Rethink Real Estate. For Good.

Development

Office conversion.

According to CBRE the overall U.S. office vacancy rate hit a 30-year-high of 18.2% in mid-2023  That doesn’t sound so bad, but reality is just not so even-handed.

Only 10% of all U.S. office buildings account for 80% of the occupancy losses since the onset of Covid. I visited Atlanta in early October, 2023. My host told me vacancy in downtown Atlanta was at 80%. He was just waiting for the lease to expire to abandon their space as well.  Soon 80% might climb to 81%.

These are not just numbers. You can see the impact on every downtown street. Way less foot traffic and shuttered retail continue the downward trend. 

The fix is housing, say many.  Convert those offices to homes and convert downtowns to neighborhoods. Co-housing, affordable housing and luxury apartments.  We need them all.  But that, my friends, is much easier said than done.

In 2018 there was 97 billion square feet of office space in the US. Let’s assume that increased by a modest amount to 100 billion square feet today.  In good times, office vacancies might be 10 – 12%, so let’s assume that we need to figure out how to repurpose 8%, or 8 billion square feet. 

Now let’s assume that we’ll need an average of $500 per square foot to convert the 8 billion square feet to residential.  

Every real estate developer knows that what goes in must come out.  In other words, if you are going to spend $500 per s.f. + the original cost of the building, then you have to support that expense with sufficient rent or sales income … or you will have a sinking ship.

But not every building sits in a market that can support costs like these. Hot markets and high-end luxury units might work.  But what about everyone else.  Don’t we want middle-income and affordable housing?

Conversion will only work in these instances with an influx of funds that might never be paid back. We call this the funding gap.  It would be reasonable to assume that the funding gap spread across ALL of this office space might be 25%. That’s  $4 trillion, or 15% of the GDP.  

The $800 billion has to come from somewhere.  Is it worth it?  It won’t ever be paid back, but buildings will be put back into use,  real estate taxes will be paid and downtowns will be saved.

Anyone got some change?

Magic in the details.

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

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

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

Read the podcast transcript here

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Eve: [00:08:51] Yeah. it’s bad.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Eve: [00:27:37] That’s interesting.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Lorenzo: [00:35:49] Absolutely.

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

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

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

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

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

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

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

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

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

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

Eve: [00:36:26] Okay.

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

Image courtesy of Lorenzo Perez

The Aux Evanston

There’s a real estate project underway in Evanston, Illinois, and it’s called The Aux. Led by a diverse team, it represents much more than just the revamping of a 16,500 square foot vacant factory building. It represents the aspirational hope of a community.

Not only does the community plan to fully renovate the building into a wellness hub, they plan to populate the space with local, black-owned businesses including an award-winning chef, a laundry cafe, private offices and co-working space to name a few. Space is also planned for pop-up businesses coupled with entrepreneurial training programs in order to provide accessible marketplace options for growing new businesses.

The instigator, a non-profit, assembled a co-developer team of local leaders. They’ve decided to take on an even bigger challenge than this renovation.  They are planning real community ownership. Every investor will become an owner with voting rights.  

If you’re interested in supporting real estate projects that make a difference, look no further than Small Change, where The Aux is raising funds through a crowdfunded community round. Anyone who is 18 years old or older can invest here.

This is not a solicitation of an offer to buy or sell any securities. All investing is risky and involves the risk of total loss as well as liquidity risk. Past returns do not guarantee future returns. If you are interested in investing, please visit Small Change to obtain the relevant offering documents.

Image courtesy of The Aux Evanston

Architectural entrepreneur.

Atif Z. Qadir, AIA is the Co-founder & Chief Impact Officer of Commonplace, a market network at the intersection of real estate and capital markets. He is a Registered Architect and LEED Accredited Professional turned entrepreneur with a particular interest in housing and impact. His strengths are observing, asking, analyzing, and using the power of narrative to uncover, share, teach, support, advocate and champion. He is a builder at heart, who is comfortable in different scales and settings – from small workforce housing units to multi-billion dollar redevelopments, from podcasts and panels to public service, from nonprofits and academia to private equity & venture capital backed companies, and from design to finance to public policy.

