  But most importantly while other funds aspire to reach 10 billion dollars once the 1 billion hurdle has passed, Ommeed’s aspirations differ. Rather than go bigger he’d like go riskier – with untested developers and untested ideas in untested neighborhoods.

You can find out more about impact real estate investing and access the show notes for today’s episode at my website, rethinkrealestateforgood.co.  While you’re there sign up for my newsletter to find out more about how to make money in real estate and while building better cities.

Thank you so much for spending your time with me today, and thank you Ommeed, for sharing your thoughts with me.

We’ll talk again soon, but for now, this is Eve Picker signing off to go make some change.

Image courtesy of Ommeed Sathe

Learning by doing.

With any project, learning from success and failure is important. In real estate, paying attention to and making adjustments based on what works and what doesn’t can have a major impact on the success of both current and future projects. This is especially true for projects that involve unique problems or complex issues that lack clear solutions. In these cases, the ability to learn by doing, and to effectively and quickly implement new knowledge, is crucial.

The affordable housing crisis is an example of one such problem. It is becoming an increasingly urgent issue in urban areas throughout the country. It has put millions at risk of losing their homes and their quality of life. Many different factors have had an impact on the current housing crisis over the last few decades and as a result it’s become an increasingly complicated issue with no simple answers.

Innovative financial tools

The good news is that many people are working to find ways to address it. As different communities, organizations and individuals work to preserve and create affordable housing in their own unique neighborhood, we can learn from their experiences. Leveraging the successes (and failures) of different affordable housing solutions is one of the most effective ways for communities to learn multiple and comprehensive solutions to this crisis.

One solution is to address financial issues in building affordable housing.  Rebecca Foster, the CEO of the San Francisco Housing Accelerator Fund, is a great example of this. Her fund focuses on this specific issue – how to innovate financial tools to ensure that affordable housing is produced in the face of a competitive real estate market.

The Accelerator Fund has two primary programs: bridge loans and providing homeless housing.

Bridge programs are supported through a mix of private, public and philanthropic funds. Rebecca’s team understands that public funding is necessary to fund affordable housing in the long-term. At the same time, they appreciate the fact that the private sector’s speed, flexibility and comfort level with risk is needed for the acquisition and development of those projects. By combining private and public funds they can act quickly in order to more effectively preserve and create affordable housing in the Bay Area. Private funds go in first, to acquire properties quickly, and once stabilized public funds provide long term loans so that private investors can be repaid.

Just as with bridge loans, Homes for the Homeless, uses philanthropic capital to create housing for the homeless community. The Accelerator Fund is currently working on a 146-unit project in San Francisco’s Fillmore neighborhood. The project aims to build each unit well-below the market costs in the neighborhood, and on a tight timeline.

Always learning and getting better

At the heart of all of their work, the Accelerator Fund’s focus is first and foremost on how they can help their partners. They have some big hairy goals which include how they can help to get a project completed, how to make sure that a building isn’t lost, and how to make sure that homes aren’t left vacant.

At the same time as they see project success, they remain laser-focused on how they can do better on the next one. They must remain vigilant about lowering costs, reducing the amount of time that it takes to build or rehab housing, and finding better ways to use capital to complete projects. Foster and her team understand that small differences can make a big impact on their ability to fund and complete projects. Thus, learning from successes and failures is a critical part of their process.

The Accelerator Fund’s current goal is to preserve 15,000 units in the Bay Area and to build 30,000 new ones. As Foster and others work to close the gap on affordable housing in the Bay Area, their constant progress and improvement in both funding and building techniques is something that others can learn from and build off of. Listen to our full interview with Rebecca Foster to learn more about what the Accelerator Fund is doing in San Francisco and how this model can be applied to other communities.

Image courtesy of Jonathan Greene

How to transform a city.

Tom Murphy is the second-longest serving mayor of Pittsburgh (after David Lawrence).

He is noted for overseeing the difficult, but transformative transition of the city from the mid-1990s to mid-2000s during turbulent Downtown development cycles, an initially unpopular funding bid for two new waterfront stadiums, a new convention center (then the largest ‘green’ building in the U.S.) and investment in and development of 1,500 acres of land from abandoned steel mill sites to vacant houses. He built many miles of river trails and ran on them religiously.

“Public space can be the most democratic space in the city”

Mayor Murphy’s administration took a market-driven approach and downsized governmental departments. With the savings from downsizing, Tom created the visionary Pittsburgh Development Fund, a $60 million fund which he employed to leverage private real estate projects and investment all over the city. Public/private partnerships were key to this strategy. He was looking towards a future that not many others saw.

Struggling with outdated taxing structure regulated by the state, as well as state resistance to city growth through annexation, Mayor Murphy made hard decisions such as declaring a budget crisis and pushing through alternative funding sources such as a parking tax for commuters.

By the end of his tenure he had shepherded the city, kicking and screaming, onto a new track which led to it being held up as the model for urban transformation – a former industrial city reinvented as a biotech, medical, university and robotics hub. In 2008, the G-20 was staged in Pittsburgh, highlighting its transformation. 

