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Trends in multigenerational living.

August 23, 2019

How the trend toward multigenerational living will change real estate development

The concept of the single-generation, single-family home is in decline. Over the past four decades or so, the total percentage of Americans living with family members has increased from 12% in 1980, to 20% in 2019. Experts have not reached a consensus as to why this is happening, but it seems likely that a confluence of factors is to blame.

The skyrocketing cost of housing, stagnant real wage growth, and urbanization trends all play some role in the shift towards multigenerational housing. Americans are also living longer. As the average life expectancy in the United States has climbed, so has the incidence of multigenerational living situations. Many families are unable or unwilling to send their families to a retirement home or purpose-built retirement community. Combine this with the growing number of renters in the US and what you are left with is unmet market demand.

Rising life expectancy has also changed how Americans buy homes. In-law units, once relegated to a small number of high cost-of-living states, are seeing being adopted across the spectrum of property markets. Lennar Homes, one of the premier home builders in the United States, now offers in-law units in its home models in 13 states, and they are far from the only large builder exploring this option.

New housing development strategies

While in-law units are one way to approach this shift in living needs, it is far from the only strategy developers and builders have in their repertoire. Here are a few methods developers can use to take advantage of this new housing paradigm.

Larger multifamily units

In most markets, the majority of multifamily apartment units skew heavily towards one, two and sometimes three bedroom apartments.  Some areas, like the Southwest, tend towards multi-residential buildings where three and four bedroom apartments are the norm. This is primarily due to a tendency to have larger families in that part of the country. Working on projects that embrace the need for larger multifamily units could pay dividends in the long run.

Mixed-income buildings

The call for mixed-income development has proven benefits for society, including increasing mobility upward, lifting low-income citizens out of poverty, and several other positive effects. Mixed-income developments can also help keep families together. If you are a senior on a fixed income, or a student just starting out in life, it can be hard to afford rent or a mortgage at the same level as a working adult in their prime years. Mixed-income developments can allow families in different stages in life to maintain and strengthen familial connections, and thus the community as a whole.

Mixed-use buildings

Another trend gaining steam is the move towards mixed commercial and residential spaces. These spaces allow residents to live and work in the same area, reducing commuting time and increasing the amount of capital that stays within that community. These developments can be fantastic for families of all ages, particularly for retirees who might find part-time work in a local shop or business.

Reconsider the studio

Studio apartments are wildly popular with millennials, and there is a phenomenal demand for them, particularly in urban areas. Smaller spaces are an excellent way to tackle housing affordability, but they are not ideal for multi-generational living. One caveat, as we mentioned earlier, is that sometimes studios can work well as part of a mixed-income property as a way to keep families together.

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Identifying and taking advantage of trends is critical for success in the real estate industry. By investing or developing projects that take this societal shift into account, investors can meet the market where it is going to be and reap the benefits of being there first.

Finger Family Song for Kids, by MrNguyen68, CC BY-4.0

The power of design.

August 21, 2019

Christine Mondor describes herself as an eternal optimist regarding the power of design in shaping sustainable cities. And that’s what she has been working on for the past 15 years. She is using the power of design as an architect, educator and activist to shape places, processes and organizations nationally and internationally.

As a principal of the architecture firm evolveEA, Christine brings creative solutions to projects like the award-winning Millvale EcoDistrict Pivot Plan every day. She has taught architecture, landscape design and sustainability concepts at Carnegie Mellon and Slippery Rock universities, and at Chatham College. And she is deeply involved with organizations that promote design and the environment.

Currently she serves as chair of the Pittsburgh Planning Commission and she is a former president of the Green Building Alliance, a member of the Global Ecodistricts Protocol Advisory Committee, the Penn State University Stuckeman School advisory board, and former chair of the Design Center of Pittsburgh. Christine received her Bachelor of Architecture degree from Carnegie Mellon University and studied architecture and sustainable design in Scandinavia. Christine is a registered architect and LEED Accredited Professional, and a 2019 American Institute of Architect Fellow.

Listen in to our fascinating conversation about the power of design and the shifting role of architecture in this age of environmental challenges, and you’ll believe too.

Insights and Inspirations

  • Christine likes what Jane Jacobs had to say – “Cities have the capability of providing something for everybody, only because, and only when, they are created by everybody.”
  • She’s intrigued by the concept of naturally occurring affordable housing.
  • She thinks that co-operative or fractional ownership models have legs.

Information and Links

  • Christine loves Party with a Purpose and she’s working on two parties. The first is in partnership with Eco Districts and is a nationwide network for communities to create inclusive and integrated communities. The second is the 10th global EcoDistrict Summit to be convened in Pittsburgh in November, 2019.
  • Christine loves community based efforts and the use of citizen science to transform places such as the Breathe Easy project completed in Millvale.
  • Christine’s favorite brownfield rebirth is Malmo, Sweden’s Western Harbor. She really enjoyed walking through the amazing neighborhood that has been created and artfully weaves water into public spaces. 
Read the podcast transcript here

Eve Picker: Hey, everyone, this is Eve Picker, and if you listen to this podcast series, you’re going to learn how to make some change. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. My guest today is Christine Mondor, a neighbor of mine in Pittsburgh and an architect with her own company, evolveEA.

