Rethink Real Estate. For Good.

Visionary

How to transform a city.

Tom Murphy is the second-longest serving mayor of Pittsburgh (after David Lawrence).

He is noted for overseeing the difficult, but transformative transition of the city from the mid-1990s to mid-2000s during turbulent Downtown development cycles, an initially unpopular funding bid for two new waterfront stadiums, a new convention center (then the largest ‘green’ building in the U.S.) and investment in and development of 1,500 acres of land from abandoned steel mill sites to vacant houses. He built many miles of river trails and ran on them religiously.

“Public space can be the most democratic space in the city”

Mayor Murphy’s administration took a market-driven approach and downsized governmental departments. With the savings from downsizing, Tom created the visionary Pittsburgh Development Fund, a $60 million fund which he employed to leverage private real estate projects and investment all over the city. Public/private partnerships were key to this strategy. He was looking towards a future that not many others saw.

Struggling with outdated taxing structure regulated by the state, as well as state resistance to city growth through annexation, Mayor Murphy made hard decisions such as declaring a budget crisis and pushing through alternative funding sources such as a parking tax for commuters.

By the end of his tenure he had shepherded the city, kicking and screaming, onto a new track which led to it being held up as the model for urban transformation – a former industrial city reinvented as a biotech, medical, university and robotics hub. In 2008, the G-20 was staged in Pittsburgh, highlighting its transformation. 

Mayor Murphy, who studied urban studies in college, also previously served as a state representative for the North Side, as a neighborhood organizer there, and between college and graduate school, in the Peace Corps.

Insights and Inspirations

  • Tom focused on five things as mayor. Finding money for projects that would change the city. Taking control of vacant land. Building a really great team. Creating a vision. And building excellent public/private partnerships.
  • Since ending his tenure as mayor, Tom has come to believe that public spaces matter more than anything else in building better cities.
  • He believes that the interface between buildings and community is critical to the making of a place.

Information and Links

Read the podcast transcript here

Eve Picker: [00:00:14] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing.

[00:00:23] My guest today is Tom Murphy, Pittsburgh’s turnaround mayor. He oversaw the difficult, but transformative transition of the city from the mid-1990s to mid-2000s. Those were turbulent times and included many highlights and many struggles. During his tenure, he declared a budget crisis, built two stadiums, created a $60 million development fund and built many miles of river trails. Tom Murphy is an authentic city expert.

Eve: [00:01:03] Be sure to go to EvePicker.com to find out more about Tom on the show notes page for this episode, and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:01:38] Hello, Tom, I’m so delighted that you found time to join me today.

Tom Murphy: [00:01:42] I’m always honored to be with you. You were one of the pioneers in many developments in Pittsburgh when very few people saw the opportunity.

Eve: [00:01:50] You were the second longest serving mayor in the history of Pittsburgh. And in 1994, when Pittsburgh wasn’t sure what it was going to become, was really on the verge of collapse. And you shepherded the city through a very turbulent transition from a place that had emptied out with the closing of steel mills and suburban flight, to a city transformed almost every respect. And I was in Pittsburgh for every moment of it. So, you reshaped Pittsburgh, kicking and screaming all the way.

Tom: [00:02:22] Underlining kicking and screaming, Eve. As you remember, every time we tried to do something, there were, there was controversy. I mean, it just, it was amazing to me.

Eve: [00:02:34] Well, this is slightly conservative city, so maybe that was part of it, but people couldn’t imagine what you imagined. When you begin with a city that has lost its industry and half its people?

Tom: [00:02:47] Well, I’m a product of that, I mean, my father worked for 51 years at Jones & Laughlin Steel steel mill on the South Side. So, my whole life was defined by the shifts he worked there, I mean … you know, he was, he worked in the mill. I mean, he wasn’t a boss or anything, he just worked in the mill and our lives were shaped by that and … and sort of everybody I knew pretty much, their lives were tied to the mill. And so I grew up with that. And to watch that disappear in the, really the 70s and the 80s, I was a state legislator on the North Side, and I don’t think people appreciate how incredibly destructive it is for families. You know, where you had very traditional families where the husband went to work in the mill, you can make a good living, buy a house, buy a car, take a vacation and now all of a sudden that disappeared. You know, the wives went to work, kids who had thought about going to college deferred that, you know, we lost a whole generation from Western Pennsylvania – 500,000 people left and they were overwhelmingly are our kids, young people who were leaving, because they didn’t see a future in Pittsburgh. And so having come through that, having lived it, you know, on the North Side, where we’ve lived for almost 50 years now, and how destructive it was, never thinking I would be mayor. When I became mayor, I mean, my focus was how do we stabilize this situation? And to do that, we needed to re-imagine Pittsburgh in lots of different ways. In how we educate kids, because you didn’t need a high school education, let alone a college education to work in a steel mill. And you know, what we did with all this land, all of these industrial, thousands of acres of industrial property. And the culture of Pittsburgh, which, you know, was almost opposed in the technology industry because they were seen as non-union.