Mayor Murphy, who studied urban studies in college, also previously served as a state representative for the North Side, as a neighborhood organizer there, and between college and graduate school, in the Peace Corps.

Insights and Inspirations

  • Tom focused on five things as mayor. Finding money for projects that would change the city. Taking control of vacant land. Building a really great team. Creating a vision. And building excellent public/private partnerships.
  • Since ending his tenure as mayor, Tom has come to believe that public spaces matter more than anything else in building better cities.
  • He believes that the interface between buildings and community is critical to the making of a place.

Information and Links

Read the podcast transcript here

Eve Picker: [00:00:14] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing.

[00:00:23] My guest today is Tom Murphy, Pittsburgh’s turnaround mayor. He oversaw the difficult, but transformative transition of the city from the mid-1990s to mid-2000s. Those were turbulent times and included many highlights and many struggles. During his tenure, he declared a budget crisis, built two stadiums, created a $60 million development fund and built many miles of river trails. Tom Murphy is an authentic city expert.

Eve: [00:01:03] Be sure to go to EvePicker.com to find out more about Tom on the show notes page for this episode, and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:01:38] Hello, Tom, I’m so delighted that you found time to join me today.

Tom Murphy: [00:01:42] I’m always honored to be with you. You were one of the pioneers in many developments in Pittsburgh when very few people saw the opportunity.

Eve: [00:01:50] You were the second longest serving mayor in the history of Pittsburgh. And in 1994, when Pittsburgh wasn’t sure what it was going to become, was really on the verge of collapse. And you shepherded the city through a very turbulent transition from a place that had emptied out with the closing of steel mills and suburban flight, to a city transformed almost every respect. And I was in Pittsburgh for every moment of it. So, you reshaped Pittsburgh, kicking and screaming all the way.

Tom: [00:02:22] Underlining kicking and screaming, Eve. As you remember, every time we tried to do something, there were, there was controversy. I mean, it just, it was amazing to me.

Eve: [00:02:34] Well, this is slightly conservative city, so maybe that was part of it, but people couldn’t imagine what you imagined. When you begin with a city that has lost its industry and half its people?

Tom: [00:02:47] Well, I’m a product of that, I mean, my father worked for 51 years at Jones & Laughlin Steel steel mill on the South Side. So, my whole life was defined by the shifts he worked there, I mean … you know, he was, he worked in the mill. I mean, he wasn’t a boss or anything, he just worked in the mill and our lives were shaped by that and … and sort of everybody I knew pretty much, their lives were tied to the mill. And so I grew up with that. And to watch that disappear in the, really the 70s and the 80s, I was a state legislator on the North Side, and I don’t think people appreciate how incredibly destructive it is for families. You know, where you had very traditional families where the husband went to work in the mill, you can make a good living, buy a house, buy a car, take a vacation and now all of a sudden that disappeared. You know, the wives went to work, kids who had thought about going to college deferred that, you know, we lost a whole generation from Western Pennsylvania – 500,000 people left and they were overwhelmingly are our kids, young people who were leaving, because they didn’t see a future in Pittsburgh. And so having come through that, having lived it, you know, on the North Side, where we’ve lived for almost 50 years now, and how destructive it was, never thinking I would be mayor. When I became mayor, I mean, my focus was how do we stabilize this situation? And to do that, we needed to re-imagine Pittsburgh in lots of different ways. In how we educate kids, because you didn’t need a high school education, let alone a college education to work in a steel mill. And you know, what we did with all this land, all of these industrial, thousands of acres of industrial property. And the culture of Pittsburgh, which, you know, was almost opposed in the technology industry because they were seen as non-union.

Tom: [00:04:40] And so we went through huge controversies in talking about re-imagining Pittsburgh. And now we’ve come out the other side and, you know, it looks very different.

Eve: [00:04:51] It does. Did you have a strategy from day one?

Tom: [00:04:57] Well, I laugh at that. I mean, hindsight always gives you the strategy. But we did in the sense that we felt we needed five things, right? We needed money. We were a flat broke city and … you know, essentially, as you said, I mean, close to bankruptcy. And we needed to figure out how we will get money so we could invest in Pittsburgh and entice developers. Two, we wanted land control. A lot of this land was tied up in bankruptcies and it was, you know, uncertain titles. And so, a developer who has a choice of buying a 100-acre greenfield site or 100-acre steel mill site, they’re going to buy the greenfield site. It’s safer. And the third was that we needed a really good team of people who were going to be public entrepreneurs, in effect, that were willing to take risk. And the fourth thing we needed, we needed a vision. We needed to be, to sort of know where we wanted to go. And the fifth thing is we needed good public-private partnerships. We needed people who believed that Pittsburgh could be a different place. And you remember back then, Eve, you were one of the few people that …

Eve: [00:06:08] Yeh.