Eve Picker: Evolve is leading the charge in sustainability in the architectural world in Pittsburgh. Christine believes in the power of design in shaping a sustainable environment. I’m fascinated at how much Christine focuses on designing or redesigning the infrastructure of cities. This is something that not even I, a fallen architect, expect. In this podcast, we talk about the rapidly shifting roles and responsibilities of architects for our rapidly changing environments.

Eve Picker: Be sure to go to Eve Picker.com to find out more about Christine on the show notes page for this episode and be sure to sign up for my newsletter so that 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 Picker: Hi, Christine. Thank you for joining me today. How are you?

Christine Mondor: I’m doing great. How are you, Eve?

Eve Picker: Good. Good. Good. I know you pretty well. I’ve known you for quite a few years now, but our audience probably doesn’t. You want to tell them a little bit about what you do?

Christine Mondor: My name’s Christine Mondor, and I am an architect. I have the pleasure of having that be both my vocation and my profession. I really love the field of architecture – buildings, and spaces, and communities, and environments. I also have a practice called the Evolve Environment Architecture, where I get to have that as my profession, and I do that for a living.

Christine Mondor: My firm, Evolve Environment Architecture, was started in 2004. I had a history of practicing in kind of post-industrial cities, or the city of Pittsburgh during some of its hardest times and really always thought that there was an upswing coming and specifically when that upswing is framed around sustainability, and triple-bottom-line equity, and environment, and economics.

Christine Mondor: I started my firm with my partner, Mark. We really framed it around sustainability. I think, when we started the firm, a lot of the work that we were doing, people thought might be temporary; might be a nice thing to do for a couple years in terms of sustainability. What we’ve found is that while we were out in front in the early years with regards to sustainability in our practice, the rest of the society kind of caught up. What was once an outlier became standard practice.

Eve Picker: Now, in the folks that we hire, the people that we work for, they’re always asking for what’s next? What’s more? What else can we be doing? It’s been a really great process since 2004, defining a field of practice, spreading the word about this field of practice and having people join us, as clients, and as communities, and as our colleagues. Now, it’s to the point where there’s just so many challenges to try and hit on that we definitely are glad that many others are walking here beside us.

Eve Picker: I love, in your bio, the first statement – that you’re an eternal optimist regarding the power of design in shaping a sustainable environment. I’d love to know more about that.

Christine Mondor: I used to have this phenomena where, in Pittsburgh … You know these places well, as well; you would walk around communities, and you might have a visitor with you from somewhere else, and you would be just enamored and in love with everything that you see. Somebody would say to you, “Why are you taking me around to this neighborhood? I don’t see anything here.”

Christine Mondor: You have this kind of gut check, where you realize that you’re looking, and you’re seeing a future condition; a condition where things are more environmentally sustainable, where the community is lifted up, so that all may prosper, and frankly, it just has really great, design as well. When you have these other people around, they’re not seeing that, so it’s your obligation to make that happen. When I realized that I had that kind of disjuncture in what I was seeing and maybe what others were seeing, that was my eternal optimism. People would say, “Well, you’re optimistic, aren’t you?” Yes, I am!

Eve Picker: I think it’s a great way to describe it. My husband always says that when I drag him into an old building and all he sees is pigeon shit and [cross talk] and I’m standing there saying, “This is beautiful!” He’s just perpetually stunned.

Christine Mondor: That’s exactly it. That’s exactly it. Yep [cross talk]

Eve Picker: That’s the lot of a designer, right? Just trying to find a way to show the rest of the world what’s possible. What are you working on at the moment?

Christine Mondor: We are doing a lot of … In our firm, we work at three different scales. We work at the macro, mezzo, and micro scale. The micro scale is we think about as kind of like building spaces. We’re working a lot with universities and commercial clients to make outstanding places, inspiring places, but that are also high-performing and really are thinking about future conditions.

Christine Mondor: We’re also working a lot with district-scale work, that mezzo scale – communities and neighborhoods, and also at the regional scale, and that’s infrastructure. That’s the part that I spend most of my time in, in really thinking about these things as systems. We’re doing work with- a lot of stormwater work. That is taking an infrastructure system that previously was below grade, in pipes, and thinking about it as a land-use question and how it can really add to a community.

Christine Mondor: I find it especially fascinating, because you have to think about it in terms of future-proofing. It’s not just a question of doing, say, green infrastructure to capture stormwater and prevent it from getting into the storm pipes and putting sewage out into our rivers and waterways. It’s really a question of how are we going to recreate how our communities work so that we can deal with this issue in an environmentally and equitable way – environmentally beneficial and equitable?

