Rethink Real Estate. For Good.

Design

Magic in the details.

Lorenzo Perez is co-founder and directing principal of Venue Projects, an inspired redevelopment practice based in Phoenix, Arizona. Advocates for LOCAL community, culture and commerce, Venue crafts one-of-a-kind environments and experiences throughout the Metro Phoenix market.

A native Phoenician, Lorenzo holds a bachelor’s degree in architecture from Arizona State University, an active Arizona real estate license, and has been working in the Valley real estate development industry for over 25 years. A nostalgic storyteller who finds magic in the details, Lorenzo likes to say he talks fast, plenty and daydreams often.

A long-time member of the Urban Land Institute, a sincere believer in design and context sensitive development, Lorenzo is often invited to share his passionate perspective on Venue’s artistic approach to developing human centric places. Notable redevelopment projects include The Newton (formerly The Beefeater); The Orchard, The Windsor, The Alhambra (Mesa, AZ) and Arrive Hotel.

Read the podcast transcript here

Eve Picker: [00:00:05] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:38] It’s been four years since I first interviewed Lorenzo Perez, and I love his work every bit as much as I did then. Lorenzo advocates for local community, culture and commerce in his real estate projects and for crafting artistic, one-of-a-kind environments and experiences. He and his company, Venue, put that passion to work throughout the metro Phoenix area. This approach helped them to weather the last four years, pandemic, and all. Lorenzo was about to open his first hotel project right after everyone was sent home. And yet, well, I’m not going to say more because that would make me a spoiler. You’ll have to listen in.

Eve: [00:01:27] Hello, Lorenzo. It’s totally wonderful to have you back on my show.

Lorenzo Perez: [00:01:32] Hi, Eve. Good to have you here. Thanks for giving me the opportunity to be back.

Eve: [00:01:37] Oh, yes. So, on your website: ‘Create, Inspire, Serve’. That’s what you and your company, Venue Projects aspire to do. And I just want you to tell me about that.

Lorenzo: [00:01:49] Sure. When we first started our company, my business partner said opportunities were going to be abundant but staying on track with our ‘why’ is super critical if we’re going to be successful. He had had other businesses that he had owned long term, and so we sort of settled, why are we doing this? And for us, we distilled it down to ‘Create, Inspire, Serve’. And both of us were just itching to do creative work and to do innovative work and to experiment with new ideas. The idea of creating beauty, creating value, creating goodwill, new models, new product, new services was just exhilarating. So that was our first item is we want to create. We’re both just natural creators. Inspire. We had done the corporate thing. Big company, grew it, you know, and it was just the higher up we got and the more we got into that world, the more soulless it was and the less inspired, you know, it became about managing departments and divisions and it was just transactional. So, I just wanted to, I’m like, man, if we’re going to work and life’s not promised, I want to spend my days doing stuff that fire me up. I wanted to be fired up with the work I was doing. I wanted to be inspired. I wanted to do work that raised my vibration, but also gave me the opportunity to raise other people’s vibration and do work that inspired others to do fun, creative work that made a difference. So meaningful work.

Lorenzo: [00:03:27] And so that sort of led to the third item is serve. You know, the motivation was to I my career was doing really exclusive, high end, unconventional projects in my former life. Like, real high-end homes for billionaire clients in California and Arizona and it was interesting for a while. But, you know, no one got to see the stuff we got to do. We were always tied to non-disclosures. We couldn’t take photos. Privacy was super big, and I just wanted to do something that was meaningful. I wanted to take what we learned, use our talent, and use our creativity to do stuff for everyday people. And so there was this service thing. I wanted to serve my community. I wanted to serve myself, my family, our team, our investors. I just was like, we wanted to do it not just for us, but for some, make, I guess, a greater impact beyond ourselves. So that’s where we settled on create, inspire, serve. And we use it as a metric in, underwrite all our projects, both quantitatively, so we do proformas and we look at that, but we also do it qualitatively and we try to balance, you know, okay this makes sense but then the qualitative piece is, you know, are we achieving our ‘Create, Inspire, Serve’ with this. You know and we number it 1 to 3 and we rank it. And sometimes we have competing projects that we’re excited about all of them. And we want to do all of them. But we can’t. Right? We only have so much capacity. We’re only a nine-person firm. So, we break out the create, inspire, serve 1 to 3. We each grade it, my business partner and I, and we see which ones stand out. And sometimes it’s incremental.

Eve: [00:05:21] Do you keep yourself honest, yeah?

Lorenzo: [00:05:23] Yeah. And you know I’ve had lenders and even investors say wow, you actually do ‘create, inspire, serve’ in your underwriting. I said yeah, and I go we also do this thing we call holistic ROI, which is one of our guiding principles with our projects is we’re always seeking holistic ROI, which is emotional, social, cultural, environmental, and economic return on investment. And so, we do the same with that. If we’re if we’re not getting, you know, emotional return on investment, if we’re not excited about it, it goes out the door. Social, you know, is this something we can do for the community? Is it going to be fun? Fun is huge for us, right? And then the other stuff cultural are we you know, we preserving old buildings? Are we, you know, helping to create culture in our city and our state? And the environmental piece is huge. You know, we’re big adaptive re users both with buildings but also the materials. We like to reuse materials creatively. And then obviously we’re in this to be for profit. A lot of people say, well, are you a nonprofit?

Eve: [00:06:32] That came at the bottom of your list, Lorenzo.

Lorenzo: [00:06:35] You know, it did. It did intentionally. I read a great book written by Danny Meyer called Setting the Table. He’s a super famous restaurateur and entrepreneur and he said something about his restaurants, that he made his economic return, sort of the last. And I loved the philosophy behind it because he said, if you have good people, you treat good people. You put out good experiences, good work, you know, it’s not verbatim, but that’s essentially his message. The money’s going to take care of itself. And that’s been our experience. If we do what we say we’re going to do, if we put out great projects and create places that human beings feel nurtured and excited to be in, then they’re going to want to rent from you. They’re going to want to visit, they’re going to want to patronize our businesses, and they’re going to be strong. Which is a great segue to Covid because, you know, want to talk about an opportunity to test that thesis. Covid was really eye-opening and validating for us in many ways.

Eve: [00:07:39] Right. Interesting. Yeah, you should tell us more about that. But I was going to ask you first. I was going to just say your work is really stunning, and I hope that everyone goes to your website, but you pick pretty abandoned and ugly buildings.

Lorenzo: [00:07:53] We do.

Eve: [00:07:55] That no one else seems to see value in and then transform them into these really stunning places.

Lorenzo: [00:08:03] Well thank you. Yeah, that’s intentionally intentional. We started our company in 2008 going right face-first into the deep recession in Phoenix, Arizona, of all places. We were like ground zero for the major implosion in real estate. And for many years we were on the blacklist, right? A lot of people couldn’t invest capital here and all kinds of stuff. So, the opportunity was great to buy distressed assets and to experiment. And Phoenix, you know, definitely has its share of architectural gems. We’re a young city in American standards. You know, we didn’t become a state till early 1900s, 1912.

Eve: [00:08:47] Very hot city.

Lorenzo: [00:08:49] And a very hot city, especially right now.

Eve: [00:08:51] Yeah. it’s bad.

Lorenzo: [00:08:51] You know, our building stock isn’t like the East Coast or the Midwest, you know. God, I’m always so jealous of the building stock from the 1800s and early 1900s. Our stuff is early 1900s. You know, occasionally we have some late 1800s that were old territorial buildings. But most of our stuff in Phoenix is mid-century. You know, we’re a 1950s, post-World War II city. And so that, in itself, is unique in America. And so we just decided, you know, let’s show value in what we got. We got to work with what we got. You know, we don’t have those other gems that the other coasts have. And let’s see what we can do with what we got.

Eve: [00:09:33] That’s liberating because you…

Lorenzo: [00:09:35] It was very liberating.

Eve: [00:09:36] You’re starting with something so awful that you can just go wild, right?

