Rethink Real Estate. For Good.

Impact

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

Tracking returns.

Sometimes you have to look back to see how far you have come.

We did just that last week.

With the help of our Small Change tech team, we created a brand new landing page on our real estate crowdfunding platform called Tracking Returns. You’ll find past projects posted there, organized by performance. We plan to update these quarterly.

In a nutshell, 9 of the projects listed have gone full cycle, meaning that all initial equity invested –along with any profit – has been distributed to investors. 4 of the projects have started to make quarterly or annual disbursements, and a bunch more are poised to start soon.  

Most notably, 56% of past projects listed are led by women and/or minority teams. Now that’s making change!

Shift capital.

Brian Murray is the co-founder of Shift Capital, an impact urban real estate group driving mission-oriented capital, collaborative resources and inclusive strategies into underserved communities. Through his work at Shift, Brian is focused on finding better solutions at the intersection of society’s most difficult urban challenges – intergenerational poverty, urban revitalization, access to opportunity, and community displacement. Brian led the capital raise for SHIFT’s Neighborhood Fund and manages the deployment of over $330 million of investments throughout SHIFT’s portfolio in Philadelphia, Newark NJ, Washington DC, and Upstate New York.

Brian spent the majority of his career outside of the real estate space, starting his career at PricewaterhouseCoopers as an auditor. He moved into the technology space where he helped found two start-ups, before joining the Peace Corps and heading back to get his MBA. While in graduate school, Brian observed the growing interest in impact investing – investing with a purpose. It was at this time he made his first real estate investment and discovered the importance of socially-minded development. He hasn’t looked back since.

Brian is a graduate of The College of New Jersey and received his MBA from Yale School of Management. He is the co-founder of Arete Youth Foundation, focused on youth development in the Roma communities of Bulgaria. He has two daughters that keep him young at heart and on his toes.

Read the podcast transcript here

Eve Picker: [00:00:08] 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: [00:00:43] This is my second podcast interview with Bryan Murray. But time has passed, and his business and expertise have grown. Brian came to real estate as a non real estate guy. Always interested in impact, he wanted to find a way to address poverty and real estate presented a tangible path. And so, he launched Shift Capital, an impact urban real estate group focused on mission oriented real estate strategies in underserved communities. And so, he launched Shift Capital and Impact Urban Real Estate group focused on mission oriented real estate strategies in underserved communities. Simply put at Shift, Brian works on uncovering better solutions to society’s most difficult urban challenges – intergenerational poverty, urban revitalization, and access to opportunity and community displacement. There’s a lot to unpack here, so take a few minutes and listen in.

Eve: [00:01:56] Hey, Brian, I’m really happy to have you join me today.

Brian Murray: [00:01:59] I’m super excited to be here.

Eve: [00:02:01] We are real estate developers who do things differently. That’s what your website announces really boldly. So, tell me what that means.

Brian: [00:02:10] Sure. For us, what that means is that we are focused on building equitable neighborhoods, and we are focused in doing it in untraditional ways to the typical real estate development cycle. We focus on a hyperlocal approach. We focus on scale through that hyperlocal approach, and we focus on doing it holistically and really trying to dig deeper with the community beyond just participation, but equity building as well.

Eve: [00:02:43] We’re going to unpack that a little bit later. Right? So…

Brian: [00:02:45] That’s alright.

Eve: [00:02:46] And like, how did Shift happen? What are its origins and how did it come about?

Brian: [00:02:52] Yeah. By the way, in preparing to talk to you again, I went back and I looked through all your old podcasts, and I just want to say that the amazing people that you have interviewed over the years, I’m probably going to now make your podcast a requirement for anybody that we hire just so many good friends and great people and a lot of people that I admire that I haven’t met before.

Eve: [00:03:18] It’s been an enormous learning experience for me. I’ve enjoyed, like, I’ve really enjoyed talking to people and figuring out what’s going on.

Brian: [00:03:27] Yeah, I think you’ve really unpacked so many aspects of this, quote, non-traditional part of the real estate cycle. But I think people who are focused on all aspects of it, which is amazing. Sorry. What was your question? Your question was Shift origins. Yeah.

Eve: [00:03:44] How did Shift happen?

Brian: [00:03:46] Yeah. So, I’m not a traditional real estate person. I didn’t come up through the institutional real estate world and then come into development. I came into development with a goal to make an impact on poverty. My background was a mix of entrepreneurship, nonprofit work, Peace Corps, business school, etcetera. And I knew I wanted to combine all those things in a way that was creating effective impact. And what I mean by effective impact was I was struggling with the impact that the nonprofit sector was making. I was struggling with the idea of entrepreneurially just chasing money. And I knew I didn’t have the personality for the government sector and policy. Although I’m a, you know, a huge believer that that policy really drives a lot of this change. And so, that ended up being a, you know, an investment during business school and a small real estate deal in Philadelphia. And then realizing and really connecting meet with me personally that impact of real estate in people’s lives. The physicality of it, how these things get financed, who’s benefiting from this. And you know, as you’ve talked about and we share, you know, real estate surrounds our lives. We live in it. We breathe in it, we work in it, we walk by it. And in low-income communities and communities that have been left out of investment, I think it’s even more profoundly negatively impacting. And that’s what I wanted to build. I wanted to build a company that was really digging deep into that challenge and thinking about how is what we’re doing connecting with making people’s lives better.

Eve: [00:05:38] So how do you approach that with each building project? What’s the process like from beginning to end? Can you talk about that?

Brian: [00:05:46] Well, we’ve evolved. We’ve been doing this for about 12 years. And in the beginning, I will share that, you know, I don’t think we really had this worked out. I think we made a lot of mistakes, and we were making investments without an overarching strategy, and we were making construction mistakes and other things that were challenging. But ultimately, we have evolved into really two core philosophies. One, is that we believe in investing in place. So, place-based strategies, concentrating our investments. So, it’s really not just about investing in one building. It’s about investing in a group of buildings so that we are maximizing that impact. That has shown up in our shift neighborhood fund, in our work in Philadelphia, where we’ve really gone deep in, now, three neighborhoods in Philadelphia. The other way that it has evolved for us is realizing that our work can connect the dots between other challenges in the real estate sector. So, specifically going through our own journey, and I’m a, you know, a white male, which, and carry a lot of privilege, but I found getting into the real estate sector to be the most harrowing and crazy and unbelievably risky thing that I’ve done. And I’ve been an entrepreneur my whole life,

Eve: [00:07:10] Really?

Brian: [00:07:12] It’s set up to keep people out, and we combine that with, you know, redlining and access to information and bank practices that are still happening today, to insurance practices that are now hitting our industry again in low-income communities. And there’s no wonder that there are not a lot of women-led black and brown led developers. And working in the neighborhoods that we’re working in, we knew we wanted to do something, so we created a platform and a program to focus on that as well. So, we do our own work and we also try to uplift others through partnership as well.

Eve: [00:07:49] Yeah, access to capital, really that’s what it’s all about, right?