Christine Mondor: Also, so that we can begin to deal with the issues of climate change in this very dramatic way that we’re seeing it play out. Yesterday, here in the city, we had a morning rain that sent many communities into full flood mode and even closed off a regional hospital for a period of time. That is a fascinating question of infrastructure planning.

Christine Mondor: If we are really going to deal with those issues, we’re going to- our communities are going to be reshaped. It’s not just a little bioswale in somebody’s front yard. We’re talking about rethinking the systems that we designed 100 to 150 years ago. I find that work really fascinating. We’re doing that work around stormwater and transit.

Eve Picker: Be sure to go to Eve Picker.com and sign up for my free educational newsletter about impact real estate investing. You’ll be among the first to hear about new projects you can invest in. That’s Eve Picker.com. Thanks so much.

Eve Picker: So, at the moment, I feel like I’m living in Kevin Costner’s Waterworld. It’s a little crazy. Maybe we can all learn something from that. When you talk about this, I realize that most people think about architects probably in a completely different way; that they’re busy designing single-family homes and office buildings. You’re talking about sort of redesigning the infrastructure for cities and neighborhoods. I don’t think people realize that’s what architects do.

Christine Mondor: Yes. I don’t think so either. I don’t think, sometimes, architects understand that that’s what they can do. Maybe it’s because we haven’t had the need to do that for the past 50-100 years. We’ve been kind of living off the legacy of that original infrastructure, and land-use work. But things like climate change and also economic conditions are changing in a way that forces us to rethink the development patterns that we have; whether it’s the availability of mortgages for single-family houses, the failure of shopping malls, and rethinking distribution patterns for retail. All those things caused pretty significant changes in our cities and our rural regions, too. Architects, we’re really well-suited to think about that on a qualitative way and a quantitative way [cross talk] superhero power.

Eve Picker: Yeah, no, I think that’s right. I always think of architecture as a really interesting profession that teaches you how to make something out of nothing – the process of designing something from absolutely nothing in a very creative way. I think it’s pretty rare skill. I wonder, do you think the profession, on the whole, is thinking the way you’re thinking?

Christine Mondor: I don’t think so. I think that some are … One of the things I always enjoy about your trajectory, Eve, is that you’re able to weave these disparate things together, whether it’s a development pattern, a housing type, a specific project, or a funding mechanism. You’re always pulling these things together to say what is it that we want to do as a community and then how do we make the tools work for us?

Christine Mondor: I think that our architectural training is, at the base of that, being able to see across these different disciplines and expertises. I think there’s a unique need for that now, so that the folks in the profession are waking up to that – that, in fact, our most useful role might be outside of what we consider traditional practice. I recently became an AIA fellow, and in the process of that, you kind of have to redefine how your practice has added to the profession. It helped me realize how we define ourselves as professionals is only scratching the surface of what the potential contribution we can make.

Christine Mondor: I know we were talking about the role of women. We talked about that in the past and how it’s hard to find women in the profession, or in the elevated, or recognized positions. I think that’s because they tend to- are oftentimes in non-traditional roles. The more we expand the definition of the profession, the more we’re going to find that those women are out there, and they’re in influential positions, but they’re just not in traditional positions of power.

Eve Picker: You’re still teaching at Carnegie Mellon, right?

Christine Mondor: Right.

Eve Picker: I taught there quite a few years ago now, and I was frustrated with the … For different reasons, I was frustrated with the very traditional approach to teaching these unbelievably talented kids architecture, because there are so few jobs in that profession, as well. Do you think that schools are sort of starting to see that they need to shift what the role of an architect might be in this really- in this world where sustainability has become so important?

Christine Mondor: I think that’s a great question, and I think that that shift is happening. It has to happen at two levels. First, the profession has to be ready to catch it, and to say is the goal of our professional education to graduate a narrow definition of what it means to be an architect, or can we broaden out and embrace a full spectrum, where everybody shines a different light on a topic, and in that, we see that all the colors kind of arrive?

Christine Mondor: I think the traditional way of approaching architectural education was that everybody shines the same color of light on the subject, so we are trying to make that light as uniform as possible. That’s the standards for that education. But when I look at what my students are doing up out of graduation that see a view that they’re doing things that I don’t even know what to call the job. You know, I don’t know what it is yet. And they don’t know what it is yet. But I don’t want them to be outside of my profession. I want to say that that is also architecture. It’s a different piece of architecture.

Eve Picker: I think you’re right. I think there’s an opportunity there that we’re kind of missing at school. I actually want to go back, because I know you did this little EcoDistrict PIVOT plan for Millvale, which is a Rust Belt town outside Pittsburgh. It’s kind of an unusual plan to do for a place like Millvale. I wanted to give our listeners an idea of what you did for Millvale, so they have a more concrete idea of what is possible.

Christine Mondor: Some of the work that we do in systems … Sometimes, we’re working directly with, say, a sewer authority here in Pittsburgh. We’ve done big planning with Buffalo Sewer Authority. Sometimes, we’re working with transit authorities. Those are people who hold infrastructure systems and plan that system, but communities are different; where they have many different types of infrastructure woven into the fabric – the social and cultural fabric – of what people think of as their community, their home, and their neighborhood.