Tom: [00:04:40] And so we went through huge controversies in talking about re-imagining Pittsburgh. And now we’ve come out the other side and, you know, it looks very different.

Eve: [00:04:51] It does. Did you have a strategy from day one?

Tom: [00:04:57] Well, I laugh at that. I mean, hindsight always gives you the strategy. But we did in the sense that we felt we needed five things, right? We needed money. We were a flat broke city and … you know, essentially, as you said, I mean, close to bankruptcy. And we needed to figure out how we will get money so we could invest in Pittsburgh and entice developers. Two, we wanted land control. A lot of this land was tied up in bankruptcies and it was, you know, uncertain titles. And so, a developer who has a choice of buying a 100-acre greenfield site or 100-acre steel mill site, they’re going to buy the greenfield site. It’s safer. And the third was that we needed a really good team of people who were going to be public entrepreneurs, in effect, that were willing to take risk. And the fourth thing we needed, we needed a vision. We needed to be, to sort of know where we wanted to go. And the fifth thing is we needed good public-private partnerships. We needed people who believed that Pittsburgh could be a different place. And you remember back then, Eve, you were one of the few people that …

Eve: [00:06:08] Yeh.

Tom: [00:06:08] … were willing to invest in places like East Liberty. It was very hard to get local developers to re-imagine Pittsburgh. They had their little niche. They were comfortable in it. They’ve been through 30 years of decline. And so all those ingredients, you know, we talked about them when I ran for mayor. And people obviously voted for me. But when we started to do this stuff, they said we didn’t know you meant that. So where do we get money? And the first month or so I was Mayor we reduced the city’s workforce, reduced the number of police officers we had, then shifted six million dollars of that money annually to finance a $60 million bond issue, which we called the Pittsburgh Development Fund, which gave us money to invest in the future. In every city, I mean, I talk, I meet with cities a lot and talk to them and that’s one of the challenges they face is, your demands for the day-to-day. Just ‘today’ is huge in a city. I mean, everybody wants more police. Nobody’s streets are getting salted enough, and potholes, and if you just spend the stuff on all your resources on today, nothing changes. I mean, you’re Pittsburgh and in Pittsburgh we were still declining, so the challenge was how do we get some of those resources and use it to invest in the future, which entails risk.

Tom: [00:07:27] The second thing we did, Eve, we went out and bought, as you know, Mulugetta Birru was head of the Urban Redevelopment Authority, and we had him go out and buy almost 1500 acres of land. You know, we bought what was then the South Side works of Jones & Laughlin. We bought the slag dump in Squirrel Hill. We bought the old Sears site in East Liberty. And then, you know, we looked at each other and said, what do we do with this stuff? And that’s when we began to form great partnerships with developers. Somebody like you who was willing to invest in that old building in East Liberty and, you know, and others. And the $60 million gave us the ability to create really creative and effective public-private partnerships that share the risk with developers who believe that Pittsburgh could be a different place. That’s what we did.

Eve: [00:08:17] I was going to ask the question that, do you believe developers played an important role in the transformation of the city? Obviously you do.

Tom: [00:08:24] I do. I think place is everything. I think it has huge impact on how people live, I think, like crime rates, a whole host of other things. How they, what they think about themselves. I mean, if I live in a neighborhood that has, half the buildings are vacant and there’s a lot of litter and everything, you know, I come out my door every morning, I probably have a different reaction than if I live in a neighborhood that has lots of gardens and clean. And so I think that, it has huge impact. And so developers, from our point of view, as you know, were really important partners. And this is, I tell this story all the time, is when we started to see things happen, developers would come and say, Mayor, I have a great idea for you. And we’d say, with all due respect, tell us why it’s a great idea for you. And we’ll decide whether it’s a great idea for us, and if our self interests come together, we’ll figure out how to be a good partner and share the risk with you. But that assumed we knew what we wanted and so that was one of the really big challenges. As you remember early in my administration, I had a really great planning director, Eloise Hirsh, who really helped shape that vision, as well as Tom Cox and Mulu and Steve Leaper, really helped shape that whole vision of what Pittsburgh could be. It was really reimagining, you know, old steel mills in the South Side and a slag dump in Squirrel Hill. And so we were looking at, not to ignore other things, but we were looking for things that could be catalytic, that could change people’s image of Pittsburgh. And the ballparks obviously help with that, too. I mean that when I was running for mayor, I wasn’t planning to be, have anything to do with sports stadiums. And that sort of was one of the challenges of running the city, as you know, I didn’t think about it. And then all of a sudden, it’s the number-one topic.