Lorenzo: [00:09:40] Totally. Yeah. And, you know, we have a lot of masonry boxes here and wood frame boxes and, you know, boxes are the easiest thing to manipulate. And so, you know, I studied architecture too and went to architecture school. So, it’s, I’ve designed my company around being basically an active architectural studio where we figure out, okay, we have a building, it’s our project. And then it’s like, what do we do with this? People always say, well, what kind of developer are you? And I’m like, you know, we’re just entrepreneurial and opportunistic and we’re not pigeonholed into any sector. We’re not a retail. We’re not a hospitality. We’re not multifamily or office. We look at projects, we evaluate the neighborhood and the context, and then we try to bring something that adds value to that neighborhood. And it’s a very liberating designer approach to development. And it’s just kind of what we’ve done. And it’s been fun. It’s our philosophy is create, don’t compete, right? And a close second is, deliver the unexpected, right? So, let’s take something that has been an eyesore or a problem in a community, and let’s turn this thing inside out and let it become an asset. Let’s transform it into something that adds value, but also becomes a catalyst for reinvestment and redevelopment. And that’s been our model since 2008, and it continues to be a driving force in our company.

Eve: [00:11:02] So talk us through some of your favorite projects and why they’re your favorite.

Lorenzo: [00:11:06] Oh man, they are all…

Eve: [00:11:09] They’re all your babies, right?

Lorenzo: [00:11:11] They are. You know, God I look back on them and you mentioned our website. We’re going to go through an overhaul because we’ve got probably 3 or 4 projects that aren’t even on our website that are really strong candidates for my favorite. But, you know, it’s like you build on each one. Our very first one. I loved them all for very different reasons. Our first one is like our first-born child, you know, it just was so exciting, so challenging, so rewarding. It’s been the best returning in the history of all the projects we’ve done. But man, let me think about that. I just love them all for different reasons. What I loved about all of them is that they educated us and opened our eyes and tested us, and I think every other project that followed, we were able to apply those lessons learned, and I think it continues to do so.

Eve: [00:12:04] Tell me about the one you know that I was worried about all through Covid because you opened a hotel. Actually, you were still finishing it when Covid hit.

Lorenzo: [00:12:12] Yeah, yeah.

[00:12:13] That was your first hotel project, right?

Lorenzo: [00:12:16] First hotel project. I had worked on hotels in my former life as purely a general contractor, where we did an adaptive, pretty deep adaptive renovation of a mid-century hotel here in Scottsdale called Hotel Valley Ho. So very kind of similar, but this was my first one where we were principals, and we were the developer. We were leading the charge.

Eve: [00:12:41] You had a lot to lose.

Lorenzo: [00:12:42] Yeah, we had a lot to lose. And we were co-developing this with a joint venture partner, much bigger developer, much stronger balance sheet, thank God. We had their savvy and talk about, you know, those project opportunities really throw you in the test. And you test people’s values and how they lead through problems. And we have great partners. I mean, we knew we were with true battle-hardened veterans. They just didn’t even bat an eye, you know, and they were a calming force. And we’re like, hey, we’ll get through this. Been through all kinds of stuff. We got to just figure it out. So, um, yeah, the hotel, my gosh, we started it in 2018, in a very hot hospitality market here in Phoenix. Man, bookings ramping up for all kinds of events. And I remember being excited and literally in early February of 2020 going, oh my God, we’ve never timed a project so well in a market cycle. Not… Lesson learned. Don’t ever get ahead of yourself.

Eve: [00:13:53] Four weeks later, right?

Lorenzo: [00:13:55] Literally, literally four weeks later, the world completely changed. I mean, we were on track to open April of 2020 to a really strong, you know, we had our, we were bringing on people. We were starting to work through our punch list and, but our hotel operator is out of LA and Palm Springs. At the time that co-developed the hotel with us, they had East Coast hotels, and they also were monitoring hospitality, and they started raising the flag. Hey, there’s some serious stuff going on in Asia and Europe right now that, you know, if it does get to the States, it’s going to be real interesting. And that sort of was presented to us towards the end of February and man, talk about. But you know, by May, was it March 16th I think, remember?

Eve: [00:14:53] Oh, March 15th, I came down with Covid.

Lorenzo: [00:14:56] Yeah, March 15th. I mean, I want to say it was the weekend before that they called us and said, we’re shutting down all our East Coast hotels. It’s going to happen in California. It’s going to happen. This is going to happen. And we were like, wow, really? We think we were kind of in shock and kind of like, what do we do? We have a hotel that’s about to be finished and opened. And we had people being trained. We were hiring. We’re making contractual agreements, big time financial decisions. And it was stressful. It was stressful, you know, and I think that month, March, and April were pretty crazy. We had to figure out, how are we going to finish this? Are we going to be shut down? You know, we’re almost to the finish line. God, where we could see the light at the end of the tunnel. After a really long, complicated, intense buildout. We were all exhausted and here we were going into, we thought we were going to get into revenue and change the the energy from pouring money out of our pockets into pouring money into our pockets. And it was a scary time. It was it was crazy. But I would say that project, we called it Arrive Hotel at the time we’ve since rebranded, which is another part of the Covid story we can talk about. But yeah, what a what a deal. We actually had to sit on an empty hotel, fully finished for an entire summer.

Lorenzo: [00:16:25] And you know, we’re burning overhead dollars like you couldn’t imagine. Utilities, we had to have everything, air conditioning through the summer. We had to have people living on property. So, it wasn’t vandalized because, you know, we fenced it. We had security, we just were, you know, the streets were empty here, too. Everything was on shut down lockdown and only essential workers, and Arizona was one of the states that allowed construction projects to continue. But we also dealt with a lot of the early breakouts. I got Covid in June of 20. I was a asymptomatic carrier. I had no idea I had it but brought it home to my wife and she was on total lockdown as the only way she got it. And it was just crazy. You know, we had the entire crew, crews, we had to do the whole early quarantining where we had to shut the entire job site down, so it was just, it was chaotic at best. But on top of that, you know we have a lot of restaurant-anchored retail properties that were operating assets. And so simultaneously I’m dealing with the hotel, but I’m having to speak with five different lenders because all our government shut down restaurants. So, I’m sitting there going, oh my God, you know, if they can’t open, they can’t pay rent.

Eve: [00:17:41] That must have felt really surreal.

Lorenzo: [00:17:43] It was crazy. It was really surreal. And I remember having, talk about sleepless nights, sitting there, really having to kind of just breathe, stop, and breathe and just go, okay, this is so out of your control, so don’t make yourself sick over it, right? Like it’s important you stay healthy right now and not stress out so that you’re, you know, I’m thinking about what’s in the air, you know, is this something that’s going to kill me? Is the whole company going to implode? I mean, it’s the world falling apart. What’s going on here? Is this going to financially just be a disaster?

Eve: [00:18:15] I was negotiating rent abatements with all my tenants while I had Covid, with a fever of over 100. I don’t even know what I said to them.

Lorenzo: [00:18:27] Oh, God. What an experience, right? I mean, I just sat there some days and laughed and said, what? This is one heck of an adventure. I mean, who could have ever saw this coming. It was an interesting experience. I mean, I’ll tell you what.

Eve: [00:18:44] I don’t want to have it again. Put it that way.

Lorenzo: [00:18:46] Me either. But I’ll tell you, it was the most diverse mix of emotions, from extreme fear, nervousness to, elated gratitude for just the, the little things, you know. Banks working with you, reassuring you that, hey, we’re in it together. You’re good. You know, we have a great relationship. We value relationship. Do what you got to do, you know, just keep us posted. And I was just like, God, I’m so grateful for the choices and the decisions we made with our partners, with our lenders, with our tenants. Top to bottom, grateful for the neighborhood relationships we had, our staff, our team. Grateful for the US government throwing us PPP and an EIDL loan so could keep our team employed and keep us functioning. I mean, in many cases, it was extremely just so devastatingly sad and scary. But in many cases, it was just a wonderful experience in terms of just seeing how people can put aside differences to come together and make things happen. So, I’m with you, I don’t ever want to go through that again. But I’m grateful that I did and I’m grateful that I survived it. You know, we knew people who didn’t survive illness. And a lot of companies didn’t survive financially. Some people were devastated by bankruptcies and foreclosures. And I’m just so grateful, you know, it was one heck of an experience.