Christine Mondor: EcoDistricts, in the way that we co-developed it, actually, with our colleagues in Millvale and with our colleagues in Larimar, another community here in Pittsburgh, is really looking at those larger systems and understanding how these smaller neighborhoods, communities, boroughs interface and weave themselves into it.

Christine Mondor: For instance, in Millvale, in the PIVOT plan, the PIVOT plan looked at, at first, three different areas. It looked at food, water and energy, and said how do we make our community better, more equitable, more healthy by looking at these systems and the resources, and flows that move through those systems? That’s what resulted in a plan in 2014 with a number of different things to do for the community. They did them in about two years and [cross talk]

Eve Picker: That’s very fast. That’s really fast.

Christine Mondor: I have to say that no … These plans- no plan really works unless a community’s ready to activate around them. Really, we had great community partners and worked hard, through the process, to build their supportive groups around them, so that the community had capacity to do this work. It doesn’t work to make a great plan unless they have the capacity to actually execute it, and they did, so we-

Eve Picker: What did they do in those first two years?

Christine Mondor: The first few years were … I’ll give you a for instance in energy. We looked across the entire municipality to say where is energy being used in the community? Where is it being lost? Where is it being gained? That’s anything from looking at building performance, to possibilities for renewable energy, to how those things weave into the daily life of communities.

Christine Mondor: One of the proposals was saying you’ve got a couple places here in town that you could do an energy hub, where you’re harvesting solar energy. It’s feeding into a particular function that services the community or a business. You can kind of punch above your weight, because you’re thinking outside of a single property, and you’re looking at more district-scale work. These energy hubs became resiliency hubs. The community was able to get funding to put a solar-resiliency hub in their municipal building, because, tragically, they have frequent flooding. In the case of that, this municipal building served that, in, perhaps, in some cases, off-line, off-the-grid hub, but it’s prepared to be the place where people can go for flooding.

Christine Mondor: They also did that in places called the food hub. The food hub is a place where there are a couple businesses being incubated around food-oriented businesses – whether it’s a caterer, or a startup, but also an organization called 412 Food Rescue, whose home is in the Moose; an old Moose Lodge that became the food hub. That is where 412 Food Rescue gathers waste product, waste food, from other businesses and places where somebody’s ordered too much food. They can capture that and re-use it, re-purpose it, put it back out there and really close loops within the community and within the region.

Christine Mondor: Attracting a business like that; having a facility that’s sustainably designed, and high-performance, and really creating a culture around these big idea comes from this type of EcoDistrict planning that says we’re bigger than a project. We’re really looking at resource flows, and we want to make some great design moves and really improve the quality of our places in the process.

Eve Picker: They did all of that, and what was next?

Christine Mondor: Food, water, and energy were first. With that success, they felt air quality and mobility were two things that were important, as well as the concept of equity. Equity was an underlying theme through everything, but bringing it to the forefront, elevating it to its own category forced everybody to really look hard at what these goals meant and how they were quantitatively, and qualitatively serving the community.

Christine Mondor: I think probably the one that’s got the most depth to date, so far, is air quality, because they were able to get additional funding to understand the nature of the exposure of the community to poor air quality, both regionally and localized sources. We did citizen science and monitoring around the community to understand where the bigger issues were, and then to, “try to fix” some of the problems and decrease exposure to the community, but also to try and raise awareness. Because what we found, in fact, through this citizen science, is that although there are minor variations … For instance, the homes that are near to the woods, but right above the fast-food place that fries burgers and sends its exhaust out, they had the worst air quality.

Eve Picker: Interesting.

Christine Mondor: Yeah, we would have thought the houses near the highway had the worst, but [cross talk] I know, but we didn’t check weight to know if smelling burgers frying also encouraged you to eat, so I’m not sure about that. But that was an interesting finding that it’s locally variable for those reasons. What we found is that most of the- all of the stations, in fact, tracked to the regional. We are exposed to things that are coming from Ohio, things that are coming from coal-fired power plants, and then the intermittent releases that happen from our local air emitters. That is an advocacy issue. There’s nothing that somebody in that community could do to stop that directly, if they want to live outside and walk around, but it is something that, if they know it, they can try to change it through policy and through advocacy.

Eve Picker: Interesting. Interesting. I’m going to just change course a little bit and ask you if there are any current trends in real estate development that interest you the most at the moment?

Christine Mondor: This is a great conversation to have with you, because I know your ear is always to the rail on these things. The two things that I’m really intrigued by, they could be related, but I’m not going to try to relate them here. First of all, I’m interested in the concept of naturally occurring affordable housing, because this seems to be the nexus of the strain that we feel, when we talk about gentrification, or changing markets, and displacement. At least in our region, this concept of naturally occurring affordable housing was a fairly common phenomena that we didn’t recognize.

Eve Picker: Can you explain that to the listeners? I don’t know if everyone knows what that is? What is naturally occurring affordable housing? What does that mean?

