Rethink Real Estate. For Good.

Development

Ready. Set. Homes.

Necessity is the mother of invention.

In 2019, Dafna Kaplan embarked upon an investigative journey to uncover the obstacles preventing true construction innovation from widespread adoption. Extensive research and development led to the launch of Cassette, an integrated product and service model with an innovative delivery approach.

In 2022, Cassette introduced a beautifully designed one-bedroom apartment pod that can stack up to six stories high into a multifamily development.  And their first order for 200 pods came in.

The company’s commitment is simple and straightforward: Deliver one manufactured product exceptionally well, improve that product’s performance and features over time, and with that discipline and repetition – reverse the cost escalation in housing construction.

Dafna is a recognized futurist and design influencer, with a vast and varied career spanning two industries: consumer product tech and construction. Her past roles have included VP Marketing at MATT Construction where her leadership helped the company achieve over 300% revenue growth and senior roles in several rapid-growth organizations, from Inc. 500 startups to mid-size ($500M) companies. In 2017, she co-founded a live entertainment company, HATCH Escapes, before exiting the role with 30% return on investment in 12 months. Between 2009-11, she launched successful products for high-net-worth clients and influencers, including Marley Coffee and the Johnny Carson Digital Archives. And there is more!

Dafna has been a board member and advisor to several organizations, including American Institute of Architects Los Angeles, Western Museums Association, HATCH Escapes, Consumer Electronics Association, Urban Land Institute Los Angeles, the Consumer Electronics Association accessories division, and A+D Museum, among others. She  completed an MBA at UCLA Anderson School, where she graduated top of the class with honors, and completed her BA at the University of Oregon.

In 2020, Dafna received the Presidential Award from the Los Angeles Chapter of the American Institute of Architects (AIA) for her work at Cassette, addressing the housing crisis.

Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:43] Necessity is the mother of invention. In 2019, Dafna Kaplan embarked upon a journey to uncover the obstacles preventing true construction innovation from widespread adoption. Extensive research and development led her to launch Cassette. In 2022, Cassette introduced a beautifully designed one-bedroom apartment pod that can stack up to six stories high into a multifamily development. Dafna’s commitment is simple and straightforward. Deliver one manufactured product exceptionally well, improve that product’s performance and features over time, and with that discipline and repetition, reverse the cost escalation in housing construction. In 2020, Dafna received the Presidential award from the Los Angeles chapter of the American Institute of Architects for her work at Cassette, addressing the housing crisis. Listen in to be inspired. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:12] Hi, Dafna. I’m really excited to talk with you today. Thanks so much for joining me.

Dafna Kaplan: [00:03:17] Thank you. I’m excited to be here, Eve.

Eve: [00:03:20] The tagline on your website says, Accelerating construction, 1000 homes at a time. Tell me about that.

Dafna: [00:03:30] Sure. Actually, I appreciate you reminding me what it says. It’s been a long time since I’ve been on my own website.

Eve: [00:03:37] That’s a great tagline.

Dafna: [00:03:39] It’s really connected to, in some ways, how we started the business which was this observation that there was a lot of interest in construction, especially in housing, toward utilizing what we know works in manufacturing. So, there’s a lot of adoption of prefabrication and manufacturing construction in the form of things like what we do, modular. But there’s also this, what seemed to be a lack of understanding in the real estate and construction world, that part of what really makes manufacturing efficient is this ability to run at scale. And so, while your project might be 15 units of housing or even 100 units of housing, when you’re thinking about efficiencies that come from manufacturing, it’s really in the thousands or it needs to be thought about in the thousands to really capture the efficiency and more important, the process improvement that you get from doing the same thing over and over and over again.

Eve: [00:04:42] That makes sense. Although, you know, it’s the same problem with the missing middle housing, right? That’s almost too small to build efficiently, which is why there’s so little of it. You know, tell me about the company. When did you found it? How young is it?

Dafna: [00:04:58] Yeah, sure. And as long as you get back to that missing middle, because that’s a big part of, I think, why we’re doing that.

Eve: [00:05:03] Oh, we can get back to it right now. Go ahead.

Dafna: [00:05:06] Okay. Yes, I agree. Most of those projects are too small to gain any kind of efficiency. But that is part of the purpose of how we’re looking at the business of creating the housing as a product and at least a componentized part of that project that we could repeat over, say, 100 different projects, so that your project of maybe ten units, at least half of the cost of your project might be able to be encapsulated in this manufactured item that is getting cheaper over time, like your television set, as opposed to getting more expensive every year. And so, if we can capture a big chunk of your project and then aggregate that savings for a bunch of developers like you, then we have the potential at scale to really reduce the cost of housing.

Eve: [00:05:55] That makes a lot of sense. So, how long have you been in business?

Dafna: [00:06:01] So, in business, we actually formed and raised a little bit of friend and family capital to launch in early 2020, concurrent with the pandemic launching.

Eve: [00:06:10] Perfect timing.

Dafna: [00:06:13] And that set in motion a beautiful series of pivots that that I’d say every founder launches at the wrong time for some reason or another and at the right time for some reason or another. So, we formed the business. And as soon as the pandemic hit, we saw it as an opportunity to do two things. One, to start just consulting and taking everything, we had learned and understood about modular housing and modular construction and start doing feasibility studies for developers. While we were doubling down on our actual product design and engineering. So, we spent the last couple of years really focused on designing a best-in-class structural system that could go together very quickly on site and could be very easy to understand for the trades that have to interface with that object when it comes to the site to get the design finished. So, we launched that product, which is not only a structural system, it’s an entire finished one-bedroom apartment. This one designed by Hodgetts and Fung, an incredible design duo in California, and we launched that in late October last year.

Eve: [00:07:22] So, it took a while. Yeah, I saw the first Cassette Home you rolled out, the pod, and it’s absolutely gorgeous. I want to move right in.

Dafna: [00:07:32] Thank you. Same here.

Eve: [00:07:33] I’m wondering where you’re shipping it to at this point. Let’s start with how big it is and what it looks like finishes and windows and.

Dafna: [00:07:41] Yeah. So, as I mentioned, it was designed by a duo in California named Hodgetts and Fung, Craig Hodgetts and Ming Fung. They’re pretty well-known architects, but they have a lesser known history in industrial design. They actually had two modular patents, so unbeknownst to us before we met up and started chatting with them about a year ago, they’d been passionate about this idea of industrializing great design and we sort of landed on this idea and an alignment that just like, Target in the nineties, hired Michael Graves, a famous architect, to design your teapot for 20 bucks. Right? If you can really leverage manufacturing to do this at scale, there’s no reason you can’t have great design. And so, they took this roughly 600 square foot structure that we had, and they really made it sing from a livability standpoint. If you had 600 feet, that was about fourteen and a half feet wide and 43 feet long to live in, what would be the best version of that to live in?

Eve: [00:08:48] And so, what is the best version of that? Just how would you describe it?

Dafna: [00:08:52] Well, because of the structure, one of the real benefits of this unit is that we have a wall-to-wall window system on the front of the unit. So, about a 14 foot wide floor to ceiling window system. And on most applications that will be a window system with a couple of operable windows. A developer does have the option to get a sliding door system and to hang a balcony off of that unit.

Eve: [00:09:16] Right.

Dafna: [00:09:16] That’s sort of the… you see it the moment you walk in the door, you see that the end of the unit is just this giant, beautiful opening.

Eve: [00:09:24] It always makes space feel so much bigger when there’s light.

Dafna: [00:09:28] Yeah, and then a gorgeous sort of compact but luxurious cooking kitchen because both Ming and I love to cook, and I think a kitchen makes a great home. And then between the bathroom, which is immediately off the door and the living room is a bedroom that completely opens up with a three panel Hafele slider door. And the thinking behind that was that 80% of renters are one and two person households. We imagine that most of the time that bedroom would be open. And so, why make it a small door? Why not just open that entire wall so that your hallway doesn’t feel like a hallway?

Eve: [00:10:08] Nice. And again, anyone who’s listening, you should go check it out because it really is gorgeous. So, it’s a pod and how can it be used? You talked about, you know, someone who might use ten of them. I mean, how can it be put together?

Dafna: [00:10:24] Yeah, the design of the unit was really made for the business-to-business market. It was made for a real estate developer of any size who wants to deliver housing really quickly, to be able to stack it up to six stories high in multiple kinds of configurations. The constraints are really how it connects, which is at the corners. So, it is a bit rigorous in terms of a grid, but you could do a building with a single loaded corridor on the outside or you could do, if you have enough space, they’re long units, you could do a double loaded. And the unit comes with the structural support brackets to hold up that corridor or to hold up a balcony on the other side.

Eve: [00:11:06] So if someone purchases like ten of these units and they’re going to make a five-story building with two units on each floor, do they build the common areas and then these pods slot in? Or do you provide, or are you hoping to provide staircase pods as well?

Dafna: [00:11:27] Someday we would provide the staircase pods. At this point, I think what our interest is, how can you make a product that is the same every time so that as we discussed, what is the minimum chunk of a building you could replicate and not have it changed between buildings. And so, often the common areas and the stairs and the, say the amenity spaces, are the things you really want to customize. But there’s only so many ways to design a 600 square foot apartment. And most architects will accept that because we hired a great architect to design the inside of that, they don’t need to revisit that. And so, we are only going to prescribe the apartment part and then give you multiple options for how you can configure that as an architect on the site.

Eve: [00:12:15] That makes a lot more sense.

Dafna: [00:12:17] Yes, you will have to add the corridors. Yes, you’ll have to add a staircase. There are many miscellaneous metals companies that will prefab a stair pod. That’s not something that you need a special thing to do.

Eve: [00:12:28] Right, fascinating.

Dafna: [00:12:31] To help visualize the way they connect together. They don’t slide in; they actually stack like Lego bricks. So, the beauty of our particular system and the way we designed it and the benefit of those two years in a pandemic, is that we got ourselves to a system where you don’t even need to weld it or bolt it together. It literally just stacks on top of each other until you’re at the top of the building. And then we tension a cable down the columns. It’s a vertically post tension connection.

Eve: [00:13:00] I’m going to ask questions I hadn’t planned now because I’m wondering what that’s like to get through building, permitting, and if that’s going to vary from state to state. Where are you targeting as your, for your rollout?

Dafna: [00:13:13] Yeah, we are based in California, and while it may have been easier to design a system for Texas or for any other place in the country, housing is not only deeply needed in California, it’s the entire West Coast. And what makes the West Coast difficult for modular structurally is the seismic, just the seismicity of the West Coast. And so, we felt like the greatest need was here and steel construction and specifically post tension construction, the way we’ve done it, it’s beneficial in a seismic zone if you can get it right. It’s tricky. But we have designed this particular product to be able to stack up to six stories with no external bracing, which is very unusual, especially for a modular project and one of that height. And so, it can go together very rapidly in a seismic zone. You could use the same product in a different state. We likely just wouldn’t need all of the columns, if that makes sense.

Eve: [00:14:16] Right, yeah, yeah, yeah.

Dafna: [00:14:17] Right now there’s eight columns per unit. You probably will only need to connect the corner columns in a state that doesn’t have the same seismicity.

Eve: [00:14:26] That makes a lot of sense. But are you focused on California is your market for now.

Dafna: [00:14:32] It’s our launch market. We’re focused anywhere on the West Coast. And you are right in that modular is permitted differently in every state, but most states permit modular at the state level rather than for a small municipality. And so, the benefit is the same product we’re using in Los Angeles we can use anywhere in California. And it’s permitted through private agencies in our case, which is also the case, and I think more than 40 states, where the state farms it out to private agencies to really specialize in this manufactured housing division.

Eve: [00:15:09] Interesting. I have to ask, why 600 square feet?

Dafna: [00:15:14] Oh, it’s a great question. It’s really driven by the dimensions that would make the cost and constructability and shipping logistics most efficient in our minds. That is something that changes from state to state and from highway to highway because different roads have different regulations, even within the same state. Different highways allow different widths on the trailer for different costs. So, ours was driven around this, for us, it’s like, how do we get the 80% or 90%? And what we decided was to keep it under 15 feet wide, even with all of the wrapping and the tarp on a truck, and to keep it at a length that was kind of just in that sweet spot where there’s the greatest number of trucks available. They certainly can drive a 75-foot module on a truck. And there are a lot of wood modular companies that are doing 75 feet long so that they can get two apartments in one with the corridor. That restricts the type of building you can design, but it also does make the logistics quite challenging.

Eve: [00:16:25] Oh yeah, I imagine, yeah. 75 is long.

Dafna: [00:16:27] And while there are trucks that can do that, there’s only so many and you run out of them. And so, you don’t want your project being a slave to what the shipping industry has available. We wanted it to be something that could ship on the most widely available fleets. And so, that’s how we landed. And we wanted a livable space. We didn’t want an eight-foot-wide container home. In our minds, that’s not a livable space for most people.

Eve: [00:16:54] Right. So, you just launched. Do you have customers yet?

Dafna: [00:16:59] We do. We’re very fortunate. So, we launched the product, but we had already been working with a few developers and we’ve, both Nick and I, have been in the industry quite a while, so we’re fortunate to have a lot of goodwill. We have a signed letter of intent from a woman owned developer.

Eve: [00:17:18] Yay!

Dafna: [00:17:18] To do 200 plus units of workforce housing in the, not north of Los Angeles, but in LA County, in a city called Lancaster. And so, we’re just in the early stages of conceptualizing. It’s a ten-acre site, so we’re in the early stages of conceptualizing how that lays out.

Eve: [00:17:38] It’s a great first LOI to have. Congratulations.

Dafna: [00:17:42] Thank you.

Eve: [00:17:43] So, what’s your goal for 2023 and two years from now and five years from now? How do you get to the 1000 homes at a time? I suppose with five of those projects, right, and you’re done.

Dafna: [00:17:55] I would love to be serving projects of all size. I would love for more infill developers with ten units to understand that they can get the benefit of this, whereas they may not be able to get the benefit of most modular because you need a bigger scale or a bigger order. But by ordering a product that a company like Cassette has already prototyped has already put the R&D into, you don’t need to add that to your pro forma. And so, maybe now it pencils for you and maybe now we can scale that and make an impact across the industry with that as a product, as opposed to being a custom fab shop that kind of starts from zero every time.

Eve: [00:18:36] Interesting. So, I did talk to you once before and I was sort of really interested by the statement that you made that your hope is that eventually they will, costs will go down for each Cassette, not up.

Dafna: [00:18:50] Absolutely.

Eve: [00:18:50] So, let’s talk a little bit about that.

Dafna: [00:18:52] Yeah, I mean, why else would we do this, right?