Eve: [00:10:17] Well, it’s always the number one topic in Pittsburgh. Sports, so.

[00:10:20] Well, unfortunately, I mean, I don’t know if you know the story, Eve. As I, when I ran for mayor, I was elected mayor in November. In early December, the then-owners of the Pirates gave me a letter that said they intended to sell the team. I don’t even know this, that Dick Caligiuri many years ago had signed an agreement with the team that if ever they were going to sell it, that the city would in affect own the team for nine months in which they would be required to find a buyer. And if we couldn’t in nine months find a buyer, then the team could be sold to another city. And so there I was, having run on crimes, jobs and taxes, now owning a baseball team. It really, literally when I was running in November, I had no idea that the first year of my time as mayor, two years, would be dominated by trying to figure out how to build a baseball park and a football stadium and a convention center. So, that’s life, right? So, we had to figure it out, right?

Eve: [00:11:20] When the sun goes down, with Downtown as a backdrop, it’s a very special place.

Tom: [00:11:27] Well, it’s a, my favorite seat in PNC Park, regardless of what the team is doing, is that, at the very highest point in the left field stands, and because the view of the city at dusk like that is incredible.

Eve: [00:11:41] Was the Pittsburgh Development Fund the most important thing that you implemented? Were there the other programs or policies with very big impact?

Tom: [00:11:49] Well, what’s the Development Fund gave us is, it gave us the ability to be, to be flexible. When I go to lots of cities, they would say, we’d love to do this, but we don’t have any money. The money, for better, for worse, becomes a really important part of being able to pursue your dreams. And so the Development Fund was our money in the sense that we didn’t have to look to the state or the federal government, you know, to wait for months or a year before you figure out whether you’re going to get the money or not. We also, as you know, in the URA, people at the URA led by Mulu and Steve, were very entrepreneurial in understanding how they used tax increment financing and other federal and state sources, so it … it was fairly typical, it might be true in your deal, your deals that you were doing, is that you were getting sources of money from 10 or 12 different sources. And what I have found is that’s unusual in a lot of cities, that cities are not entrepreneurial like that, of understanding how you mix and match money to make a deal work. So, what I say, Eve, is it’s really, it’s really a market driven approach, is that basically you as a developer come and say, you know, I want to do this building, but this is what the bank is going to lend me, and there’s this gap in financing, and if it’s something we want to see happen, we being the city in this case, then we become your partner and figure out how to help finance it, whether it’s our Development Fund or other sources.

Eve: [00:13:30] My experience with the Liberty Bank Building was very typical. I think I had 12 sources of financing.

Tom: [00:13:36] Yeh.

Eve: [00:13:36] Most of the URA money, which I’m really glad gets to be recycled. But Mulu was extremely entrepreneurial. He, first of all, he didn’t quite trust me when we started …

Tom: [00:13:36] Well, but you were a small developer at the time, right? With not a long track record. But with great ideas.

Eve: [00:14:05] There were really interesting meetings. I really became very fond of Mulu. So, but he, you know, his approach was, look, we have this amount of money. 300,000 dollars out of this pot of money, or whatever it was. And you need two million. Go away and think about how it might work. And so I would come back and I’d say, look, I could make it work if you took little interest payments for two years or, you know, whatever, whatever it was that made it to some sort of stabilized scenario. I learned a lot. And then, you know, things shifted very much, and I think the URA lost a lot of its funding in the mid-2000s and the banks got more skittish and it all changed, right?

Tom: [00:14:49] Well, it did and it didn’t. I mean, I think the philosophy in the city changed and maybe … so I was saying this about being market driven. Mulu met with you and you convinced him that the market was what it was, that without flexible public money that could defer interest or payments even for a few years, that that this deal was not going to happen, and we wanted it to happen, and so we would make the loan. The market has become much better in Pittsburgh, though. You were, you know, in my view, the early bird gets the worm in this case, in the case of your building, you were, you were the early bird. Is that you got better financing then maybe after the market’s healthy. So, we tried to be market sensitive in that sense. And at the same time, recognize that we wanted these deals to happen, so we were willing to put, risk public money. I think the key to it, what I learned about myself in this, Eve, as I was, I am not a good day-to-day manager, but I understood how to hire good people and just give them room. And if a deal blew up, you know, that’s what’s going to get reported on the news. But I need to be willing to support the people if they did the deal for the right reasons and it just didn’t work. And we had some of those done, you know, Fifth and Forbes Downtown was one of those examples. But we were willing to take those risks, whether it was with you or other developers, that we didn’t know with the market, we didn’t know if people would move and live on a slag dump in Squirrel Hill or, you know, live in apartments in South Side. We didn’t know what the market was. We were way out there and that was the risk involved in this, and using public money.