Christine Mondor: In a weak market, a weak real estate market – like, say, Pittsburgh was, say, the ’90s especially,  more uniformly weak – naturally occurring affordable housing meant that you never really had to look hard to find affordable housing. It also means that the housing is under-invested in, in a way that it doesn’t sustain the basic maintenance requirements of the house.

Christine Mondor: When I cut my teeth in the profession, what affordable housing meant in Pittsburgh was putting people who were above the average median income into communities that had very low median incomes, because there weren’t enough people who … There was no income diversity, and there weren’t people who could necessarily care for the infrastructure that existed, because there wasn’t enough economic resource in that community.

Christine Mondor: As a market pivots from weak to strong, the more commonly held narrative that we have now is trying to prevent displacement, because that naturally occurring affordable housing disappears. Then folks who had been living there, don’t have as many options. I think we need to have a broader conversation about the pros of naturally occurring affordable housing, recognizing places that have it, but also recognizing that it comes with its own set of problems that need to be addressed for that housing to be equitable, to maintain a quality that is equitable. In some communities, code enforcement is targeted at naturally occurring affordable housing, because, rightfully so, the conditions are not ideal to raise a child in, or to live in, but the investment that’s required to fix that place then prices somebody out of that unit, or it just doesn’t get done.

Eve Picker: Okay.

Christine Mondor: We need to understand what the extent of it is. We need to understand what our tolerance of it is and how we make sure that people are living in healthy and affordable places.

Eve Picker: This is an interesting concept, because there probably is a lot of naturally occurring affordable housing left in Pittsburgh, but the anger from people who are currently being displaced is really around the fact that it’s no longer in their own neighborhood, right? Those neighborhoods have been improved now.

Christine Mondor: Right. What is the balance that we have between the market doing improvements, between subsidizing improvements to make sure that people have choices and aren’t forced to leave? It’s oftentimes terms like gentrification are used to kind of flatten an argument. When you flatten an argument, you can’t get to the nuance that allows you to make sure you’re turning the right dial to [cross talk] solve a problem.

Eve Picker: I totally agree with you, and I think there are lots of dials to turn. Just that the idea that as neighborhood gains value, your property taxes go up with it is a peculiar idea to me. I just really think that people who live in that neighborhood should enjoy the increased value around them, but not be forced to leave because of that adjustment. I think there are lots of pieces to it, for sure.

Christine Mondor: That gets to the second thing that is of interest to me, in terms of that kind of real estate thing. That gets to the idea of ownership, because one of the reasons why people experience it unequally is access to investment, access to properties that don’t have tangled titles, access to financial mechanisms to purchase, and ownership. That means that some folks who do have access to that are better prepared to take advantage of a shifting market, whereas others are not.

Christine Mondor: I know that home ownership isn’t for everybody. What are other models we have, where people can have a stake in their neighborhood and be landed, if you will, and have that idea of stability, but not be burdened by responsibilities that they either don’t have the resources, whether that be time, or money, or interests to take care of? That is a cooperative model. It’s something that I’m very intrigued by, and I don’t see widespread adoption of. I don’t know why that is, but I’m very, very curious about that [cross talk]

Eve Picker: Have you seen anyone use that model in an interesting way?

Christine Mondor: You know, I think that there are examples of it outside of our region, here in Pittsburgh, and I have spoken with some experts who say there are some here in the region. I haven’t. I don’t have enough firsthand experience to know what the reality of the success of those things are yet. But it’s definitely something that I’m going to be looking into more so-

Eve Picker: Interesting. Interesting. We agree that socially responsible real estate is important. What do you think we need to think about generally to build better places for everyone?

Christine Mondor: I’m a big fan of the Jane Jacobs quote … I’m going to paraphrase it here. Cities are best whenever they’re … Cities serve everyone best, when they’re built by everyone. I think that thinking about cities as an equitable real estate opportunity is a powerful tool, because we know that capital thinks of cities as a means of making money.

Christine Mondor: It shouldn’t be that you’re on one side or the other. It should be that we’re thinking about how this mechanism we have can serve a broader purpose in a broader market – whether that’s helping folks who wouldn’t otherwise understand our built environment as a wonderful place to be, but also a place to develop stability and security because of the investment mechanisms that they might have available to them, or whether it’s thinking about their piece within a broader opportunity.

Christine Mondor: I think that your Small Change tool is really a part of that story that’s being written, where people can participate in this in different ways, because there’s just not enough flexibility in how people participate in making a city; to make sure they don’t just have an opinion on how something looks, but also how something works, and that they have a stake in it, in the long term.

Eve Picker: Yeah, I think you and I have seen how important that is in Pittsburgh, right? Yeah. What community engagement tools have you seen that you think really work well? That’s always the most- one of the very difficult things, I think, personally.

Christine Mondor: Yeah, I agree. In order for engagement to be transformational, it needs to be long term, and it needs to be repeated. The EcoDistrict model that we did in Millvale and with other communities really depends … I think it sets up a model of, first of all, giving people information, because they need information, and they need to be given decision points that are meaningful and not just decision points that check a box for participation.