Eve: [00:18:56] To make a lot of money. Not to bring costs down.

Dafna: [00:19:01] Yeah. I mean, making money is important, but there’s certainly easier ways to make money than starting a really complicated business. So, I could have stayed in an executive job. I could have done that. You know, life is precious. And I think a lot of us get to a certain point in life where we try to align the things that we know how to do and make money with the things that really matter. And that moment sort of came from me and my ability to think through that sort of came a few years ago, and that’s how that came about. All of a sudden, I forgot your question.

Eve: [00:19:34] You know, I suppose it’s how do you differentiate yourself in the marketplace? But also, I remember you saying that your ultimate goal was to drive the cost of each pod down.

Dafna: [00:19:44] Yeah.

Eve: [00:19:45] Purely because you’re not offering customized options.

Dafna: [00:19:49] Yeah, it gets down to a few years ago when I was leaning into industrialized construction. It wasn’t just because it was the hot new thing. It was because I had spent ten years in the manufacturing sector before I was in architecture and construction. And what I saw happening in prefab was not really manufacturing. And now there’s such an interest both from cities and the investment community in what prefabrication can do, because there’s this thought that, wow, manufacturing gets cheaper every year, right? We get better and better. We are so far advanced in manufacturing in terms of productivity improvement, that it is basically at the top of all other industries when it comes to productivity gains per year. And construction is pretty much dead last on that list. And in fact, we’ve probably lost productivity in the last 20 years for a lot of reasons, some of them good reasons for safety reasons, but some of them not so good reasons.

Dafna: [00:20:53] So, there’s this sort of understanding that there’s an inevitability around industrializing this construction industry yet, I think. You know, manufacturing is a really complex business, especially complex manufacturing, which would be more like automotive or aerospace. It’s not like manufacturing, say, a widget that has one plastic tooling form and then you amortize that form like we’re making plastic cups. It’s like, you have 50 different subassemblies inside of this product that are sub assembled by different. Call it mechanical, electrical, plumbing, subassemblies, etc…

Dafna: [00:21:33] So, it’s complex manufacturing. Yet if you look since the thirties, complex manufacturing, it’s been measured that for every time you double the number of units you make, there is a constant savings and there is a curve of efficiency and savings associated. But that is when you’re doubling the same unit over and over. That is something that the way that most developers are buying modular construction, it’s still not happening. Even if you have 100 units in your building, that’s barely enough for a factory to start understanding how to build that product. And those savings, don’t, they do come a little bit from material aggregate, but Katara proved that just having big volume doesn’t get the cost down the way that process improvement actually gets the cost down. Which is the primary driver of cost savings, and manufacturing is this process improvement. So, we thought, okay, how do we create a process that really could be the same every time, all the way through installing the product? And so, that’s sort of the target. And the answer to your goal is I want to get this one product to 1000 and start to measure that curve. And what is that constant savings for every doubling? Because then we have a way of predicting how the cost will come down and then we have a reason to launch a second product and a third product.

Eve: [00:22:57] So, you also will have to probably, I’m assuming, scale your manufacturing operations. I don’t know where you’re manufacturing right now, but how do you expect that to change over the next few years as these numbers go up?

Dafna: [00:23:10] That’s exactly true. And so, the business was designed around scaling manufacturing from the start. And so, we actually have two agreements right now. We have two manufacturing hubs, and we’re bringing a third one online. And they’re in all in different places to have some diversification, to have scalability, but also have geographic diversification. Sort of, what’s best for this project? Where should these come from? And then building the back end, one of our goals in 2023 is starting to build what they call an ERP system in product where you start to really have control and data on every single material that goes into that product. And to be able to move that material and supply database across your different hubs of where you’re manufacturing it.

Eve: [00:24:03] Interesting. So where did the inspiration for this come from?

Dafna: [00:24:08] Oh, boy, I don’t think it was sort of a sudden inspiration. It was really more of a leaning in. It started with the hypothesis that manufacturing should work in construction, specifically around multifamily, because you have the ability to do the same thing over and over. It’s a lot harder in this country to do that with single family. That’s a whole other conversation, but I thought it should work. I’m going to lean into this, and for about a year I traveled around the world. I talked to different manufacturers, and not just of modular, but different forms of prefabrication, from CLT to panelized housing to volumetric. And in Asia, there’s a lot of volumetric that’s been going on for decades, actually. And I asked a lot of people in the US who’ve been doing these projects. And so, it was really a leaning in that led to just a lot of observations and questions. And one day I wrote a business plan. I thought, there’s something I see that I don’t think other people see. And as I started speaking about it, there were large companies and partners that were very interested right away in working with me.

Eve: [00:25:24] Another question I have is we know that buildings are responsible for probably about 40% of tainting our environment, our world. How does this process help, or does it help?

Dafna: [00:25:36] Yeah. I mean, that’s one of the most exciting parts about this, is that construction is also one of the most wasteful industries.

Eve: [00:25:44] Very wasteful.

Dafna: [00:25:45] When you think about things that are thrown in a landfill and a dumpster.

Eve: [00:25:48] That’s beyond the 40% emission number, right?

Dafna: [00:25:51] Yeah. No, no, absolutely. So, from a sustainability perspective, there’s been some measurement. Obviously, I’m not big enough and don’t have the track record yet to start measuring our specific business around it. But the early studies, at least in the UK and I think now in Canada have shown something like 70% less carbon emissions just from less trucks to the site.

Eve: [00:26:15] That’s what I was going to say. You’ve got one truck run instead of like probably hundreds, right?

Dafna: [00:26:20] I believe you have to be really honest and say, okay, well then you also have to measure trucks to your manufacturing hub. And so, people get very concerned about having a manufacturing site maybe where they think it should be. But what I would say from a sustainability perspective is the biggest thing you want to make sure is that all the suppliers are in close proximity to that manufacturing hub. So, and we have a manufacturing hub in Korea. We have a partner in Singapore. We’re working on a couple in North America right now. But the bigger important piece of that is designing the product and supply chain that goes into that manufacturing and making sure that that doesn’t have a big distance to travel and that that’s a sustainable material. If you’re doing it to really be sustainable rather than to just get points on a board, it makes you think about a lot of different things. And it’s one of the things I think we’re most excited to start measuring from day one is, how do we benchmark our carbon emissions and then over time, how do we improve that?

Eve: [00:27:24] Yes, fascinating. So, what’s standing in the way of producing housing like this? What’s making it harder for you? Or harder than it should be?

Dafna: [00:27:36] Yeah, harder for us versus harder for the industry may be two different things. I mean, we are, like a lot of women owned businesses.

Eve: [00:27:44] Oh, well, that’s hard right there.

Dafna: [00:27:46] Yeah. That started in a pandemic. I’m not complaining, but we’ve bootstrapped and that’s just a slow process. You know, maybe it’s my optimism. I don’t think things are standing in our way. I think there’s a lot of capital markets that don’t understand how to calculate a risk of something that’s very new. And so that’s not just me, that’s the modular industry facing industries like banking and insurance that are not incentivized to take risks, right. So, changing things in that industry usually takes a crazy amount of capital to be able to guarantee loans and those things. So, that’s one of the obstacles to the industry. But it’s softening. And then what I would say is the bigger obstacle, and this is the less talked about obstacle, is this culture of custom start from scratch. And even a lot of architects are looking at prefabrication and saying, Oh, I want mass customization. And what I would say is, well, you haven’t even figured out how to make the industrialization work. Great, let’s get to mass customization. I love that.

Dafna: [00:28:49] I was, the contractor I worked for, built the Broad Museum and the Academy Museum of Motion Pictures, and every kind of iconic, like one off unique thing and using 3D technology, and it’s all great. But that’s not where construction started and that’s not where prefab or modular needs to start. We need to start by understanding that when I build a project as a developer and a general contractor, my typical process involves 80 different stakeholders down the chain, from the lender to the plumber on site to the neighborhood to the permitting agency. There’s a lot of people involved in this process. And the crazy part about what we do, is that every time you develop a new project, you change all 80 of those entities, or maybe like 75 of them are different every time. And so, if you’re going to say like I do, that cost savings over time comes from process improvement, how in the heck is that going to happen when you have a different 80 companies doing that process every time?

Eve: [00:29:54] Right.

Dafna: [00:29:55] And so, I’m trying to sort of cordon off this 50 to 70% of what you’re doing to make sure we can have a repeatable process for you. But what that means for everybody else is that I need to make sure that my product is actually created in a way that’s simple enough that I can teach it to a very fragmented industry, and they can quickly get it every time. So, I think one of the obstacles is this sort of desire to customize everything and not really respect and understand the investment that goes into creating a product in a manufacturing environment. But I do believe that just by showing the industry that a beautiful product can be created and it has a fixed price, and you could actually know exactly what you’re getting for the price you’re getting it, which is unheard of in construction, that developers will buy that. If you build it, they will come. And that’s what we’re starting to experience and it’s, hopefully that will be transformative in the industry when that starts to happen.

Eve: [00:31:00] Well, I feel like I’ve missed some question somewhere. Is there anything else you want to tell us? It’s a fascinating business.

Dafna: [00:31:07] I feel like I’ve been talking too much, and I’d like to know more about you, actually.

Eve: [00:31:12] Well, that’s not what this is about, but we can talk about that later. It’s really fascinating. What’s next for you? I mean, what do you have to do over the next three months to keep this going and keep building it?

Dafna: [00:31:25] Yeah, well, we’re set on executing perfectly, right? I mean, there’s a lot of people that want to get a lot of projects. I want to get our first project in the ground and have the project work the way we’ve promised and to keep our word and to measure it. And we’re fortunate enough to have at least one customer that wants to move forward and work with this system. And I think our job is to just execute well. So, that’s my goal. I believe everything else falls into place from that.

Eve: [00:31:54] Well, I can’t wait to see it. Thank you very much for joining me. It sounds fantastic.

Dafna: [00:31:59] Thank you, Eve.

Eve: [00:32:18] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Dafna Kaplan

Disability Forward Housing.

Micaela Connery is co-founder and CEO of The Kelsey, a San Francisco–based nonprofit that co-develops accessible, affordable, inclusive multifamily housing, advocates for policy changes that promote inclusive practices, and provides tools and templates for others who want to build housing based on its model.

Since founding The Kelsey in 2017, Connery has secured more than $120 million in funding to pilot programming in existing units in Oakland and to finance new buildings in two of the nation’s most challenging housing markets—San Jose and San Francisco. She also oversees strategic planning across program areas, including housing development, field building, and community and political advocacy.

Connery’s lifelong advocacy for people with disabilities stems from her relationship with her late cousin and close friend, Kelsey Flynn O’Connor. The Kelsey co-founder and chief inspiration for the organization, O’Connor lived with multiple disabilities. As the two grew up together, Connery saw firsthand the obstacles many disabled people face in accessing the same resources as their nondisabled peers. Determined to work on solutions, Connery realized there was no cohesive model for housing that would allow people like her cousin to live independently in a mixed community, so she set out to build one.

The Kelsey’s model for accessible, affordable, inclusive communities allows disabled and nondisabled people with a wide range of incomes, needs, and life experiences to live side by side in equally high-quality homes. Locations are chosen for their proximity to jobs, community, culture, services, and transit, while architecture and engineering go beyond building code requirements to implement universal design. In addition, thoughtful but optional community outreach programs foster interaction, understanding, and connectedness, leading to mutual support and a sense of belonging.

Connery is proudest of the role The Kelsey plays in shifting the narrative of what disability-forward housing looks like. The Kelsey is spearheading a movement for equity co-led by people with disabilities—voices that should have been at the forefront a long time ago. Connery envisions a world where inclusive housing is the norm and people with disabilities have true options for community-based living. She believes The Kelsey’s work will show that everyone is better served by design choices that include disabled people. Prior to founding The Kelsey, Connery published leading research as a fellow at the Joint Center for Housing Studies at Harvard University. Her findings identified what became the core elements of The Kelsey’s design and programming principles. Before that, she served for 12 years as CEO of United Theater, a nonprofit organization she founded at age 15 to foster inclusion and leadership among disabled and nondisabled students through the arts.

Read the podcast transcript here

Eve Picker: [00:00:10] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:51] Michaela Connery is co-founder and CEO of the Kelsey, a non-profit focused on inclusive housing for people with disabilities. Michaela’s lifelong advocacy grew out of her relationship with a late cousin and close friend, Kelsey Flynn O’Connor, who lived with multiple disabilities. As the two grew up together, Connery saw firsthand the obstacles many disabled people face in accessing the same resources as their non-disabled peers. Determined to work on solutions, Connery realized that there was no cohesive model for housing that would allow people like her cousin to live independently in a mixed community. So, she set out to build one. Since founding the Kelsey in 2017, Connery has secured more than 120 million in funding to pilot programming in existing units and to finance new buildings in two of the nation’s most challenging housing markets, San Jose and San Francisco. You’ll want to hear more.

Eve: [00:03:08] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:32] Hello Michaela. I’m really excited to talk with you today.

Micaela Connery: [00:03:35] Thanks for having me. Excited to chat with you too and share more.

Eve: [00:03:40] So, let’s start with this. What is The Kelsey?

Micaela: [00:03:44] Yeah. So, The Kelsey is an organization that both advocates for and develops disability forward housing that’s affordable, accessible and inclusive. We are a not-for-profit based in San Francisco, working both in the Bay Area but also nationally. Our work began with Kelsey, our co-founder, who was a disabled advocate and my cousin, and can share more on that. And yeah, our mission is really to address what we see as both a really critical but too often overlooked housing need of people with disabilities. 1 in 4 Americans who live with a disability, addressing their housing need, and also recognizing that building housing that meets that need, that’s affordable, accessible and inclusive actually just makes better housing and communities for all people.

Eve: [00:04:35] It does. So, let’s go back and tell me why you started it. Like, take me on the journey.

Micaela: [00:04:40] Yeah. So, as I mentioned, my co-founder and my cousin and dear friend Kelsey, she and I really grew up together and, you know, went through every life milestone together and through all of those, you know, experienced, you know, access and inclusion or in some cases, lack of access and inclusion through really all life stages. And, you know, whether that was at our schools or in summer camps or church or recreational stuff or travel. And so, that was just a part of our lives and how we saw the world. And when we were both in our 20s, similarly, life milestones going through at the same time. We were both, you know, in that phase of life where we were looking to move out of our parents’ home, and Kelsey didn’t use verbal language to communicate, she used modified signs. But she made it very clear that she was ready to move out on her own. And the options were just incredibly lacking and limited for her and particularly lacking the option for integrated, community based, inclusive housing where she could live not only with other people with disabilities, but in real community, with people of all backgrounds and disability.