Eve: [00:16:33] I moved to Pittsburgh accidentally and was kind of involved in all of this on the periphery, and it really shaped my life. The way I think about cities is very different now. So, thank you for that. The plan that did not work out was the redevelopment plan to reshape Downtown which…

Tom: [00:16:49] Actually it worked though didn’t it? I mean, four of the five blocks that we were going to acquire have been redeveloped.

Eve: [00:16:57] Yes, it did work. But my question was, yeah, it just took time, didn’t it? Took time for people to get used to the idea.

Tom: [00:17:04] Well, it looks differently than what we would have, I mean, we were more focused on a retail strategy and it might or might not have worked. I don’t know.

Eve: [00:17:12] Well, today with Amazon, it might have backfired again.

Tom: [00:17:15] And that’s where you don’t, I don’t know with today’s retailing whether it would have worked or not. If we would have been able to put together sort of what we were thinking. But, in any case, all five blocks have now been redeveloped, that we focused on. And it’s a much more vibrant place. We could see the decline there. I mean, we could look at the sales numbers of businesses that were there and just see the decline of what was going on, and I think felt the need to try to intervene, you know, and maybe did it really in a clumsy kind of way. And but, you know, at the end of the day, it was a necessary intervention that ended up working. PNC played a big part, was a big partner in that with their new building

Eve: [00:17:59] Yes. It was really difficult, I remember. What would you do differently today? A different city.

Tom: [00:18:06] When I’ve come to really love is the public spaces. So, in East Liberty, I think we would have had, we had the opportunity, which we didn’t do, to create a sort of a central plaza somewhere there. That we could have really recreated a much more, you know, in a public space, it can be the most democratic place in the city. And so, I mean and so with Home Depot, we were looking to make a democratic place where people, wealthy people and poor people would all shop. If I had done East Liberty thoughtfully more, maybe we would have created a public space like that, too. And Market Square, in many ways, plays that role Downtown now. There’s a public space where people of, with all incomes and all backgrounds show up. And so even in smaller neighborhoods like Lawrenceville and other places, because there were such, you know, abandonment of property, we had opportunities to really create better public spaces, little town squares. Because one of the strengths of Pittsburgh is with its 90 neighborhoods is, is that we have this real sense of communities and I’ve come to appreciate that much more. And we really would have focused more on creating places where that community can play out in neighborhoods like Lawrenceville and other places. I go to China a fair amount. Not recently. thank goodness. And when I, I get up early in the morning to go for a run and one of the things I see there, and China has done a very bad job of creating public spaces, but where there is public spaces like at six, seven o’clock in the morning, there are hundreds of people there in the plaza doing tai chi or dancing to a boombox. It’s this great sense of community. There’s lots of older people or people running. And you can see feel this community, I mean, people talking and laughing. Every morning they’re there. And we don’t have that tradition in America. But it would be wonderful. We did, but but we ought to create places where that happens. You know, the Blue Slide Playground is a place like that in Squirrel Hill. I mean, famous now because of Mac Miller.

Eve: [00:20:24] I visited Beijing three years ago, and the photo I loved the most from there is a small urban park which had exercise equipment in it. And in fact, I saw this several times …

Tom: [00:20:34] Right.

Eve: [00:20:35] … exercise equipment, really basic. And you could see people all congregating, and doing their little exercises in the park, open to everyone, It was fabulous.

Tom: [00:20:46] Right. We did a half step under Eloise’s leadership in public works. We made a decision to rebuild all of our 100 and some neighborhood parks, like the Blue Slide Playground or the Schenley Park, and also many of the smaller ones. And we would have community meetings and we would hire landscape architects who would meet with the community and, you know, with the playbooks. And then they would work to design the kind of playground they wanted. They would given a budget, 100, 150 thousand dollars, and they could pick from the play equipment books, the playground they wanted. But the instinct we had was right, but we should have expanded it. And in many neighborhoods where, like Homewood. I mean, you have an opportunity in Homewood, still today, I think, to create a really great plaza that would become the center of Homewood, and how you would do that. And East Liberty represented that opportunity. I mean, there were, as you remember, lots of vacant land there that was tax, you know, essentially abandoned. So that’s probably one of my bigger regrets, was not creating places where that sense of community can play out.

Eve: [00:21:58] What do you love most about Pittsburgh? I know you still live here.