Tom: [00:06:08] … were willing to invest in places like East Liberty. It was very hard to get local developers to re-imagine Pittsburgh. They had their little niche. They were comfortable in it. They’ve been through 30 years of decline. And so all those ingredients, you know, we talked about them when I ran for mayor. And people obviously voted for me. But when we started to do this stuff, they said we didn’t know you meant that. So where do we get money? And the first month or so I was Mayor we reduced the city’s workforce, reduced the number of police officers we had, then shifted six million dollars of that money annually to finance a $60 million bond issue, which we called the Pittsburgh Development Fund, which gave us money to invest in the future. In every city, I mean, I talk, I meet with cities a lot and talk to them and that’s one of the challenges they face is, your demands for the day-to-day. Just ‘today’ is huge in a city. I mean, everybody wants more police. Nobody’s streets are getting salted enough, and potholes, and if you just spend the stuff on all your resources on today, nothing changes. I mean, you’re Pittsburgh and in Pittsburgh we were still declining, so the challenge was how do we get some of those resources and use it to invest in the future, which entails risk.

Tom: [00:07:27] The second thing we did, Eve, we went out and bought, as you know, Mulugetta Birru was head of the Urban Redevelopment Authority, and we had him go out and buy almost 1500 acres of land. You know, we bought what was then the South Side works of Jones & Laughlin. We bought the slag dump in Squirrel Hill. We bought the old Sears site in East Liberty. And then, you know, we looked at each other and said, what do we do with this stuff? And that’s when we began to form great partnerships with developers. Somebody like you who was willing to invest in that old building in East Liberty and, you know, and others. And the $60 million gave us the ability to create really creative and effective public-private partnerships that share the risk with developers who believe that Pittsburgh could be a different place. That’s what we did.

Eve: [00:08:17] I was going to ask the question that, do you believe developers played an important role in the transformation of the city? Obviously you do.

Tom: [00:08:24] I do. I think place is everything. I think it has huge impact on how people live, I think, like crime rates, a whole host of other things. How they, what they think about themselves. I mean, if I live in a neighborhood that has, half the buildings are vacant and there’s a lot of litter and everything, you know, I come out my door every morning, I probably have a different reaction than if I live in a neighborhood that has lots of gardens and clean. And so I think that, it has huge impact. And so developers, from our point of view, as you know, were really important partners. And this is, I tell this story all the time, is when we started to see things happen, developers would come and say, Mayor, I have a great idea for you. And we’d say, with all due respect, tell us why it’s a great idea for you. And we’ll decide whether it’s a great idea for us, and if our self interests come together, we’ll figure out how to be a good partner and share the risk with you. But that assumed we knew what we wanted and so that was one of the really big challenges. As you remember early in my administration, I had a really great planning director, Eloise Hirsh, who really helped shape that vision, as well as Tom Cox and Mulu and Steve Leaper, really helped shape that whole vision of what Pittsburgh could be. It was really reimagining, you know, old steel mills in the South Side and a slag dump in Squirrel Hill. And so we were looking at, not to ignore other things, but we were looking for things that could be catalytic, that could change people’s image of Pittsburgh. And the ballparks obviously help with that, too. I mean that when I was running for mayor, I wasn’t planning to be, have anything to do with sports stadiums. And that sort of was one of the challenges of running the city, as you know, I didn’t think about it. And then all of a sudden, it’s the number-one topic.

Eve: [00:10:17] Well, it’s always the number one topic in Pittsburgh. Sports, so.

[00:10:20] Well, unfortunately, I mean, I don’t know if you know the story, Eve. As I, when I ran for mayor, I was elected mayor in November. In early December, the then-owners of the Pirates gave me a letter that said they intended to sell the team. I don’t even know this, that Dick Caligiuri many years ago had signed an agreement with the team that if ever they were going to sell it, that the city would in affect own the team for nine months in which they would be required to find a buyer. And if we couldn’t in nine months find a buyer, then the team could be sold to another city. And so there I was, having run on crimes, jobs and taxes, now owning a baseball team. It really, literally when I was running in November, I had no idea that the first year of my time as mayor, two years, would be dominated by trying to figure out how to build a baseball park and a football stadium and a convention center. So, that’s life, right? So, we had to figure it out, right?

Eve: [00:11:20] When the sun goes down, with Downtown as a backdrop, it’s a very special place.

Tom: [00:11:27] Well, it’s a, my favorite seat in PNC Park, regardless of what the team is doing, is that, at the very highest point in the left field stands, and because the view of the city at dusk like that is incredible.

Eve: [00:11:41] Was the Pittsburgh Development Fund the most important thing that you implemented? Were there the other programs or policies with very big impact?