Brian: [00:07:53] Access to capital. But not just capital. Right? So, for those of us who work in places where the numbers and the math don’t work in a traditional sense, we also have to be experts at tax credits and subsidy sources. And with all of those additional items in the capital stack, the skill set needed is exponentially more than someone who’s just doing a simple office product or what have you.

Eve: [00:08:24] Oh yeah, and I think appraisals are absolutely key as well. Early on in my career, I would have appraisers calling me just bewildered about what I was doing and not sure what comps to look at. And that’s another skill set you have to develop, I think. Yeah.

Brian: [00:08:43] It’s a combination of factors. But you know, and one of them is a spiral  effect of, you know, of groupthink that happens. Right? I think the statistic is 95% of appraisers are white, male, and in all likelihood not from the communities that they’re appraising. And as Andre Perry and many others have pointed out, you know, just a devaluation of urban black and brown neighborhoods as a result. And so, you combine that with institutional and, you know, capital staying out of those neighborhoods, afraid of being termed gentrifiers or afraid of the perception of safety. All these things combine to make real estate in the places we want to invest in much harder. And I only bring that up to say that it’s not just about access to capital. It is truly challenging on all levels. And for someone who is, wants to do good and, you know, and maybe does have some of the skill set, the team that you need to hire to be able to do a larger project, it’s an awful lot of money just to get a project off the ground. You know, you can’t make any mistakes because the numbers and the math are very difficult. And then you’re you’re not going to see a dollar yourself for maybe three, 4 or 5 years and then…

Eve: [00:10:06] Or longer.

Brian: [00:10:07] Or longer. What we have experienced ourselves and, you know, I have been really pushing against this is, whether it’s banks or investors and even mission investors believing that we need to continue to stick things in the same box. So, what I mean by that is that when a project is, we’re two weeks away from closing, we’ve been working on a project for two and a half years and interest rates change. Well, you know, everybody comes back to the developer and says, okay, well, now you need to contribute your developer fee, or you need to defer your developer fee, or you need to get rid of your, the only dollars you’re ever going to have to put food on your plate. Guess what? You can’t have that either. And at that point, when someone’s been working on something for two and a half years, what are they supposed to say? They’re going to get it done. And they give up the only way that they can provide for their families. That’s just not fair.

Eve: [00:11:04] Well, I wouldn’t agree, but still. Yeah, it’s really a very difficult business, I have to say. I’m a developer and I have a portfolio thanks to my husband. I don’t know, because he supported us through all those years of waiting for something, now we have a very nice retirement fund, so it’s payback time. But I just don’t know who someone on their own can do this. They have to be getting an income. You have to be. And the problem with it is, Brian, for some reason, developers are painted as evil, money-grubbing people across the board.

Brian: [00:11:45] Yeah.

Eve: [00:11:46] Maybe some of them are, but a lot of them aren’t. So how did that happen? When you talk, you talk about, you know, giving up fees and just scraping by.

Brian: [00:11:56] When we talk about, it’s funny because I bring this full circle to the Small Change platform. And one of the incredible benefits of participating and being a part of, and we have now our second project on the platform, but one of the massive benefits is not that we’re necessarily going to get thousands of people in the community to invest, is that we are going to expose thousands of people to the community, to what happens behind the curtain. And, you know, I do believe that the evil developer has been used as a tool that has negatively impacted a lot of the neighborhoods that need good developers and good development and good investment, because it has filtered down from watching maybe 30 years of center cities getting gobbled up for dollars, and then the truly evil developers of the world who have exploited opportunities when in reality most developers you know, are not and are working within a system and just trying to put together things. This is not a business for someone to run in and make a ton of money quickly, you know, and blood, sweat, tears, you know, in 30 years, yeah, I think, you know, it’s a great business. But that’s a lot, it’s a misconception, both actually of young developers and a lot of our work is helping to demystify and make sure that people understand the risk.

Eve: [00:13:28] Yeah.

Brian: [00:13:28] Because a lot of people get into the business without understanding that they might be putting their home up. But I do think that that translates down into communities. And this you know, I think the gentrification conversation is in that, I think the fear of change is in that, but using the Small Change platform to educate people like, hey, wait a minute, you know, look behind the curtain, you know, this school project that we’re doing, you know, there is not a lot of money that we make, and there’s a lot of risks that we’re taking to get this thing done, has been really valuable. And I think we need to continue to educate communities on the positive side of inviting developers into their communities as well.

Eve: [00:14:08] There’s also the issue that investors, maybe goes back to Sesame Street. They want immediate gratification. I actually had one investor say to me, I’ve been investing in, I don’t know, something that she was getting returns every six months. You know, I’d like a short-term investment in real estate. I’d like to move into real estate. Can I get my money back in a year? And I was like, dumbfounded. A year is no time at all in the real estate world. Like, you know, you’ll have to wait a little longer. And I think that’s also an educational mountain to climb because everyone talks about portfolios, right? And yes, some people need to have a return immediately. But I think the value of real estate is that you can have something that will grow over time, in value, in time. It’s not about that immediate cash flow. But most people don’t understand that there’s a big educational gap.

Brian: [00:15:06] Yeah, and I think that’s not just individuals. I mean, I think that the other factor that I didn’t mention yet is just institutional capital. So, when we raised our first fund, we were pre opportunity zone, pre you know a lot of stuff. And we were asking investors to invest in a neighborhood that had an average median income of $22,000 but we believed in, for a variety of reasons. And you know I wanted to do a ten-year fund. And I just said, you know, this is not going to be an overnight thing. It’s going to be a long-term investment. That’s actually how we seek to be more aligned with community if we’re longer term. And, you know, my advisors at the time said, you know, the marketplace isn’t, you’re not going to raise any anything. No one does ten-year deals and funds and you’ve got to be five years. So, five years is impossible.

Eve: [00:15:59] It’s impossible. It’s impossible.

Brian: [00:16:01] So I ended up doing a seven-year fund with three one year extensions is what I was able to pull off. And then of course, the marketplace changed with the Opportunity Zone legislation, which changed mindsets to ten years. But I believe that the real work is actually with the generational investment groups, the groups that can think generationally or think at least on ten, 15, 20-year time horizons. That’s where the real value opportunity is. There’s still so much capital chasing the five-year cycle, and that is detrimental to investments in cities, which I think you have to inherently believe long term in cities. But if you do, there’s a lot of opportunity.

Eve: [00:16:50] Because the hard stuff that really provides a return, it’s just going to take a longer time.

Brian: [00:16:56] Yeah.

Eve: [00:16:57] Anyway.

Brian: [00:16:58] Yeah. So, you know, I think you combine that with, and I’ll just make one last comment on this that I think is important, especially for those out in your audience who are, you know, are talking to institutional equity and thinking about that source. The impact investing world has evolved and has really grown. You know, 12 years ago at Socap, which is the premier impact, I felt like we were the only real estate person there. And now, you know, it really is revolving around investment and community. But I have found that institutional capital still is on the 80 over 20 and 2 mold, you know, which is to simplify that down to basically 2% asset management fee and then a 20% promote over a certain equity hurdle.