Tom: [00:22:01] Our strength and our weakness is our parochialism and that’s what I love most … is that we’re an unusually friendly city. I’m in Washington four days a week, right? And my habit in Pittsburgh is pretty much everybody you see, even before I was mayor, but when I’m mayor I don’t know whether I know them or not, or they know me. So you say hello to people, right? You get on an elevator, you say good morning, right? People, you do that in Washington, D.C. people look at you like you’re … going to rob them. You know, it’s a weird feeling for me. I see that in lots of cities. I would just did Orlando for a couple of days that I felt it there. Same thing, is that, sort of people don’t make eye contact, don’t acknowledge. I mean, if there was just two of you in a place, that you don’t, they don’t acknowledge you.

Eve: [00:22:50] You know, that’s interesting. There are other cities like, I think Atlanta and Detroit are very friendly. I always notice it when I go there.

Tom: [00:22:56] Yeah. So it’s, and I hear that. It’s funny, I mean, when I speak, and I was in 50 cities last year, so I end up engaging with thousands of people. One, is the numbers of people that have lived in Pittsburgh. You know, I mean, that’s sort of the legacy. I always say you’re our failures. We couldn’t give you a reason to stay, you know, there’s so many people that left in the 70s and the 80s. And the other is inevitably people who are not from Pittsburgh. I just was talking to a guy in Orlando yesterday who, his daughter and he, and they’ve never had any connection with Pittsburgh, but she loves the Pittsburgh Penguins. And they go to Pittsburgh every year to see a couple of Penguins game, and he was telling me he’s going in March and, you know, he said, I’ve never been to a friendlier place in my life. Everybody talks to you and it’s just, it’s a great place, right? We don’t even think of that. And that’s partly what I like. And I think that’s the strength of Pittsburgh. When I say parochial is that we are really, those of us who are from Pittsburgh or who moved there, you become really rooted in your neighborhood, and in the city. I think in places like Orlando, that is, you know, a lot of Florida cities in California and even Texas cities. You know, there’s lots of new residents. And so they don’t have that kind of history. And so I, that’s part of the challenge of Pittsburgh. How to keep that, and at the same time not have it be a deterrent to making Pittsburgh a competitive city.

Eve: [00:24:28] But you know, I think what’s most interestingly Pittsburgh, about Pittsburgh to me, is again, I’ve always thought it’s topography saved it from becoming what Detroit has become.

Tom: [00:24:40] Oh, I think definitely, I mean, the hills and valleys and how Pittsburgh is defined, I think is a large part because of its topography. You know, I learned that running for office when I was in the legislature, when I first ran for the legislature. If you confuse people from Spring Garden with people from Spring Hill, they will never vote for you. I mean, they’re very rooted in their neighborhoods, right? And so there’s that whole hierarchy like that around Pittsburgh. When I meet somebody, when they say they’re from Pittsburgh, I typically say, where did you go to school? And that tells me a lot about them.

Eve: [00:25:19] Interesting. Yeah, I think the topography also, it kind of contains each neighborhood. So, I think that that sense of being in a neighborhood is going to stay.  I can’t, I can’t see it disappearing in the city.

Tom: [00:25:33] No, and that’s what, when I was talking about the public space, I mean that’s, that’s what I have a big regret it was around that idea of how do you build even a stronger sense community using public space, whether it’s playgrounds or a park, a community. How do you in a very thoughtful way connect people in that neighborhood so they feel a sense of place? And there’s a purpose for that, because I think if people feel rooted in their neighborhood, I think they’re willing to put up with a lot of problems if they see themselves and others committed to wanting to making it better. I mean, if I can see a light at the end of the tunnel, I’m willing to stay on the journey, right? A lot of people are not willing if they don’t see any end to it. And I think of a neighborhood like Allentown that’s been through a lot of problems. And yet, there’s a strong core of people in Allentown who have really stayed with that neighborhood. And, you know, it has gone up and done and now I think it’s back, going back up again. I know we used say, Eve, you know, that houses in the North Side up in Fineview at the time, I mean, you could buy for 30 or 40 thousand dollars. And we said if Pittsburgh’s population were like any other city and it was growing, those houses would be worth a million dollars with the views. And that was part of the problem, is that we weren’t growing as a city. And it’s still part of the challenge of Pittsburgh, is that we’re doing much better, but we’re still not growing compared to, certainly the region is not, compared to a lot of other cities and communities.

Eve: [00:27:19] Today you work, you’re a senior fellow at the Urban Land Institute, which some of my listeners may not know about. What do you do in your role there?