Tom: [00:11:49] Well, what’s the Development Fund gave us is, it gave us the ability to be, to be flexible. When I go to lots of cities, they would say, we’d love to do this, but we don’t have any money. The money, for better, for worse, becomes a really important part of being able to pursue your dreams. And so the Development Fund was our money in the sense that we didn’t have to look to the state or the federal government, you know, to wait for months or a year before you figure out whether you’re going to get the money or not. We also, as you know, in the URA, people at the URA led by Mulu and Steve, were very entrepreneurial in understanding how they used tax increment financing and other federal and state sources, so it … it was fairly typical, it might be true in your deal, your deals that you were doing, is that you were getting sources of money from 10 or 12 different sources. And what I have found is that’s unusual in a lot of cities, that cities are not entrepreneurial like that, of understanding how you mix and match money to make a deal work. So, what I say, Eve, is it’s really, it’s really a market driven approach, is that basically you as a developer come and say, you know, I want to do this building, but this is what the bank is going to lend me, and there’s this gap in financing, and if it’s something we want to see happen, we being the city in this case, then we become your partner and figure out how to help finance it, whether it’s our Development Fund or other sources.

Eve: [00:13:30] My experience with the Liberty Bank Building was very typical. I think I had 12 sources of financing.

Tom: [00:13:36] Yeh.

Eve: [00:13:36] Most of the URA money, which I’m really glad gets to be recycled. But Mulu was extremely entrepreneurial. He, first of all, he didn’t quite trust me when we started …

Tom: [00:13:36] Well, but you were a small developer at the time, right? With not a long track record. But with great ideas.

Eve: [00:14:05] There were really interesting meetings. I really became very fond of Mulu. So, but he, you know, his approach was, look, we have this amount of money. 300,000 dollars out of this pot of money, or whatever it was. And you need two million. Go away and think about how it might work. And so I would come back and I’d say, look, I could make it work if you took little interest payments for two years or, you know, whatever, whatever it was that made it to some sort of stabilized scenario. I learned a lot. And then, you know, things shifted very much, and I think the URA lost a lot of its funding in the mid-2000s and the banks got more skittish and it all changed, right?

Tom: [00:14:49] Well, it did and it didn’t. I mean, I think the philosophy in the city changed and maybe … so I was saying this about being market driven. Mulu met with you and you convinced him that the market was what it was, that without flexible public money that could defer interest or payments even for a few years, that that this deal was not going to happen, and we wanted it to happen, and so we would make the loan. The market has become much better in Pittsburgh, though. You were, you know, in my view, the early bird gets the worm in this case, in the case of your building, you were, you were the early bird. Is that you got better financing then maybe after the market’s healthy. So, we tried to be market sensitive in that sense. And at the same time, recognize that we wanted these deals to happen, so we were willing to put, risk public money. I think the key to it, what I learned about myself in this, Eve, as I was, I am not a good day-to-day manager, but I understood how to hire good people and just give them room. And if a deal blew up, you know, that’s what’s going to get reported on the news. But I need to be willing to support the people if they did the deal for the right reasons and it just didn’t work. And we had some of those done, you know, Fifth and Forbes Downtown was one of those examples. But we were willing to take those risks, whether it was with you or other developers, that we didn’t know with the market, we didn’t know if people would move and live on a slag dump in Squirrel Hill or, you know, live in apartments in South Side. We didn’t know what the market was. We were way out there and that was the risk involved in this, and using public money.

Eve: [00:16:33] I moved to Pittsburgh accidentally and was kind of involved in all of this on the periphery, and it really shaped my life. The way I think about cities is very different now. So, thank you for that. The plan that did not work out was the redevelopment plan to reshape Downtown which…

Tom: [00:16:49] Actually it worked though didn’t it? I mean, four of the five blocks that we were going to acquire have been redeveloped.

Eve: [00:16:57] Yes, it did work. But my question was, yeah, it just took time, didn’t it? Took time for people to get used to the idea.

Tom: [00:17:04] Well, it looks differently than what we would have, I mean, we were more focused on a retail strategy and it might or might not have worked. I don’t know.

Eve: [00:17:12] Well, today with Amazon, it might have backfired again.

Tom: [00:17:15] And that’s where you don’t, I don’t know with today’s retailing whether it would have worked or not. If we would have been able to put together sort of what we were thinking. But, in any case, all five blocks have now been redeveloped, that we focused on. And it’s a much more vibrant place. We could see the decline there. I mean, we could look at the sales numbers of businesses that were there and just see the decline of what was going on, and I think felt the need to try to intervene, you know, and maybe did it really in a clumsy kind of way. And but, you know, at the end of the day, it was a necessary intervention that ended up working. PNC played a big part, was a big partner in that with their new building

Eve: [00:17:59] Yes. It was really difficult, I remember. What would you do differently today? A different city.