Eve: [00:17:47] A promote for those who don’t know what it is, is what goes to the person who’s putting the fund together or the project together. Yeah.

Brian: [00:17:55] It’s your pod at the end of the rainbow. But obviously if your project doesn’t work out, you don’t have any of it. And so, I think in the impact space, there needs to be a reckoning on incentive structures that properly reward the amount of time and effort. Because an impact project, I mean, I’ll put it toe to toe with any, you know, equity real estate group out there, is infinitely harder than, you know. If I’m buying triple net industrial across the country, you know, I can have a team of two and do that. If I’m doing, you know, the type of projects that we do, the neighborhood investments that we do, I have to have a team of ten plus and the expertise is hard. And so we don’t get paid for that, nor do we get, you know, even, you know, the 2%. Now we have to also report on impact metrics. But guess what? We have to do all this additional work in this model that was never set up to, it was set up for a different world, honestly.

Eve: [00:18:59] Yes. Yeah. Well, tell me about a favorite project and why it’s favorite and how it met your goals.

Brian: [00:19:08] Yeah, I’m going to get to my favorite project by just talking briefly about this next gen platform that we were doing.

Eve: [00:19:16] Okay.

Brian: [00:19:16] It started with actually a group in Philadelphia, Mosaic Development Partners, where a Sharswood Ridge project that we did on Small Change that created the framework for us to create this next gen platform. And our next gen platform is a platform where we are investing in and with what we call the next generation of impact developers. And it’s the belief that we are seeking to help raise the game for developers who are trying to break into that next level of their business. And the majority, you know, with a strong emphasis on women led development groups, Black and Brown led development groups. And right now, we’re working with 11 different sponsors across the country from Rochester, Ithaca, Newark, Baltimore, D.C., Southern California.

Eve: [00:20:09] And again, for our listeners who don’t know what a sponsor is, that’s really the developer, right?

Brian: [00:20:14] A development partner. So instead of, you know, in our world, a lot of times developers have to look for allocators. So, people who are allocating capital and we’re trying to come up alongside as a practitioner, as a developer ourselves and recognize that it’s not just about the money, it’s also about, you know, providing and buttressing, you know, development groups who are, you know, on their growth path that might not have exposure to new market tax credits, for example. And we’re able to help lean in on that on a particular deal. So, through this platform, about two and a half years ago, we were approached by a Latino owned housing group in Philadelphia called Voyage Investments. And Voyage was started by two gentlemen, Alex Robles and Juan Saenz, who went to undergrad together. Alex, both, you know, incredibly incredible pedigrees. Alex, many years in the real estate space and went to Wharton from the neighborhood of Kensington, where our offices are. Juan, you know, deep institutional finance experience. And they went off to start their own business. And I’d known them and, you know, we would talk every once in a while, and, you know, I’d relay some advice. And they went maybe two plus years trying to put deals together and make things work. And of course, this was, you know, ’18, ’19, ’20 and the marketplace was very hot and it was very difficult.

Eve: [00:21:52] I’ve got to add, I’ve worked with Alex. He’s got to be one of the smartest, most responsive thinkers I’ve ever worked with. Really super impressive.

Brian: [00:22:02] Yeah, they’re both impressive. They’re both incredible. But, you know, in this space, you need more than that. You need a little bit of luck. You need the right people to help you out and they were just losing out on deals. And at the time, I had needed support, I needed help. And so, I approached them in the conversation and said, you know, would you guys be interested in embedding yourself within Shift for a couple of years? We’ll, you know, I’ve come from the venture world or had experience in the venture world where they have these entrepreneurs and residents at the VCs. And I hadn’t seen that happen in real estate. And I said, would you guys be a developer in residence? And, you know, let’s do a three-year program and you guys come on and for the first year, you’ll spend, you know, a lot of time on our projects. And over the course of a three-year period, we’ll JV together and we’ll look for opportunities to to help you guys out. But the goal is at the end of three years that you guys are back out on your own. But now, you know, you’ve got a track record, you’ve got relationships that we help build up, etcetera. So, Alex and Juan have been on our team for two years. We’ve done a project in West Philadelphia, which was a housing preservation a deal. And then we found a deal locally in Kensington, which was a 40,000 square foot warehouse space. Alex is from Kensington. This is right around the street from our offices. And we said, hey, how about we partner on this one together? So, we partnered up with Voyage and we had this warehouse and we said, and we actually at the time had a tenant who was going to take the whole thing.

Brian: [00:23:49] The tenant was a ceramic company that was part of our ecosystem. So we are, one of our bases of philosophy is really investing in the creative economy. I know you’ve had, you know, my good friend Lindsay Scannapieco on recently. And, you know, we share a lot of similarities in terms of things that we’ve done in the Philadelphia area. But one of our companies was a ceramic building business that was growing out of its space. And so we partnered up with them to buy this building. This was going to be their future home. They were going to grow into it, and we bought it together. We started moving down that pathway. And the construction cost to build out their space was more than they anticipated, and so they decided they wanted to back out of the deal. They wanted to stay as partners in the deal, but they no longer wanted that to be their future home. So maybe about 3 or 4 months later, we ended up getting approached by a school, a school called Big Picture El Centro, which is a opportunity youth school in Philadelphia for those you know, and this is education for me as well, an opportunity youth school that’s focused on youth who are struggling in the traditional system, and this provides them an alternative pathway to graduation by focusing on skill set education, on putting these kids into businesses earlier in apprenticeship programs across the spectrum, from culinary to trades, etcetera.

Brian: [00:25:28] And they were looking for a permanent home in Kensington and their timeline was really tight. They were they could only move in half of the building at first, but they did want to go into the whole building. And so, Alex, Juan and the Shift team, we put our hats on, we put together that lease and we are building the future home of El Centro. And for me, it’s probably one of the more rewarding projects that we’ve ever done. It checks all the boxes of impact for me. You know, we’re, I think, making a healthy return for the risk, but not an egregious return for, to make sure that we are providing the most economical space we can for the school. We are building a high-quality school. You know, I say that because, you know, Philadelphia is marred with a education licensing system that is really problematic for building good schools. The charter school system is on a five-year program, and the and schools are really not able to pay a whole lot. And that combination means that the private sector is not really able to step in very often and build higher quality schools. But we feel we’ve been able to thread the needle on this one. And so, the plan is for them to move in in January. We’re about 60% through the construction. We are partnering with Small Change on this project to provide opportunities for people in the neighborhood. And again, going back to this importance of education and involvement and access, you know, we couldn’t be more thrilled to be bringing this project on there as well.

Eve: [00:27:22] But just about the finances, you’re actually raising quite a lot of money through on Small Change. So, what’s the financing been like for you on this project? Because it’s an odd start construction and try and figure out the financing as you go strategy, right?