Christine Mondor: Secondly, they need to have tools that are suited for their participation, meaning not just how you’re asking a question at a meeting, or how you’re engaging them in a volunteer activity, or outside activity, but also this idea of how they become invested in their community financially,  through time, through effort. It can’t just be a meeting, and then everybody goes home to their house. It has to be an ongoing effort to build that community.

Christine Mondor: I think that happens with a process that says we’re going to take some time; we’re going to figure out who’s in the room; we’re going to figure out who needs to be in the room. We’re going to have the vision, and then we’re going to take these multiple steps and let many voices determine how it is we’re going to get there.

Eve Picker: Yes. Okay. I think my final question is where do you think the future of real estate impact investing lies?

Christine Mondor: I’m not sure how qualified I am to say that on the broadest scale.

Eve Picker: I was actually going to say you probably just answered that, because what I’m hearing from you is that you really believe the community should be invested in themselves and in their own future, and that’s impact, right?

Christine Mondor: I worry about the aggregation of capital in large-scale investment, and whether that’s … Not something that we see here in Pittsburgh, as much, but in other cities, where investors have come in and bought up large amounts of single-family homes. What you’d get is an aggregation of capital and power, and you prevent people from participating in their community in a way that is meaningful.

Christine Mondor: Not to say that that everybody wants to be that single-family home longer, but in many communities, it’s becoming less and less possible. I think, here in Pittsburgh, our challenge might be otherwise in that we need to figure out how to … As our market is shifting, we need to figure out how we allow people to invest in projects and in places that are beyond their scale of engagement. A single investor can’t do it. Is it a community investor? Is it co-housing? Is it a co-operative? Is it an investment tool, like Small Change? To write a more different narrative than just a large-scale global capital that is making so much change in cities across [cross talk]

Eve Picker: No, I do agree, but I think what you’re grappling with is what I learned early on as a developer, and that is control of property is absolute power. The question is can you somehow shift control of property to a larger group of people? Not-

Christine Mondor: Yeah.

Eve Picker: -and that’s a really difficult question. I mean, control of property is powerful for a whole bunch of reasons, financial reasons, and other reasons, so it’s a really big question. I have three sign-off questions and I ask everyone [cross talk] I’m going to ask you, too. What is a key factor that makes a project impactful for you?

Christine Mondor: I think that, out of an impactful project, there is a high quality of design and improvement of the physical place, but there’s also a sense of empowerment that comes out of it for all who have participated, whether they just helped shape it with their opinion, or whether they invested, or whether they performed some of the work. That empowerment is what builds community. That’s what I think is the most impactful.

Eve Picker: Okay. Other than by raising money … You know what we do at Small Change, so you know that we can involve investors, so that they can invest and make money just like everyone else. Is there any other benefit of crowdfunding that you see that might benefit communities or impact real estate developers at large? Honestly, one of them … I’m going to answer you on one of them. I know that you head up the planning commission, here locally. I always think about, if someone came to the planning commission with a project that had a local crowd of investors invested in it, what would the planning commission think about that?

Christine Mondor: It’s an interesting thing, because tools we have to influence development, are sometimes regulatory, and they’re sometimes financial, and they’re sometimes kind of cultural, or social norms. I think that the planning commission has some regulatory tools that have … But it also reflects- some of those criterion reflect broader social norms and some of these other influences.

Christine Mondor: I would love to see the projects that come in with creative design that are led by teams that have empowered communities and have a strong financial working model. Having a great triple bottom line is a great way. Go into it with that, and if you fall short of some things, that’s okay, but have some big goal. It really makes for an amazing process and project. I would love for every project that we see in our city to have that type of effort. I think we’re still blessed, here in Pittsburgh, because we have a number of locally owned properties. We’re not as subject to global capital as other cities are, at least at the time, so we still have some of that ethos, where we’re doing [cross talk] the common good.

Eve Picker: The final question, which is a really hard one, what is the one thing that you think would improve real estate development in the U.S. that you would change?

Christine Mondor: I think that much of it is opaque to people who don’t have time to really sort through the complexities of it. I’m not sure that this is the entire system change that’s needed, but some part of it needs to change to allow transparency, whether that understanding how big deals happen and what effect it has on a city and the community, or whether that understanding how one can participate in it to their own benefit, but also for a common benefit. I think if those things were more clear and transparent, we’d probably have more equitable participation.

Eve Picker: That’s a great answer. I’m going to thank you very much for joining us. I really enjoyed it. I’m going to go check out the Millvale Eco plan, right now. It sounds really [cross talk] I haven’t paid enough attention to it. Thank you very much, Christine. It was really nice chatting with you.

Christine Mondor: It’s been great chatting with you, too, Eve.