Tom: [00:27:32] So the Urban Land Institute is an organization founded about 75 years ago by a group of developers concerned about the quality of development beginning to happen in America. And fast forward, the Urban Land Institute now has about 50,000 members worldwide. And it really, it’s focus is how do you create thriving communities? And ULI had participated in several programs in Pittsburgh when I was mayor, and then I got recruited to speak at different ULI events. And when I was leaving as mayor, it was right after Katrina in New Orleans and along the Mississippi coast. And they asked me whether I would go down and work with the mayor of New Orleans and with other public officials across the Mississippi coast. And so I did that for about a year and a half after leaving as mayor. And it was fascinating. I mean, it was really a fascinating experience. And, you know, in New Orleans, their mayor ended up going to jail for 15 years. And the political structure was really fairly inept back then. It’s gotten better. And so I watched, really, New Orleans return in large part because of grassroots decisions and leadership, through churches and nonprofit groups and neighborhood groups, and a lot of outside help. Foundations and movie stars like Brad Pitt. But people, but ultimately, the up-swelling was really, really bottom up. It wasn’t top down. And so it was a fascinating experience to work in, there. And I still am, I was on the board for many years of a community development corporation there. So it’s been an experience. Since then I got to about 50 cities a year and speak at ULI events or other events, and then often end up working with cities for a while. And I’ve written several papers – working on one now for ULI.

Tom: [00:29:40] It’s been a good, a good experience, really a great experience after being a mayor. And part of what I get asked to do all over the world is, in part I get asked to talk about Pittsburgh. How we went from this failing industrial city  to what we’re becoming. And the reason I get asked by, about that is, wheat I’ve come to realize, Eve, is virtually every city in the world, whether it’s Hong Kong or London or Dublin, or are all struggling with some of the same issues that we went through in Pittsburgh, of sort of what what is our place in the world? We were forced to have that conversation because of the collapse of the steel industry. Other cities have not had that kind of dramatic change, but they are seeing the world change and they are trying to figure out how to  stay current and get in front of those changes and manage them.

Eve: [00:30:34] Are there any current trends in real estate development that interest you the most?

[00:30:39] Well,every city, every place I’ve been, and this is, I mean, last month I was in Dublin and London, right. And I was supposed to go, I go to China about four times a year. I was supposed to be going in March. My plane trips are now all being canceled, but I was going to cancel anyhow. But so whether it’s cities in China or European cities, affordability is a huge issue. Of how do people, where do people live? And how do they afford to live? And so how cities develop affordable housing is a big, big issue. Where am I going to work? Because of the impact of technology and we see it in Pittsburgh up close every day as we see a whole litany of driverless cars on the streets of Pittsburgh or autonomous vehicles with attendants in them. But, you know, pretty soon the attendance won’t be there. As I mentioned, I was in Orlando yesterday, just east of Downtown Orlando but still in Orlando is a place called Lake Nona. And they now have, I don’t know, a half a dozen driverless autonomous buses that drive people around this very large development. Nobody driving. Nobody in, no driver. And no attendant. It is just on its own already on a sort of a, sort of private street where bikes and others places can go, but not cars. So we’re seeing this happen and what does that mean? I mean, if you think of 50 percent of the land use of a typical city is for cars, between roads and parking and everything like that, what does that do to how we think about cities. And not it’s not even that kind of technology. It’s why do young people want to come places? Part of what I say is what does General Electric and McDonald’s and Marriott and Fifth Third Bank and Heinz Kraft Foods and what they have in common is over the last five years they’ve all moved their headquarters from suburban office parks into cities. And why are they doing that? They’re doing it because … they’re having a hard time recruiting talent, young people, to move to the suburban office park. Where you need a car to get to. You know, if you do a survey of the Google employees in East Liberty, I’m betting that 25, 30 percent of them either walk or ride a bike to work. So that has huge implications on cities. You know, do you spend your money building more highways or do you build a transit system. That’s part of Orlando’s challenge. They don’t have a good transit system and now they’re  strangling, you know, because of the congestion.

Eve: [00:33:33] Yeah. It’s changing.

[00:33:34] So it’s those debates that I’m watching all over. Mobility is a huge conversation. The equity conversation, I mean, one of the things I see really fascinating, The New York Times did this, I thought, very cruelly. A few months ago they did an article about cities and they talked about winners and losers.

Eve: [00:33:56] Yes.

Tom: [00:33:56] And they talked, and they compared Nashville and Birmingham. And they said Nashville is a winner, they both start at the same place 25 years ago. Nashville is now a hot city, booming, and Birmingham is not. And they talk about, why, how that happens is really a lot to do with leadership. And then within, so we’re seeing cities sort of separate themselves, if you understand, those that are, where Amazon is going to consider locating, and those that are not. And what are the ingredients that make that cut? And then the other, within cities we are watching a huge divide with lower income people and the people that are sort of part of the new economy. And so, I think that equity issue is a huge challenge for cities also.