Brian: [00:27:38] Yeah. This is one, you know, I’ll look back and say, you know, man, this was this was a tough one. We knew the school needed to move fast. We knew they didn’t have a lot of options, and they were getting a lot of pressure from the district to move to Kensington. And so, we pulled the trigger, and I’ll say this, we actually started construction, you know, earmuffs here, before we got the lease signed. Just to give you a sense of…

Eve: [00:28:12] I’ve done that.

[00:28:13] How much we’ve leaned into this. By the way, no one do this. Do not do this. But, you know, we had a lot of confidence that, you know, we were going to get the lease done. You know, we had built a very strong, very, you know, relationship with the board, with the leadership team. And we knew that the pressure was on for them. And so, we wanted to, you know, we really wanted to get them in earlier. But you know, construction, you know, has pushed us to moving them in in January. But to close on a project, to sign a lease where, you know, not all of the equity and the debt is together is certainly a terrifying place to be. We’re in a much stronger place now. We do have and we’re closing on our construction debt, about $3.9 million of construction debt, maybe as early as next week, which, we’re in October right now. We are raising 2.4 million, and we’ve put in $800,000 ourselves. We’ve also bridged a lot of this construction during this time. And we are seeking both accredited and non-accredited. So, we’re doing a side-by-side raise. And, you know, we’re out there talking to a lot of groups right now on the accredited side. But, you know, and meeting with community groups on the non-accredited, you know, looking to raise awareness.

Eve: [00:29:36] I have a question about that. How do the community groups respond to this. It’s an unusual opportunity for them, right?

Brian: [00:29:45] Uh, it’s been fantastic, and I will say that, you know, the Voyage team, especially Alex as a native person from Kensington, you know, has really been on the front end of this, has been excited to be able to talk about this. And, you know, I would say that a lot of this is really it’s a very soft sell, right? I mean, we’re using this as an opportunity to educate as much as possible in addition to saying, hey, this opportunity is here, but not, you know, but be realistic in terms of what where people are.

Eve: [00:30:18] It’s more about like, this is your neighborhood.

Brian: [00:30:22] That’s right.

Eve: [00:30:22] This is the value it’s going to add to your neighborhood, there’s value here besides a return you might get on the dollars you invest. And that’s actually a lot to think about, I think.

Brian: [00:30:33] Yeah. And, you know, I think this neighborhood, for those unfamiliar, Kensington was on the Republican national debate stage as the, you know, worst place in America. You know, we were the center of the opioid crisis. You know, we are dealing with $1 billion drug trade, you know, just blocks away from here. This community is resilient. You know, it’s a big second-generation Latino community. It’s a very mixed community. Old generation, new generation, lots of kids. And, you know, to take a building that has been vacant for 25 years and to put it into productive use like this positively, and for them to be able to see how and, you know, pull back the curtain and allow them to see that happen, you know, is just very rewarding for us.

Eve: [00:31:28] I have to ask; how did you end up in Kensington and why the worst neighborhood in America?

Brian: [00:31:35] Well, a little bit happenstance, but Kensington was the workshop of the world for the textile business at the turn of the century. And so, it has two really incredible things going for it from a real estate perspective. One, it’s on public transportation. There’s only two subway lines in Philadelphia. And so, we had a long-term belief that Philadelphia was going to turn from a car city into a public transportation city. So, everything we purchased within a five minute walk to a subway station when we got involved in the neighborhood. Two, as a result of being the workshop of the world, there’s a lot of larger real estate and older buildings that we could adaptively reuse, and we could purchase at a low basis at the time. And that low basis for those interested in impact, I cannot emphasize enough how important low basis is to doing the work of impact. It gives you flexibility that if you buy in, you know, later, you don’t have as much flexibility without a lot of subsidy. And so those two, three things really were what brought us to Kensington. You know, the reason for it being a challenge neighborhood is very complicated. It is just north of some of the hottest neighborhoods in the country with Fishtown and Lower Kensington. But this neighborhood has been ring-fenced by the city, and drug trade has been allowed to happen. And that has, you know, and again, I don’t want to get too deep into the politics of it, but I would say, you know, it is largely so that it doesn’t spread to other neighborhoods in Philadelphia. This neighborhood has pretty much been sacrificed, in my opinion. It’s an incredible tragedy but within that tragedy is this incredible story of a phoenix rising that, you know, we’re proud to be a part of and proud to work through with the community that’s there, that’s, you know, continuing to want to live there and want to see this neighborhood come back.

Eve: [00:33:53] I’m going to shift a little bit because that’s a pretty incredible story. But I just want to know, how big is your portfolio now? And do you have an end goal in mind? And are you working anywhere other than Philadelphia?

Brian: [00:34:05] Yeah. So, our Philadelphia portfolio is probably about 1,000,000ft². We have a number of projects in development right now. Outside of Philadelphia is through our next gen platform. This is where we are working in Rochester, Ithaca, Newark, Baltimore, DC. Our portfolio as a whole is probably about 3 to 4,000,000ft² which, you know, is, that’s pretty remarkable to say that out loud now that I think about it. But it’s largely been through sharing, partnering, joint venturing in a way that feels, you know, very appropriate. We’re about 30 people, so we’re vertically integrated within the Philadelphia marketplace. And we’d like to lend ourselves into other marketplaces where needed. I would say that, you know, we’ve been at the forefront of thinking long term. How do you create mixed income communities? So, from the day we started our work, we were thinking about our exit strategy. We helped put together the first neighborhood trust in the country, which is the Kensington Corridor Trust. I know you’ve had David Kemper and Trust Neighborhoods, which is a corollary group that started about the same time. Adriana Abizadeh, who leads the Kensington Corridor Trust, should absolutely be a someone you interview.

Eve: [00:35:46] Oh, send me the information. I was just writing this down.

Brian: [00:35:50] So the Kensington Corridor Trust, and I can’t speak for them. I got kicked off the board, which is a wonderful feeling. But they own probably a couple of blocks now in the Kensington neighborhood. They’ve been buying their own real estate on behalf of a mission for the community, and that mission is to preserve affordable workspaces on the corridor. And that model, I’m excited to say, is now starting to spread across the country. And so, we are constantly thinking about exit, you know, how do you preserve in advance? I’m a big believer that while I think the LIHTC, the low-income housing tax credit tool, is probably one of the greatest tools ever created at the same time, it’s a reactionary tool. And the mindset should be when we have that low basis of real estate in a lot of places, now’s the time to think about preservation. We need to think about preservation on a 20- 30-year scale. And we need more tools. We need more financing groups. We need philanthropy. We need investors to think more strategically about how do we think about capital long term. You know, if you told an investor they could make, you know, 8% returns over a 30-year period, you know, that’s a great return.

Eve: [00:37:12] It’s a great return.

Brian: [00:37:13] Unfortunately, when you have short term investors who are oh, I need 15, 20% returns on a five year schedule, and then you compound that, compound that over 30 years, you’re at a much different place. And that is a detriment to neighborhoods and cities. And it’s a problem we have to solve.