Atif is also a Founder & Partner at Amanat Properties and serves on the Planning Commission in the City of Hoboken, the Advisory Council of Provident Bank and on the Board of Trustees of The Hudson School. He previously worked at Extell Development and Turner Construction. He began his career at Rafael Viñoly Architects and Boston Housing Authority. He studied at MIT, where he received dual bachelor’s degrees in Architecture and in Urban Planning, and at Columbia Business School, where he received a MBA focusing in Finance.

His work has been covered by MIT Technology Review, Commercial Observer, Propmodo, and The Real Deal. He’s also a frequent speaker on the future of buildings and cities on popular industry podcasts and at conferences, including this past year at the Commercial Observer National Diversity & Inclusion Forum, Yale Alumni in Real Estate Association Conference, the Columbia Real Estate Symposium, NYC Open Data Week NYC and Austin Design Week.

Read the podcast transcript here

Eve Picker: [00:00:04] Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone.

Eve: [00:00:39] Atif Qadir is a serial entrepreneur, but that’s not where he started. Trained as an architect and urban planner. Atif decided pretty early on that what he wanted was to work his way up the ladder from servicing developers as an architect or builder to being one. So, he started developing his own small properties. And as his frustrations with finding project financing grew, so did his entrepreneurial ideas. He launched Commonplace, a fintech platform with a mind to create a marketplace for emerging developers and investors. Dating for development projects. In amongst all of this and in partnership with the Office of Michael Graves, Atif hosts a podcast show called American Building. He’s a high energy guy. You’ll enjoy listening in.

Eve: [00:01:40] Hey, Atif, it’s really good to have you on my show today.

Atif Qadir: [00:01:44] Thank you so much for having me on, Eve.

Eve: [00:01:46] Oh, yes. It’s going to be fun! So, you have a very multifaceted resume, lots of fingers in many pies, but your background is fundamentally architecture and planning. And then you went on to get an MBA at Columbia. What prompted you to transition from a registered architect to entrepreneur?

Atif: [00:02:08] Sure. So, the job that I had before going to business school was at Turner Construction, doing construction management for huge projects in the New York area. And for me, I had thought that going from architecture to construction was higher up in the food chain about actually be making decisions. When I realized that as a construction manager for a developer, I still wasn’t making any decisions. I was executing on decisions, but I was telling the architect what to do. So I sort of had moved up in the food chain but not quite to the the decision making power center yet. So, I knew there was a few more steps I had to go.

Eve: [00:02:45] And what was the top step you were attaining to acquire.

Atif: [00:02:51] At that point? I think it was being a developer, but then not to bury the lead, I realized that even being a developer is not the top of the food chain because now you’re answering to the investors, so, and the bank most importantly.

Eve: [00:03:02] Always the banks, always the banks, right? But anyway, you can definitely, as a developer, you have more control over more aspects of the project, right? Not just, and that’s a lot more fun, right?

Atif: [00:03:14] I think it’s a lot more fun. I would say the way that I describe being a developer in the context of, say, jobs or roles that are easily understood is I think a developer is a lot about being a project manager, an accountant, a janitor, a babysitter, a therapist, a divorce lawyer. Like all of those things is all the skill set of being a developer.

Eve: [00:03:38] Well, I would add artist to that.

Atif: [00:03:40] Oh, yeah, yeah! Artist, of course, yeah. Sometimes it’s easy to forget that one.

Eve: [00:03:45] You’ve got to use that side of your brain to really envision things, right? If you’re going to do a good job of it, right?

Atif: [00:03:51] Of course. Yeah. I think that there’s this great quote that I saw on LinkedIn. There’s a gentleman named Tyler Sumaila who does coaching for architects about how to think and how to present themselves the value that they bring. And I think there’s a lot of similarity between what we’ll say for architects and developers. Basically, it says teaching an architect is like teaching a baker how to bake every bread that’s ever been made before and how to make every bread that could potentially be made in the future and not teaching them how to run the bakery. That’s essentially what an architect does.

Eve: [00:04:25] Actually a pretty good analogy. Yeah.

Atif: [00:04:27] And feel developers are maybe like a shade similar to that too.

Eve: [00:04:30] That’s true, that’s true. So, I’m going to explore three of your companies. They were the only three I could find so far.

Atif: [00:04:38] I’ve tucked to a few more into the side.