Tom: [00:18:06] When I’ve come to really love is the public spaces. So, in East Liberty, I think we would have had, we had the opportunity, which we didn’t do, to create a sort of a central plaza somewhere there. That we could have really recreated a much more, you know, in a public space, it can be the most democratic place in the city. And so, I mean and so with Home Depot, we were looking to make a democratic place where people, wealthy people and poor people would all shop. If I had done East Liberty thoughtfully more, maybe we would have created a public space like that, too. And Market Square, in many ways, plays that role Downtown now. There’s a public space where people of, with all incomes and all backgrounds show up. And so even in smaller neighborhoods like Lawrenceville and other places, because there were such, you know, abandonment of property, we had opportunities to really create better public spaces, little town squares. Because one of the strengths of Pittsburgh is with its 90 neighborhoods is, is that we have this real sense of communities and I’ve come to appreciate that much more. And we really would have focused more on creating places where that community can play out in neighborhoods like Lawrenceville and other places. I go to China a fair amount. Not recently. thank goodness. And when I, I get up early in the morning to go for a run and one of the things I see there, and China has done a very bad job of creating public spaces, but where there is public spaces like at six, seven o’clock in the morning, there are hundreds of people there in the plaza doing tai chi or dancing to a boombox. It’s this great sense of community. There’s lots of older people or people running. And you can see feel this community, I mean, people talking and laughing. Every morning they’re there. And we don’t have that tradition in America. But it would be wonderful. We did, but but we ought to create places where that happens. You know, the Blue Slide Playground is a place like that in Squirrel Hill. I mean, famous now because of Mac Miller.

Eve: [00:20:24] I visited Beijing three years ago, and the photo I loved the most from there is a small urban park which had exercise equipment in it. And in fact, I saw this several times …

Tom: [00:20:34] Right.

Eve: [00:20:35] … exercise equipment, really basic. And you could see people all congregating, and doing their little exercises in the park, open to everyone, It was fabulous.

Tom: [00:20:46] Right. We did a half step under Eloise’s leadership in public works. We made a decision to rebuild all of our 100 and some neighborhood parks, like the Blue Slide Playground or the Schenley Park, and also many of the smaller ones. And we would have community meetings and we would hire landscape architects who would meet with the community and, you know, with the playbooks. And then they would work to design the kind of playground they wanted. They would given a budget, 100, 150 thousand dollars, and they could pick from the play equipment books, the playground they wanted. But the instinct we had was right, but we should have expanded it. And in many neighborhoods where, like Homewood. I mean, you have an opportunity in Homewood, still today, I think, to create a really great plaza that would become the center of Homewood, and how you would do that. And East Liberty represented that opportunity. I mean, there were, as you remember, lots of vacant land there that was tax, you know, essentially abandoned. So that’s probably one of my bigger regrets, was not creating places where that sense of community can play out.

Eve: [00:21:58] What do you love most about Pittsburgh? I know you still live here.

Tom: [00:22:01] Our strength and our weakness is our parochialism and that’s what I love most … is that we’re an unusually friendly city. I’m in Washington four days a week, right? And my habit in Pittsburgh is pretty much everybody you see, even before I was mayor, but when I’m mayor I don’t know whether I know them or not, or they know me. So you say hello to people, right? You get on an elevator, you say good morning, right? People, you do that in Washington, D.C. people look at you like you’re … going to rob them. You know, it’s a weird feeling for me. I see that in lots of cities. I would just did Orlando for a couple of days that I felt it there. Same thing, is that, sort of people don’t make eye contact, don’t acknowledge. I mean, if there was just two of you in a place, that you don’t, they don’t acknowledge you.

Eve: [00:22:50] You know, that’s interesting. There are other cities like, I think Atlanta and Detroit are very friendly. I always notice it when I go there.

Tom: [00:22:56] Yeah. So it’s, and I hear that. It’s funny, I mean, when I speak, and I was in 50 cities last year, so I end up engaging with thousands of people. One, is the numbers of people that have lived in Pittsburgh. You know, I mean, that’s sort of the legacy. I always say you’re our failures. We couldn’t give you a reason to stay, you know, there’s so many people that left in the 70s and the 80s. And the other is inevitably people who are not from Pittsburgh. I just was talking to a guy in Orlando yesterday who, his daughter and he, and they’ve never had any connection with Pittsburgh, but she loves the Pittsburgh Penguins. And they go to Pittsburgh every year to see a couple of Penguins game, and he was telling me he’s going in March and, you know, he said, I’ve never been to a friendlier place in my life. Everybody talks to you and it’s just, it’s a great place, right? We don’t even think of that. And that’s partly what I like. And I think that’s the strength of Pittsburgh. When I say parochial is that we are really, those of us who are from Pittsburgh or who moved there, you become really rooted in your neighborhood, and in the city. I think in places like Orlando, that is, you know, a lot of Florida cities in California and even Texas cities. You know, there’s lots of new residents. And so they don’t have that kind of history. And so I, that’s part of the challenge of Pittsburgh. How to keep that, and at the same time not have it be a deterrent to making Pittsburgh a competitive city.

Eve: [00:24:28] But you know, I think what’s most interestingly Pittsburgh, about Pittsburgh to me, is again, I’ve always thought it’s topography saved it from becoming what Detroit has become.