Eve: [00:34:43] Yes. You know, I have always thought that one of the things that’s most overlooked in discussions about cities and how to grow them is their connection to other cities. And, you know, I think that’s probably Pittsburgh’s growth problem. It takes a really long time go by train.

Tom: [00:35:00] Well, we lost a whole generation of people that would normally be having babies.

Eve: [00:35:07] If you want to get to New York by train, it’s a day. There’s no easy, fast way to get to work hubs. We’re sort of a little bit stranded. And I was always puzzled by the fact that we, you know, people would talk about better transit in the city, but I wanted better transit to other places, nearby, to open up opportunities. If I wanted to do a development project in a city, I wanted to be able to get there in a day in and back. Right?

Tom: [00:35:37] Right.

Eve: [00:35:37] So I, you know, I wonder if you plot out those connections, you know, where the, you know, the cities done well, will land.

[00:35:49] I think it’s a mix. I think mobility is one piece of the conversation of how easy it is to move around a city. Our son, for example, is now 29 years old, does not even have a driver’s license. He lives in Pittsburgh. On the North Side right now with us, he’s moving, though. You know, he is, has been able to manage fine living in Pittsburgh, using Uber and using public transit and, you know, walking a host of other things and abusing his friends every once while they’re able to, you know, he’s able to sort of manage living in a city pretty well. But I think mobility is part of the conversation. And that’s what, when I was becoming mayor, Eve, our focus was we need to figure out how to create a diversity of jobs. And we needed to make Pittsburgh a place where people wanted to live. You know, we’re never going to be, maybe we will someday, we’re never going to be a warm city. Like I was just in Orlando yesterday. It was 90 degrees. We’re not going to be near the ocean, but we had other assets. And so, as you might remember, I was very focused on building riverfront trails for that reason is that was an underutilized asset. You know, we watched, you know, a great music and bar scene sort of, and that happened organically. It’s funny, I watch the, I read the media in Pittsburgh now about the Strip District and we made a very intentional decision not to do anything in the Strip District. We, you know, people would come and why don’t we do this and why don’t we do that in the Strip District.tAnd we really said The place is working really well. Why do we want to get involved in it? Let it, it’s just happening on its own. So. You know, that it’s interesting that that’s the big, big debate right now in Pittsburgh, I guess about, are we killing the Strip District. So I think that you make decisions, you know, some of them are going to be right. Some of them were wrong. Hindsight will tell you whether it works or not.

Eve: [00:37:56] You know, this show is about real estate impact investing. And I want to know what you think a key factor is that makes a real estate development project impactful.

Tom: [00:38:06] You know, I think it’s the public space. Is the building itself attractive, but it’s the space around it, how it engages people that work in that building, and even people walking by, how they might use it. I think that, how it all connects. And you can get senses of it, right? When it works well? I think, you know, there are places in Pittsburgh that I think of that are just great places to be. People like to be there, right? I look at Mellon Park, you know, going back many, many years, long before I was mayor. Still a very iconic place on a nice summer day. It’s packed with people, having lunch. And I think how that happens, and that’s where the public private interface is so importantA and where the public needs to have, to be put money in the game, to say to a developer, you know, we want to get this quality in, and a developer might say, but I can’t afford to do that. And if you look at the books and the market is going to be make it hard for the developer to do that, then there’s a public role for that. I think another good example is that is Schenley Plaza, which for for 40 years or 50 years was a parking lot. I mean, think about that. I mean, I, you know, on one side is Schenley Park, on the other side are the museums, on the other side is the Pitt law school. And then on the other side, the Cathedral of Learning. And what is the highest and best use of that land for 50 years? It was surface parking. And Mark, this chancellor at Pitt and I got together and said we should be, we should do better than that. And so we work with the Parks Conservancy and came up with an idea to put a park there, to take the parking. And I got all this hate mail, but I’m never going to vote for you again. You’re taking away my parking place. And I said, you know, you’ll get over it. There’ll be other places to park it. But this is, this, we can do better than that is the interest of a great university. To a great park. To a great museum. We can do better than that. And you look at that on a nice summer day, it’s filled with people. So creating those kinds of places, I think is is that there’s a responsibility of both the developer and the community. You know, you did something quirky Downtown with those statues. And I bet lots of people walk over, who maybe have never been in Pittsburgh, walk over just to look at them.

Eve: [00:40:58] Yes. In fact, I think the taxi drivers use it for directions when someone says, I want to go Downtown.

Tom: [00:41:05] Yeah. So that’s what I mean. And look at Randyland on the North side.

Eve: [00:41:10] It’s fabulous. Yeah.