Micaela: [00:05:52] And, you know, recognized really quickly that what I thought might have been a unique issue to Kelsey based on her level of support need and where she lived was not unique to her at all. And in fact, Kelsey was an example of a much larger systemic issue of a lack of housing for people with disabilities. We had affirmed in this country through a lot of policies and rights-based work, the right of people with disabilities to live in the community of their choice and can talk more about what those policies are. But that that right was 100% not made a reality and that it was particularly acute for people in lower income communities and communities of color. And so, that led me to go on this journey to first understand like, what was this problem, who was solving it, what was the system around it that I could plug into and be a part of solutions and ultimately realize that solution didn’t exist and created that within the Kelsey.

Eve: [00:06:49] Wow. So, can you talk about some of the biggest issues you saw her struggle with? I mean, what were the reasons why it was so difficult to find housing?

Micaela: [00:06:58] Yeah, this is something that I really looked to investigate right off the bat, both as it related to Kelsey, but also as it related to like disability housing more broadly. Because one of the things that was really clear once I started to both, you know, with Kelsey and her family, but also talking to other people with disabilities, is that nobody kind of disagreed that there is a need for housing for people with disabilities. But, you know, it was hard to create some clear language around what that actually means. What is housing mean for people with disabilities? And that gets to your question around like what were the barriers and what I categorize and saw as the barriers, and this still informs our lens of our work today. I said earlier, affordable, accessible and inclusive. Those are our focus areas at the KELSEY, because those are the three barriers that we’re actually seeking to overcome in our model of both housing development and housing advocacy. And so, really what gets in the way of people with disabilities ability to live in community of their choice is one, a lack of affordability where folks with disabilities are disproportionately likely to be low and extremely low income. Our SSI system forces people to live in extreme poverty. So, those individuals, 4 million plus Americans who rely on SSI are at the lowest of incomes in our country. And other disabled people, you know, have other affordability considerations, not to mention just broadly in this country, we have an affordable housing need. So, the first barrier is really people couldn’t afford to live where they wanted to live. The second barrier then came that even in some cases if you solve for affordability, which was not being solved for, that then there was the gap in accessibility.

Micaela: [00:08:37] And accessibility we really define as anything to do with the built environment, so that even once people found housing, it wasn’t located in an accessible space, their unit wasn’t accessible to them, the amenities weren’t accessible, it didn’t meet their specific access needs and wasn’t designed for them. And then really the third barrier that came in had to do with inclusivity, which was really about the operations and the services that, you know, if you solve for one and two, that then still, and this was particularly true for Kelsey. Kelsey was somebody who used 24-hour support and care and that communities, you know, weren’t designed to be connected to the kind of services that, you know, Kelsey needed in her home, in the community. And that still, and we can have a long conversation about this, that still there’s a really, what I would say, unfortunate, if not dangerous sort of, you know, divide in saying, oh, people with disabilities use supportive services, those ones go to facilities and group homes. Like if you have less needs, then you can live in community-based housing. And we reject that concept. And really then it’s about how do you design communities where people with disabilities, regardless of the level of their support need, have access to integrated, diverse community with diverse neighbors and diverse experiences and within that community have access to the services they need to not just survive, but thrive there.

Eve: [00:10:03] Yeah, because disabilities come in all shapes and sizes, don’t they? Which makes it. And yeah, we have, I mean it’s already very difficult to build affordable housing, but to then be able to address all of the issues that need to be overcome, that must be an enormous project.

Micaela: [00:10:19] Yeah, well, you know, I think I would say yes to people with disabilities, you know, have diverse access needs and are a heterogeneous population. One size does not fit all. I would challenge a little bit that building disability forward housing has, you know, additional complexities by nature of the fact that disabled people have different needs because, you know, what we found is that actually if you just anchor on these access needs from the start, they’re just better design choices that for, you know, in 90% of times don’t actually bring additional costs to a project or make it any more difficult. It’s just shifting to have that consciousness, that access and disability is a natural part of the human experience, and we should be designing spaces that reflect that, you know, just like we would, you know, now it’s, you know, there are so many things that are standard around how we think about and develop housing and include within that, you know, access can be one of those things. It’s it’s a choice not to include that. And we would say it’s an opportunity to include that to create better spaces.

Eve: [00:11:23] Yeah, no, that makes a lot of sense. I think at least where I live, the zoning codes have required inclusion of accessible units in all sorts of projects and sometimes it doesn’t make sense. They can be really high-end projects and you’re required to set aside a certain number of accessible units which, you know, they might be available, they might not be available, they may not be affordable. It makes a lot more sense to address the entire building in some way.

Micaela: [00:11:53] Yeah. And we think that that’s the interesting thing about disability too, is that like, while I mentioned the affordability consideration, like and it is the case that, you know, many people with disabilities live on low and extremely low income. There are people with disabilities at all levels of income, including high income, workforce housing, you know, teachers, you know, direct service workers. There are disabled people at all levels. And so, we should be really thinking about how do we define and design housing of all types to include accessibility. The design principle that we’ve used at the Kelsey Air Station, which is our first community that’s under construction right now, is that 100% of our units are visitable and adaptable, meaning that if you are a person with disabilities, you can one visit any unit. So, because we would see communities where, you know, you couldn’t have a friend over if they used a wheelchair because they couldn’t get into your apartment. That’s a terrible way to build community.

Micaela: [00:12:48] So, that 100% of our units are visitable and adaptable, meaning a guest with disabilities could come in, enjoy dinner, use the restroom, you know, be in the unit, and then 100% of units are adaptable without, you know, skills or training that somebody could come in and adapt their unit to make it fully accessible for their needs. And then 25% of the units are specifically already adapted and designed with, you know, enhanced accessibility features. But like, all countertops are the same height. And I’m a very tall person, and I would tell you that that works. All the countertops are the same. All the widths and spaces and additional design features for access are included everywhere. Backing for grab bars are included everywhere. And that’s just.

Eve: [00:13:33] That’s basic, yeah.

Micaela: [00:13:34] It’s smart to do also from an efficiency and a turnover because you’re not saying, oh, like you have to go into that one unit or what if you have less or more or whatever it is. It’s just a, it’s a better, it’s better for disabled people, it’s better for owners and operators, and it’s better for future residents who could become disabled or have a disabled child or have a disabled guest. It’s just all across the board better.

Eve: [00:13:55] I’m sure you’ve made comparisons between these buildings that you’ve built following these procedures versus a regular building and what is the cost increase when you provide 100% adaptable units?

Micaela: [00:14:08] Yeah, so our community, I mean, we’re in the Bay Area, so cost is expensive to start with. But we have found if you compare our buildings to comparable projects, it is not like significantly more expensive. I don’t have a specific dollar amount to give you and that’s something that we once we’re finished with construction, we can probably give those numbers more directly. But that from our initial budgeting and estimating that we’ve done with all of our contractors and partners, it is not measurably more expensive to do these accessible projects than it would to do other kinds of projects. The cost comes in on accessibility when most people grumble about accessibility being more expensive, it’s because they didn’t do it from the beginning, and it’s incredibly expensive to retrofit.

Eve: [00:14:52] To retrofit yeah. Because you’ve got to have wide enough doors and you’ve got to have, you know, think about your hallways and everything from the beginning, right?

Micaela: [00:15:00] Yeah. But if you build that in, then it’s just in your cost. And our units are tighter. Our studios are at 490 our twos are around 700ft², about. So, there are like also people are like, Oh, that’s going to be this huge building. It’s going to have a massive footprint. We’re doing like dense infill development with these kinds of accessibility. So, it’s really feasible to do it. But again, it’s the intentionality of doing it from the start.

Eve: [00:15:26] I can see a primer in the works here.

Micaela: [00:15:29] Yeah, yeah.

Eve: [00:15:30] For contractors.

Micaela: [00:15:32] Yeah, we do actually have something called our Housing Design Standards for Accessibility and Inclusion. Those are at thekelsey.org/design and these are a set of design guidelines and design strategies for people doing cross disability accessibility and not just around some of the stuff that we’ve talked about, but it starts with community engagement and outreach from the project conception, obviously through all the units and the built environments, but up into resident services and operations. And it’s, you know, 300 elements that people can use in their own projects or, you know, as a funder or as a developer to define what accessibility looks like. And we’ve got folks using them all across the country and they’re just a really, we like went from our first community to our second and we felt like we had to retrain our whole design and development team on all of our accessibility goals and what it meant and what cross disability accessibility meant and all of that. We were like, why isn’t there a standard that we can just share with our team? And there wasn’t. So, we created one and it’s up for folks to use exactly in that way as a primer.

Eve: [00:16:34] That’s great. So, when did you launch the organization?

Micaela: [00:16:37] So, we are just coming up on five years. Our first round of funding came in March of 2018 and that launched us into a community organizing work we did across the Bay Area called, Together We Can Do More, as well as securing our first two sites in that time. So, we’ve been around for just about five years.

Eve: [00:16:57] And how many projects have you built? They’re all in the Bay Area so far.

Micaela: [00:17:00] Yeah. So, we have a project under construction in San Jose of 115 mixed income homes for people with or without disabilities. We’ll be breaking ground soon on a similar 112 home community in San Francisco right across from City Hall. We also have a small pilot that we operate providing residents services within an existing project in Oakland, so all in the Bay Area. But then we also do technical assistance where we might not be the developer, but we help support other people working on housing projects or housing adjacent projects where they’re working on being disability forward and needing capacity building or project scoping or feasibility studies or community engagement support. And so, we’ve done technical assistance both across the Bay, across California and nationally, too.

Eve: [00:17:51] So, it sounds like you’re not always the developer. How do these projects get developed?

Micaela: [00:17:56] Yeah. So, we are not always the developer in these examples of the projects that are under construction or about to be, we are the co developers, so we work in partnership with local, you know, both for profit and not for profit housing developers, building, you know, these communities and they come on and we share development responsibilities. Us obviously really leaning into the disability forward elements of the project and our development partners, you know, sharing their, you know, track record with just developing standard affordable or mixed income housing and our technical assistance work that really ranges from, you know, as we talked about at the beginning, disability. You know, disabled people are, you know, parts of communities everywhere. And so, our technical assistance clients range from affordable housing organizations who, you know, know that they are serving or desire to serve disabled people, but it’s not explicitly their mission and want to do that better and understand, you know, community engagement or dealing with regulation around disability services and compliance there or involving more disabled people in their design and development process. And so, we do that.

Micaela: [00:19:03] We’ve also worked with disability service organizations who deliver services, and as part of those services, aim to provide housing or support somebody in the provision of housing for the people that they serve but aren’t a housing developer or housing expert. And so, we’ll lend development capacity to them. And then we’ve also worked with some finance organizations who are thinking about how to think about accessibility or disability inclusion within the projects that they fund. And so, helping them think about, you know, design and development guidelines like our design standards as it relates to ecosystems of multiple projects, not just a single one. And so, you know, it really ranges in terms of all the different players, and we do a lot of stakeholder mapping of, there’s a lot of players who impact how housing gets built and who housing gets built for. And so, we really are open to lending capacity for any of the people who are moving the needle on getting housing out there to make sure that needle is moving towards more disability forward models.

Eve: [00:20:04] So, how is leasing managed and how long is the waiting list?

Micaela: [00:20:09] The community that’s under construction in San Jose will open in the first part of 2024. And so, we’ve actually just hired our resident services director who’s just starting that leasing, the marketing and leasing process and partnership with our property management and other compliance partners. Um, we don’t know how long the ultimate wait list will be, but I can tell you that even just on having like a, we have like a general form that people without any active outreach just sort of having it up there, we’ve got several hundred people who have like put their names to be notified when the lottery comes on. We imagine when we actually market it, that number will grow just from based on what we’ve seen both in affordable housing generally and particularly for people with disabilities. Our process works in that 25% of our homes are explicitly reserved for people with disabilities who utilize supportive services. And we have tenant referral organizations and partners who help us verify, you know, residents, you know, having eligibility under that criteria of being disabled and using services. And then within that, people qualify. And based on that criteria and income and there’s a lottery, then out of the qualification. And then the other 75% of the homes are available and marketed based on income, whether or not you have a disability. And it may also be the case that there are people, it will likely be the case, that there are people in those 75% of homes who might not qualify as a person with disabilities who use supportive services, but they’re a teacher who uses a wheelchair in San Jose, who likes the middle-income home, who still is disabled and comes through those 75%.

Micaela: [00:21:47] So, you know, people with disabilities will exist in both categories. And I’ll just note that we do specifically do a lottery. I saw a lot of communities that operate, especially in disability founded models or disability focused models that do waitlists. But we feel really strongly that, you know, we shouldn’t preference people who had involvement in the process or who are in the know and able to get in line first that we, you know, have a very specific affirmative marketing goal to make sure this community is known and particularly underserved and underrepresented, low and extremely low income communities, as well as communities of color in the cities we build and making sure that all people have an equal chance of getting a home in the building so people will qualify, get in and then be ultimately selected through a lottery, to try to give the most open process.

Eve: [00:22:43] I do want to get back to some of the policy questions you alluded to. And I’m just wondering what the biggest hurdles have been for you and what challenges you still have.

Micaela: [00:22:52] Yeah, I think we look at our policy focus as not far off from the framing of affordable, accessible and inclusive either. The biggest hurdles around building disability forward housing as we created at the Kelsey as one like, you know first of all, full stop, we don’t have a universal right to housing in this country and we are under subsidizing a system that needs more subsidy overall. And so, we exist within that as a housing development organization, regardless of whether we’re focused on disability. But I will say that the existing financing sources for affordable housing, very few target disabled people as they’re kind of, you know, when you apply for funding, there’s different sort of target populations and disability is not included typically in like preferences or scoring for programs. And often if it is included, it only applies if you are a disabled person experiencing homelessness. And we 100% believe that disabled people experiencing homelessness should be provided housing. But we also believe that you shouldn’t have to become homeless.

Eve: [00:23:59] In order to get it, yeah.

Micaela: [00:24:01] In order to get it. And so, it’s a both, and situation there that we need to have subsidy that provides housing for disabled people who are living in a household with parents or guardians who are aging. We need to provide funding to disabled people who are in an institution or a hospital and are ready to move out but have nowhere to move into the community. And so, just one like increasing public subsidy into, you know, housing and particularly making sure that that subsidy includes, you know, either incentives or requirements to include homes for disabled people. The main federal program that exists around that is the HUD 811 program. And we do a lot of advocacy to increase that. But that can’t be the only, and I’d also say that like we’ve also seen that a lot of our funding sources, even including like, you know, recent Nofas put out by the city of San Francisco, while well intended, a lot of these funding sources actually like don’t adhere to some of the goals of community integration and building mixed communities of people with and without disabilities of all incomes. You know it’s this sort of like let’s solve all together and concentrate extremely low-income housing. And I understand the need because we need to build more of that housing. But we also do need to think about Olmstead, which is the the Supreme Court ruling that mandates, you know, the right to community living for people with disabilities as well as, you know, the integration mandate of the Americans with Disabilities Act, that we need to make sure our housing policies live up to that integrated community model and that our funding sources not only incentivize it, but don’t actually disincentivize it, which sometimes they do.