Eve Picker: That was Christine Mondor, founder of EvolveEA. Here are some of my takeaways from our chat today. I learned that architects, and Christine in particular, are going far beyond just designing buildings. They are designing infrastructure and PIVOT plans for entire towns and neighborhoods. I heard the passion behind Christine’s conviction that high-quality design can reshape the future for cities. And I heard about her conviction that the housing models of the future need to be cooperative, providing access to ownership for everyone.

Eve Picker: 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, Christine, 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 evolve EA

The democratization of finance.

August 19, 2019

Throughout history finance has been the province of emperors and kings. Later it included the merchant classes and the new aristocracy born of the Industrial Revolution. Your average Joe only really got involved in investing during the stock craze of the 1920s. Even today the average investor holds assets in a small subset of classes – primarily stocks, mutual funds, and bonds. If Joe wanted to acquire real estate assets, she was relegated to a mortgage on her home, or her residential rental properties, or publicly-traded real estate service firms like the Simon Group, AvalonBay Communities, and others.

While all those asset classes have value and the potential to generate returns, the ability to invest in other real estate classes without a massive pile of capital has been limited until recently. In the early 2010s other real estate asset classes like commercial, shopping centers and retail became available to the average Joe as a result of the 2011 Entrepreneur Access to Capital Act.

The Entrepreneur Access to Capital Act gave a much wider pool of investors the ability to participate in crowdfunded investments. It did this by providing a crowdfunding exemption from SEC (U.S. Securities and Exchange Commission) regulations, as long as a company raised a maximum of one to two million dollars, the amount set at the time the bill was signed. Under the Entrepreneur Access to Capital Act, anyone could invest up to $10,000 or 10% of their annual income, whichever was lower.

Opening up markets to new investors

When markets open to firms, economic growth tends to follow. A great example of this is the surge in investment capital and growth in China after they gained Most Favored Trading Status in late 2001. China went from third-rate to one of the most dominant economic powers within just a few decades. While not entirely analogous, the democratization of finance could follow a similar trajectory, providing great economic benefit to a much larger pool of real estate investors and the communities in which they choose to deploy capital.

Rather than well-heeled and institutional investors sucking up profits by virtue of being the only ones allowed to play the game, now individual investors can take advantage of commercial real estate opportunities. This includes investing in a wide array of property types, such as multifamily apartment buildings, self-storage facilities, retail and shopping centers. Real estate projects with capital requirements that are out of the reach of most individual accredited investors are now within reach thanks to equity crowdfunding. 

Impact investing and the democratization of finance

One of the most exciting possibilities that the democratization of finance brings, is its possible marriage to socially responsible impact investing. Historically, the type of person who is interested in high-finance has not typically been particularly socially responsible. We can see that through industry’s past opposition to things we take for granted, like the weekend, child labor laws, safety standards, and a whole host of other protections. That is not to say that all investors or capitalists are bad people – just that they are laser-focused on profit, often to the detriment of society at large.

As many new investors enter the scene, bring different attitudes to ethical investing with them, this focus on profit may take a backseat to sustainable, community-led development projects. Impact investing does not need to mean sacrificing returns or investing in unprofitable projects – it is simply a market mechanism for affecting change while also generating a return on your investment.

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As we’ve seen throughout history, large concentrations of power are not good, regardless of whether that power is financial, political, social etc. The democratization of finance has the potential to avoid or even alleviate many of the corruptive and detrimental effects of the finance system- by spreading ownership and wealth amongst the crowd instead of amongst just a few, and by shifting investment focus to impact investing with the end result of creating better places for everyone.

Image by MTAPhotos, Hudson Yards Real Estate Development Update: April 16, 2015, CC-BY-2.0, image cropped.

Is revitalization a dirty word?

August 16, 2019

Revitalization, gentrification, and displacement are now a mainstay in the heated national conversation about housing. For many years urban renewal and revival were sold as cure-alls for improving economically vulnerable neighborhoods in big cities from New York to Oakland. Unfortunately, the effort to bring new life to these areas was more successful than anyone predicted. In fact, it was so successful that it began to drive low and middle-income residents out of their homes as property values and the desirability of each neighborhood grew. And in the process revitalization went from a hopeful phrase to a coded word for displacement of minority and low-income residents.

This process started in the early 1990s in some high cost of living areas like San Francisco and Seattle and has substantially ramped up during the current real estate boom. Much of the issues arise from the Gen-X and millennial preference for smaller homes and their desire to have immediate access to urban life rather than schlepping in from the suburbs. As these young people flock to urban areas, existing residents are unable to keep up with rising rents, property taxes, and the general increase in expenses as their neighborhoods gentrify.

A silver lining

It is clear that gentrification is negatively affecting many Americans, with those most affected coming from low-income and minority groups. Some critics make no distinction between unmanaged market-driven gentrification, and the revitalization efforts happening in cities across the country. These revitalization efforts are having real, positive effects in some rust-belt states which are seeing incredible turnarounds, at least partially as a result of real estate revitalization.

Detroit as a model?