Eve: [00:04:40] If there’s a few more just let me know, okay? But the first is Amanat Properties, which is perhaps the most traditional of your companies. That’s your development company, right? And what type of projects do you focus on and where are they?

Atif: [00:04:54] Sure. So, it’s in the Garden State, the great state of New Jersey, and the types of work that I do is historic redevelopment on a small scale. So, these are the projects that completed are a rental building in Hoboken where I live, and a condo building as well. And then I also have a workforce housing portfolio of 13 different assets that are, I purchased them as Class C and then brought them to Class B with renovation. And those are in Hudson and Middlesex County in New Jersey, which is the I-95 corridor.

Eve: [00:05:30] Oh, okay. And what drew you to this niche?

Atif: [00:05:33] So I would say from a few different perspectives. One is from the geography perspective, once I moved to New Jersey after business school, I realized there’s this whole amazing place called New Jersey and Hoboken and Jersey City in particular is the half price clean version of Brooklyn. And I was like, there’s so much value, so much value there. So that was I think the geographic reset was really important. I think number two was having spent a couple of years at Extell, I realized that at a very prominent real estate development firm like that and perhaps others, there’s a glass ceiling that you come to. And of course, it’s based on gender. But there’s another layer, of course, on that, which is if you’re not the family member of the founder of the company, there is a limit to how far you can go. And in this particular situation, Gary Barnett, the owner of Extell, very intelligent, very prolific developer. All of his daughters were already married so there was really no option for me to join the family at that point. So, I started considering the other options.

Eve: [00:06:43] Was that your way in, marrying a daughter?

Atif: [00:06:45] I would be so good as a house husband. I would kill it as a house husband. But unfortunately, that route wasn’t available. So that was the second thing kind of draw out. And I would say in particular, when it comes to fixing, I’ve realized over the course of my career that my nature is actually very much more a fixer and a bringer together and a resolver than my nature is as an executor as opposed to a creator. So, for me, I actually enjoy the idea of historic redevelopment significantly more than vacant land. So, I think all those reasons were the influences that brought me to do development the way I described it to you.

Eve: [00:07:28] And so what are the unique challenges that you faced?

Atif: [00:07:32] Yeah. So, I think the most often thing, when ask this question to other developers, it’s how much time do you have?

Eve: [00:07:39] Go, go for it.

Atif: [00:07:42] Go for it, do it. I would say, the three that I would say come to mind right away, number one would be access to capital. So, I think that for me, for my deals, I had probably done a hundred tours of Hoboken and Jersey City to raise $8 million from a small handful of investors. And then I talked to 35 banks to get the debt that I needed for my two development projects. And I still ended up having to use a mortgage broker.

Eve: [00:08:13] And why do you think that is? Why is it so hard?

Atif: [00:08:16] I think that fundamentally it boils down to this issue of a supply and demand mismatch. And I think at the smaller level, there is an array of potential investors, but none of them are institutional level and being able to actually find them and find them at the time that they have the money to give to you is really like the whack-a-mole challenge.

Eve: [00:08:39] It’s a huge challenge. So, you’re talking about what I call the $10 million check problem, right?

Atif: [00:08:44] 100%. I was just talking to Caleb Ratinetz, who’s a principal at Asland Capital Partners. So, a mid-size equity provider for residential inclusive of affordable housing. And he’s like, asked me like, why wouldn’t you invest in projects where you’re cutting checks of three, 4 or 5 million? He’s like, why? They’re bigger headache than me for like a $10 million check and even a $10 million check is a headache.

Eve: [00:09:09] Which is a really big problem because that means that emerging developers, disinvested neighborhoods, all those things that you and I probably care about get left behind because I think that gap is widening and widening. It’s not, it’s probably no longer $10 million and it’s probably creeping up to $15 million.

Atif: [00:09:27] I think it’s inflation is now like 30% a year.

Eve: [00:09:31] So that’s a huge problem. And has that slowed you down in the projects that you’ve been able to? Well, of course it has.

Atif: [00:09:41] Come to think of it like this, is that if it took me, so 2018 is when I acquired title to the two properties and both of them were stabilized by the spring of 2020. So, it was two full years to do two projects that were under $5 million each. I just like, imagine the amount that I could have done. I could have done eight townhouses or like eight small multifamily buildings in that time if I wasn’t running around doing the dog and pony show for investors and for lenders. So, I think the volume of stuff is definitely what ends up being affected.