Eve: [00:25:42] Right, right.

Micaela: [00:25:43] And then I’d say the two other policy focuses are around that accessibility. As you pointed out, there’s a lot of confusing and sometimes compliance heavy accessibility focuses where, when people think about accessibility of the built environment, it’s like one just like, oh, endless regulations, you know, opaque guidance. You know, I never know what I’m going to get. This funding source requires this, and this funding source requires that. And so, doing some work to streamline and clarify baseline accessibility so that all communities meet increased baseline accessibility, which they should, as well as that would be considered a stick. That’s a requirement and we think that’s important. But also layering that with incentives, carrots of how do you, in addition to just requiring a baseline accessibility, how do you provide incentives or systems that support enhanced accessibility or provide technical assistance or capacity building for people to do really robust accessibility? And so, we’re working on some federal legislation that’s going to be introduced in the Senate soon, specifically around that.

Micaela: [00:26:49] And then the third area is really about housing related services and that, you know, we have underfunded Medicaid in this country significantly. And California, where we’re based, relatively speaking, has robust supportive services. But that’s even that relatively is still not enough. We don’t pay direct care workers enough. We don’t, some states haven’t opted into waitlists or into waiver programs and still run waitlists where people can’t have access to services and are waiting to receive the services that they need. And so, even though we are not a service provider at the Kelsey, we recognize that people’s access to Medicaid and other supportive service programs directly impacts their ability to live in the community of their choice. And so, we we don’t necessarily lead advocacy in the service funding area, but we definitely participate in support and lift that up as that. Those two things have to go hand in hand. And perhaps there’s also opportunities which we do work on, is how to better coordinate between housing systems and service delivery systems to serve people better. When we de-institutionalized in this country, we sort of said, okay, here all you disabled people, you can take your money for services and go live wherever you want, and quote unquote, and we never actually built the live wherever you want things. And therefore, our housing system sometimes don’t even think about disabled people who use supportive service as like their responsibility or on their docket. They think, oh, those people are like served in group homes or some other things. They’re not like who the state of California is developing affordable housing for or who the city is responsible for. That’s like another system, and that’s absolutely wrong. The housing infrastructure has a responsibility to serve these people but has an opportunity to leverage service dollars coming out of the service systems once that housing is built. And so, how do we get those systems in our post institution world, getting those systems to work better to to meet the true goal of community living?

Eve: [00:28:47] How many people with disabilities are there in the US?

Micaela: [00:28:52] 61 million, I believe, is the most recent number. That’s 1 in 4 people.

Eve: [00:28:58] 1 in 4 people. And if you add into that, seniors who are having trouble getting around and could probably benefit from housing that thinks about that, you know that’s a lot of people yeah.

Micaela: [00:29:10] Think the 1 in 4 does include older adults with disabilities but yes. You’re exactly right.

Eve: [00:29:15] I mean, it’s not even necessarily a disability. You know, your knees are creaky. You don’t want to take steps anymore like, you know, sort of basically, you know, lifestyle hurdles that you start having.

Micaela: [00:29:26] Yeah, it’s a huge population. It’s also a diverse population, as we talked about before. We spend a lot of time too, like, I think it can be a both, and of thinking about the big tent disability of we are a stronger political movement when disabled people and allies like think about and advocate for disability holistically and don’t separate based on you know, do you have this type of disability or that type of disability or are you this age or that age or, you know. Just really take a big tent approach. And then you can within that big tent also be very intentional around specific interventions of supporting specific access needs or specific service needs. I feel like, you know, sometimes we’ve diluted our power as a disability rights movement of, you know, I go to conferences where it’s like, well, this is for high support need people not low support. And it’s like, okay, let’s just like talk about that all people need support and let’s like build for that.

Eve: [00:30:21] I love that approach, yeah. It makes a lot of sense. Who else is working in this space? Should there be more of you?

Micaela: [00:30:27] Yeah. Fortunately, I think there have been more and more developments coming up focused on disability access and inclusion. We actually, with that in mind, you know, part of the Kelsey’s mission has from day one always been like, we seek not to be the only. We seek to be a part of a robust field of a lot of people doing these kinds of developments. Like it would be crazy if there was one senior housing developer in the country. There’s not. There’s, you know, thousands of developers who do that. And there should be, you know, all developers should be doing disability forward development as part of what they do. We convene a group called the Inclusive Houser Network that includes housing developers that have, you know, individual projects. You know, one in Maryland, another one that’s getting developed in Maine, some work out of Chicago, something happening in Denver, in the DMV, Washington, DC area, to name a, Pacific Northwest.

Micaela: [00:31:24] So, there are some, you know, single projects. And one of the things that we do at the Kelsey is really try to bring those disparate organizations together to share best practices, start to build like an industry group, and then also have that group be working on shared policy priorities. Again, building power for this issue together. And we also hope again with things like the design standards and our technical assistance, like one of our goals is also like, hey, you developer, take what we have, run with it, it’s free, it’s Available. We want to make it so that every developer can say that they are a disability forward housing developer and sharing the tools and strategies that make that possible.

Eve: [00:32:04] So, I have to ask, what’s your background? You’ve got a lot of knowledge wrapped up in this.

Micaela: [00:32:09] Yeah. So, you know, I often say as it relates to this work, my initial background is as Kelsey’s cousin and just really from a young age, and I think about this a lot as a currently non-disabled person leading a disability organization, but that my whole life has been really wrapped up in, you know, disabled allyship and what that means in a, you know, a powerful way to share power and build opportunities in that way. And Kelsey really taught that to me. And that, you know, was from a very, whether when we were like 13 years old and our mothers had the brilliant idea that like we would be each other’s support staff at a summer camp, just the two of us or many other things that throughout our lives. I think I actually was younger than 13. But anyway, so my background really started with Kelsey. I also, prior to this, because of Kelsey, I had started a school-based inclusion program. I was a theater kid growing up and was perturbed by the lack of disabled representation in our arts programming in our school, and so redeveloped arts programming for people with and without disabilities that was student led and led by students with and without disabilities to do theater. And, you know, just as it leads to this, that was like this aha moment as Kelsey was going through her own housing challenges. And I was seeing this on a family level. I was running this education program and seeing our young people who were graduating our school programs was in middle and high schools. And we had talked in the education programs, all our entire kind of theory of change was like, inclusive education and recreational programs like prepare students for more meaningful inclusive adulthoods.

Micaela: [00:33:47] And it was like those inclusive adulthoods did not exist. And that was really a part of the inclusive concept of the Kelsey really building integrated communities was to realize that promise of inclusion that our education system is making to students with and without disabilities. But our housing and community development infrastructure is not meeting. And so, that was that. And then I kind of did, more formally before launching the Kelsey in 2018, was a graduate student at the Harvard Kennedy School and eventually as a Mitchell Scholar at the University College Dublin too. But at Harvard I was a Research Fellow on housing and disability publishing my initial research on this that really formed the Kelsey and did the Social Innovation Fellowship there also to initially design the Kelsey’s business model so that that helped launch into this work.

Eve: [00:34:40] So, one final question I have for you, and that is what keeps you up at night?

Micaela: [00:34:46] You know, I think what keeps me up at night is, it depends on the day is either out of concern or out of hope of just, how do we as a society create and in some cases return to true community and like, true like interdependence and recognizing that an interdependence is a principle of disability justice, that, you know, I’ve really been moved by and that really try to both internalize in my personal but also in obviously the work we do at the Kelsey and like their interdependence exists, we can point to really great communities. And I think we even saw it in many of our communities in this country during COVID, that we really recognize that like we are only as strong as our neighbors biggest trouble. And so, we really have to look out for one another and care for one another and that, you know, we need to create communities where that’s not just possible, but it’s encouraged and supported. You know, some of the systems we build go right in the face of that. And so how do we both, on an individual level, lean into that, you know, and I feel when I see moments of interdependence and moments of true community, I feel so inspired and like, oh, we can do this, it is possible. And then I feel worried when I see, you know, how isolated people are and how much our sort of capitalist systems, you know, create this false narrative that we are only, you know, little cog machines that are going to get forward by ourselves and nothing else. We just need to go, go, go. And so, yeah, that keeps me up at night, of just thinking about what it really means to have community, what it means to have communities that take care of one another. And with inclusion of diversity and both seeing when people do that really well and seeing where we have a lot of work ahead to make that happen in a real way for everyone.

Eve: [00:36:46] Well, it sounds like you’ve only just started, and I can’t imagine you’re not going to be wildly successful. So, I’ll be really interested to see where this goes, and I’ll be looking for that download too. I’m really interested in what you’re saying. It’s fascinating.

Micaela: [00:36:59] Awesome.

Eve: [00:36:59] Very sensible.

Speaker3: [00:37:01] Thank you so much, Eve. Well, it was great to chat with you on this and appreciate you lifting up, you know, disability forward housing in your storytelling.

Eve: [00:37:10] Okay. Thank you.

Micaela: [00:37:11] Thanks, take care.

Eve: [00:37:21] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Micaela Connery

Caterpillars.

Philip Kafka is President of Prince Concepts, which he founded after selling his company, Prince Media. Philip spent six years building the New York based billboard business, developing and marketing sign locations across Manhattan, Brooklyn, San Francisco and Los Angeles before he sold it to LAMAR, the largest billboard company in the country.

Philip decided to focus on Detroit for his next gig as real estate developer. He started buying real estate in 2012, in neighborhoods that no-one else wanted to be in, buying abandoned lots and land. Prince Concepts has now acquired and owns seventeen acres of land, renovated 62,000 square feet of formerly blighted industrial property, imagined and built 20,000 SF of new housing, created 15,000 SF of thoughtful public space, planted over 300 trees, and won nine national and international awards for its completed projects.

The vast majority of this development has taken place, and will continue to be, in Core City.  Philip believes that consistent, dedicated, and focused work within a specific area is how the unique character and value within the Detroit neighborhoods comes to life.

Prince Concept’s first ground-up development project, True North, was named 2017’s Multi-Family development of the year by Architects Newspaper, was a winner of a Progressive Architecture award, and was one of six finalists for the prestigious Mies Crown Hall America’s prize; it was one of just two finalists from the USA, the other being the Smithsonian National Museum of African American History in Washington D.C.

Kafka also serves on the board of MoCAD in Detroit, and has frequently been a guest critic and lecturer in the architecture departments at the: Illinois Institute of Technology in Chicago, Fay Jones School at the University of Arkansas, Bezalel Academy of Arts and Design in Jerusalem, University of Michigan, and Wayne State University.

Read the podcast transcript here

Eve Picker: [00:00:09] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:40] Being a developer without believing in architecture and its fundamental principles is like being religious without believing in God. This is Philip Kafka’s take on architecture and real estate. He’s my guest today, and I think you will be as wowed as I am. Philip has taken a position on rebuilding Detroit that is inspirational, innovative and rare. He’s working in forgotten places on land that no one else believes has much value. His projects weave together commercial buildings and community space to create sculptural places you just want to be in. And his unique approach has earned him accolades. I just want to visit every single one of his projects, listen in to be inspired. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:02:53] Hello Philip, I’m really excited to talk with you today.

Philip Kafka: [00:02:57] Hi Eve. It’s great to be here. I’m excited to speak with you as well.

Eve: [00:03:00] So I’m going to start with a quote I read. You’ve been heard to say, being a developer without believing in architecture and its fundamental principles is like being religious without believing in God. So, I’d like you to tell me about that.

Philip: [00:03:14] Well, yes, I have said that. And what I mean by it specifically is that I think about always what is the essence of what I’m doing. And I think that as a real estate developer, I’m in the business of making space. I’m not in the business of making assets. I’m not in the business of making returns or of creating density. I’m in the business of making space. And to me, architecture is the practice of crafting space. And so, if I first wanted to be a developer, I had to understand architecture so that I could then create good space and create a great product.

Eve: [00:03:51] It’s a pretty unusual way for a developer to think, unfortunately. I wish more of them thought like you. You know, I’m an architect by training.

Philip: [00:03:59] Okay, great.

Eve: [00:04:00] I’m definitely on that side. But your work is really stunning. And Quonset huts become amazing residences, abandoned land, gorgeous parks. What’s your philosophy about the spaces that you decide to create as a real estate developer?

Philip: [00:04:17] Well, my original training is in philosophy. That’s what I studied in university. And so inevitably, my interest in real estate, it’s a vehicle for me to express my beliefs. And I’ve been fortunate because I started as an entrepreneur in New York City, not doing real estate. I was in the advertising business. I started a billboard company, which in a way was real estate. I was developing walls for advertising space, always knowing that I wanted to get to what I’m doing now. I made my way to Detroit. And it was Detroit’s unique conditions, which helped craft my specific philosophy. And my specific philosophy is, develop a minimal amount of leasable space to subsidize a maximum amount of public space or quality space. And when I say quality space, that’s unique living residences, interesting experiences, places to work, places to eat. Again, I believe that my product is space, and so I’m always trying to figure out a way to create the most inspired spaces I possibly can, whether that’s outdoor public space or indoor private space. And I’m trying now to stretch my mind and figure out how I can create indoor public space as well in an interesting way, not just as a lobby or as a passage to other private spaces, but really try to wrap my head around it because I think it’s an interesting challenge. So, it’s Detroit that allowed me to develop that philosophy because land and real estate was so inexpensive relative to, I guess, I don’t like to get into things I don’t really understand, but relative to the macroeconomic factors of the city, land was so affordable relative to the opportunity there that, let’s just say, for example, I paid $20,000 for an acre that should have cost me $500,000. And if I was doing a $2 million project, I then had 480,000 extra dollars that I could then invest into the quality of spaces both indoor and outdoor, without offsetting that cost to the people who are living there, working there, or just enjoying the public space. Does that make sense?

Eve: [00:06:28] Oh, absolutely. Yeah, the numbers give you room to do something more, but is that what drew you to move to Detroit? Just the potential?