Eve: [00:20:25] So what happened with the hotel? How what, like, where is it now?

Lorenzo: [00:20:29] Oh my God. So, the hotel is doing really well right now. Thank you. And and I’m so grateful. And surprisingly, we started pretty dang strong. That hotel project was going to be the death of me, though. My God, we hit every frickin’ curveball obstacle that you can imagine.

Eve: [00:20:50] I shouldn’t be laughing.

Lorenzo: [00:20:52] Oh my God, no, but it’s just, you know, I look back now and I’m just like, how the heck did we survive that? We were a year late. We were $4 million over budget. We went through a pandemic. We had a really tough experience with a general contractor. We went through five superintendents. We were in the early stages of serious market escalation. Phoenix is a hot market still. I mean, it was hot through the pandemic. It was hot before the pandemic. We have so much going on here in construction, semiconductor industry, a lot of infrastructure, work, office, industrial, logistics, just name it. And so the demands on our workforce and resource spaces, concrete, stuff like that, I mean, we just, we hit it all. We also went through two of the wettest El Nino years during construction. And of course, it’s when we were doing site excavation and grading and underground utilities and foundation work. So, we literally had to shut our site down like 4 to 6 weeks sometimes because we were so saturated. And, you know, this desert soil doesn’t absorb like, it’s just so hard. So, we get runoff and it just takes forever for sites to dry out. And then the dry heat comes. It didn’t help that we were actually kind of humid during that time. So, it was very just uncharacteristic experience for Phoenix.

Lorenzo: [00:22:25] And then we get open, finally get open in the late summer, just out of necessity. I think we opened half the property in August of 2020 and to our surprise, booked, like crazy because people wanted, we had a lot of people coming from California escaping the lockdowns there. We were pretty open in Arizona, so people were literally coming for getaways to Phoenix, and they were staying at our hotel. A lot of people were kind of living there, renewing, coming back every other weekend. We had a lot of staycationers, people that were locked up in small apartments or whatever, they wanted to be… If you haven’t seen our hotel and it’s not on our website yet, but you can look it up. It’s been rebranded as Rise Uptown, in Phoenix, Arizona, and it’s a boutique hotel. We took two 1950s office buildings and created a boutique hotel out of it, and it’s very indoor/outdoor oriented. So, we actually had, I forget the hotel group, Conde Nast did a write up with Arrive Hotels, and we had some other group come out and interview us, but they actually walked through the property late 2020 and was like, oh my God, this is a poster child of a post-pandemic hotel because it was so indoor/outdoor oriented. It was basically like a 50s hotel, like you didn’t have to go in any corridors to get to your room. You could walk upstairs or take an elevator. You had choices. And out of 79 rooms, 59 of them have private, dedicated outdoor space.

Eve Picker: [00:24:07] Oh, perfect.

Lorenzo: [00:24:07] Very roomy balconies with views and private courtyards on the ground level rooms. And so, people could socially distance, easy at our hotel. So, I mean, our appraiser actually did a post certificate of occupancy walk with me. And he was very critical. He used to drive me nuts actually and this was very rewarding and validating because I got the last laugh. But he was very kind of critical about the hotel. He just couldn’t see the vision for it because it was just such an old beat-up building. And he saw the pre-construction estimate. He did a mid-construction estimate, and then he came and did the final appraisal. And when I walked up to him, he’s just snapping photos like crazy on his phone, and he’s just got the biggest grin on his face. And I walk up to him and I said, hey, how are you? And he goes, oh my God. He goes, I am just speechless. I cannot believe what you guys pulled off here. The transformation was just incredible to him. And he said the same thing. He goes, man, I thought you would be at a disadvantage having to get to your rooms in outdoor corridors and walk upstairs or take an elevator like you were so outdoor oriented, it just seemed like it was going to be a disadvantage to you. But he goes, I actually think this is going to be such a differentiating element to you, and it’s such a differentiator in the market, and it really proved that. It does to this day, we are a very hot location for not only out-of-town visitors, but a lot of inner-city interstate staycationers. We offer day passes at our pool, and that’s become just such a huge revenue driver for us, for people who want to come to a cool hotel and hang out. And so, it’s just, it was such a tough journey but man, I’m so grateful to say.

Eve: [00:26:00] That’s really good to get at the end of it.

Lorenzo: [00:26:02] Yeah, we’re doing really well.

Eve: [00:26:04] So I wonder if, you know, if you’ve been thinking about like, a world full of other viruses and climate change and how does that impact the way you think about design, or do your designs fit right in, you know/

Lorenzo: [00:26:19] So our properties, if you look across our portfolio and I’ve had lenders and appraisers say this, I’ve had brokers say this, they’re like, man, your properties were so resilient during Covid because we always approached our projects with a balance of indoor/outdoor. You know, people always characterize Phoenix as hot, but nine out of the 12 year, nine out of the 12 months here, I mean, we live indoor/outdoor all year long. It’s just really that. And even in the summer, I’d say we’re outdoors a lot because it’s a dry heat. And then when the sun’s down, or if you’re in shade and you get some air movement and a little bit of moisture or humidity, it’s actually somewhat tolerable. But I would say 8 to 9 months out of the year, people want to be outdoors. And the most successful retail and now residential now hospitality environments offer an indoor/outdoor experience. So, in Covid, our projects were really pretty resilient. Our retail restaurant, because we have expansive patios and outdoor space, so that really proved to be, I mean, some of our restaurant tenants had multiple locations, and the only ones they kept open were on our properties.

Eve: [00:27:37] That’s interesting.

Lorenzo: [00:27:38] Because they just were set up for takeout and outdoor lingering. And so that was just really validating for us. And our lenders actually were like, God, you know, they’re asking their other developers these questions, how are you designing to be more resilient in an environment where we may need to be more indoor/outdoor? And our buildings also open up, they breathe. So, we have a lot of multi-slide doors, flip up windows. They become basically pavilions in spring and fall. And so, a lot of the buildings were able to just open up and people felt safer in them. And so, our restaurants, all with the exception of one, are pre-pandemic. They’re killing it. They’re doing really well. They’re struggling because the lack of workforce in the back of house and kitchen. But we’re seeing that in any industry, we just we don’t have the workforce that we used to, but revenue wise they’re doing really well. We have one restaurant on a property that just hasn’t made it back. They’re more of a fine dining concept, and it just didn’t lend itself well to take out, and it didn’t lend itself well in a post-Covid world. It’s more expensive, it’s labour intensive, and they’ve decided that they are going to concentrate on a smaller restaurant and put all their energy. They’re going to close their second one in the spring.

Eve Picker: [00:29:08] Interesting.

Lorenzo: [00:29:08] We’re helping them with that transition. And, but we’ve got a lot of suitors for that space because they saw how resilient it was. And so, we’re grateful that we’ll hopefully be able to transition into a new operator here soon.

Eve: [00:29:23] So after all of this, what’s next for you?

Lorenzo: [00:29:27] We’re in transition. We’re in our 15th year of business. I’ve got a business partner who turned 75 earlier this year, and he’s starting to eye working less, grinding less and traveling with his wife and want to go spend some time with their grandkids up in Oregon. So, we are thinking about, you know, a strategic transition plan where they’re working themselves. Both of them, him and his wife fill very big roles here. He pretty much watches over our construction field guys and execution of projects because we’re a design build, develop, own, and operate practice. And his wife is my right-hand person. All things in the business, HR, risk management, finances, managing our accountants and entity management for our partnerships. So, we’re working through succession. We’re also trying to think about, we’ve sold off some stuff to just make us a little more liquid in that transition. And, but we acquired a bunch of properties during the days when we could find distressed assets here. And so, they’ve been sort of just income properties for us. But now we’re in entitlement on many of them. We’ve decided a few years ago to shy away.