Eve: [00:10:18] Okay. And then, like, what does your team look like? Who are you working with? Yeah.

Atif: [00:10:24] Yeah. So, for Amanat Properties, it’s a one man show. So basically, I JV with a company called Hanini Companies, Hanini Group sorry, and that’s in, based in Newark, New Jersey. And the construction is sometimes from them and sometimes from a third party. Architecture is from a third party. The development soup to nuts is my responsibility, including the expediting, because I tried an expediter and that’s not a good idea. So, I did not decide to go down that path. And then asset management, all that stuff is me. So that’s essentially the way that I’ve broken down Amanat Properties. I’ve had probably at least a dozen interns over the course of the years that I’ve done development, but it’s more because it’s fun and I like teaching as opposed to like actually having any benefit from it for me.

Eve: [00:11:12] So Covid must have slowed you down a bit.

Atif: [00:11:16] Covid messed a lot of stuff up. And I think in particular it was the idea of the left hand not knowing what the right hand was doing when it came to government decisions as to what work was considered essential versus not. And it was as crazy as the state of New Jersey declaring certain trades as essential, and the city of Hoboken declaring others as non-essential. And then even when they were declared essential, oh, City Hall was closed for a few weeks. So, we were never getting the inspections that we needed anyway. So, I think that that was the biggest frustration. The banks, I thought my banks, they were patient. My investors were incredibly patient. It was the municipal approvals and all of that stuff. That was the problem.

Eve: [00:12:02] And coming out of Covid, like we’ve heard a lot about the disarray of the commercial real estate industry and how is that impacting you? Do you have a next project lined up? Is it harder than it was? Even harder than it was?

Atif: [00:12:17] Yeah, I would say the biggest issue that I am foreseeing is this reality. So, I’m talking to a chief credit officer of a local community type bank in New Jersey and said, oh, so how are you doing with new commercial real estate loans? And he’s like new commercial real estate loans? What are you talking about? And I was like, no, like, seriously, aren’t you deploying capital? He’s like, only for Perm and only to people that we’ve done business with before that have a significant amount of cash at our bank. That’s it. And that type of a of a response. I heard maybe a slightly more liberal like version of that from a super regional bank that I do a lot of business with. And then from the Wall Street and the larger banks of the community development banks that are operating in this space. For them, it’s generally business as usual, but the issue often is that the checks under $10 million, like there’s no use of, like they can’t do them anyway. Before they wouldn’t do them and now, they wouldn’t do them. So, I think it’s the evaporation of options, which is the issue right now. And I think coming forward for the next two years, it’s not going to get any better.

Eve: [00:13:30] Not going to get better.

Atif: [00:13:31] Yeah, there’s about $1 trillion of commercial real estate debt coming due dominantly in office and retail and dominantly held by regional and community banks. So that the lender that would lend to people like us, no, they’re not, they have bigger issues now.

Eve: [00:13:49] Right, it’s pretty difficult times. That’s really depressing Atif, but it’s really true and I think the bank collapse earlier this year is also going to make lending even harder because now experience will count even more. So, it makes it very difficult to start a career in real estate, you know.

Atif: [00:14:08] I feel like experience is often the catch-all term to incorporate many shades and variations of biases together, because the quintessential problem many of our colleagues, when we were together at the Small Scale Developer Forum that Jim Heid runs in Philadelphia, the last one, is that is the chicken and the egg problem. How is it possible to have a diverse group of developers in this country when your requirement is to have done 50 projects already? So, unless you were born to come out of the womb with 50 projects done, how would one even do that?

Eve: [00:14:42] Yes, it’s a very big problem. Very big problem. Let’s move on to the second company, which is now called Commonplace, which I think probably, I’m guessing, addresses some of these issues. So, what does Commonplace do? What is Commonplace?

Atif: [00:14:56] Sure. So, Commonplace is not a real estate development company or an investment company like Amanat Properties. It’s a technology company and it’s one that’s considered a startup. So, we have venture capital financing. And what our mission is, is to help impact developers be able to access capital more easily in order to do the good work that they’re doing. So, we’re a team of six, based in New York, and our focus is on making double opt-in qualified introductions between impact developers as well as capital providers. That’s our first product. And from there we’re building out a suite of other activities and initiatives and products that we hope to release in the next couple of months.