Tom: [00:24:40] Oh, I think definitely, I mean, the hills and valleys and how Pittsburgh is defined, I think is a large part because of its topography. You know, I learned that running for office when I was in the legislature, when I first ran for the legislature. If you confuse people from Spring Garden with people from Spring Hill, they will never vote for you. I mean, they’re very rooted in their neighborhoods, right? And so there’s that whole hierarchy like that around Pittsburgh. When I meet somebody, when they say they’re from Pittsburgh, I typically say, where did you go to school? And that tells me a lot about them.

Eve: [00:25:19] Interesting. Yeah, I think the topography also, it kind of contains each neighborhood. So, I think that that sense of being in a neighborhood is going to stay.  I can’t, I can’t see it disappearing in the city.

Tom: [00:25:33] No, and that’s what, when I was talking about the public space, I mean that’s, that’s what I have a big regret it was around that idea of how do you build even a stronger sense community using public space, whether it’s playgrounds or a park, a community. How do you in a very thoughtful way connect people in that neighborhood so they feel a sense of place? And there’s a purpose for that, because I think if people feel rooted in their neighborhood, I think they’re willing to put up with a lot of problems if they see themselves and others committed to wanting to making it better. I mean, if I can see a light at the end of the tunnel, I’m willing to stay on the journey, right? A lot of people are not willing if they don’t see any end to it. And I think of a neighborhood like Allentown that’s been through a lot of problems. And yet, there’s a strong core of people in Allentown who have really stayed with that neighborhood. And, you know, it has gone up and done and now I think it’s back, going back up again. I know we used say, Eve, you know, that houses in the North Side up in Fineview at the time, I mean, you could buy for 30 or 40 thousand dollars. And we said if Pittsburgh’s population were like any other city and it was growing, those houses would be worth a million dollars with the views. And that was part of the problem, is that we weren’t growing as a city. And it’s still part of the challenge of Pittsburgh, is that we’re doing much better, but we’re still not growing compared to, certainly the region is not, compared to a lot of other cities and communities.

Eve: [00:27:19] Today you work, you’re a senior fellow at the Urban Land Institute, which some of my listeners may not know about. What do you do in your role there?

Tom: [00:27:32] So the Urban Land Institute is an organization founded about 75 years ago by a group of developers concerned about the quality of development beginning to happen in America. And fast forward, the Urban Land Institute now has about 50,000 members worldwide. And it really, it’s focus is how do you create thriving communities? And ULI had participated in several programs in Pittsburgh when I was mayor, and then I got recruited to speak at different ULI events. And when I was leaving as mayor, it was right after Katrina in New Orleans and along the Mississippi coast. And they asked me whether I would go down and work with the mayor of New Orleans and with other public officials across the Mississippi coast. And so I did that for about a year and a half after leaving as mayor. And it was fascinating. I mean, it was really a fascinating experience. And, you know, in New Orleans, their mayor ended up going to jail for 15 years. And the political structure was really fairly inept back then. It’s gotten better. And so I watched, really, New Orleans return in large part because of grassroots decisions and leadership, through churches and nonprofit groups and neighborhood groups, and a lot of outside help. Foundations and movie stars like Brad Pitt. But people, but ultimately, the up-swelling was really, really bottom up. It wasn’t top down. And so it was a fascinating experience to work in, there. And I still am, I was on the board for many years of a community development corporation there. So it’s been an experience. Since then I got to about 50 cities a year and speak at ULI events or other events, and then often end up working with cities for a while. And I’ve written several papers – working on one now for ULI.

Tom: [00:29:40] It’s been a good, a good experience, really a great experience after being a mayor. And part of what I get asked to do all over the world is, in part I get asked to talk about Pittsburgh. How we went from this failing industrial city  to what we’re becoming. And the reason I get asked by, about that is, wheat I’ve come to realize, Eve, is virtually every city in the world, whether it’s Hong Kong or London or Dublin, or are all struggling with some of the same issues that we went through in Pittsburgh, of sort of what what is our place in the world? We were forced to have that conversation because of the collapse of the steel industry. Other cities have not had that kind of dramatic change, but they are seeing the world change and they are trying to figure out how to  stay current and get in front of those changes and manage them.

Eve: [00:30:34] Are there any current trends in real estate development that interest you the most?