Lorenzo: [00:30:41] Actually, we decided pre-pandemic to shy away from a lot of the restaurant anchored retail, just because there’s a lot of players in that space now. And we wanted to really get back into innovative housing and experiment there and different concepts we have in mind. So, we’re working on that. There’s a need for housing big time in Phoenix, a diversity of product. So, we’re shifting our attention into some really interesting housing projects, multifamily rentals, some infill pocket community stuff. And we’ve loved the hospitality. I mean, the hotel, as difficult as it was, it’s, you know, hospitality is weaving its way into every sector, you know, I mean, every sector. Medical, office, I’d even say industrial, like, you know, wherever humans are, there’s a hospitality bent. So, we love playing in that space. We’re still focusing on urban infill and adaptive reuse as a core business. However, most of our housing projects are going to be new construction because they’re on big lots with vacant, small vacant buildings that really didn’t lend themselves to be repurposed. And so, we’re getting into that space. We’re venturing into more joint ventures.

Eve: [00:31:58] This doesn’t sound like winding down, Lorenzo.

Lorenzo: [00:32:02] Well, it’s not winding down.

Eve: [00:32:04] It’s moving on to the next thing.

Lorenzo: [00:32:06] It’s moving on. Well, it is. This has been the delicate dance in our evolution as a company. We’ve got a really young team that’s just inspired and fired up to keep doing what we do. And so, in one hand, I’m looking forward to working with this just energetic bunch of just talent that we’ve been able to groom and cultivate over the years and find a stable financial future and fun future for them in their career development. On the other hand, I’m trying to manage this transition with my partners. So, they’re just very supportive. And I think they are thinking, yeah, we want to help you get to the future, but how do we do that? So, they have less risk, but they also get to play a role in continuing to co-invest alongside us and stuff. So, it’s been exciting.

Lorenzo: [00:32:56] The last few years, I’d say the last 3 to 5 years, we’ve done more joint venture work with other, bigger developers where they’ve had stronger balance sheets or more experience, but they’ve been attracted to working with us for our creativity. And, you know, we came from big, corporate, very disciplined companies so we’re sort of an outlier in the sense that we’re small, but we’re very disciplined and we’re extremely dreamy and creative, but we’re very, we’re counterbalanced in reality. And, you know, we’ve always had to bank and underwrite our projects, and none of us want to lose everything we worked so hard to create. So, we’re kind of this interesting piece that can plug into a bigger company, into a bigger development arm and play with a bigger canvas, I’ll say. So, I see more of that kind of work in the future. We’re working on a great project right now I told you about. It’s a public/private partnership with the city of Tempe. We were invited by the city to take a look at their five-acre site. It’s an old historic flour mill that sits right in the middle of Mill Avenue.

Eve: [00:34:06] Oh, fabulous.

Lorenzo: [00:34:07] It’s tied to the founding of the city. It’s on light rail. It’s serviced by, it’s in a walkable, dense urban area. But it’s an industrial eyesore, but it’s right in the middle of the best location. And so, we’re excited to do it. We’ve never done a public/private partnership, but we’ve partnered with probably one of the largest local developers, if not the largest local developers in Arizona. He’s very accomplished. He’s been a mentor of mine, and we never thought we’d find an opportunity to work together. But when he heard, he actually threw my name out there and said, these guys got to do this project, they’re perfect for it. When I turned him down and said, I would love it, I’m not even scared to tackle it, but I know nothing about public/private partnerships, or it has to be on a land lease structure. I don’t even know how you would capitalize it. It’s so unconventional and that’s what this guy excels at. He’s a land lease expert. He’s done tons of PPPs, he’s a finance genius. And he says, hey, why don’t we team up? Let me take that piece, and you do what you do. And together we actually might get this thing done. I think there’s been 7 or 8 attempts by other developers over decades to try and redo this site. It’s very nuanced, it’s t’s very complicated. It’s a culturally and historically significant site for Arizona tribal communities. It’s a tough site. It’s a hillside. Geotechnically it’s tough. It’s historically protected. It’s just got a lot going on and a lot of political and civic emotion behind it. So, it’s, we’re in the fishbowl. It’s going to be one heck of a challenge.

Eve: [00:35:46] When you get a little further on with that one, I’d love to talk to you about that again.

Lorenzo: [00:35:49] Absolutely.

Eve: [00:35:50] And I’m going to threaten what I’ve been threatening a lot of people. I just have to come and look at all your buildings.

Lorenzo: [00:35:56] Oh, you’ve got to come out.

Eve: [00:35:57] Not in the Summer. Not in the summer.

Lorenzo: [00:35:58] No, come in the spring or fall, and we’ll put you up in our hotel and we’ll have a fun time. We’ll take you out to some fun restaurants.

Eve: [00:36:05] I was planning to do that in 2020.

Lorenzo: [00:36:09] Well, you’re going to need to unplug in late 23 or early 24, so give me a ring.

Eve: [00:36:16] This is fabulous, Lorenzo. It’s really exciting to hear about your work and…

Lorenzo: [00:36:21] Thank you.

Eve: [00:36:21] … I’m just hoping it gets better for you. Better and better and better.

Lorenzo: [00:36:24] Thank you. So do we.

Eve: [00:36:26] Okay.

Eve: [00:36:41] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Lorenzo Perez

Lindsey is a scout.

Lindsey Scannapieco leads Scout, an urban design and development practice that focuses on the activation of underutilized space. Scout’s largest project to date is the redevelopment of Bok into an innovative space for makers, artisans and entrepreneurs. The project has been recently recognized with the Charter Award for Transformational Development by CNU (2021) and long listed in adaptive reuse by Dezeen (2022).

Lindsey has been recognized with the 40 Under 40 by the Philadelphia Business Journal (2023), Girls Inc Community Impact Award (2022), the Rising Star Award in Real Estate (2018) by the Philadelphia Inquirer. Outside of work, she is the co-President of the Friends of FDR Park and an active board member of Fleischer Arts Memorial and the Knight Foundation Advisory Council. Lindsey holds a B.S. from the University of Southern California and a MSc from the London School of Economics in City Design and Social Science.

Read the podcast transcript here

Eve Picker: [00:00:05] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:36] Lindsey Scannapieco is an urbanist and an artist in every sense of the word. While living and studying in the UK, Lindsey worked on projects such as activating an underutilized subterranean crossing alongside Westminster Council, supporting Tech Shop in their global expansion, and developing a community led design project that reconsiders traditional construction hoardings in South Kilburn. All of this led her to found Scout, an urban design and development practice that focuses on the activation of underutilized space. Not one to think little, Lindsey submitted a proposal to purchase a 340,000 square foot vocational school building from the city of Philadelphia. Much to her surprise, she won the bid. Eight years later, BOK, as it is called, is a thriving and creative mix of makers, small businesses, and nonprofits, and 100% full. The building is a testament to Lindsey’s staying power. You’ll want to listen in to learn more.

Eve: [00:02:03] Hi, Lindsey. Thank you so much for joining me today.

Lindsey Scannapieco: [00:02:07] Thank you so much for having me, Eve. It’s a pleasure to be here.

Eve: [00:02:10] Yeah, well, I had the pleasure of visiting BOK a few weeks ago. That was, that’s a monster project. I can’t wait to hear how you pulled it off. But first, I wanted you to tell me about your company Scout. When did it all begin and where did it all begin?

Lindsey: [00:02:28] Yeah. I’m so glad you were able to see BOK in person. It’s been a great project, but a little bit about how we got started. So, started Scout in 2011. We are an urban design and development practice, and in the early years we were really working on consulting projects, really about underutilized spaces, primarily for planning agencies in the UK. That’s where Scout was founded in 2011. We did our first kind of big public project that year, which was a pop-up cinema called Films on Fridges. And although a pop-up cinema might seem pretty different from large scale development, actually there was a lot of shared characteristics in both of those projects, which I think are kind of a common thread throughout our work, which is trying to reimagine histories of space and place. I think playfulness is a big piece of our practice and I think inviting people in to have an experience is another part that we think is a really strong tool in any project. And so, we started Scout with this idea of looking at underutilized space in different ways. And in the beginning that started off as cinemas, community engagement projects, public realm work and evolved into development many years onwards.