Eve: [00:15:45] Interesting. How far along are you with the product? How many introductions have you made?

Atif: [00:15:50] So we’re about 150 a week is where we’re at right now. So, we’re starting to now do the, like the assessments from the past quarter of how many went to first conversations, how many went to second conversations, and how many went to term sheets. And I think over the next quarter, we’ll be able to reassess that as well. But essentially what we’re, we’re approaching the problem from the perspective that the issue isn’t necessarily technology, and the technology is the accelerant of something like this. But the issue often is simply the relationship not existing. So, from that perspective, we’re taking actually, frankly, a low tech approach to the introductions and then implementing technology in different layers to make that accelerated. And we’re actually seeing this as the test case for us to be able to deploy something that is more robust and more technology native, which we’re calling Capital Applications. And that’s a product that we’re excited to launch with six capital providers in the next couple of months.

Eve: [00:16:53] Oh, interesting. So, when did you start Commonplace?

Atif: [00:16:57] So commonplace. We started in its original iteration in 2020 as REDIST, which was a software as a service company focused on data related economic development incentives and then Commonplace, we relaunched as Commonplace in May of this year.

Eve: [00:17:15] What prompted you to reimagine it?

Atif: [00:17:18] So I mean, I thought when I was banging my head against the wall and capitalizing my deals that, gosh, it must be economic development incentives that’s going to solve, they’re going to solve all my problems. And I was like, these are really hard to figure out and find and learn and get. So why don’t I put all the information together and I’ll make my life a lot easier and probably that of developers. So, we did that. We gathered all the data related to 6000 different incentives in 13 states. We curated all the content and wrote that up in a way for developers to understand, and we piloted that with 250 companies. We had paying customers. And often what we heard from our customers and from the folks that piloted our product was this is great, could you help us find debt for a new construction multifamily project in Detroit? Because we don’t know any community banks in Detroit that want to fund new construction right now. Or, like another classic one that we heard was, oh, I have all the capital from my 80 different sources for a repositioning of a historic hotel in a majority minority neighborhood in Chicago, but we just need another million and a half of equity and we don’t have any more friends and family to go to for $10,000 checks. Could you help us find some more equity? My favorite one was a developer in New Jersey who had said, oh yeah, we’d love to get debt help. We need help with debt besides the incentives. And he’s like, you’re a licensed architect, would you, could you also design our whole development for us too?

Eve: [00:18:54] So are you adding in design services?

Atif: [00:18:57] Oh, no, I’m not going back to that one. And also, it’s been so long since I’ve gotten CAD, but generally the three people that I’m describing all were of a similar style person, which was a midsize impact developer that was developing in a majority minority area. And we realized like the similarities again and again, and that’s what made us take a pause, spend a couple months, do a bunch of research interviews, go through our notes again and figure out how we want to address the same problem in a different way.

Eve: [00:19:27] Really interesting. Well, that brings me to the final one of the three I know about, and that’s called, the podcast, American Building Podcast, which you host. Tell us about that and what motivated you to launch it.

Atif: [00:19:41] Sure. This was motivated by the magic of LinkedIn. So, the new CEO of Michael Graves Architecture and Design, His name is Joe Furey. He has the three letters after his name it’ not AIA, it’s CPA. And he is probably the most fascinating head of a design firm that I’ve seen because he’s no nonsense. It’s like, let’s get to the point. And I think particularly for firms that are going through transitions where their founders have passed, particularly when it’s a very iconic founder, it is, not in every case, but I think it’s a challenge I’ve seen in several different places to transfer the business development responsibilities to the new generation. So, long story short, Joe was following a bunch of my LinkedIn posts that I did when I left Extell because, I mean, given I wasn’t developing because I couldn’t find the equity and the debt fast enough.

Eve: [00:20:35] The capital, yeah.