Eve: [00:37:33] Yeah, I agree, and I think that impact investors I’ve talked to have been an enormous disappointment to me, because I think that that longevity is definitely part of the equation. But what I get is what’s your exit strategy and how soon? They’ll talk about impact and then it’s what’s your exit strategy and how soon? And I just want to build the best platform I can that will serve the most people.

Brian: [00:38:00] I am, I’m gonna give you a little…

Eve: [00:38:01] I don’t know what, I don’t…

Brian: [00:38:02] And I have been in the doldrums with you. I have seen the slow march forward and, you know, having been there when the only investing impact investors were doing was, was in CDFIs and affordable housing, to this, you know, a place-based mindset. I believe that although it’s taking a lot more time, that we are seeing more and more investors getting that message. And I do think it’s these podcasts, Eve. I think it’s, you know, the cadre, the community that’s gotten created over the last ten years of people saying these things. And I believe it, I really believe it needs to come from family offices in particular, who have the ability to think long term as opposed to the, you know, the black rocks of the world, so to speak, getting into impact investing is not where it’s going to come from. It’s going to come from the next generation of families who, there’s a big transition of wealth. And if you look at things like the Durst Organization, right? I mean, they invest generationally. And I do think that more and more families are going to start getting this message and understanding that they can be part of the solution. It’s already happening. We’re having some conversations, and I feel like the message is getting through, even though you know, it’s not fast enough and it’s not enough yet. I mean, certainly not enough. Yeah.

Eve: [00:39:31] It’s not fast enough. No, I mean, we have thousands of users as well who must have an interest in impact because that’s all we offer investment in, right, So but it’s still, it’s not enough. It’s not enough. When you compare it to the hundreds of thousands who are investing on platforms in ways that have absolutely no impact. They just, yeah. Depressing. Okay. So, last question. What’s been your biggest challenge and biggest disappointment?

Brian: [00:40:03] Um.

Eve: [00:40:04] Maybe that’s not an uplifting question to end on, but I’ll ask you that and then.

Brian: [00:40:09] No, that’s okay. I mean, yeah, I think it’s the right question when we’re talking about development, because there isn’t a day that is not challenging that we go through. You know, sometimes I feel like I’m, you know, whether it’s whack-a-mole or whatever, the right metaphor, whack-a-mole, or you’re plugging the dyke over here, and then a leak happens over here.

Eve: [00:40:32] Oh yeah.

Brian: [00:40:33] And, you know, one of the challenges is keeping positive through that and recognizing that the small incremental movements forward are going to be part of the big movements later. You know, it’s been very difficult to grow the team that we’ve grown. We’ve taken a lot of risks. My team has dealt with a lot of stress. You know, we’ve gone through periods and, you know, where payroll is an issue. And I’ve you know, I’ve had during Covid asked the team to not take payroll for, you know, more than a month to just help us get through and try to keep everybody together, you know. I have a goal, maybe one day in life to write, you know, the developer confidential book that needs to be written based off of the Kitchen Confidential book that Anthony Bourdain wrote. But, you know, there is so much behind the scenes that’s challenging. I would just say, you know, keeping people positive in the wake of what feels like insurmountable challenges and push-back and, you know, is definitely our biggest challenge.

Eve: [00:41:50] So I’m going to ask you if it’s so challenging, why do you do it?

Brian: [00:41:54] Oh, why do we do it?

Eve: [00:41:56] What’s the reward? Why do we do it.

Brian: [00:42:00] It Depends on what day you ask me that question. You know, some days I’ll say, well, if I knew then what I know now. But most days I really feel that real estate is the most impactful and important thing to combat the challenges and the ills of today’s world. Whether that’s the idea that real estate spaces can bring people together, whether it’s about financing and how do we bring positive dollars into low-income communities and bridge an equity gap, wealth building. I mean, it touches so many things that for me, you know, that I can wake up every day and say, we’re, you know, we’re doing something positive for society, and that’s why we do it. Yes. I love the building and I love the physicality side of it, and that is important. But I would say arguably the people side of buildings is probably more, is the most important for us.

Eve: [00:43:12] Well, thank you very much for joining me. And I can’t wait to see what you do next. This current project is fabulous, so I’ll be watching.

Brian: [00:43:22] Well, you’re, I mean this, you’re a gem to this whole world and this movement. And, you know, I’m just so happy to see how much you’ve grown and how much you’ve built this thing and think I’m just really excited to be back on the podcast. So, thanks for having me again.

Eve: [00:43:39] Thank you.

Eve: [00:43:46] 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 Brian Murray

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?

Wall Street capital.

Joel Miller serves as CEO of Wall Street Capital Partners (Advisors), a Real Estate Syndication firm based out of Atlanta GA,  specializing in sourcing and arranging debt and equity for acquisitions, development and recapitalization of Commercial Real Estate. The firm also invests its own acquisition and development projects as a GP investor. Current pipeline includes over 1,100 of Multifamily units primarily in Atlanta and the mid – Atlantic region. Joel has also been responsible for the intrinsic planning of site development for the execution of conservation strategies. He formerly served as head of Private Equity Fund Management & Investor relations related to Real Estate tax mitigation strategies for Cambridge Capital Partners (CCP). A boutique international investment bank focused on tax mitigation, capital markets, conservation easement strategies, and management advisory services. CCP was built on a platform of delivering tax efficiency with global business solutions. CCP’s clients include numerous banks, investors, and Fortune 500 companies throughout the Americas and Europe.

Joel began his career in New York City at U.S. Trust Co., After strengthening his acumen under some of Wall Street’s most influential financial strategists, he founded what would become Wall Street Capital Funding. Under the tutelage of Prudential Securities executives, at 28, he became one of the youngest CEO mortgage bankers in the history of the United States. The firm was ranked as one of the Top 10 Most Dependable Mortgage Companies in the SE. He has served as strategic adviser to one of the nation’s top ten wholesale mortgage banks and has served as a consultant on financial institution mergers. He has served as an adjunct Professor of Economics at the Clayton State University – Management School of Business. In late 2008, he received the privilege of being a tertiary adviser to President Barack Obama’s Transition Team on the topics of housing and the economy related to the residential Real Estate crisis of 2008. The Atlanta Business Journal named Joel one of the Top 40 under 40. He was also the host and producer of the “Mortgage Minute” and “The Joel Miller Show” on Business Radio 1160 AM The CFO, as well as a regular contributor to CNBC.

Currently, Joel also produces and hosts the Morning’s w/ Joel Commercial Real Estate Podcast which interviews and highlights the achievements of minorities in the CRE space. He also teaches the Capital Markets class for Project REAP. This fulfilled a commitment he made to stay accessible and to open his “Rolodex” to expose and encourage the next generation of CRE minorities to opportunities in the CRE space.