Lindsey: [00:03:58] And we got the name because when we were talking about it, we were thinking about this idea of both scouting for space, so actually being a scout in that way, but also kind of a Boy Scout or Girl Scout sash in that we were accumulating skills and we didn’t know where they would take us. And so, I remember after we did this pop-up cinema, we got calls from a bunch of people who said, oh, can you do a pop-up cinema here? And we said, actually we don’t want to become known as the pop-up cinema company. For us, the cinema was a tool to bring people to a space that they otherwise would not go to because people are willing to travel for experiences. And so, we kind of put that on our sash or on our badge and turns out that was kind of a skill set or an approach to space that came in handy when we were tackling much larger projects down the line. So, this kind of idea of a tool kit or different badges of different types of skills for how to reimagine vacant space.

Eve: [00:05:03] But let’s go back a little bit even further. So, what sort of training did you have that made you even want to think about scout? There’s surely a lot of story before that, right?

Lindsey: [00:05:17] So my background in undergraduate, I studied real estate finance with a minor in classics and art history. And at that time in my life, I thought I would go into art business because I really enjoyed the arts and that made sense to me, arts and business. I actually think that what I’m doing today is I get to work with way more artists than I ever would have had I kind of gone down that track further. And so I guess after I graduated, I became really interested in urban planning and development and then pursued a master’s in City design and social Science at the London School of Economics. And through that work focused my studio on an area adjacent to what was then the 2012 Olympic site called Hackney Wick. And from there started to work for the London Legacy Development Corporation, where I led interim uses, which was looking at kind of the opportunity of spaces before the long-term development plan comes to fruition, but is kind of a better alternative to just fencing or hoarding a site. And I think through that work was really the impetus to starting Scout and started Scout a little bit because of that role. I was encouraged to start my own company and to be able to kind of work for them as a consultant. And then through that we took on more clients and grew a team and grew projects and that was over a decade ago now, which feels pretty wild to say today.

Eve: [00:06:57] So how would you say your approach differs from a traditional real estate practice?

Lindsey: [00:07:03] I think one of the first things that we do is I think often times in development, people bring ideas for a project into a space. And so, they’re saying, I know what I want to do and I’m trying to force this building to do that thing. I think what we’re interested in is really looking at the infrastructure, the assets, the physicality of a building as it exists and finding value and usefulness in that and almost listening to the building, letting the building tell you what it should be and how it should be used. And I think, you know, we can be quite precious, I think, about development sometimes and sometimes actually there’s a real practical piece of what a good building can be or can provide, particularly in our cities. And so, we’re really interested in that. I say oftentimes I’m really interested in dirty work and that kind of means to say the work that doesn’t happen at kind of our clean desks. That unfortunately is often very fragile. It’s usually moved to, you know, the edges of our city. It’s at risk, it’s sometimes happening in buildings without proper heating or roof systems or it’s just, you know, warehouses we see, every single day, being converted into residential or kind of, quote, higher and better uses. And so, I think we’re really interested in the preservation of those spaces, and I think how we can allow spaces of experimentation and growth in cities, I think that’s really something that we’re very passionate about.

Eve: [00:08:49] Yeah. So, you moved out to Philly? That’s right. What was your first project there?

Lindsey: [00:08:55] So we moved Scout to Philly for BOK.

Eve: [00:08:58] Oh, okay. Okay, I didn’t realize that. So BOK came first and Philly came second.

Lindsey: [00:09:05] A bit, I’m from Philadelphia, so for me, it was a bit of a homecoming personally, but we had submitted to an RFP for this big old school. It’s a 340,000 square foot school. It occupies an entire city block. It’s nine stories high. It has a very commanding presence over its surrounding neighborhood. And so, we submitted a response to the RFP. And to be quite frank, we never thought that we would get it. I just thought we would learn something about what that process was like in the US. And we had been looking at buildings, but at the time in London we couldn’t afford a building in London, so it made sense to go to another place that I had familiarity. And to be honest, we were shocked when we found out that we were the highest bidder. I was also the youngest bidder, I was obviously the only female bidder and so said, uh oh, we’ve either done something really right or really, really, really wrong. And so we jumped in and built a team in Philadelphia to start to take on that project. We had a year about of due diligence before we actually closed on the property from the school district. And over that period of time, we realized that the building is not flexible. It was built as a bomb shelter. It was extremely resilient, and it has, you know, incredible floor cores and floor strengths. It was built as a vocational school. And so I think most people had said to the city, and I don’t know this, I’m just, you know, speculating that they said, I’ll give you a dollar because to convert the building into residential or something that was more market driven would have required a ton of money and they would have said there’s no way that they could tackle that.

Eve: [00:10:58] Yeah, I’ve been to the building. I’m not even sure it’s possible. It’s really, really tough. Very inflexible, as you said.

Lindsey: [00:11:07] And so we embrace that. And so, we said, you know, how do we take spaces that aren’t flexible and how do we actually allow them to stay that way, allow them to stay what they want to be? You know, that means that, you know, an old woodworking shop became a home to a woodworker, an old culinary arts classroom, became home to a catering company. And so, you know, it really was about looking at the infrastructure and matching that to people who could use the space.

Eve: [00:11:35] You saw the existing infrastructure as an asset rather than something that needed to be like swept away and replaced.

Lindsey: [00:11:43] That’s exactly right.

Eve: [00:11:45] Yeah. So, when you submitted your RFP, what did you tell the city you were going to do with it?

Lindsey: [00:11:50] We told the city our vision was exactly as it is being used today. We said that our goal was to create affordable workspaces and they were not just going to be for artists or nonprofits. It was a yes and, so art spaces, nonprofits, community services, small businesses, people who just need access to spaces to be able to work. We had a theory that South Philly, which is an extremely dense part of Philadelphia, is a neighborhood with a typology of kind of the 12- to 14-foot-wide row home so that, you know, people didn’t really have access to larger, wider open spaces. And so, you know, we had a theory that people would be seeking that space and seeking that space in proximity to where they live. And I think when we talk about local impact and community led development, I think the ability to walk to work has such an incredible impact not only on your mental and physical health, but also the health and wealth of your community and your neighborhood at all and attracts all different types of people to support the small businesses and operations that are happening in the building. So today we have over 260 businesses based out of BOK.

Eve: [00:13:14] A lot of businesses.

Lindsey: [00:13:15] And 72% of them are owned by somebody who lives in South Philadelphia. So very much locally driven.

Eve: [00:13:25] That’s amazing. How many residents in South Philadelphia like how big is the neighborhood?

Lindsey: [00:13:30] Oh, that’s a great question.

Eve: [00:13:33] It’s got to be big to draw that many people.

Lindsey: [00:13:36] Yeah, I’m just, hold on, I feel like I have this number somewhere, but I’ll have to look it up. I don’t have it off the top of my head.

Eve: [00:13:44] Nevertheless, it’s got to be a big neighborhood to have that many people wanting small business space. How long had the building been vacant?

Lindsey: [00:13:52] So the last graduating class at Bok was in 2013.

Eve: [00:13:58] Oh, not so long.

Lindsey: [00:14:00] So not so long. Although the top two floors of the building had been closed before we took it on. The building was a high or is a high rise, I should say, by its height. But the school district, in order to not comply with high rise building code, cut off the top two floors and said, see, it’s not a high rise so we don’t have to sprinkler the building. And so that was one of the big pieces of work that we undertook was the sprinkling of the entire building. But essentially it really wasn’t vacant for long. And crazily, the school district thought that out of all the schools that they put on the market, and they put over 30 schools onto the market in that year, that BOK would be the last to sell. So, they actually moved all of the stuff, all of the chairs, all the tables, everything from all the other schools to Bok. And people could essentially come and kind of find the furniture that they needed. And that was that was fine and good and when we went to actually go close on the property, obviously we wanted the building empty because there was rooms just filled with stuff up to the ceilings. Plus, it was practical stuff. And we all know that our schools need equipment, they need supplies, they need furniture. Unfortunately, approaching the end of the process of moving towards closing, they started to throw out things and we said, all right, that’s it we’ll keep the rest. So, if you go to BOK today, sometimes you’ll see, for example, children’s chairs and a lot of people will say, well, wait, wasn’t this a high school? And it’s because they thought that BOK would be the last building to sell, and I actually think it was one of the first.