Atif: [00:20:36] So I had to fill the rest of my time doing something. So, I was making LinkedIn posts and Joe saw this and he was like, hey, you seem like a really interesting guy. Would you want to come and just grab coffee? I said, funny enough, I’m actually at my parents’ place, which is like five miles away from your office. Let’s meet tomorrow morning for coffee. So I met him and then I invited him to a panel that I was hosting at the Harvard Real Estate Symposium on Entrepreneurship and Intrapreneurship within our industry and we just started, on the way up, we were just like talking a lot about how does he, as a firm, reach out to a new generation of potential customers, who are now in their 30s and 40s leading development firms all across the country? And we said, you know, both of us listen to podcasts. Let’s just do it, let’s figure it out. So, we basically came up with our plan, what we wanted to do. We dug into our virtual Rolodexes of friends in the city, and the thesis that we wanted to bring was, let’s talk to a new generation of developers and the ones that you don’t see on the cover of the Real Deal, the ones that you don’t see on every single industry panel, though, and you know exactly what I’m talking about, all of those people. So that’s what we started with. And I think we really kind of struck a chord with people. We got some really great guests on. So, Vishaan Chakrabarti from Practice for PAU, great, great architecture design studio. Marion Gilmartin, Melissa Birch. A whole set of people that are really amazing. So our 75th episode we recorded yesterday with Keith Rand from Mill Creek Residential. So yeah, that’s basically the path.

Eve: [00:22:23] And what have they told you? What have you discovered in these interviews?

Atif: [00:22:27] So in each of these interviews we wanted to get to the heart of it is, the why of what they actually were solving for it. What was it that drove them to develop this building or design this building? And what is it that a listener can take away from them to understand what is the future of our industry going to look like? Generally speaking, that was season one and two and then three focused much more tightly on housing in the greater New York City area. And we included, started including a journalistic style monologue in the beginning that talked about a certain issue in great depth. So one of the ones that I thought was really fascinating was where did the modern system of home mortgages come from? Like, how did that even start? So, we kind of go all the way back to FDR, the 1940s, and describe that process on the way back. So that’s what made this season a little bit more unique than the other ones.

Eve: [00:23:26] Interesting. But what have you learned about developers, this next generation?

Atif: [00:23:30] Do you know? What I would say is this, as that as easy as it is to stereotype our whole industry as being in it for the money, which is usually what people yell at me when, I’m a city planning commissioner in Hoboken as well, so that’s usually what people in the audience will yell. They just yell indiscriminately aloud from the audience. And a couple times I’ve also done like the so tell who are these developers you’re talking about? But I think what, so what I’ve learned is that there are many people that aren’t that and there’s many people that care about the place that they develop. And there’s many people that care about the people that are going to live in, work in or enjoy the buildings that they’re creating. And that’s something that is deeply inspiring because I think the other description or stereotype of our industry tends to dominate the public psyche.

Eve: [00:24:22] I think that’s true. And then what about architects, this next generation of architects? How is the industry changing? Is it changing? Because, you know, architects are very undervalued on the whole. And I’m, I’ve puzzled for years over why that isn’t more actively addressed because I think they bring enormous value. But I’m not the norm in that thinking, right?

Atif: [00:24:51] Yeah, I think that it probably comes to something that my therapist would say, which is about boundaries. And I think that architects are terrible at creating boundaries in terms of what they will do versus what they won’t do and how they value themselves versus what they will give away for free with the hope of being able to get something else. And I think perhaps an old school way of thinking about this is what H.H. Richardson said, which is that he’ll design anything from a cathedral to a chicken coop. And I think the new-age version of this is where an architect’s values overlay with what they will actually do. So, for example, Vishaan Chakrabarti, the architect that I mentioned, makes it explicit in the manifesto for his business, he will not work for authoritarian regimes. He will not design a prison. So, and he is not interested in doing stuff related to law enforcement. So, I think that all of those areas and declarations are the beginnings of this boundaries of saying that this is me, this is what I do, I am valuable. And if you choose to value me, this is the price associated with it. And if not, somebody else will. That’s the tough one.

Eve: [00:26:08] I really admire that. But I’m thinking of value in a much broader sense. Like, I walk around my neighborhood or where I have my little cottage and I’m just appalled when I see the buildings that are going up in a place that has such distinct character. And the buildings are thrown up by builders who have never been trained to recognize that character or replicate it or build anything that fits into it. And architects are not even a thought. They’re just not a part of the conversation. And so, we end up with really wonderful places being just ruined over time by either an unwillingness to think about what it means to put up a building and the space it creates. And I am, I’m appalled when I talk to people about this who don’t know what architects do saying, but they’re so expensive why would I why would I need one? The builder can do that for me. I’m just puzzled at why the architecture industry hasn’t been able to find a way to talk about its value broadly.