Philip: [00:06:36] Yes. Like I said, I was a student of philosophy in university and in my life, I’ve been a student of history. And when I looked around the world, I only saw two cities, really significant cities that shared the condition that Detroit has. One was Detroit and the other was Berlin. And that condition is that these were both cities whose infrastructure was built with grand ambition and whose population did not max out its infrastructure. So, Berlin was built for 8 million people. I believe it was intended to be the capital of Europe after Germany was going to conquer everybody, and it only has four and a half million people. So, there’s a lot of space, there’s infrastructure for all those people, but there’s space, there’s things to do, and that’s why it’s such a creative city. Detroit was built for 2 million people, and it only had 700,000. So, I visited a lot of cities when I was living in New York. I went to Pittsburgh, I went to Philadelphia, I went to Cleveland and Columbus, St Louis.

Philip: [00:07:33] And I just found that even though they were all part of this consortium, which is known as the Rust Belt in these old industrial cities, which I love the muscle of those cities, there weren’t any that really had the conditions of Detroit, which were a former heavyweight champ that now basically had big shoes to fill. But it had the shoes. It had the stature to be great again, already built, and it wasn’t there yet. So, I’d never seen anything like it. And through studying, I realized that there were really only two cities in the world like it, and I thought it was a once in a lifetime opportunity to be part of that amazing genesis. But that’s only the physical side of it. There’s also the historical and cultural side of it. Detroit’s a predominantly African American city. It has great, rich historical roots, great culture that has a history of innovation. From the Model T to reinforce concrete. Detroit is, it’s inspiring to me. So, I couldn’t help but want to be part of it.

Eve: [00:08:30] So your company, and by the way, I got to add here, my husband is a historian and philosopher of science. So, he’s in the same business, very creative, but he did not end up being a real estate developer. That was me. So, your company is called Prince Concepts, and you started it really not very long ago, maybe 12 years ago, ten years ago.

Philip: [00:08:53] I originally started as Prince Media Company because my first billboard, like I said, that I developed in New York City when I had my company was on Prince Street, Prince and Mulberry. And I just took the name of the street that was kind of the backbone of Soho, my first location was there. I was living off of Prince Street at the time in New York City. And so, I put the name Prince Media Company on my billboard company. And after I sold that company, I had it for six years. I sold it in the summer of 2015, and then I just named my real estate company, Prince Concepts. I’d been buying real estate in Detroit while I had my previous company. Once it was successful, I started buying real estate in Detroit about 2013, and then I just carried the name. It’s not significant. Other than that, it was where my business roots kind of began in Soho.

Eve: [00:09:36] Right. So, it’s significant to you. So, how large is your portfolio now?

Philip: [00:09:41] Now I’ve developed about 30,000, when I was finishing this project, I’m in Texas right now, finishing up a project. It’s an aberration from my typical development zone, but I’ve developed maybe 45,000 square feet of new construction and I’ve renovated about 100,000 square feet of previously kind of derelict industrial buildings. And then I’ve actualized about 30,000 square feet of just land into public spaces. And then in Detroit, my work, I started with one building that was a little bit off the beaten path. It wasn’t so adventurous. It wasn’t quite in the thick of things when I first bought it in 2013. But it also was kind of close to some action, and that was my first project. It was a restaurant that was architectural, and it was very successful.

Eve: [00:10:28] What restaurant was that?

Philip: [00:10:30] It was opened as KATOI, and now it’s called TAKOI.

Eve: [00:10:33] You know, I ate there when it was in its original form, and it was amazing. Yeah, I have to come back to its reincarnation as TAKOI.

Philip: [00:10:41] Yes.

Eve: [00:10:41] Because it burned down, right?

Philip: [00:10:44] Correct. It was open for 11 months and then somebody broke in to steal some alcohol and burn the place down to cover their tracks and we rebuilt it. It was a challenging six months because I was in the middle of my next project, which was True North, at the time as well. But we kept it going. We kept the team together and we were able to rebuild the restaurant. It’s been open ever since and doing well. My next phase of projects were in an area about 5 minutes from there and it was an area that was, there were three operational houses in like a 20-acre area. And I bought a lot of land, and I bought a lot of abandoned buildings. And it was an area that anybody in real estate, since we’re talking about real estate, told me to stay away from. And this is, that advice is one of the things that’s continued to inform my philosophy and help me make distinctions as to what I actually do. But I started to buy real estate there and then that was my first Quonset Hut project, is how I activated that area.

Philip: [00:11:36] I built a True North, and that was a live work community using Quonset huts, which was then very generously awarded throughout the architecture community. And it kind of opened up a whole new world to me as to how architecture can be such an electrifying. I believed in it prior, but it’s like it’s like you can have faith. If we go back to the religion quote, you can have faith, but it only gets stronger after it gets tested. And if it passed those tests, then you really start to believe in it. So, after True North is when I really began to believe in architecture and its power to inspire people, and to bring them places they otherwise maybe never would have gone.

Eve: [00:12:17] So, where did the inspiration for Quonset huts come from? It’s not what someone would think is going to have a beautiful end goal, but the projects that you’ve built are really pretty extraordinary.

Philip: [00:12:30] Thank you.

Eve: [00:12:31] I’d like to know how you thought that through, yeah.

Philip: [00:12:34] So, it was twofold. So, like I said, I had an interest in space. I knew that space was what I was trying to make. That was what was interesting to me. I wasn’t looking to build apartments or just to build density offices, just units that I was going to rent. I was interested in creating spaces that were going to inspire people to want to be somewhere where everyone else told them they shouldn’t go. So, I knew I needed quality space to make people say, well, you know what? I’m going to take a risk and live over there because the quality of space that I can get there is far superior to the quality of space that I can get over here. And so, I was seeking that. And then that collided with, like I told you, I was reading about Berlin and its history of housing after World War II and how the city was being rebuilt.

Philip: [00:13:23] And I saw an image of an American army base outside of Berlin built with Quonset Hut. And the two paths that I was that were in my mind kind of collided when I saw that image. And I said, wow, I’m going to investigate using the Quonset hut to create quality space. And then I started to think about hiring architects, and I knew that it was going to need an architect’s touch to make it very special. See, the thing is, the Quonset hut is interesting as a tool, but it’s not the essence of what it gives me. I don’t build Quonset huts. I build space, and the Quonset hut is just the tool that allows me to do it well and interestingly, and to make it accessible price wise for myself and for my tenants.

Eve: [00:14:05] You’ve also stretched yourself, and I think hired one of the most remarkable landscape architects to help you create that space, right? Dirt, who I also interviewed, Julie Bargmann. So, the spaces really are gorgeous, absolutely gorgeous. So, you’re turning really derelict and unwanted pieces of property into an asset for the city. And everyone, everyone who lives there. Right, they’re not private spaces. So, anyone can wander into the green spaces that you create. Is that correct?

Philip: [00:14:37] That’s absolutely correct. And, you know, this is a, again, like I said, Detroit’s unique conditions helped inform and cultivate my development style and my philosophy. Som I’ll give you an example. I have another beautiful restaurant and I have other bakeries and cafes that surround this beautiful public park. Now, some small minded people, I hate to say that there are small minded people, there are magnanimous people, there are big minded people, there are ideas and thinkers, and then there are people who want to focus on negatives. They can look at my work and they can say, wow, you’re building these restaurants where there were three operational houses in the neighborhood. Those three people, they might never be able to go. And that is true, but that’s okay because this is what a city does. It services so many interests. That’s okay because that restaurant is okay in that neighborhood if it subsidizes public spaces that beautify the neighborhood and are accessible to everyone. Now, that park, we put benches on the front of it. It’s where people who are on their way to the bus stop, if they’re 10 minutes early, 20 minutes early, stop and take some sun and enjoy themselves and have a little conversation.

Philip: [00:15:48] So, it’s so interesting for me to see how, when I build a project, it only has eight apartments let’s say. Eight apartments cannot change a neighborhood, but the public spaces that they subsidize certainly can. And so, it’s that marriage between being extremely generous with the people who pay me rent, let’s say. I’m talking about business. But then also being equally as generous, if not more generous with the people who don’t. And I’m in a very unique situation because I own so much land in one area. I have 20 acres in that area that I can be extremely generous with the area, and which means I can be extremely generous with the people who don’t pay me rent, which means that I can actually make something special. And so, it was very important to me to make the public spaces as notable, if not more notable than the private spaces. And that to me is what makes the work interesting, is when I can figure out how to subsidize those spaces and fulfill everybody’s interests. That’s the real challenge of the work, and that’s what most developers complain about, to be honest, is that they can’t service everyone’s interest. And it’s true. It’s very hard and it’s frustrating sometimes. Development is hard work, as you know. But when you’re able to kind of get into that territory that you never thought you could get into, it becomes very interesting.

Eve: [00:17:10] So, you know, you said one thing I’m going to disagree with, and that’s you know, you can’t really change a neighborhood with eight units. But I disagree. I think that you can change a neighborhood by showing people what’s possible. You know, because most people are scratching their head over what to do with all of this vacant land. I’ve driven through those neighborhoods and they’re decimated and they really have to be reimagined, right. So, you’re starting the reimagining process, which is very exciting, I think.

Philip: [00:17:39] I think that your critique of it is correct. But I will say this, too, is that what I found in development is that a lot of developers, I hate to be critical, but I’m just being realistic. They don’t push to get to the essence of what it is that I’m actually doing. So, I could build eight of the most inspired apartments. And honestly, I even see this from architecture students who come and visit from all over the country, all over the world, really. First questions they always ask me, no matter how inspired the spaces are, is, what is your return? What did this cost you to build, and how much are you getting in rent? And I’m like, you’re Architecture students. Like there’s an idea here. This was the middle of nowhere just three years ago, and all you want to know is how much it cost me? You can go ask the developer in downtown that, like, you know, there’s so much more here. And I finally started to realize, if I wanted to get people to pay attention to the real true elements of what it is that I was doing, I first had to talk about the things that they never think about, the trees and the public space, to get them to notice that the things that they do care about, which is the return, You know, like, I always say that Caterpillar with my second Quonset Hut project. When I describe the project, it’s this simple. It’s a project that planted 186 trees and eight apartments. That’s it, that’s the project. 186 trees and eight apartments. And at first developers are scratching their head, you know, that’s the project? And yes, that’s the project. It’s about the trees. The eight apartments are really a vehicle by which I can subsidize this beautiful woodland.

Eve: [00:19:12] The trees, right.

Philip: [00:19:13] But I have to do that to get them to start to expand their mind a little bit. Not that my way is the right way, but we all want people to kind of maybe see the world in the way that we do.

Eve: [00:19:25] I completely agree with you because I think, unfortunately, the built environment has succumbed to being a financial commodity for people to make money on.

Philip: [00:19:35] Yes.

Eve: [00:19:35] And it really shouldn’t be. It’s all about the space between the buildings, right? Streets we use are pleasant or unpleasant because of the way we place buildings on them, right. So, I totally get it. It’s pretty inspirational.

Philip: [00:19:51] Thank you.

Eve: [00:19:51] But when you start work on a project, where does your inspiration come from for each project and how much does history count and the neighborhood?

Philip: [00:20:01] Well, this was one of the things that was so interesting that you and Julie talked about in your podcast with Julie is, and Julie taught me this really, I kind of understood this intuitively when I began my work, but Julie was the person that I worked with that really helped me understand this explicitly. And this is Julie’s quote. A great project emerges, it doesn’t descend. And that captures like the way that I try to work in terms of respecting history and respecting place is that there’s so many elements that inform a project and then that is mixed, the existing conditions, I like to say. Existing conditions have to do with materials that I have access to, to the history of the place, to the economics of the place, to the demographics of the place, to the trades that I have on hand.

Philip: [00:20:46] Like, if I have a welder on site, a really good welder, I’m going to work with steel. And if I have a great mason, I’m going to work with BLOCK. And if Detroit is a city that’s rich because it has a steel history and it’s easy for me to get welders, I’m going to work with steel and there’s so many things that a city’s existing conditions inform about my projects, but it’s not my project until those existing conditions then marry my mistakes. And so, the things that I would say inform my projects the most are the marriage between existing conditions and the mistakes I previously made. So, it isn’t like an idea just comes out of nowhere. One of the reasons I started with a Quonset hut was I had no construction experience, and this was something that I could look at a YouTube video online and make. So, I figured this is something that I can do.

Eve: [00:21:34] That’s great.

Philip: [00:21:36] That at the time, my lack of experience at the time was an existing condition that I had to deal with. And the Quonset hut was a really nice consequence to that existing condition, in addition to Detroit’s industrial history. And then Edwin Chan, the architect that I worked with on True North, he was also so respectful of the scale of the neighborhood and the scale of the block. That project was built across five lots. It’s eight Quonset huts, ten units, in between an old industrial garage and a regular single-family house. It was an area where manufacturing zone met residential zone. So, the Quonset hut at the scale, which is an industrial tool, at the scale of a home, was kind of the consequence that we derived. And we implemented things like Detroit has a great porch culture, for example. We did a stoop on the project, so that people would live the same sort of lifestyle from this project that they do in the rest of the neighborhood, but in this futuristic looking place. And so, it was so important for us to take elements of what was around us, elements of the path of the neighborhood, and kind of mix it into this salad that becomes the project.

Philip: [00:22:48] And so, right now I’m the general contractor and I typically am usually, I’ve worked with, I’ve collaborated with other contractors, but usually I build my own projects and I’m down in Texas as the general contractor, finishing a project. It was Landscape Architecture by Julie Bargmann or Architecture by Marlon Blackwell. And it does use Quonset huts as well. And there’s a lot of mistakes that I made on the project. Being here every day, working with the trades and understanding how things get done or if things don’t get done well, is such a rich source of inspiration for my next project. And wherever it’ll be, it will be in Detroit. That project will be a consequence of all these mistakes and lessons that I’ve learned from being on the battlefield, so to speak, and the existing conditions of the neighborhood itself as I develop. That was a long answer, I apologize.

Eve: [00:23:41] No, no, it’s great. I’m just smiling because I’m enjoying it so much. So, does a Quonset hut save you money or not in the end?

Philip: [00:23:51] You know, in the end, what I would say is that it doesn’t. What it does, though, is that for the same price per square foot, let’s say, that you would build a regular method of construction. You get a more museum quality space. So, the Quonset hut is not less expensive if you really want to make it architecture, there are intelligent ways to use it. Every project I’ve done so far, I’ve done three Quonset Hut projects, each with a different architect, each kind of exploring different avenues. And I’m learning more and more about how to use the tool in the most effective and efficient way possible. I haven’t mastered it yet, at all. But what it consistently does, in spite of whether it cost me less or not, is that it continues to give me inspired spaces that are very novel for a comparable price that would already exist. And so, that’s a win.

Eve: [00:24:45] That’s really important where you’re working, because you have to have a special draw because I’m sure, you know, most real estate agents in Detroit are telling people to stay away from those neighborhoods, right. You have to find a way to really entice people to come and feel like they’re part of something special.