Eve: [00:15:39] That’s interesting. So, when you tackle a project like this, 340,000ft², most people would feel overwhelmed. You had some really huge challenges like code compliance and financing. Where did you begin? What was your strategy and how full is it today, by the way? Is it 100% occupied?

Lindsey: [00:16:02] It is. Today, BOK is 100% leased. We have no available space in the building, Unfortunately, I know I’m supposed to say that’s a good thing, but I actually think it’s a bad thing because for so many years we’ve prided ourselves on being able to expand and grow with people as their business changes. And it’s actually been, it’s hard now when you actually are full. But I think we also feel very grateful to be at 100% occupancy. So how did we start this? I always kind of say, you know, how do you eat an elephant one bite at a time? But our first bite was a decision to open up a pop-up bar on the roof of the building. And I think kind of going back to the beginning of this conversation, that’s because that’s something that we had done before. And I think that people are willing to travel for food and drink in a way that we’re not willing to travel for other things. We talk about traveling for other things. I talk about going, you know, maybe to a neighborhood I don’t go to frequently for an art exhibit or a shop, but most of the time it actually takes a lot for me to actually get there. I can think about it. But to actually get there and food and drink and I don’t know if it’s because it’s a shared activity or because there’s actually kind of a sweet adventure at the end but we kind of really knew that that was a strong tool and had seen that in the past.

Lindsey: [00:17:33] And so we opened up a pop-up bar and the joke is that I invited a bank every single night for a drink until I closed on our big construction loan, which I did. And, you know, we were open for 22 nights that first year and we had over 30,000 visitors. And so.

Eve: [00:17:54] Oh, wow.

Lindsey: [00:17:55] You know, I think a lot of people were saying, who’s going to come? How’s this going to work? How are people going to find out about this building? How are you going to deal with the parking needs? Who wants to be in a big old school? And I think for a lot of people, whether that was neighbors, future tenants, partners, bankers, politicians, coming upstairs to a very full and vibrant bar allowed them to say, wow, there’s something here. And people are willing to come here to find it and be a part of this place. And so, I think actually that was helpful in convincing people that, A, we could pull things off and make things happen. And we did that within 30 days of closing on the building, mind you, because I really feel strongly that oftentimes in development we wait years, we talk about grand visions, we undertake the large scale, you know, development, construction, and then we have a ribbon cutting and we’ve actually never had a ribbon cutting for BOK and never will, obviously at this point.

Lindsey: [00:19:07] But the idea of kind of incremental growth, I really believe that slow is really healthy actually, when we’re talking about large scale projects in a city. I don’t think it’s natural, normal or good to just open up the doors and add 350,000ft² of activity to a neighborhood. It’s much better to have that be an iterative process where people get to know you, you build trust. You also learn what works and what doesn’t work. There were mistakes along the way, you know, where should the trash sit, for example? You know, we moved that around a few times before we got it to the right place where trash trucks could access it and it wouldn’t disturb neighbors. And so, you know, I really believe in kind of iterative and slow development, but I always kind of say the bar is the thing that started it all. And that really allowed us to gain the momentum and the confidence of our team, even our neighbors, all of our collaborators and partners in that something was possible here.

Eve: [00:20:15] So as you built this thing, what other major challenges did you face during the project? Because you built it slowly with 200 tenants. It’s a lot of space.

Lindsey: [00:20:28] So it’s funny because I think sometimes your greatest strength is also your biggest challenge. And so, I say, I really like the idea of slow development, of iterative development, of the idea of the building kind of taking and evolving over time. And it really has. It took seven years to essentially finish all the construction pieces. And I’d actually argue that there still are pieces of the building that we still want to tackle or want to go back to or kind of take further. But I say that, at the same time one of the biggest challenges is that that meant that we were doing construction while we were an occupied building. And so that was also a challenge. There’s no other way to say it. We installed the sprinkler system actually when we were probably at 40% occupancy, something like that. We had outlined a scope of work with the fire board where we would basically install major infrastructure every six months with a kind of timeline of completion. So new standpipes, for example, went into all stairwells, I think for the first year. And then the second year we sprinklered a part of the building and then the next part and the next part. And so, I feel very grateful for the creative minds in the fire board and the city who kind of allowed us to create a safe building together, knowing that that was a huge piece of infrastructure and a huge cost item. But also, it was just a real operational challenge in terms of we did that work overnight in occupied spaces. So, I think, you know, to every strength also sometimes has its drawbacks too.

Eve: [00:22:14] I mean, financing is something that you fill slowly, is got to be really difficult as well because you need revenue to pay the loans. And how on earth do you manage that?

Lindsey: [00:22:25] Yeah. So, a similar approach in that how do you eat an elephant that one bite at a time and that our first loan was actually really just based on an appraisal of the building. We had had a zoning change and so kind of was able to argue to the bank that, you know, it was now worth three times more than essentially it was purchased for and it was purchased very cheaply, I think that should be acknowledged. We purchased the building for 1.75 million, although as I said, we were the highest bidder by a lot apparently.

Eve: [00:23:00] You could say that was a huge liability when you purchased it.

Lindsey: [00:23:03] Oh, 100%. But I actually think that that kind of that low entry per square foot is actually really essential in terms of allowing you to take a more creative approach. And I think, you know, Jane Jacobs says this best when she says, you know, new ideas must use old buildings. And I think it’s really because, in that when you’re getting a building for cheaper, that’s kind of been considered less valuable, it actually has more opportunities for experimentation in it and less pressures on it. And so I actually think that’s a really important piece of the puzzle. But essentially, we first got our first piece of funding just based on the kind of increase in value from a zoning change. And then once we signed kind of our first couple of leases, we kind of showed them that this was working. We were able to increase that by, I don’t know, 2 million or something like that, and then we increased it again, then we increased it again, and then we brought in new market tax credits and historic tax credits. And I had to condo out the buildings that I could kind of apply different financing pieces to different pieces of the puzzle as they came online. And that’s how we got it done.

Eve: [00:24:18] A little bit at a time. So, what about the community in the neighborhood? What role have they played in this revitalization of this, it’s a huge building sitting in the middle of a very dense neighborhood, as you said. It’s very, very large.

Lindsey: [00:24:32] Yeah. So, one of the first things we did when we started the project is we did a community asset mapping and I would encourage everyone to do that before you start anything kind of on your on your own turf, which is to look around you and see what’s already working and what already exists. Because I really think, although, you know there are certain characteristics of our neighborhood that we wanted to speak to, we started off by saying, how can we help the existing agencies, communities, organizations and people that are already are, you know, symbols of strength or kind of have agency or have organizing efforts within the neighborhood? And I think one of the best examples of that is a group called SEAMAC, which is the Southeast Asian Mutual Aid Coalition. And we invited them in to use this space for their elder’s breakfast on Tuesday morning. And so, they did that for 3 or 4 years. And through that partnership, which was pretty loose, you know, we were just giving them free space to be able to have their elders breakfast, they were able to work with Jefferson Hospital System to bring in a health clinic called the Wyss Wellness Center, which is a primary care health clinic. So, anybody can go and see a doctor there for primary care, but they’re specifically trained in the immigrant and refugee needs of our neighborhood, both language and cultural sensitivities. And that has just been an incredible resource for our community. Not just South Philadelphia but think of Philadelphia at large. A lot of the refugees recently who have been kind of bused into the city, that’s actually their first port of call in Philadelphia. And so, it’s really become an incredible space and anchor for that community. But that took almost six years to make happen. And so, I do think it really is about building trust and understanding how you can enable and support the growth of organizations that are already A, doing the work and B, very trusted within the community itself.

Eve: [00:26:52] I’m just fascinated about who the tenants are. Tell us a little bit about the mix of people in the building. I was lucky enough to walk through it, so I some of it’s burned into my brain, but I think you need to describe it a little.