Atif: [00:27:20] Yeah, I think that there is this element of, um…

Eve: [00:27:25] Elitism.

Atif: [00:27:26] Elitism. I think this idea that you poor people don’t deserve nice things and architects don’t work for poor people. And I think the, what I think about is also the minimization of our trade by the increasing presence of legality and fear of lawsuits throughout every aspect of our industry. So, I think the AIA has done a wonderful thing by codifying contracts that our industry uses as our norm for both owners, architects and contractors.

Eve: [00:27:57] And builders.

Atif: [00:27:58] And builders. Yeah. And I’ve read those contracts as a principle. Like I’ve needed to read all of those contracts when I’m hiring a contractor, I’m like, gosh, architects, we’ve really backed ourselves into a corner. And when I think about, let’s go all the way back to one of the greatest, still one of the greatest buildings of all time is the Taj Mahal. So, the head architect, his name is, was, Sir Ustad Ahmad Lahori. So funny side story, he’s essentially a Pakistani that designed in India, which is a whole other side story. But the amazing thing is that, um, as an architect, it wasn’t like he just drew the drawings and was like, okay, you do it and if you have a problem, I’ll probably sue you. Or if you want to sue me, let’s go to court. His whole responsibility was everything, including the supply chain. And what I found so amazing is he was responsible for the team of people that were getting all the precious stones and all the precious materials like Jade from China, Tourmaline from the Middle East, all of these different things. And they all spoke all these different languages. And he was responsible for all of that. And I think that owning of the whole process is what allows architects to truly be maximized in their value in the way that you’re describing.

Eve: [00:29:11] Yes, but I still puzzle over how that’s ever going to be brought into, you know, everyday lives because streets, neighborhoods, blocks are ruined by poor design, and then we all get to enjoy that.

Atif: [00:29:28] I mean, there’s some avenues. Let’s think, so, I mean, it’s not like us having to turn the clock all the way back to the, I guess that would be the 1400s when the Taj was built. Maybe I’m off by a century two, something like that. But I mean the idea is citizen commission. So, I think participatory democracy in some ways is a very good thing. And I think having planning commissions and zoning commissions and historic commissions can have positive benefit there. I think perhaps another one that’s not a fully baked idea, but the idea of perhaps making real estate more accessible from an investment perspective, I think there’s a really beautiful thought process around that. And then I would say…

Eve: [00:30:07] You mean like we’re doing at Small Change?

Atif: [00:30:09] Exactly! Yes.

Eve: [00:30:11] Oh, yeah. That’s how you build wealth, right?

Atif: [00:30:14] Completely, and I think that there should be, the way that the SEC thinks about and regulates funds at a larger level, I think being able to think through and structure and support the great work that Small Change is doing and people that are looking to invest at the smaller scale sounds like that’s something that’s worth effort from a legislation perspective and maybe even a funding perspective rather than huge amounts of money thrown at infrastructure to the tune of billions of dollars through the last two major bills and the Biden administration.

Eve: [00:30:44] So what was your favorite interview ever, and why?

Atif: [00:30:50] Okay, so my favorite one ever, and I love all my babies, all my babies are wonderful, all my episodes. But my one that I think of in particular is the episode I did with Louis Schump, who’s a creative director at Gensler, on the subject of the West Side Pavilion, which is Google’s new headquarters in Los Angeles. And it’s essentially, it’s a conversion of the mall that was featured in Clueless, the movie, into a mixed-use office complex. And as part of that, we talked a lot about the goals of Google and the, I guess you could say, the largesse of a large company like that to be able to promote good urbanism at a large scale. And then one area that we explored is just reeling it back. How did America get so many malls to begin with? So, both of us are amateur historians.

Eve: [00:31:45] And what are we going to do with them now? Right?