Philip: [00:25:04] Correct. I mean, at that point is one that I also belabour quite a bit, which is there’s this umbrella that’s real estate. And then underneath real estate there’s a lot of different trades within that field. I think that too often, real estate investment and real estate development are co-mingled is the same thing. And I want to make a distinction consistently in my work and in the way I speak about my work that there’s such a big difference between investing in real estate and developing real estate. Investing in real estate, what you’re really buying. You’re not buying space; you’re buying an audience. And oftentimes that means that you’re going into areas that already have demand and there’s no onus on you to create the demand. You’re relying on everything around you to make people want to rent space from you. So, it has nothing to do with the space, but more to do with the audience that you bought. To be a real developer, in my opinion, humbly, to be a real developer. And this is what I’m trying to be at all times. I want to go somewhere where people don’t necessarily want to be, and I want to create a product that makes them want to be there. And then you bring people to an area they otherwise wouldn’t have gone. That is development, you know, And I think that too often people mistake development with investment. And they’re two very different things. In development, you’re investing your capital in the product and the idea. In investments, you’re investing your capital in the audience that already wants that place. And so, I want to try to be a developer, continue to be, which will continue to challenge me and try to bring people to places that they otherwise wouldn’t have thought to go or live in ways they otherwise wouldn’t have thought to live or eat things that they otherwise wouldn’t have thought to eat, or even just to have the sensitivity. If I can inspire somebody that never would have picked the flower to pick a flower and one of my parks, that’s a win. That’s development, you know what I’m saying?

Eve: [00:26:53] Yeah. Oh, no, I know exactly what you’re saying. So, you know, I agree with you. And what you’re imagining is a way of life for a few people. And eight is not very many. Right. That might want to really stretch their own boundaries in a very special way. So, yeah, I totally get it. I have to ask, though, I think you’ve already answered this. Is this the reason why your projects are, tend to be small interstitial projects and not really big ones? Are you contemplating a 40 unit building or a 60 unit building or a little village?

Philip: [00:27:28] Yes, Well, it’s a good question. And I think that I want to work in a scale where I can continue to try new things. And the bigger the scale gets, the less margin for error you have. A 10% mistake on a $10 million project is $1,000,000. A 10% mistake on a 2 million project is 200,000. As a businessperson, I can probably find $200,000 somewhere to fill those gaps and eat the mistake myself. It’ll be a little bit more difficult to find $1,000,000 somewhere. And so, I’m experimenting all the time, trying to be a developer. Because as soon as I start to create things that I already know how to create and that there already is a demand for, I’ve become an investor and I’m still energetic enough to not go to that place yet. So, I’m able to keep the projects interesting and inspired because I want to keep experimenting. That’s one thing.

Philip: [00:28:24] The other thing is, like this project that I’m doing in Texas right now, it was a very interesting experiment because I’m taking a philosophy that was cultivated in very unique conditions, which is Detroit, and then bringing it to Fort Worth, Texas, which is a very different kind of place. And it was an opportunity that was brought to me, and it was a great chance for me to explore architecture. And my dad is the one who brought it to me. He owns some land in Fort Worth, he’s not a developer, and he was asking me to develop it with him. And I was hesitant at first because I didn’t know exactly how my philosophy that was very Detroit specific was going to translate. And the scale is bigger of the project. And if I’m honest, the scale got too big too fast. And that’s a consequence of the market that we were working in because there’s so much more demand in Fort Worth. And so, our experiments didn’t pan out as much as I’d like. And the project isn’t as vibrant of a manifestation of, let’s say, the philosophy that I cultivated in Detroit. Is it a phenomenal project? It’s phenomenal. It’s dramatic. It’s like Julie designed this amazing primordial landscape and these futuristic buildings that Marlon Blackwell designed just rise out of it. It’s a monument. Did it respect the existing conditions of where I am in development at the time? Probably not. It was too big of a scale for me, and I would maybe work my way up to it. But the bigger the projects get, the less I can experiment and kind of discover new answers. You know what I’m saying?

Eve: [00:29:49] Oh, I know exactly what you’re saying. So, I’m so jealous. It sounds like a blast. I have to ask, has anyone influenced your work or is this you experimenting and building ideas on your own?

Philip: [00:30:04] Yes, we have so many opportunities to have so many mentors. They are all around us. Their work is all around us all the time. In Detroit, I live in Lafayette Park, designed by Mies van der Rohe. It’s a very special place. The landscape architecture is phenomenal. They’re these little pristine glass box townhouses that exist in this amazing urban woodland that is such an amazing place to live.

Eve: [00:30:26] That’s a huge inspiration. Yeah.

Philip: [00:30:29] Huge. I wake up every single day and learn lessons from it, from the fact that there were no pure clean ceilings with no recessed lights or air ducts in them, the proportions of the eight-foot spaces and how you make that space. These really tight proportioned spaces feel so generous and grand with full glass walls and how every wall is either a full window looking outside or a perfectly proportioned art wall. It’s like, there’s so many lessons there that I learn all the time. And then every season is a new lesson to learn because the majority of what you’re looking at is the exterior. It’s just, it’s so inspirational to live there. But again, I’m trained differently. I find great inspiration. Joseph Campbell was a mythologist and a professor who was a great inspiration to me. When I need confidence in trying new things, I always pull out his work about mythology and understand where my roots are and what I’m trying to do. And the more difficult it becomes, maybe the more important the work actually is. And so, he’s a great inspiration.

Philip: [00:31:31] The people that I worked with I learned so much from. I mean, Julie has been a great inspiration to me, an amazing teacher. She’s so wise and she’s so renegade. And it’s like, you know what Julie’s like? She’s like a jazz musician that somehow worked her way into, like, a classical orchestra, and they love her. You know, like, she just plays jazz all the time. But like, the classical musicians, like, want to play with her and like, she’s elevated beyond, she really understands the music. And it’s amazing to work with her because of that. Then again, two of the other architects that I’ve done significant amount of work and exploration with are Edwin Chan in Los Angeles and a young architect named Ishtiaq Rafiiuddin, he started his own office with my projects. We’ve done a lot of work together. I’ve worked with him more than anyone else, and he used to work at OMA prior to having his own office. He designed KATOI and he’s done a lot of projects with me. He’s so wise and he’s so holy, and I feel very lucky. And along the way, I’ve worked with other very talented people who I learn a lot from. My projects have been awarded, and I’ve had the chance to meet some great thinkers. There’s little tidbits of wisdom all over the place. I named, I guess, my most significant inspirations for my work right now. And that will evolve, I’d say, probably.

Eve: [00:32:50] And will change at the time.

Philip: [00:32:51] Exactly.

Eve: [00:32:52] I want to ask, who gives you pushback? You know, most of the world is pretty traditional and your work is definitely not. So, who gives you pushback and why?

Philip: [00:33:03] It’s a very good question. Detroit is a city, like I said earlier, Detroit is a city that’s always been about innovation and new ideas. And that’s kind of written in its DNA. It’s I think it’s very different trying to do an experimental project in Detroit than it would be trying to do it in Richmond, Virginia, for example. Richmond, Virginia is a city that had industry and had an interesting rich history, but not a history of ideas. And the fact that Detroit is a city with a history of ideas is very important because it opens people’s minds to new things. And that’s the history of the place. The pushback that I often get in Detroit, let’s say, is a social pushback. I’m going to a neighborhood that I wouldn’t even call it a neighborhood that is low income. It’s a neighborhood that was totally abandoned. Like I said, there were three operational houses there across 20 acres when I arrived. The rest were kind of abandoned, burned out houses and just overgrown lots and land, abandoned industrial buildings which I’ve renovated. But I still get social pushback because there’s a theme in development that there’s gentrification. People throw that word around without even thinking about what they’re saying. And like I said, I’ve worked hard to address these qualms by doing really good work.

Philip: [00:34:18] And so, for example, there’s a great Argentinean restaurant that’s a world class restaurant, literally a James Beard finalist this past year. So, one of the best restaurants in America. It’s not accessible to every person. It really isn’t. I mean, that’s a place where you go and you have an excessive dinner for anybody, for even a working person. It’s a nice place. The criticism I get is, why would you build that restaurant? Well, it inspires people and it’s aspirational, sure. But more importantly, that restaurant, the way I fight back to that criticism is it subsidizes public space. It subsidized a 110-tree park right next to it and a 75 tree park across the street from it. It beautifies the neighborhood. So, I’m always trying to address that sort of pushback and criticism all the time. That’s the most significant criticism I’ve received that I actually listen to. But the thing is, I always say that my projects aren’t good enough if they only inspire the international architecture community but alienate the local community. And they’re not interesting enough if they only make the local community feel comfortable but don’t inspire anyone greater than that.

Eve: [00:35:26] Yes.

Philip: [00:35:26] So, it’s hard work to do both at once.

Eve: [00:35:29] Very hard.

Philip: [00:35:29] And like, I can tip one way or the other. If I tip too far in one direction, I’ll start to get criticism from, because now that the architecture community watches our work, I’ve got people who will critique, work that isn’t inspired enough or isn’t thoughtful enough in that realm. And then because I’ve been sensitive to the local community, if I go in a direction that isn’t sensitive enough, I’ll start to get criticism from them. Now, I love that because it really makes me think every time I start a project, like my brain has to be employed to figure out how to navigate that territory. And I love that. So, if I get criticism, I don’t blame people for giving it to me. That’s a new bit of information that I can use to inform my next project, you know?

Eve: [00:36:16] Wow. So, do you have anyone following in your footsteps?

Philip: [00:36:21] It’s hard to say because, see, here’s the thing about developers. There’s a project in Columbus, Ohio, that used True North as an inspiration, and they did a Quonset Hut project. I haven’t visited yet. I need to go see it. But I saw they didn’t plant any trees. There’s no public space. They extract the wrong essence. They thought the essence of the project, and this is what we were talking about earlier, they thought the project was about the Quonset hut. No, the Quonset hut was just a tool for me to be able to create exceptional indoor and outdoor spaces. And so, I see people who see what we’re doing, and they extract the wrong thing from it. You know, the thing that maybe is the most obvious, but I really can’t wait till the day, till somebody else copies me and says, we just built eight apartments and planted 186 trees. It’s like, that’s when I know that I’ve actually changed something. I haven’t seen that happen quite yet. What do you think? By the way? You have your eyes on it. Do you see other things brewing with this sort of attitude?

Eve: [00:37:28] Depressingly, no. I’ve taken a ten-year hiatus from real estate development myself to build this crowdfunding platform, and I’ve learned a lot about what other developers do in the process. And there is so much built that is just built to be the same. Now, to be fair to developers, they’re trying to make a living and banks are geared towards lending always to the same. Even in a market like Pittsburgh, it’s very hard to break out and do something different and find the financing for it. So, I think the world of real estate development is set up to make it very difficult to do what you’re doing. I think the fact that you’ve chosen a city so thoughtfully where you can experiment is the key, and most people don’t have that luxury. So, I don’t want to blame real estate developers. I actually think the world of finance is probably more to blame for the constant drumbeat of buildings that just don’t build better cities.

Philip: [00:38:32] Correct. But if we’re really exploring this intellectually, too, I think the world of finance in a way, is to blame. I also think that our education system is to blame because it used to be in the early 20th century, if you were a lawyer, you had a true inclination towards the law. If you were an architect, you had a true inclination towards architecture. And before there was an economy and education, people were really, really, really drawn to what was really interesting to them. And now you have people who aren’t even interested in space doing real estate because there’s an economy in it.

Eve: [00:39:05] I think that’s right.

Philip: [00:39:06] And I think that education is in part to blame. And you have people practicing architecture that don’t even have an inclination towards architecture. I don’t know. There’s a lot of things that lead to that. And at the end of the day, unfortunately, real estate has basically just been put into a category of, it’s an asset class, it’s something to hold in your portfolio.

Eve: [00:39:28] It’s an asset class. It’s not, it’s the place where we live, right? It’s where all of us live. And it should be much more than an asset class.

Philip: [00:39:37] Exactly.

Eve: [00:39:38] So, yeah, a little bit depressing. Did you expect all the attention and awards that your work has received?

Philip: [00:39:47] I did not, no. I didn’t at all. And sometimes it’s still kind of surprises me because like, what do they say when you know how the sausage is made, you don’t really want to eat it. And so, I know how the sausage is made in my office and I know where the ideas come from. And as much as I try to make them inspired, I still consider myself an amateur. And I really don’t think that I’m anywhere close to a level of mastery in what it is that I do. But I’m inspired because my ideas are what are getting the attention and I’m not running out of them. I’m getting more all the time because I’m in the field. When I’m in the field building and working, not even working with architects, but that helps a lot. But I go to architects with ideas because of my failures as an amateur developer, I go and I say, I made this huge mistake here, but I thought about how to fix it while I was there. So, let’s design this beautifully and figure out how we’re going to do this and how we’re going to use this. So, I’m very surprised by the attention that I get and the recognition because I consider myself an amateur with a lot to learn. But at the same time, I have a lot of confidence in my ideas and that’s why I spend my life and my capital and my time developing them. So, I’m optimistic that my work will only get better as long as I continue to wake up with will and ideas. It’s hard sometimes in development. It’s really difficult to work. There’s like this ethereal world where there’s ideas and then there’s.

Eve: [00:41:18] The reality.

Philip: [00:41:19] The actual world. There’s reality where, like, you have electricians that just don’t want to be bothered with being told like where you want the switches and how you need the lights to line up.

Eve: [00:41:30] I had a fight with one of those just two days ago.

Philip: [00:41:34] Yeah. So, you know all this and it’s hard to reconcile the two worlds, you know what I mean?

Eve: [00:41:40] Yes.

Philip: [00:41:41] But I have an amazing team in Detroit, and I work with great architects, and they keep me inspired with their ideas, too. I’m far from the only person that brings ideas. I collaborate with people that have amazing world class ideas that helped me take my vision to a whole other level that I couldn’t have even imagined. And so, it isn’t just that I’m winning the awards, it’s that part of the sense in being a developer is that I’m almost like a maestro more than an instrument player is that I’ve picked the right instruments to play at the right time, and I’m working with such talented people that I guess awards were kind of inevitable.

Eve: [00:42:19] That’s great. So, can you tell us what the next project is?