Lindsey: [00:27:06] Yeah. So, we have over 260 businesses based in the building today. And of those, 52% are women owned businesses, 25% are minority owned businesses. And think about 15% of the building is nonprofits. And so, what that means is that we have everything from a glassblower who’s also doing glass recycling, to a daycare, to a tattoo parlor, to architects, jewelry designers, fabric printers, a tufting workshop, photographers, graphic designers, an accredited art school that focuses on contemporary realist painting, so a lot of work on the nude form and portrait work. We have a bakery called Machine Shop Bakery, which was just nominated for a James Beard Award in the pastry category. We’ve got a restaurant, Irwin’s, which has been rated one of the top ten best new restaurants in America. We’ve got a fabric recycling center, we have Girls Inc, which is a national nonprofit supporting young women, we have ballet classes, we’ve got a catering company, we have ceramic makers. It’s all types of people doing all types of things. And I think that’s actually really, really important, is that it’s not just a building for one type of person or one type of use. It’s a building for a lot of different uses to happen side by side.

Lindsey: [00:28:41] And I think one of the questions we always get asked is, oh, is there kind of a jeweler’s row or wing? Is there kind of the carpenter’s wing? Is there the band wing? And, you know, how much do you kind of curate this building and this space? And the answer is that we really don’t curate the building. We allow people to find spaces that suit their needs and their budgets. So, if somebody has a budget of $500, we’re trying to find a space that fits that budget and has the infrastructure that they need, that’s a sink or a lot of power. But the thing that we are really conscious about is sounds and smells. So, the people who make a lot of sounds and aren’t sensitive to sounds, they do go together. But beyond that, there’s not a ton of curation. On the first floor, obviously, we very much focused on things that are more public facing and want to interact with the public, because ultimately a lot of the building is just a workspace, not just but is a workspace. And so, people don’t necessarily want people knocking on their door saying, can I buy a, you know, a product that you’re making right there? They’re really there to focus.

Eve: [00:29:53] And how big is the team that manages all of this?

Lindsey: [00:29:56] Yeah. So, we’re about ten people, 10 to 12 people. And this, none of this would be possible without the team. I have an exceptional team. We have a facilities director who is just wonderful, is constantly, as an old building, it’s constantly moaning and groaning and he’s kind of there to oversee it with a great facilities crew. We’ve got a director of operations, we have an events team that does a variety of different events in the building we do around, we do weddings, we do community events, we do self-initiated events like Open Studios, for example, is one of them. Alumni Day, where we invite people to come back who are alumni of the school and so just have a great team. And I think that’s just so, so, so important for the project to be able to get to where it is today.

Eve: [00:30:53] But it’s not a traditional leasing and maintenance team, right?

Lindsey: [00:30:59] No, I mean, most of our leasing is done in house. I think over 50% of the people that we’ve leased to this is their first commercial lease. So, a part of our process has been trying to break down some of the jargon and lease terminology that really people aren’t familiar with outside of the leasing world, to help people to feel comfortable making that first big jump into a space. And in our work, we’re not working with a lot of large credit tenants. I think in the most more recent years we’ve had a few, but generally, and particularly the early years, we had no credit tenants. And so the idea of trying to lock somebody into a long term lease really doesn’t make sense for us or for them. And so really, it’s about allowing people to test and experiment and see what works and see what doesn’t work. And at the end of the day, if it doesn’t work for them, we’re lucky enough that there’s been enough demand and the scale of the space is kind of a very, I think, attractive size that that’s okay. It’s okay for us to have, you know, people move on and move out if it’s not the right fit. And we’re not locking people into leases that are longer than they can really take on.

Eve: [00:32:19] I think you and I see eye to eye on that. I’ve always been very disturbed at the real estate industry that rewards leasing agents based by commission, because of course, that means that they’re going to focus more time on larger leases. And so I have a couple of buildings where I took pretty much the same attitude. You know, shorter leases were fine. And if they could only renew for a short time, that was fine too. And what’s happened is I’ve had some tenants in some of my spaces for 15 years just renewing one year at a time or expanding and eventually moving on. But yeah, there’s just there’s something really broken with the industry that doesn’t allow for that to happen more freely. I think unfortunately, you know, real estate agents have to make money like they’ve got to live, right? But if they’re going to make $200 on a small lease, of course they’re going to spend more time on renting a big space where they can make $10,000, right?

Lindsey: [00:33:21] You know, I wonder if Covid has made anybody rethink that, because I always joke that in the beginning of Covid, I think I was my first bank call. They were like that building with all of those non-credit tenants. It’s, how are they going to fare through Covid? And the reality is that we fared better than any other building, a commercial building and my bank’s portfolio or any bank’s portfolio.

Eve: [00:33:47] Dare I say that’s because it’s 50% women owned businesses?

Lindsey: [00:33:51] I mean, I also think, you know, listen, it’s small scale. I think, you know, a third of our building is under 800ft². And so, you know, when somebody decides to close their business or move to Maine or move to Mexico or wherever it was that, you know, whatever they decided to do kind of in the pandemic.

Eve: [00:34:12] It’s a tiny percentage of the whole building, right?

Lindsey: [00:34:15] It’s a tiny percentage. And so we were able to kind of, you know, stay flexible, stay nimble. I think we also created a really incredible program around rent relief and deferment for our tenants, where we gave over $300,000 of rent relief and support. And that meant that we basically had, I think it was under 10% turnover during Covid. And so, you know, I hope that the industry as a whole looks at buildings like ours and says, oh, these buildings that we’ve always thought are more risky because they don’t have large anchor tenants, they don’t have the credit tenants, actually, there’s strength in the small and that there’s something very strong about our ability to be nimble. But at the same time, you know, I think it’ll always be interesting to see how that grows and goes. But I hope that maybe it’s made some of the industry just rethink a little bit about kind of who we think are dependable.

Eve: [00:35:13] You know, I’ve had a similar experience. I’ve got a building that has these, it’s much smaller, but it has these 13 little studios that range from 400 to 800ft². And I keep telling people I wish I had four buildings like that because it really never lost steam during Covid. And the people who are looking for space now want space like that. And I’m thinking about how to subdivide larger spaces to turn them into these little spaces because, yeah, I totally agree with you. If it’s a, it’s much easier for a landlord to manage than losing an entire floor plate of a building.

Lindsey: [00:35:51] Yeah, I mean, it’s a lot of work. I think like, you know, doing 260 leases versus doing, you know, ten or something would have, you know, but we think it’s also more interesting. It’s the type of people we want to work with and…

Eve: [00:36:03] Much more interesting.

Lindsey: [00:36:04] I would take it every day. So.

Eve: [00:36:06] So what other projects is Scout working on today, or is this just keeping you busy full time?

Lindsey: [00:36:13] No. So, we’re starting to work on other projects, which is very exciting. So, we actually are working on two projects up in Providence. One is called 50 Sims, which is a manufacturing building that will be workspace. We have some great workforce development tenants in there today. We’ve got a great brewery; we’ve got people doing CNC training and forklift training and we have a boat builder and an artist studio and a preservation society that’s teaching people how to repair historic windows. So, we’re really, really excited about that project and excited to be also working in a new city. It’s been wonderful. I think Providence has a lot of similarities to Philadelphia and we’ve really enjoyed being a part of that community.

Eve: [00:37:11] And how big is that project?

Lindsey: [00:37:13] It’s around 110,000ft².

Eve: [00:37:17] Oh just weeny. Weeny Scale.

Lindsey: [00:37:20] I think for better or for worse, once you do big buildings, everybody calls you about big buildings. So, I think we have to get comfortable in this space.

Eve: [00:37:29] Yes. Yes. One other question. Is collaboration important in your projects? I know that’s what you started out doing with Scout, but how is that morphed into BOK? Who do you collaborate with? What does that look like?

Lindsey: [00:37:44] So yeah, Eve, there’s a few different things that come to mind there. I think we collaborate a lot with artists on site specific pieces. So, if we are looking for furniture, for example, for a space, we’re typically commissioning and working with local artists, oftentimes people in the building. In the last couple years, we’ve also done two amazing projects that are pretty different than our kind of real estate development practice side. So, we’ve done two projects for the flower show in Philadelphia, which were both incredible collaborations with a whole host of different creatives and makers in the city. The first year we did a Risograph printing house where we printed aspirational posters, or inspirational I’m sorry, inspirational posters to give people hope in 2021, kind of following the year of 2020 that we had all been through. Three of those posters were in a language other than English to speak to the population of South Philadelphia who previously really didn’t have any materials in their languages at the flower show. And then last year, I guess in 2022, we did an installation called The Smelly Tunnel, which was essentially just a piece that you would walk through, and it would mist scents on you. And the idea of kind of flowers in terms of our mental health and kind of the ability to just step back and breathe. And so pretty different from our kind of management and development of a large building. But I actually think are great examples of things that A, make our team really excited and B, kind of that that collaboration. And so, I think we like working at a lot of different scales and find that kind of continuing to keep our hand in some of those small scale installation work that makes our kind of our long term development practice also stronger.