Read the podcast transcript here

Eve Picker: [00:00:03] 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: [00:00:37] From Wall Street to mortgage banking to real estate developer, Joel Miller has focused his career with clarity and purpose. And now he’s taking it one step further by raising money for his next real estate project through crowdfunding. Joel wants to bring others up behind him. He wants to give others the opportunities he’s been given, and one small way to do that is to provide an opportunity for everyone to invest in his latest project. Early on in his career, Joel realized that his goal to lead an organization might not happen if he waited for an opportunity. So he made his own. He started his own company, Wall Street Capital Partners, specializing in sourcing and arranging debt and equity for acquisitions and development of real estate. And of course, over time, he started to build his own real estate portfolio. I enjoyed every moment of this conversation and so will you. Please listen in to hear more.

Eve: [00:01:56] Hi, Joel. I’m really delighted to have you join me today.

Joel Miller: [00:02:00] Hey, how are you, Eve? Good to be here. I’m happy to be here.

Eve: [00:02:04] Very good. So, I wanted to ask you about your journey from Wall Street to Wall Street Capital Partners. What led you to launch your own company?

Joel: [00:02:14] Well, you know, it’s very funny that you would ask that question because that was the thing that was running around in my mind when I was a young guy back on Wall Street, and I had this really ambitious dream of how I was going to be this top executive and do this and do that. And one thing I realized once I got to Wall Street was that there were other guys that were already ahead of me that were 20, 30 years older than me, and they were still trying to climb that ladder to get to where I wanted to be. And I didn’t want to wait 20 to 30 to 40 years to get there. And these guys were basically willing to kick me down the ladder to make sure I don’t pass them on the way up. So, I just simply had to decide, was I going to continue to play the Wall Street game? Or would I look for other opportunities where I might be able to shortcut that if I had the willingness to work very hard and the due diligence and the determination in order to make it happen. So that’s the short version for you older folks out there, the Reader’s Digest version of, you know, how this all came about.

Eve: [00:03:18] And when did you launch your company? And…

Joel: [00:03:21] Well, we actually started, believe it or not, in the early 90s. So this was some time ago, and we’ve had reiterations of the firm as we’ve grown as a company, adapted our focus over time. And, but that’s really when we got started back in those days.

Eve: [00:03:36] And I know you’re in Atlanta. So, you went from New York City to Atlanta. Why that move?

Joel: [00:03:44] Well, it’s very interesting you mentioned that. At the time I viewed Atlanta as New York 70 years ago. And what I mean by that is, if you look at New York City and you roll the carpet back 70 years, it was a new city, not necessarily new, but there was a lot of people coming into the city and creating what it is today. A lot of immigration, a lot of people coming in from the outside. And it opened up the opportunity for a lot of people that may not have been major players years ago to now be major players in the marketplace because there were no major players. Everybody was kind of trying to get their footing. And so, Atlanta back at that time was kind of the same type of place. This was before the Olympics. There were a lot of people migrating down there. It was wide open, and there was a lot of opportunity to really make your impression on the city without trying to, you know, knock off a lot of the older, established players that were there, like you saw in New York back at that time. So, it was an opportunity. It’s almost like, why did people decide to go west many years ago?

Eve: [00:04:50] That’s what I was thinking, like the gold rush.

Joel: [00:04:52] It was the same type of thing, yeah.

Eve: [00:04:53] How has that played out in Atlanta, do you think?

Joel: [00:04:57] Well, you know, I always ask that question, you know, where would I be today if I was still up in New York? So, I don’t know. But I think it’s worked out well. You know, one thing that’s good about Atlanta is you don’t have a lot of the, just the stresses of living. You know, New York is a very intense, compact city with people all over you. You know, everywhere you go, you walk right out to your building, there’s people all over the street. And, you know, to be in a more relaxed environment gives you more time, I think, to mentally kind of focus on what you’re trying to achieve. So, it’s worked out well for me. You know, I exchange the back yard of buildings and concrete to one of deer and trees.

Eve: [00:05:37] Nice! That’s nice. So tell me what services like Wall Street Capital Partner provides.

Joel: [00:05:44] Yeah. So, our core business over the years has been financing real estate, you know, so we’re the firm that many individuals come to in order to acquire real estate, refinance real estate, develop real estate, rehab real estate. We’re involved in that space. And as you can imagine, over time of making, you know, quite a few of our clients very wealthy, you know, we turned around and we said, you know, it’s time for us to step over to the other side of the table. So, years ago, we started investing in our own deals. And also, we decided to bring capital and resources to developers that maybe had deficiencies in their capital stack. Maybe they didn’t have experience, maybe they didn’t have all the capital, maybe they didn’t have the knowhow, maybe they didn’t understand the numbers, you know? So, we brought all that skill set to the table. And as a result of doing that, you know, we became equity players in other people’s deals and then started working on our own projects as well.

Eve: [00:06:45] So how big is your own portfolio now?

Joel: [00:06:49] Well our portfolio. I don’t really want to quote numbers here on online, but we’ve got quite a few projects that we’re more than happy to share with any investors that might be interested in investing in our projects.

Eve: [00:07:01] Okay. Fair enough. And are your projects primarily residential or commercial, for sale or for rent? What do you focus on?

Joel: [00:07:10] Yeah. So, our primary investments are, they might be for rent properties but we’re developing them for sale. You know now some of our acquisitions like in Atlanta, for an example, we’re looking at keeping those properties in the portfolio. Our development projects in the D.C. market we’re looking to sell. So, it really just depends on the market strategy, depending on where the property sits, as to what we plan to do with it. So, it’s kind of…

Eve: [00:07:41] Well that leads me to ask, you know, where are your buildings located? Where are these investments? Not just Atlanta, by the sounds of it.

Joel: [00:07:48] Yeah, not just Atlanta. Right now, we’re focused on acquisitions in Atlanta. We have other assets in New Orleans right now, and we have development projects that we’re working on up in the DC metro area.

Eve: [00:08:02] Okay. So, you’re in Atlanta. What’s the biggest need in real estate in Atlanta right now? What’s the biggest challenge?

Joel: [00:08:14] Uh, you know, that’s a multifaceted question. You know, it’s amazing because when I first got down here, it was rare to find a property that was, that cost $1 million to buy. You know, now it’s very common to find million-dollar homes. And yes, this is many years later, but just like many other markets, the cost of housing is an issue, especially in the urban core. The periphery of the city has got expensive as well. So, the demand for quality housing, even in those areas is a need. We have a issue with office space where there’s a lot of it available right now and what is that going to become? So that’s a need that has to be addressed. And you know traffic’s a big thing down here in Atlanta. Most people aren’t aware of that, but it is. And as a result, you know, many people want to live in urban core so that they don’t have to commute from outside the city. So affordable housing is something that’s needed as well. So I would say all of the issues associated with a major city is an issue here. One deficiency that Atlanta does have, though, is the mass transit is not as extensive as in New York or Washington, D.C. It’s more like a Los Angeles or Dallas or, you know, a city like that. And as a result, that presents its own challenges.

Eve: [00:09:35] So commute times can be long if you can’t live close in.

Joel: [00:09:39] Yeah.