Philip: [00:42:23] Yes, the next project is, I have about 50 units of housing designed in this neighborhood in Detroit right now. 24 of them are designed by Edwin Chan, and then 26 are designed by Ishtiaq Rafiiuddin. And his office is named UNDECORATED, and Edwin’s is called EC3. I would say that 60% don’t use the Quonset hut, but another 40%, we’re kind of playing with the Quonset hut, still trying to continue to master it. That’s Ish and I are now interested. Ish sees architecture as a riddle. He’s more of a scientist with a laboratory than an artist with a studio. And so, we have a great time trying to solve the riddle of the Quonset hut and solve the riddle of, like I always tell people when I sit down to work with them, like this collaboration is a truth-seeking process. And what is this truth-seeking process? We’re trying to arrive at what the best and truest project we could build in this place at this time actually is. And I do believe that there is an objectively best project that you can build based on where you’re building, who you’re building it for, and where you are at in your life and in your skills at that time. And there’s kind of a real exploration that goes through the project’s design process of us trying to figure out what should we really do here? And I have some amazing collaborators in that. So, sorry I got off track.

Eve: [00:43:42] Yeah, that’s fun.

Philip: [00:43:43] We have 50 units of housing designed, that I’m going to begin to work on this spring. I renovated nine buildings now that were kind of derelict and I’ve got two more buildings in the area to renovate. One is going to be taking place right now, When I finish this project in Texas, which I’ll be done any day now. And then Julie’s designed another park, kind of a mirror park to Core City Park, which was the last big project we did together on the other side of Grand River, which is the main street there. So, we’re going to bring that public space to the other side of the street. We’re going to activate the building, the commercial buildings right on it. And so, kind of just continued iterations of what we’ve been doing with new explorations and materials and trying to give people better quality space for a better price all the time. And that’s the effort.

Eve: [00:44:28] I am completely inspired, and I imagine our listeners are as well. And my next question is, is when can I come and visit?

Philip: [00:44:34] I would love to have you come visit, maybe after, now that our work is so landscape centric, you have to come in the spring when the trees are blooming, and you’ll really feel the magic of what we’ve done. Although I will say that the winter in Detroit is, it tests your conviction to the place. Whenever I have people that are thinking of moving to Detroit, maybe to work for me or otherwise, I tell them to come in February and if they like it then, then they’ll really like it at other times of the year.

Eve: [00:45:02] I’m in Pittsburgh, so I get that, I get that.

Philip: [00:45:04] But we’ll enjoy ourselves more, Eve. Yes, I love Pittsburgh. Pittsburgh is such a dramatic, beautiful city. It’s amazing.

Eve: [00:45:11] Yes, it is amazing. It’s also got its difficulties. But look, thank you so much for your time today. I thoroughly enjoyed this.

Philip: [00:45:18] Yes, we need to continue this in person in Detroit or in Pittsburgh, Eve. I could come visit you, too, right?

Eve: [00:45:23] Yes, absolutely. Thank you.

Philip: [00:45:25] Okay, phenomenal. Thank you so much for your interest. And I’m going to be diving into what you do and continued success with everything. And we’ll speak soon.

Eve: [00:45:47] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Philip Kafka

Cut My Timber.

In 2010, Greg Howes co-founded CutMyTimber, a prefab mass timber company based out of Portland, Oregon, and he remains a partner at the company. CutMyTimber works with architects, structural engineers, builders and other fabricators, to supply custom mass timber products for a variety of building types, ranging from small cabins to 500,000 sf commercial buildings.

CutMyTimber has created products now used in  hundreds of buildings in Europe, Canada and the U.S. They also fabricate green wooden buildings to the “passive house” and net zero energy standard and are currently developing their own  line of mass timber ‘tiny houses’ as well as a new building system for both multi-family and commercial buildings. The company collaborates with the College of the Rockies, in British Columbia, to teach modern building systems, digital manufacturing, Cadwork (a virtual design software), and green building techniques to students in their Timber Framing program.

Greg is also a co-founder and board member of the AEC (Architecture, Engineering, Construction) Hackathon for developers and designers to collaborate and work with new automation, AI, robotics, etc. to look for solutions to daily problems in the built environment. Greg and his team have organized over 48 events globally to date. An AEC Hackathon will take place in Hangzhou, China, this coming December, and events scheduled for 2023 in Austin, Copenhagen, Dublin, San Francisco and Stavanger. He also organized “Mass Timber March Madness 2021,” a series of webinars that spanned a month, featuring speakers from around the world discussing mass timber production, general contracting, architecture, government,  sustainable finance, and tech.

Read the podcast transcript here

Eve Picker: [00:00:07] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:46] My guest today is Greg Howes, co-founder of Cut My Timber. Cut My Timber is a fabricator of timber and steel components for the entire building industry. Their projects are spread as far as Alaska, Quebec and Australia, with production based in Portland, Oregon, and an office in Vancouver. They are able to make highly complex and efficient building systems available to both large and small companies, as well as to individual independent builders. Cut My timber uses state of the art computer software to optimize projects. This optimization results in less waste and offcuts, so they can build greener at lower cost. And now they are pushing their technology even further, building to passive house and net zero energy standards. Finally, let’s not forget the mass timber tiny homes they are developing. Listen in to hear more. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do, share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:13] Hi Greg, Thanks so much for joining me today.

Greg Howes: [00:03:16] Good morning.

Eve: [00:03:16] So, you’re really heavily involved in the mass timber industry. Can we just back up a little bit and you tell me what mass timber is for people who don’t know?

Greg: [00:03:29] Yeah, I think it’s not really come on the radar in the US, except over the last ten years. And then very slowly, it’s been a real niche market. Essentially, I think a different way to think about it as heavy timber as opposed to two by fours and two by sixes. It involves glulam beams and also now increasingly what’s called cross laminated timber or nail laminated timber. And a simple way to think of that as really thick plywood. But you’re essentially making it out of often two by sixes and you’re stacking them, a layer of them, and then you make another perpendicular layer and glue those together, then typically do a third or more layers. So, you have it almost like a very thick sandwich of lumber and it comes in very, very big panels. I mean, you know, even larger than like ten by 30 or 40 feet. And that’s a single panel. It’s very strong. It’s obviously very thick. And that is used in many ways for walls, typically, floors, roofs, ceilings with it in buildings and mass timber in my research was actually, I mean, cross laminated timber itself was invented almost a hundred years ago actually in Tacoma, Washington.

Greg: [00:04:48] But it really took off in Switzerland and Austria in the nineties and they’ve been doing a lot of buildings with it. Initially, it started as a way to use less strong wood, not even almost waste wood, but it was a way to take wood that wasn’t structurally as strong and essentially through engineering and making this bigger, gluing it together and using automation to manufacture it has more engineering strength. And what’s happening now is that has come into the US market where again, following the Switzerland, Germany and Austria in doing this, and it’s really booming. And when I think of its most attractive properties are, one that it quite literally it’s very difficult, it doesn’t burn. It does burn, but it’s like having a campfire and trying to start the campfire. Not with twigs, but big logs. The outer layer, when it does burn, it’s really hard.

Eve: [00:05:43] I do that all the time.

Greg: [00:05:45] Yeah.

Eve: [00:05:47] A lot of smoke. Goes out quickly.

Greg: [00:05:50] Well, it does. And then it creates that char layer on the outside. So, even if you have that big log and you throw it on the fire and you leave it on all night, even on a big raging fire, it generally won’t burn through because it will have that char layer on the outside. So, it has some really good properties for fire and again, it can be very, very strong. And another big advantage is you can construct the buildings very rapidly, because essentially you’re building digitally before you build on site and you’re essentially manufacturing and custom cutting all of the pieces. So, let’s say the cross laminated timber and all the beams and all the connectors, you’re essentially doing that work before the trucks go to the job site and assemble the building. And when you do that, well, it can be really, really efficient. I give it many examples where buildings are literally going up in a matter of days, and this includes buildings of many stories, including ones we’ve been involved in. You’re doing a five-story building. The foundation is in all of the concrete and then you come in with the trucks and essentially you have a crane, and everything gets assembled extremely rapidly. And then the building continues with all of the things that go inside the building afterward. I think it’s a big advantage.

Eve: [00:07:04] So, what’s the primary problem that we’re trying to solve with mass timber?

Greg: [00:07:08] Well, big not only with mass timber, but in construction in general. We don’t have enough buildings where we’re short of builders and also, we want to build more sustainably. I think there’s a growing interest internationally. I’m obviously in my niche market, so I view the world from the mass timber perspective, but we need a lot more buildings and we need to figure out how to build them more sustainably. As we know, concrete is responsible I think for 8% of the global carbon production, just through making concrete. And so, we need to use more environmentally friendly materials. We need to figure out how to build faster, smarter, less expensive. And we have to do that in a world where we don’t have enough to be blunt builders. And so, how are we going to do that? So, I think creating building systems is one of the best answers. And specifically with cross laminated timber, you can build much higher. There are buildings, I think the biggest one in the world now is in Milwaukee, The Ascent building.

Eve: [00:08:15] Yeah, I just read about that. Yeah, yeah.

Greg: [00:08:18] I think it’s 26 stories, and there are buildings much, much taller that will be made primarily from mass timber. So, there’s a boom in, let’s call it timber skyscrapers. But I think every building is actually a hybrid of materials, so it does have concrete in it and wood and metals, just to different ratios. The big problem I think we’re trying to solve also as well. How do we take Woods and make them stronger through engineering processes or through the factory? How do we do more with wood? And use it more efficiently. And what I think the mass timber boom has created is a way to build taller with wood. And because when you build this way, unlike conventional building, and I’ve been a builder for 25 years, you can go to Home Depot and order a lot of two by fours and then try to figure out how to build your house on the job site. With mass timber, that’s not really realistic, simply because the beams and the laminated timber products are too big. You can’t really cut them precisely on the job site. So, you have to do that work in a factory. Yeah.

Eve: [00:09:33] Yeah. So, basically, it’s like ordering a steel member or a cross line beam ahead of time and making sure it’s sized correctly. Like we’ve been actually doing that for years, right? But now it’s shifting to it sounds like many more elements in the building.

Greg: [00:09:49] Yeah, we’ve been doing it for years. If you drive by and you see a steel building, generally all of those parts or the majority of them are pre-cut and predrilled and the builders job is essentially to assemble those and figure out how to do that efficiently. And we’re applying the same thinking to mass timber specifically.

Eve: [00:10:09] How does this help forests? How are we going to save our forests if everyone’s going to be using timber buildings?

Greg: [00:10:15] I am not a forestry expert. There are many people who are. I defer to them. We do use wood. Here’s my question, the wood we do use, we should do more with it. We should use it efficiently and we should use lumber that comes from forests that are well managed. They’re sustainably managed. In the US, there are a lot of statistics, we’re actually adding to our supply of forestry. We’re having more forests that we can harvest. And the US is the biggest country in the world to build with wood. About 93% of Americans lived in a wood framed home. So, my answer to that is like, well, let’s use the resource that is sustainable and renewable. Let’s use specifically wood that is from a sustainably managed forest. If we use good building systems, we can reduce the amount of wasted wood, a lot. We can quite literally have only a couple percentage points of waste as opposed to conventional construction. That, as you know, creates a lot of the waste.

Eve: [00:11:23] A lot of waste, yeah.

Greg: [00:11:24] Well, I think we can build buildings that use wood, use it more efficiently. We can do more with that wood because we’re creating things like glulam beams and cross laminated timber, and we’re figuring out how to do that efficiently. And we can use the forest the same way we build better and more sustainably with them.

Eve: [00:11:46] What percentage of buildings being built today use mass timber, and how do you think that might change over the next five or ten years?

Greg: [00:11:54] Oh, of all the wood buildings in the US, the percentage that use mass timber is far less than 1%.

Eve: [00:12:01] Oh, it’s tiny.

Greg: [00:12:02] It is a tiny niche market, it is growing. There’s quite a few people in the industry that think the US will become the largest market in the world for mass timber buildings in a short number of years. The same way the US already is the world’s largest market for wood frame buildings in general. But because mass timber is very good for specific kinds of buildings, it’s highly likely that we’re going to become the biggest market of all.

Eve: [00:12:30] And how quickly is that going to happen, do you think?

Greg: [00:12:32] It’s not a demand problem. I think you read the same things I do. We’re short of houses at every price point in many parts of the country. So, we don’t have enough buildings. We have people who need them. It’s difficult to build. I think the growth of building systems where you’re essentially already, call it prefab, buildings is going to grow because it’s really one of the only solutions. We’re suddenly not going to have a lot more carpenters. And it’s the same reason I got into this. It’s like, how do I build more buildings? How do I deliver more complexity? And I think the answer is through building systems. Mass timber is booming, where our factories based in Oregon, Oregon produces the most softwood lumber of any state. There’s a lot of demand out here. Most buildings are, in fact, wooden buildings, and where mass timber is the best product for that type of building, there’s a lot of demand. It’s actually growing faster than the supply. And I would argue that the shortage is of factories that do create the kit of parts for mass timber buildings. There’s not enough of those, and it takes years to build them. And they’re expensive. They’re full of very expensive machines.

Eve: [00:13:53] The actual factory, yeah.

Greg: [00:13:56] There’s interest in mass timber and I think it’s growing, and there’s more interest than there are available supply, and the supply comes through those factories and there aren’t very many of them. That’s the constraint to its growth.

Eve: [00:14:10] So, are you seeing people investing in factories like that? Like are people beginning to understand that issue?

Greg: [00:14:19] Well, there are investors coming in. I’ll give an example. In Europe, Stora ENSO is a Swedish Finnish company. They keep building factories, they’re one of the biggest producers of cross laminated timber in the world. They continue to build more factories and demand exceeds supply in Europe as well. We are having some factories come into the Canadian and US market. One of the biggest suppliers in the world that’s new is a company called Sterling, based in Chicago. Their product just became certified as a cross laminated timber panel, and it’s certified in that it’s legal to use for buildings. So, they’re one of the world’s biggest producers now. So, we’re seeing more companies invest in Canada and in the US. I know them, it’s still a niche market. But the constraint, the bottleneck right now is, well, we’re going to have we have a lot of lumber, we’re going to have more mass timber product, but we need those factories that create those custom kit of parts. That’s what we’re short of. That’s the big bottleneck.

Eve: [00:15:26] That’s interesting. And other than that, is there any specific work that needs to be done to advance mass timber? I mean, you talked about the fire resistance of these really heavy pieces of engineered lumber, right?

Greg: [00:15:39] Correct.

Eve: [00:15:40] Does the building code recognize that? What needs to be done to advance the idea?

Greg: [00:15:45] A lot of work needs to be done on many fronts. And I want to clarify, I am not a forestry expert. I am not a fire expert. I’m not a structural engineer. There are lots of great organizations, people doing the research and also the building codes are being changed and updated to allow for these tall buildings in more municipalities. A big challenge we have in the US, as you know, building codes vary a lot.

Eve: [00:16:17] They do.