Eve: [00:39:43] And one more question for you, and that is I’m wondering how your time in the UK influenced your perspective on the built environment.

Lindsey: [00:39:53] I think there’s so many examples in Europe, I think, of how adaptive reuse is encouraged and I think just really done well. I think that’s certainly something I think that the value of both the creative community, but also of the cultural community, of cultural institutions, cultural organizations, has a different value in Europe and a different, I think, support system in terms of actually how those entities are funded compared to here in the US. So, certainly drew inspiration from many projects that I had seen and worked on there in Hackney Wick. There were some great examples, The White Building being one of them, and Amsterdam and DSM, I think was a, is an incredible example of kind of a building where the government really allowed people to experiment with what was possible and has now become kind of a center, a cultural center in Amsterdam. So, certainly it was a was a huge inspiration, is a huge inspiration and certainly informs my work. And I think, you know, this idea of kind of allowing things to stay a bit unpolished, unruly, but also surprising, I think is just certainly something that continues to inspire me, and I certainly travel to get to see projects like that, that continue to just be an inspiration for our work here.

Eve: [00:41:27] Yeah, it’s pretty amazing when you can say government did something so fantastic. We should be able to say that all the time, right?

Lindsey: [00:41:37] It would be nice.

Eve: [00:41:38] I have one more question for you. What keeps you up at night?

Lindsey: [00:41:41] Oh, so many things, to be honest.

Eve: [00:41:44] Maybe nothing. Maybe nothing.

Lindsey: [00:41:47] Oh, no, I wish I could say it was nothing. I mean I think to be honest, um, maybe I’ll start with where I think the kind of the opportunities are in that I think we are seeing cities shift. We are seeing obviously a lot of office space come online and I think there’s an opportunity there. And just thinking about what types of workspaces we need. I think, again, that kind of dirty workspace is something that doesn’t actually work well in our homes. And I think particularly for creative individuals, I think collaborative and creative environments are really key as sources of inspiration. And you know, people work better in those communities than perhaps they would in a basement or a, you know, a guest room or whatever it is that they might otherwise be working. So, I’m excited to see how that evolves. I think I am always just, I think, I don’t know if you feel this way, but it always feels still very fragile, and I always feel like I’m, it’s hard to enjoy the successes because I’m always fearful of the next hit.

Eve: [00:42:58] Well, that means you’re prepared, right? I mean, I think, yeah, it’s scary, but it’s probably healthy too. If you don’t have any fear, then you’re probably being too cavalier because there will always be a next hit, right? There will always be something else.

Lindsey: [00:43:16] There will. And particularly in old buildings, there’s always the next hit. I think that’s the reality. And so, I think that certainly always keeps me up. And, you know, I think just also as we’re in this next phase, I think of trying to figure out, you know, what’s next for Scout as we’ve kind of gone to the city of Providence and I think we’re looking elsewhere, I think that’s something that’s certainly keeps me, kind of, keeps my brain thinking at night about all the possibilities and projects that we might take on. So…

Eve: [00:43:50] Well, it’s been a pleasure talking to you, and I can’t wait to see what you do next. You have to stay in touch. It’s very, very exciting work. I really appreciate it.

Lindsey: [00:44:00] Thank you. I would love to. I’d love to show you our next projects and the next ones after that. And I know many years ago when we were starting back, we came out to Pittsburgh to visit you.

Eve: [00:44:11] Yes, that was a long time ago. A long, long time ago, yeah,

Lindsey: [00:44:14] Long time ago. So, you’ve certainly been an inspiration and a part of this process.

Eve: [00:44:19] And maybe, sometime you want to even crowdfund one of your projects.

Lindsey: [00:44:23] I would love to explore.

Eve: [00:44:24] Can’t mention which one.

Lindsey: [00:44:30] That would be great.

Eve: [00:44:31] Thanks very much, Lindsey.

Lindsey: [00:44:32] Thank you, Eve.

Eve: [00:44:43] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Lindsey Scannapieco

Retrofits.

Converting vacant office buildings to housing is not an easy fix for our ailing downtowns.  Not by a long shot.

Over the years experience has shown that they are never straightforward. There is no magic sauce. The unhappy truth is that retrofits are hard, expensive and sometimes make no sense at all. Here’s why …

Large floor plate office buildings generally have one central core, with elevators, bathrooms and utility runs in the middle  of a very large open space. Natural light only reaches the middle because there are no walls. A multi-family residential building requires the reverse.  Lots of bathrooms and kitchens stacked on top of each other, with utility runs spread throughout the building. And once you add demising walls for bedrooms and living spaces, there is precious little natural light for living in.  In many instances it might be more efficient (and less expensive) to start from scratch. Historic office buildings are perhaps the exception – their  smaller floor plates can more easily be converted into housing, if you can find one.

Of course this means that vacancies in downtowns will persist for some time. No-one knows yet what will happen to all of those office towers.  But I’ll bet some real estate innovators are already testing new ideas. Some other building use will bubble up.  Something that accepts the configuration of these buildings as an asset and doesn’t try to squeeze them into a use they were never meant for.

Image courtesy of The New York Times

The Garden.

by Eve Picker

There is not much good to say about the Covid pandemic. But three years later I am richer in two ways. I have plenty of antibodies and I have become obsessed with plants.

Gardening is too mild a word for my passion. Books and the internet fill hours of time, as I  troll my favorite landscape gurus online and plot complicated planting plans. Hundreds of plants have become familiar to me as I learn where they love to grow and how to help them thrive. Early on I tried to tame the animals and bugs that love my plants as much as I do, but nature is ferocious and impossible to rein in.  Now I adjust my plans to make sure I choose plants that attract bees and butterflies not voles and rabbits. 

A good challenge is something I enjoy and my garden gives me plenty.  I’ve watched voles suck three rounds of plants into the ground early on, in my novice year.  Planting 60 narcissus bulbs did the trick. Now they’ve moved on. My “lawn” is now predominantly clover. It distracts the rabbits from my precious plants. Hydrangeas have been caged for the winter and covered in leaves to keep the deer away … and more.

Every day I impatiently wait for the work day to end so that the final  two, three or four hours of sunlight can be spent digging, pruning and pulling weeds. My plants have shaped an outdoor room for me. This is where I take coffee every morning, watching each plant progress through its cycle of growth and decline. 

And I love every moment of it. 

What passion did you grow during the pandemic?

Great streets.

I live on a not so great street. It’s a shame because it could be really great!

My side of the street is filled with small storefronts, bars and restaurants. There is lots to see from the sidewalk and there are lots of places to stop along the way. The other side of the street is filled with a monolithic building that has no retail (or other) activity at all. And the next block down is no better since it’s filled with a parking garage.  

No amount of street furniture, trees or landscaping will solve this fundamental problem. No-one wants to walk on the other side because it is boring and painfully empty. You’d be a solo pedestrian and no-one wants to be that. Even worse, the street is wide and inhospitable. There is no canopied median strip and there are no bike lanes. Crossing is not a leisurely stroll. It’s a hurried dash from one side to the other.

Really great streets are hard to find. Both sides must entice you to zig zag from one end to the other, making sure you haven’t missed any delectable place to stop along the way. Some of my favorites include Campbell’s Parade in Sydney, Australia with Bondi Beach and it’s bronzed surfers on one side and endless places to eat on the other; Istiklal Avenue in Istanbul, jammed with pedestrians, lined with stunning architecture and full of things to do day and night; and Flinders Lane in Melbourne. It’s just a tiny alley, but stuffed full of exciting shops and restaurants. I can never get enough of it.

What’s your favorite street?