Eve: [00:09:40] Okay. So, what’s your favorite success story? What’s a favorite project and why?

Joel: [00:09:50] Well, I think one of the favorite projects is one that we did in unison with a client of ours. They’ve kind of been the person. I don’t want to tell you how they get their real estate deals, because that’s kind of their secret sauce.

Eve: [00:10:04] It’s like their secret sauce.

Joel: [00:10:06] Yeah, so don’t want to disclose that.

Eve: [00:10:07] I know so many people who say that. I have to tell you.

Joel: [00:10:11] I know a lot of secret sauce out there, right? But, you know, this was a situation where the property was it was office. It was roughly about 30% occupied. It was in an area where, area wasn’t bad, but the property could have been doing a lot better, and everyone just kind of turned their nose up to it. It had an absentee owner from California, but it was down here in Atlanta in a very good market. And, you know, we got together and put together a strategy in unison with one of our clients to take over this property. It was about 400,000ft².

Eve: [00:10:49] Oh, that’s big.

Joel: [00:10:50] Yeah, and convert it to a very, very profitable office environment, right now. Even with offices beat up as it is and that sector being decimated as it is, this property is running north of 90% occupancy. Actually, last I checked it was 100% occupancy and it’s doing quite well. So that’s a huge success story and we would love to do that for more clients, especially minorities that are looking to get into commercial real estate. We started off with this particular client when they were buying. I think the first deal we did for them was, it was like a little dinky office building for like $147,000, you know? And now their portfolio is, I mean, eight figures, you know, high eight figures.

Eve: [00:11:37] Wow.

Joel: [00:11:38] So it’s, uh, it’s something that can be done, you know, in a short period of time. This particular client actually used to be a substitute schoolteacher of all things. So, it can be done. It can be done if you get the right team with you to work with you. And hopefully, you know, we view ourselves as that right team to help you get to the next level.

Eve: [00:11:58] So let’s talk about the King Henry. It’s a name I love, and that’s one of your current projects. And, full disclosure, you are listing this as an offering to raise funds on Small Change, my real estate crowdfunding platform. But it’s a really fascinating project. So where is it located and what is it?

Joel: [00:12:19] Yeah, absolutely. So this particular project is in Alexandria, Virginia. It is at the intersection of, well it’s sort of the King Henry corridor. I’ll just mention that if you know where that is. That’s the main artery that runs through Alexandria. It runs from the metro station at the Alexandria stop, all the way to the waterfront, where you could actually catch the water taxi to Washington, D.C., right to downtown. And it’s a tremendous location that I got excited about, just simply because of all of the traffic and the vibrance of the city. You know, one thing that’s very unique about Alexandria, and I know you have some other questions for me on it, but one thing that I really like about it is it’s one of those few areas in the country where you have a lot of mom-and-pop shops. You know, you’re not going to walk down the street, and there’s a Walmart on every corner and a Target and a this and a that. Nothing wrong with those guys. So let me, they might want to sponsor us one day, so let me not throw them under the bus. But the idea of being able to support local businesses, the local coffee shop, the local bakery, the local, you know, jazz club, you know, all these things is available in Alexandria, Virginia, where you can really feel a part of the community. And with the cobblestone streets and everything, it’s just a wonderful area. Specifically, what we’re doing there, we’re replacing surface parking that is there currently with structured parking. We’re using an automated mechanical parking system, which will take roughly 40 spots and turn it into 140.

Eve: [00:13:56] Isn’t that insane?

Joel: [00:13:57] I know, it’s impossible.

Eve: [00:13:57] I love that, I love that.

Joel: [00:13:59] Yeah, it looks impossible, but we’ve got it all structured and built out in the architectural drawings. And we’re also putting up 50 units of multifamily housing with retail on the ground floor.

Eve: [00:14:12] So all of that replaces how many surface parking spaces right now?

Joel: [00:14:17] Yeah, roughly about 40 spots.

Eve: [00:14:19] Total.

Eve: [00:14:20] Yeah.

Eve: [00:14:21] On all the. That’s crazy.

Joel: [00:14:23] Yeah, it is crazy.

Eve: [00:14:24] Not the highest and best use. Right.

Joel: [00:14:27] Yeah. Well, that’s the point. The city realized that this wasn’t the highest and best use for that space, and that you certainly can increase the tax base by doing what we proposed. And they’ve signed off on it. And, you know, it’s a permit ready site. We’re doing it.

Eve: [00:14:42] So, how does this compare to your other past projects? Is this unusual or standard?

Joel: [00:14:51] No. Well, you know, it’s unusual from the standpoint that, you know, generally you have, you know, 150, 200, 300, 400 projects. The one that we’re working on in a city very close to that is actually 600 units, you know, and that’s a skyscraper. So, you know, generally we do get involved in much larger projects. This one I really like because of the barriers to entry. You know, you’re not going to have everybody building a similar product right next to you because it’s [inaudible].

Eve: [00:15:24] It’s very unique

Joel: [00:15:25] Yeah, it’s very unique. It’s a historic city. And you can’t just go in there and tear stuff down, which is why we’re having to do it where surface parking is, right? Where something was already torn down.

Eve: [00:15:34] Interesting.

Joel: [00:15:35] Yeah.

Eve: [00:15:35] And so what’s the total development cost for that project?

Joel: [00:15:39] Approximately total development cost is roughly $42 million.

Eve: [00:15:43] And what does the financing look like for a project like that? Roughly.

Joel: [00:15:48] Yeah, roughly, we’ll do 60% of that debt. We will raise the rest in equity, which will be roughly about $16 million. And then we’re cutting off a slice of that for participation by some smaller investors that may want to get involved. Usually projects like this, it’s all people with deep pockets that get involved, and they make all the returns and all the money. And, you know, the average working-class person is generally relegated to getting in real estate by means of doing fix and flips, you know, and trying their hand at that. And they’ll, you’re never going to get to where you want to be just doing little small fix and flips. You can do okay, but you’re not going to get to that million, multi-million-dollar threshold. But participating in much bigger deals you can eventually get there. So, you know we think this is a great opportunity.

Eve: [00:16:39] So that opportunity is listed on our platform smallchange.co if anyone is interested. But I’m just wondering why, I mean this is probably a little bit more work for you than just going out and raising the money from one institutional investor, right? So, why?

Joel: [00:16:58] Yeah, well, you know, you asked the reason why. And just to give you a little background, you know, I have teenage boys and obviously I want them to come up and hopefully be in the industry and learn the commercial side of it from day one and grow and become major players in the space as opposed to just becoming maybe just a realtor with a real estate license, selling single family homes or, you know, doing fix and flips their whole life. So, in addition to that, I also teach the capital markets class for some institutions. One is called REAP, the project REAP program, where individuals that are looking to get into commercial real estate can actually participate and learn the business from people that are already in the business and learn how they can participate in deals. So, long story short Eve, I have a passion about helping those that are behind me because there’s people in front of me that have helped me get to where I am today. I have mentors, right? So why wouldn’t I pay that forward and help the next generation of folks coming along to be able to get in deals? Yeah, also, you know, growing up in New York City, I’ve seen how people seem to never get out of the rut.