Atif: [00:31:49] I have an aunt, a great aunt, who is from Toronto that I’ll see in a couple of weeks. And every time I see her, she has the most creative ideas of what to do with, she’s not even in real estate industry, but she’s the most creative ideas and the one that she said nearly like a decade ago, far before the pandemic, she was like, hey Atif, basically what I do every day is I drive to the mall and all the other Indian aunties, we just walk around the mall together. And then sometimes we have to go to other places to pick up our grandkids and we go to other places to drop them off and then we come back. Wouldn’t it be great if there was like the mall just became my house and then the day care was there too, and then my son and daughter just lived nearby. Like, wouldn’t it be cool? And I’m like, oh my God, you hit on it right there, that’s it. That is what, that’s what malls should be. Multi-generational housing.

Eve: [00:32:37] If you want to live in that environment, that is. Because I’m not sure I could do it. Okay. So, one final question. Unless you have another company you want to explain to me?

Atif: [00:32:52] Any other companies, I would say no, I’m good for now. We’ll stay a three.

Eve: [00:32:56] You’re good for now, okay. So, one more question and that’s what’s next for you?

Atif: [00:33:02] Good question. So, we’re, for Commonplace, we’re coming up to a fundraising milestone. So, we’re excited about that. And we hope that that will allow us to expand our product offerings, our vision, our scale and bring on some more great talent to help us do that. And I think that there’s a couple other ideas I have in the works in my head. One of them is the investment portfolio that I have and scaling that perhaps to a much larger scale, allowing folks to be able to invest in workforce and affordable housing more easily on an individual level. That’s probably something a bit separate. And then the one that I love, which I feel like this is this could be the final one that I ever do, I call it, lovingly, it’s the wedding planner for high end home renovations. So, I literally, every month or so at least some family members, some neighbor, some friend from college is like, oh, P.S. I just bought a $5 million brownstone in Brooklyn. Can you just do, like the whole renovation? Because I know you did such a good job on it with your parents’ house. And I’m like, there has to be a business here. And that would be so much fun to do.

Eve: [00:34:17] So, you’re not even sure what’s next for you?

Atif: [00:34:22] One of all of them is the potential next one, so we’ll figure it out.

Eve: [00:34:26] Well, it’s been a pleasure talking to you. You’re such a high energy person. I can’t wait to see what you do next.

Atif: [00:34:31] Thank you so much for the opportunity, Eve. I love your podcast. I love everything that you’re doing and I’m so looking forward to seeing you again at our next Small Scale Developer Forum in just a couple of months.

Eve: [00:34:43] Can’t wait, in the beautiful Savannah, right? Okay.

Eve: [00:34:53] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. Please support this podcast and all the great work my guests do by sharing it with others, posting about it on social media, or leaving a rating and a review. To catch all the latest from me, you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing, head on over to smallchange.co where I spend most of my time. A special thanks to David Allardice for his excellent editing of this podcast and original music. And a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Atif Qadir

The King Henry

When developers recognize the value of place, exciting projects emerge. One such project is The King Henry in Alexandria, Virginia. 

Historic Alexandria in Virginia is just five miles south of Washington DC, a water taxi ride away from the National Harbor and a bike ride from Mount Vernon. The city is nationally recognized for its rich history and beautifully preserved 18th- and 19th-century architecture. Voted one of Travel + Leisure’s best places to travel in 2021 and a Condé Nast Traveler top five best small city in the US, 2022, Alexandria has a cosmopolitan feel and a walkable lifestyle. On Old Town Alexandria’s King Street mile you’ll find more than 200 independent restaurants and boutiques, intimate historic museums and new happenings at the waterfront.

Joel Miller realized  that surface parking was not the highest and best for the surface parking lots on King Street, and set about designing a more appropriate plan.  Four distinct buildings are planned to be built on two sites, replacing the surface parking with a brand new  parking deck and automated parking system, and adding 52 residential units to the dense and desirable neighborhood.

Joel’s taking it one step further.  He’s opened up a community raise on Small Change, inviting anyone who is at least 18 years old to invest. You can view the listing here. It’s open for investment right now.

This is not a solicitation of an offer to buy or sell any securities. All investing is risky and involves the risk of total loss as well as liquidity risk. Past returns do not guarantee future returns. If you are interested in investing, please visit Small Change to obtain the relevant offering documents.

Image courtesy of The King Henry