[00:30:39] Well,every city, every place I’ve been, and this is, I mean, last month I was in Dublin and London, right. And I was supposed to go, I go to China about four times a year. I was supposed to be going in March. My plane trips are now all being canceled, but I was going to cancel anyhow. But so whether it’s cities in China or European cities, affordability is a huge issue. Of how do people, where do people live? And how do they afford to live? And so how cities develop affordable housing is a big, big issue. Where am I going to work? Because of the impact of technology and we see it in Pittsburgh up close every day as we see a whole litany of driverless cars on the streets of Pittsburgh or autonomous vehicles with attendants in them. But, you know, pretty soon the attendance won’t be there. As I mentioned, I was in Orlando yesterday, just east of Downtown Orlando but still in Orlando is a place called Lake Nona. And they now have, I don’t know, a half a dozen driverless autonomous buses that drive people around this very large development. Nobody driving. Nobody in, no driver. And no attendant. It is just on its own already on a sort of a, sort of private street where bikes and others places can go, but not cars. So we’re seeing this happen and what does that mean? I mean, if you think of 50 percent of the land use of a typical city is for cars, between roads and parking and everything like that, what does that do to how we think about cities. And not it’s not even that kind of technology. It’s why do young people want to come places? Part of what I say is what does General Electric and McDonald’s and Marriott and Fifth Third Bank and Heinz Kraft Foods and what they have in common is over the last five years they’ve all moved their headquarters from suburban office parks into cities. And why are they doing that? They’re doing it because … they’re having a hard time recruiting talent, young people, to move to the suburban office park. Where you need a car to get to. You know, if you do a survey of the Google employees in East Liberty, I’m betting that 25, 30 percent of them either walk or ride a bike to work. So that has huge implications on cities. You know, do you spend your money building more highways or do you build a transit system. That’s part of Orlando’s challenge. They don’t have a good transit system and now they’re  strangling, you know, because of the congestion.

Eve: [00:33:33] Yeah. It’s changing.

[00:33:34] So it’s those debates that I’m watching all over. Mobility is a huge conversation. The equity conversation, I mean, one of the things I see really fascinating, The New York Times did this, I thought, very cruelly. A few months ago they did an article about cities and they talked about winners and losers.

Eve: [00:33:56] Yes.

Tom: [00:33:56] And they talked, and they compared Nashville and Birmingham. And they said Nashville is a winner, they both start at the same place 25 years ago. Nashville is now a hot city, booming, and Birmingham is not. And they talk about, why, how that happens is really a lot to do with leadership. And then within, so we’re seeing cities sort of separate themselves, if you understand, those that are, where Amazon is going to consider locating, and those that are not. And what are the ingredients that make that cut? And then the other, within cities we are watching a huge divide with lower income people and the people that are sort of part of the new economy. And so, I think that equity issue is a huge challenge for cities also.

Eve: [00:34:43] Yes. You know, I have always thought that one of the things that’s most overlooked in discussions about cities and how to grow them is their connection to other cities. And, you know, I think that’s probably Pittsburgh’s growth problem. It takes a really long time go by train.

Tom: [00:35:00] Well, we lost a whole generation of people that would normally be having babies.

Eve: [00:35:07] If you want to get to New York by train, it’s a day. There’s no easy, fast way to get to work hubs. We’re sort of a little bit stranded. And I was always puzzled by the fact that we, you know, people would talk about better transit in the city, but I wanted better transit to other places, nearby, to open up opportunities. If I wanted to do a development project in a city, I wanted to be able to get there in a day in and back. Right?

Tom: [00:35:37] Right.

Eve: [00:35:37] So I, you know, I wonder if you plot out those connections, you know, where the, you know, the cities done well, will land.

[00:35:49] I think it’s a mix. I think mobility is one piece of the conversation of how easy it is to move around a city. Our son, for example, is now 29 years old, does not even have a driver’s license. He lives in Pittsburgh. On the North Side right now with us, he’s moving, though. You know, he is, has been able to manage fine living in Pittsburgh, using Uber and using public transit and, you know, walking a host of other things and abusing his friends every once while they’re able to, you know, he’s able to sort of manage living in a city pretty well. But I think mobility is part of the conversation. And that’s what, when I was becoming mayor, Eve, our focus was we need to figure out how to create a diversity of jobs. And we needed to make Pittsburgh a place where people wanted to live. You know, we’re never going to be, maybe we will someday, we’re never going to be a warm city. Like I was just in Orlando yesterday. It was 90 degrees. We’re not going to be near the ocean, but we had other assets. And so, as you might remember, I was very focused on building riverfront trails for that reason is that was an underutilized asset. You know, we watched, you know, a great music and bar scene sort of, and that happened organically. It’s funny, I watch the, I read the media in Pittsburgh now about the Strip District and we made a very intentional decision not to do anything in the Strip District. We, you know, people would come and why don’t we do this and why don’t we do that in the Strip District.tAnd we really said The place is working really well. Why do we want to get involved in it? Let it, it’s just happening on its own. So. You know, that it’s interesting that that’s the big, big debate right now in Pittsburgh, I guess about, are we killing the Strip District. So I think that you make decisions, you know, some of them are going to be right. Some of them were wrong. Hindsight will tell you whether it works or not.

Eve: [00:37:56] You know, this show is about real estate impact investing. And I want to know what you think a key factor is that makes a real estate development project impactful.