Joel: [00:18:13] You know, when I was a kid, I thought the only way I could get to the next level was, everybody in the neighborhood it was either drugs or sports. That was the only way you were going to get a get out, you know, and get to that next level. And so, the idea of of being able to get other people into these deals at this level where they can say, yes, I was an investor in a $42 million deal, opens the door for them to do much bigger deals and become the part of the investor pool in much bigger things and much bigger opportunities. And it even exposes them if they want to do some bigger stuff on their own down the road. So, I think it’s great just to open up the door and let, at least let a slice of that $16 million go to some smaller investors so that they can participate and be part of the action. And it’s a passion that I have. I’ve been doing it for free, you know, even on my podcast and doing these shows and everything else, you know, it’s just a passion that I have to give back. And I think this is another way I can do it.

Eve: [00:19:14] So just dialing back a little bit, what are some of the challenges you’ve been confronted with personally as a Black man in real estate, which we know is a, really a white man’s industry still, very much so.

Joel: [00:19:29] Yeah. I mean, realistically, I can’t give you hard facts, but I do know that Blacks represent about 3% of the commercial real estate space across the board, 3%. But they make up 16% of the population. So, you kind of wonder why is that dichotomy there where you have so little that are in these type of deals? You know, and it’s mainly a white male dominated business, as you know. So, one of the challenges has always been access to capital for minorities. It’s a really, really big thing. My business partner on this deal has developed over 14,000 apartment units. So, you know, his experience obviously goes a long way toward getting this thing done. But just being a minority in the space, you know, people tend to gravitate toward folks that they have some type of camaraderie or some type of relationship to. And if you’re never used to seeing a minority do deals like this, it’s almost like, well, are they for real? Because I’ve never seen this before. Can they really pull this off, do they have the smarts? Remember, it wasn’t too long ago where it was said that Blacks weren’t smart enough to be a professional football coach or be the quarterback of a professional football team. That was in my lifespan. So, you know, those are the challenges and they’re not written down anywhere. But, you know, the fact that it’s a 3% penetrated industry, you know, I mean, kind of tells the tale of the tape. That doesn’t mean that there’s not a whole bunch of other people that would like to be players in commercial real estate. They just haven’t had the chance. And it always boils down to access to capital, 99% of the time, because they don’t have a daddy or somebody else that might be able to walk them into a into a bank or into an investment firm to get that capital.

Eve: [00:21:24] So what advice would you give to someone starting out a career in commercial real estate who has, who’s not a white man?

Joel: [00:21:38] Yeah, well.

Eve: [00:21:38] Anyone who, you know is from an underrepresented background or yeah, even a female, because I think the numbers look about the same for women. It’s pretty bad, yeah.

Joel: [00:21:50] Yeah. Yeah, exactly. And, you know, I want to be clear also that I’m not beating up on white males. And I want to say that because if it wasn’t for white men, the civil rights movement wouldn’t have got as far as it did. You wouldn’t even have HBCUs in Black or southern parts of the country if it wasn’t for white men that got behind trying to help these initiatives go forward. So, you know, again, it’s not a race of people, it’s just the way the numbers shake out. Right?

Eve: [00:22:24] It’s who has, I suppose, who has control right now. And we have to figure out how to shift that a little bit, right? That’s what we’re trying to do here.

Joel: [00:22:33] Exactly. Exactly. So, and even as I mentioned, my partner on this deal is a white male. So, you know, I’m certainly not beating up on white men. But I will say this when you ask about how does that change? I would say one of the things is to get involved in a deal like this one. The reason why is because then you can put on your resume of deals that you’ve invested in, hey, I was one of the investors in a $42 million deal. You know, that goes on your resume and, you know, participate at that level. Also, getting in with other individuals that have, you know, been involved in commercial real estate and deals like that. And part of it is just getting out there and meeting key folks that are in the space. You know, as I mentioned briefly, we have a podcast that doesn’t compete with you Eve, but it’s more so.

Eve: [00:23:22] I’m sure it does.

Joel: [00:23:24] No, no, it doesn’t. Because we’re not raising, you know, we’re not doing anything there, but we are introducing folks to others that have been highly successful in commercial real estate, and they can learn from them as to what they did in order to be so successful in commercial real estate. So, I would say exposure, you know, and then there’s trade organizations that are out there like, you know, A-REP and REAP and some of the others where you can get involved and meet the people that are making inroads in commercial real estate. So those are the things I would say. But getting a deal, I mean, because once you’re in the deal, then you can start reviewing the deal from the inside out and really learning this business.

Eve: [00:24:04] Yeah, yeah. There’s also a lot of meetups and clubs now. More and more of them are merging, which I think are a great way to start learning because it’s a lot to learn. And also, actually ULI, Urban Land Institute, can be a great source of information. So, lots out there. But what are you proudest of?

Joel: [00:24:24] What am I proudest of?

Eve: [00:24:26] In your career, not just your boys.

Joel: [00:24:31] Yeah, everybody says what they’re proudest of is, you know, being a great dad. Right? All that stuff aside, I mean, if you’re acting professionally. You know, Eve, it’s hard for me to answer that because I’m always focused on the future. I’m not focused on the past. So, while I’m happy about the things that I’ve accomplished and, you know, even being involved in the deal sizes that we’re talking about is, you know, something that often just the 1% of the population in commercial real estate get to participate in. So, I’m very happy and I’m proud about that, to even be having this conversation. So, I think that would be the answer to your question. But for me, I still got a lot of few things that I want to do before they write my obituary.

Eve: [00:25:18] Well, what is that? What’s your big hairy audacious goal?

Joel: [00:25:22] You know, I want to get these, these deals done. And we’re looking to grow our portfolio. We’re looking to have a balanced portfolio between acquisitions, where we’re providing affordable housing and, you know, blended housing in a lot of different areas. And we also are looking to develop projects in other key markets around the country. So that’s really our focus. And you know, with your help, Eve, I think we’ll get there.

Eve: [00:25:51] That would be wonderful. Okay. It’s been a pleasure talking to you. And everyone, take a look at smallchange.co. It’s an interesting project and I just love the automated parking. By the way, where was that developed? Where is that company from that’s providing the automated parking solution?

Joel: [00:26:12] You know, that’s a good question. I don’t know where they’re headquartered, so I can’t answer that. But if you go to smallchange.co, you will be able to get information on the project. You’ll be able to watch a video that actually shows you exactly how it works, and it will give you the information on the company so you can do your research on them there if you want to as well. And you’ll also get a chance to see where these products are already operating in other parts of the country.

Eve: [00:26:36] Well, thank you so much for joining me today. It’s been a pleasure.

Joel: [00:26:40] Thank you Eve, certainly appreciate being here and happy to come back in any other time you want me.

Eve: [00:26:51] 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 Joel Miller