Detroit was, and continues to be, the poster-child for urban decay in America. The hollowing out of the American manufacturing base led to a situation where middle and upper-middle class residents fled to the suburbs, taking their tax dollars with them. Left behind were the poorest, many of whom came from minority communities. The city lurched from year to year in a state of disrepair until a few years after the 2008 financial crisis.

Over the past decade, real estate investors have helped develop millions of square feet of prime real estate in downtown Detroit. Areas that were once in significant decline, bordering on a demilitarized zone, became livable once again- and property values and the city’s economic picture rose with the real estate sector.

The housing market in Detroit is incredibly large and complex, and there are success stories as well as the emergence of some of the more common issues with gentrification and displacement. Many of the people on the ground working to protect residents from the deleterious effects work in partnerships with local governments, nonprofits- and developers.

Riding the wave

Spider-Man once said, “With great power, comes great responsibility.” This truism can be applied to how we approach housing issues such as sustainability and affordability. When local stakeholders are not heeded, projects can have disastrous consequences- both from an investor and resident perspective. Many grassroots movements have sprung up across the country as a response to development growth, and what some locals see as the destruction of their communities.

As developers and investors, we have a surefire way to avoid conflict with locals- and that is to  build to benefit the community, rather than just to make a buck. Everyone has to eat, and there is nothing wrong with an honest buck- but finding the intersection between community-minded morals and market forces will help each party benefit- the developer, investors, and residents.

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Revitalization does not have to be a dirty word. In fact, it can be a net positive for all parties when implemented correctly.  Many cities and states throughout the country are taking steps to mitigate some of the worst problems arising from gentrification- and insightful investors have the chance to be on the ground floor of an entirely new development model- one where community and business interests are aligned, rather than at odds.

Image by Eve Picker

Development as art.

August 9, 2019

Real estate development as art

When you think of art, you probably think of Picasso or Matisse, not property developers like Mill Creek Residential or Greystar Real Estate Partners. Despite popular perception, real estate development is an inherently artistic endeavor. Some of the greatest artists in human history, people like Brunelleschi, Michaelangelo, and Da Vinci, all worked to create buildings and livable spaces.

For decades, since the birth of the modern housing industry at Levittown in the late 1940s, developers have focused on cranking out endless rows of homes with little thought given to much more than finances. Profits and growth were in the driver’s seat, with few considerations given to long-term community sustainability and dare I say it, beauty.

Many in the real estate sphere, on the investor and the developer side, are starting to realize that creating economically, environmentally, and yes, artistically focused housing is not only the right choice for society- it is absolutely essential to continue to remain relevant in a changing development landscape.

Crafting one of a kind environments

Innovative developers across the country are focusing on creating carefully crafted, artistic communities. Some of these new neighborhoods are purpose-built from the ground up. More commonly they are repurposed structures or vacant, unused lots in urban areas. Instead of seeing these areas as blighted, or unworthy of capital investment, forward-thinking developers and investors are focusing on them, partly due to the immense opportunity underserved areas present, and partly because of a genuine desire to create socially responsible communities.

Focus on urban infill

One strategy for creating art-driven developments is to focus on urban infill, defined as any new development in areas that are already built-up. Think abandoned lots in dense urban areas. There are many opportunities to create unique structures and neighborhoods in these areas, primarily because they are often overlooked by large-scale developers who prefer to develop on large and more traditional sites.

Adaptive reuse

Adaptive reuse may be leveraged to help artistically minded developers reuse existing buildings for new purposes. Many blighted or economically challenged areas have an abundance of old commercial and industrial buildings. With some hard work and lots of imagination, these underutilized structures can contribute to establishing new communities that are not constrained by the narrow-mindedness of traditional development models.

An example might be an old cannery turned into a loft housing site, with a small commercial area in the vicinity. Or an empty school re-envisioned as a community meeting place or artist studios. Beautification and artistic efforts can brighten these once abandoned or unused places to add some life and meaning to the neighborhood – not to mention the sustainability of converting an old building rather than starting from the ground up.

Creative redevelopment projects

Both of the above strategies share a commonality: Creativity. As cliché as it sounds, you will need to think out of the box to create an artistic and livable development. This not only applies to the building and the community it is part of, but it also applies to the methods that a developer might deploy to get these projects off the ground.

Creative financing strategies can help developers build the communities that people clamor to live in, no matter how out of the ordinary. While traditional lenders and banks are often reticent to lend to smaller developers pursuing “out of the ordinary” projects, new financial tools such as crowdfunding, present an opportunity for developers to build something cutting edge and extraordinary.

Instead of trying to squeeze an unique development project into a traditional lender’s box, you can go directly to potential investors via a crowdfunding platform. Investors and developers can even solicit support directly from the community in which they intend to build.

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Most residential, commercial, and mixed-use developments across the country suffer from a lack of artistic vision, and this has hurt their aesthetic qualities, but more importantly, it exposes a lack of care for the daily needs of residents, the neighborhoods they live in and the cities they are part of. Steps towards embracing artistic diversity in the real estate world will pay dividends for years to come.

Image by Eve Picker

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