Greg: [00:16:18] Based on the municipalities. And not only do the building codes vary, the fear among the local building code officials, but also among the builders. You have a lot of builders, architects and structural engineers, and they hear about this mass timber thing, but they haven’t worked with it before. And there’s a lot of perceived risk in using a new product or a new process. And so, the good thing is there’s a lot of research being done for those interested in fire and structural engineering. I would point people often to research that’s being supported by the US Forest Service and others. It’s happening at a lot of universities.

Eve: [00:16:57] Yeah, it’s really interesting. So, it’s really early days. It’s pioneering efforts still. But you know, I’ve also heard people say that there’s a mass timber boom on the way. Is that, do you think that’s true? Is that going to take a while to ramp up? It sounds like there’s a number of issues to resolve first.

Greg: [00:17:13] Again, since I’m in the industry and have been for decades, my perspective is very biased. I think a lot more people are hearing about it if they’re paying attention at all to what’s happening in the world of construction and specifically with wood, I would say there’s definitely a boom happening, certainly across Europe, Australia, New Zealand and in Canada and the US. When I speak to people in the industry, it’s very much boom times. And the biggest conference that happens in the US is the Mass timber conference in Portland, Oregon. About every March a few thousand people attend and when we were there last year, everyone’s like talking about how it’s extreme boom times. There’s essentially too much work and not enough supply.

Eve: [00:17:59] Interesting. And who’s at the forefront of the mass timber movement in the US?

Greg: [00:18:03] Oh, that question is similar to asking who’s at the forefront of construction in the US. It needs to be much more nuanced.

Eve: [00:18:13] Well, nuance it for me. Okay.

Greg: [00:18:19] I think what it is, when working with mass timber and to be able to do it well literally requires some experience. Because it’s a different process. It’s not designing a building and here’s a ten-story building, should we build it out of concrete, steel or mass timber? And then say, well, who’s the lowest bidder? We’ll build it that way. That literally doesn’t work. The architects are learning how to work design for mass timber. How does it work well, and when is it the right product? The same goes for the structural engineers. If you haven’t worked with mass timber buildings before, there’s a tendency to over engineer. And over engineering makes buildings more expensive and take longer.

Greg: [00:19:04] And builders, as a builder myself, and I’ve been one for 25 years, if you haven’t worked with mass timber before, the question becomes, well, how do I price that out? What is it going to cost me? And too often in construction, your big cost are your materials and your labor. But if you do mass timber efficiently, much of the labor is moved into the factory for the mass timber frame because you’re figuring that out, you’re shipping it to the project. It’s hard to know how to price that if you’re a general contractor who’s never worked with mass timber or prefab before. There are quite a number of people in each of those categories, architects, structural engineers, builders, subcontractors. And these factories that produce the kit of parts. There’s a small number of each of those who have experience, but there’s nearly exponential growth on the total number of mass timber buildings. We’re lucky that we’re out in Oregon. Oregon produces so much wood. The state’s been very supportive of mass timber and the US West Coast, California, Oregon and Washington. That makes up about 50% of the total market for mass timber currently. Canada is doing a lot as well.

Eve: [00:20:16] That makes sense. You know, I can understand why it’s been ahead in places like Finland and Sweden, the very northern Europe, where it’s very long, cold winters. So, this manufacturing system would permit you to be building, you know, when you really can’t work outside, right?

Greg: [00:20:32] Correct.

Eve: [00:20:32] Or not very comfortably. So, is that true too? Do you think northern states are taking onto this idea faster than southern states in the US? Or don’t you see that differential?

Greg: [00:20:43] I’ll touch on the Nordic Scandinavian countries. Europe is so different than the US because let’s say this, over 80% of the buildings in Europe as a general rule of thumb, are made from concrete. That’s essentially the primary building material. The more you go north, let’s say, to Sweden, the more wood there is, the more it’s used in construction. And even in Sweden, I like to tell people prefab, single family housing is the norm. Prefab for your housing, that reached 50% market share in the 1950s. So, this whole idea of prefab and prefab using wood is quite common in Germany, Switzerland and Austria. But it’s still like 10% of the buildings in Scandinavia, it’s much more. How will that come into the US? I think it will, not only here on the West Coast, will it be very common. It will become more common in Georgia and Alabama. They have a lot of loblolly pine there and there’s a lot of it. Some would argue there’s almost too much of it. And so, there are some new factories coming in to the southeast of the United States that will begin to produce more and more mass timber, very cost effectively. So, that supply will ramp up a lot. But again, the bottleneck will still be those factories that take those commodity wood products and make them into buildings.

Eve: [00:22:06] So just changing gears a little bit, I’m just wondering a little bit about your background. How did you get involved in mass timber?

Greg: [00:22:13] I’ve been a builder of homes for most of my life. I’ve also worked in tech, and had startups, and worked in other countries and other industries for short periods of time. But the majority of my work has been in building. Over 20 years ago after I had a startup in Silicon Valley, and we had the whole crash in Silicon Valley, again around that was exactly when we started our company. So, our timing was bad. So, we had a company not related to housing, that shut down. And I said, look, I’m going to go back to building, but if I’m going to go back to construction, I want to do it efficiently. I want to figure out the best way to build. And so, I toured many factories in Canada, the US and Europe, and said, I want to build with wood on the West Coast. How do I do that efficiently? Because life is too short to become an architect, engineer, builder and everything else all at once. I need to use a system and I want to use the best system for building with wood. So, I did tour all of those factories and I recognize it’s a question of software and it’s a question of systems. And that’s when I encountered mass timber. And so, I specifically focused in on that and ask, well, who’s doing that really, really well? And 20 years ago in the US, almost no one was.

Greg: [00:23:44] So, the leaders were in Europe. So, then my research led to, well, what are we learning from the Europeans and how do we apply that here? And then I found the person who’s now my business partner, Stefan Schneider. He was a Swiss immigrant. He’s been here for 20 years, and his job for six years was setting up factories. He was the person you called when he wanted to enter the industry.

Eve: [00:24:07] Interesting.

Greg: [00:24:08] And I said, well, look, I really want to build with wood. You’re the person who’s the most knowledgeable in my experience. Why don’t you start your own factory? For the last six years, you’ve been setting up other people’s factories across Canada and the US. Why don’t you come to Oregon and start your own factory, which he did. So, we’ve been, since 2010, we’ve had a factory in Oregon and we’ve been fabricating mass timber components, kit of parts, on literally hundreds of buildings. And then I want to emphasize, in doing so, we are one of a team of companies that do mass timber buildings. So, we have a pretty big network of architects, engineers, subcontractors, assemblers, many other people. Right?

Eve: [00:24:54] Your company’s got a great name. Cut my timber. I really like that. So, what sort of projects have you built and what does it look like? Do architects come to you or clients or all of the above or engineers? Like, how do you work?

Greg: [00:25:08] All of the above. There is no single mass timber marketplace. Let’s use an example. Let’s say Eve Picker wanted to do either a ten-story mass timber building or you wanted to do ten single family homes using mass timber. And you ask yourself, well, where do I go to do this? Who does this? Who does it well? There isn’t a single place on the web where you can go to find that information. And many of the companies that actually do it are booked out for years, or at least for a very long time. So, they’re like, well, look, it’s great you’re interested in a project, but we don’t have capacity. That’s kind of a problem that may change because more stuff’s coming on the web. But again, there’s no central hub. What happens to us?

Greg: [00:25:51] We’ve been in the industry long enough that we get approached generally through company and people we already know, and they are architects, general contractors, general engineers, some real estate developers. They’re interested in mass timber, and they ask around and find out, well, who does this, who has experience doing this? And they come to us and sometimes we play a big role in the project and other times we’re a subcontractor supplying a small part. I’ll give you an example. There’s an extension of the Portland Airport in Portland, Oregon. That project is over $1,000,000,000. We are one of hundreds of companies supplying that project, so we do some wood fabrication. On other projects, we’ll do a single-family home, let’s say a timber frame or glulam home, we’re the major supplier. We do commercial buildings. We supplied big beams to the new Adidas headquarters in Portland, Oregon. That’s over 400,000 square feet. And then we’ll do event structures like the one in the background behind me.

Eve: [00:26:58] Which is amazing.

Greg: [00:26:59] If you’ve ever watched a TEDx talk, we created the stage for the TEDx talk. That’s 12,000 individual pieces of wood specifically, mostly glulam. And that was all modeled and then fabricated and shipped up as a kit of parts. And that’s a good example of another mass timber project.

Eve: [00:27:18] That’s a really big range. Yeah. So, how do everyday people get into this market. If I just wanted an affordable home, but I really care about the environment and I want to find someone to help me build a timber home, the entire home.

Greg: [00:27:36] There are multiple ways to go about that. There are some for a single-family home. And again, with mass timber, let’s use some examples of a… There’s the homes constructed with essentially two by fours, two by six is in small beams. On the heavy or mass timber side of things, there are homes that are, let’s say, using a lot of glulam beams. Um, there are timber frames. Those are solid wood not engineered wood, it’s just solid pieces of wood. And then there are many homes that are a hybrid. They may be heavy beams and CYP panels, structural insulated panels. So, there are a growing number of suppliers who try to be a one stop shop. That you’ll go to them, and you can buy the home you want from their kit of parts, from their catalogue, or you can have a custom home designed and manufactured and built for you. In this big country, there are many options.

Eve: [00:28:35] There are many, many options. Yeah.

Greg: [00:28:38] And the price points are very varied as well, too. Some companies will focus on accessory dwelling units for your backyard. Other companies are doing big custom homes in ski resorts. It’s very varied.

Eve: [00:28:51] Right. So, I’ve heard whispers from you that you also want to manufacture houses. You want to talk about that, as a way to really produce housing quickly?

Greg: [00:29:03] Yeah. Our company and others, we think a way we can scale and become more efficient and make the whole system better is essentially through developing a catalog of buildings and a building system. Right now, everything, as you said, is bespoke. We have one project like the one behind us and then the next one we’re doing, working on an airport, or we’re working on a large commercial building. That works, we’re very busy doing that, but it requires very different skill sets. And we work with billion-dollar construction companies and the next time we’re working with a general contractor with five employees. So, we have a good business doing that. But we think the way forward, we want to use some of our capacity and we’re developing a line of single-family homes. And so, we’ll sell those as a kit of parts to other builders and to, let’s call it the do-it-yourself crowd, that they do want a mass timber, or a heavy timber home and they want it as a kit of parts. So, we are developing that. We don’t have it ready yet, but we are developing that, and we are building a new factory. Our current one is in Portland, Oregon. We’re building another one that will open up in the first half of next year outside of Portland, and we want to use some of our capacity to do that, that catalog of single-family homes. And we will, and we’ll have that ready in late spring.

Eve: [00:30:39] It feels a little retro, like going back to build your own log cabin, right?

Greg: [00:30:43] It is, But the housing demand is so extreme. So, I think the solution to creating more housing is there are millions of solutions. There have to be many ways. Some people want a big house, some people want a small house. Some people want a net zero home. So, we want to be one of the many providers of solutions.

Eve: [00:31:02] Well, it’s really interesting. So, final question for you. Are there any other current trends in mass timber that we should keep an eye on, like new products emerging?

Greg: [00:31:11] Here’s what I think you should look, when you look at mass timber. Think of, there’s cross laminated timber that’s glued together. There’s also nail laminated timber where the layers are connected with nails and then there’s double laminated timber. So, go into the whole category, understand that there are many kinds of heavy or mass timber. An exciting trend, there’s growing interest in net zero building. There’s growing interest in Passive House. So, the combination of mass timber being fabricated in a factory and they’re addressing the market of green building and specifically net zero and sustainability, where those trends are converging. Is there a way to build in a factory smarter, greener, more sustainable homes for the people who want them? And will these building systems make them more affordable? That’s what excites us, and I think those are all growing trends.

Eve: [00:32:08] Yeah, I agree with you. They’re definitely growing. Well, this is really exciting. I hope you stay in touch and let us know when your factory opens. I want you to send me the catalog.

Greg: [00:32:18] I will. And here’s a real convergence that I think aligns with all the innovative work you’re doing in crowdfunding. I do want to see crowdfunding merge with mass timber and prefab. So, people who want a home or they want a community are finding one another through crowdfunding and they’re working with the factories that can actually produce the buildings either as an investment or for the home they want. That excites me as well.

Eve: [00:32:50] Yes. It would be a lovely world, wouldn’t it?

Greg: [00:32:54] Well, we’ve got to make it happen.

Greg: [00:32:56] Yeah. Well, thank you very much for joining me. And I do expect to get that catalogue when it’s ready.

Greg: [00:33:02] You will.

Eve: [00:33:02] I can’t wait to see it. It sounds like a lot of fun.

Greg: [00:33:05] In late spring next year. I’ll share that with you.

Eve: [00:33:09] Thank you.

Greg: [00:33:09] Thank you.

Eve: [00:33:17] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange, where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Greg Howes

Starter Home. Where are you?

“The economics of the housing market, and the local rules that shape it, have squeezed out entry-level homes.” writes Emily Badger for The New York Times. “The disappearance of such affordable homes is central to the American housing crisis. The nation has a deepening shortage of housing. But, more specifically, there isn’t enough of this housing: small, no-frills homes that would give a family new to the country or a young couple with student debt a foothold to build equity.”

Starter homes were once ubiquitous in the US. They included shotgun homes, bungalows, mill worker’s cottages, split-levels, two-bedroom tract homes, ramblers, brick rowhouses, duplexes and triple-deckers. Today those houses have all but vanished from new construction. According to CoreLogic, almost 70 percent of houses were 1,400 square feet or less in the 1940s. Now they number only about 8 percent.

Some of those smaller homes were still being built as recently as the 1990s but since then the rising costs of land, construction materials and government fees, along with single-family zoning, have led to larger homes being built. This despite the dwindling size of the typical American household over the last few decades. And those entry-level homes of the past are now selling for half a million dollars or more.

Builders and communities may need to rethink what a Starter Home might be. The easiest way to produce more entry-level housing on increasingly expensive land is to build more of it on less land. Maybe duplexes, rowhouses or condos? This makes sense for everyone. Builders will reap the same profit margins for entry-level housing – that they are smaller is offset by the fact that demand is high. For homeowners a small starter home provides an opportunity to gain a foothold in the housing market and a path to building wealth. 

Daniel Parolek, author of the book Missing Middle Housing says: “We need to shift our culture away from this dependency on single-family detached housing and thinking it’s the only solution.” Listen to my interview with Daniel here. … and read the original article here.

Mid Century Starter homes Hammond Indiana by Eric Allix Rogers, CC BY-NC-ND 2.0