Tom: [00:38:06] You know, I think it’s the public space. Is the building itself attractive, but it’s the space around it, how it engages people that work in that building, and even people walking by, how they might use it. I think that, how it all connects. And you can get senses of it, right? When it works well? I think, you know, there are places in Pittsburgh that I think of that are just great places to be. People like to be there, right? I look at Mellon Park, you know, going back many, many years, long before I was mayor. Still a very iconic place on a nice summer day. It’s packed with people, having lunch. And I think how that happens, and that’s where the public private interface is so importantA and where the public needs to have, to be put money in the game, to say to a developer, you know, we want to get this quality in, and a developer might say, but I can’t afford to do that. And if you look at the books and the market is going to be make it hard for the developer to do that, then there’s a public role for that. I think another good example is that is Schenley Plaza, which for for 40 years or 50 years was a parking lot. I mean, think about that. I mean, I, you know, on one side is Schenley Park, on the other side are the museums, on the other side is the Pitt law school. And then on the other side, the Cathedral of Learning. And what is the highest and best use of that land for 50 years? It was surface parking. And Mark, this chancellor at Pitt and I got together and said we should be, we should do better than that. And so we work with the Parks Conservancy and came up with an idea to put a park there, to take the parking. And I got all this hate mail, but I’m never going to vote for you again. You’re taking away my parking place. And I said, you know, you’ll get over it. There’ll be other places to park it. But this is, this, we can do better than that is the interest of a great university. To a great park. To a great museum. We can do better than that. And you look at that on a nice summer day, it’s filled with people. So creating those kinds of places, I think is is that there’s a responsibility of both the developer and the community. You know, you did something quirky Downtown with those statues. And I bet lots of people walk over, who maybe have never been in Pittsburgh, walk over just to look at them.

Eve: [00:40:58] Yes. In fact, I think the taxi drivers use it for directions when someone says, I want to go Downtown.

Tom: [00:41:05] Yeah. So that’s what I mean. And look at Randyland on the North side.

Eve: [00:41:10] It’s fabulous. Yeah.

Tom: [00:41:12] You know, I mean, it’s just things like that make a cityS so the other word that we use a lot in ULI is authenticity, right? Pittsburgh has a great history. It has a great story. And we could still do better at telling that story. The South Side Works, when we started to develop that we put, had a competition for, and we brought artists and old steel workers who worked there together for like a morning of talking. And then we had a competition for artists. And there’s, at the end of Hot Metal Bridge is a little monument that we established for the steelworkers. But Pittsburgh is an incredible story.

Eve: [00:41:56] So I’m going to ask one last question, because I’ve taken up a lot of your time.

Tom: [00:42:00] It’s fine, I’ve enjoyed it. It’s fun to talk to somebody who actually knows Pittsburgh, Eve.

Eve: [00:42:05] So is there something that you think could really change real estate development in the U.S., for the better?

Tom: [00:42:14] I think it is, is the idea, the partnership idea. I’m amazed that the cities I go to, many developers attitude is I want a minimize my involvement with the city. Maybe there’s a reason for it. I want to get in and get out. I want to get the entitlements, whatever I may need and do what I want to do. So the challenge is the developer has a piece of property. The developer needs to figure out how to make money from that property. I accept that. I want the developer to make money from the property. On the other hand, the city, the city has the responsibility to build a great city. That it will never be a great city if these developers see their development as sort of an island disconnected from what’s next to it. And so the city’s responsibility is to figure out how that all fits together. Give you two examples that drive me nuts. I can drive on pretty much any suburban shopping street. I can go into a gas station. Maybe I want to go to the store next door. And I have to drive back out onto the highway. Or maybe I want to go to a store across the street, I have to go out on the highway. Maybe I have to drive a half a mile to get over there to the other side. So I can’t, there’s no sense of connection between any of that. And the other is, I watch in suburban areas like Cranberry Township subdivisions being developed of 100 acres or so. What would it take for those subdivisions that, maybe there’s five different developers doing one hundred acres each, if they would, then the city’s role would be to say we want to connect all this with a bike trail at the edge of your property so that every, so now instead of having a couple little playgrounds, you might have a five or ten mile bike ride, safe, off road. You don’t have to worry about traffic with your little children. And there is examples of where the public fails. Both the public and private developers fail. Because you create great, great amenities if you begin to think in a bigger way rather than individual pieces of property. That’s what’s destroying development, and quality in America today.

Eve: [00:44:33] Yeah, I agree, I think we both believe that real estate development, just as a financial tool, as a way to make money, isn’t making our cities better.

Tom: [00:44:43] Well, I think you make more money if you build quality. In the long run I think your development is more valuable. I mean, we didn’t get into all the other sustainability and all that which a lot of cities are facing.

Eve: [00:44:54] Thank you very much.

Tom: [00:44:55] Look forward to see you sometime. Bye bye.

Eve: [00:45:04] That was Tom Murphy, past mayor of Pittsburgh. Tom thinks place is everything, so place is what he invested in during his long term as mayor. He did that by reducing operational costs and creating the Pittsburgh Development Fund, a $60 million fund focused on helping developers who were willing to work in places and on projects that made the city better and better. It was a very bold, and unpopular move, but paid off in ways that no one imagined, as did many other moves that Mayor Murphy made.

You can find out more about impact real estate investing and access the show notes for today’s episode at my website, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities. Thank you so much for spending your time with me today. And thank you, Tom, for sharing your thoughts. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Tom Murphy