Tom: [00:41:12] You know, I mean, it’s just things like that make a cityS so the other word that we use a lot in ULI is authenticity, right? Pittsburgh has a great history. It has a great story. And we could still do better at telling that story. The South Side Works, when we started to develop that we put, had a competition for, and we brought artists and old steel workers who worked there together for like a morning of talking. And then we had a competition for artists. And there’s, at the end of Hot Metal Bridge is a little monument that we established for the steelworkers. But Pittsburgh is an incredible story.

Eve: [00:41:56] So I’m going to ask one last question, because I’ve taken up a lot of your time.

Tom: [00:42:00] It’s fine, I’ve enjoyed it. It’s fun to talk to somebody who actually knows Pittsburgh, Eve.

Eve: [00:42:05] So is there something that you think could really change real estate development in the U.S., for the better?

Tom: [00:42:14] I think it is, is the idea, the partnership idea. I’m amazed that the cities I go to, many developers attitude is I want a minimize my involvement with the city. Maybe there’s a reason for it. I want to get in and get out. I want to get the entitlements, whatever I may need and do what I want to do. So the challenge is the developer has a piece of property. The developer needs to figure out how to make money from that property. I accept that. I want the developer to make money from the property. On the other hand, the city, the city has the responsibility to build a great city. That it will never be a great city if these developers see their development as sort of an island disconnected from what’s next to it. And so the city’s responsibility is to figure out how that all fits together. Give you two examples that drive me nuts. I can drive on pretty much any suburban shopping street. I can go into a gas station. Maybe I want to go to the store next door. And I have to drive back out onto the highway. Or maybe I want to go to a store across the street, I have to go out on the highway. Maybe I have to drive a half a mile to get over there to the other side. So I can’t, there’s no sense of connection between any of that. And the other is, I watch in suburban areas like Cranberry Township subdivisions being developed of 100 acres or so. What would it take for those subdivisions that, maybe there’s five different developers doing one hundred acres each, if they would, then the city’s role would be to say we want to connect all this with a bike trail at the edge of your property so that every, so now instead of having a couple little playgrounds, you might have a five or ten mile bike ride, safe, off road. You don’t have to worry about traffic with your little children. And there is examples of where the public fails. Both the public and private developers fail. Because you create great, great amenities if you begin to think in a bigger way rather than individual pieces of property. That’s what’s destroying development, and quality in America today.

Eve: [00:44:33] Yeah, I agree, I think we both believe that real estate development, just as a financial tool, as a way to make money, isn’t making our cities better.

Tom: [00:44:43] Well, I think you make more money if you build quality. In the long run I think your development is more valuable. I mean, we didn’t get into all the other sustainability and all that which a lot of cities are facing.

Eve: [00:44:54] Thank you very much.

Tom: [00:44:55] Look forward to see you sometime. Bye bye.

Eve: [00:45:04] That was Tom Murphy, past mayor of Pittsburgh. Tom thinks place is everything, so place is what he invested in during his long term as mayor. He did that by reducing operational costs and creating the Pittsburgh Development Fund, a $60 million fund focused on helping developers who were willing to work in places and on projects that made the city better and better. It was a very bold, and unpopular move, but paid off in ways that no one imagined, as did many other moves that Mayor Murphy made.

You can find out more about impact real estate investing and access the show notes for today’s episode at my website, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities. Thank you so much for spending your time with me today. And thank you, Tom, for sharing your thoughts. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Tom Murphy

She’s all in.

Janine Firpo is a writer, values-aligned investor, and entrepreneur. She left a career in the tech world many years ago to pursue a more meaningful work experience. This led her into the world of micro-finance and philanthropy. And now, for the last ten years she has been on a personal mission to invest all of her assets so they create a positive impact. It’s a bold move and she is all in.  

A pioneer in Digital Financial Services (DFS), in 2002, Janine initiated and led a consortium of micro-finance leaders to explore the role technology could play in dramatically increasing the scale of financial services to the poor. In 2008, she became one of the first mobile money experts and advisors to mobile network operators, financial institutions, and other early DFS entrants. In her role at the Bill & Melinda Gates Foundation, where she served as a Deputy Director on the Financial Services for the Poor team, Janine and her team designed philanthropic and impact investments to bring poor people out of poverty by leveraging DFS to bring them into the formal economy.

In 2017 Janine left her position at the Bill & Melinda Gates Foundation to focus on bringing more female investors into the impact space.

She is currently one of the lead investors in the Next Wave Impact Fund an impact angel fund designed to help more women become angel investors, and she sits on the board of Zebras Unite, an organization developing the capital structures, community, and culture that non-unicorn start-up businesses need to thrive.

During her career, Janine worked for Apple Computer, Hewlett-Packard, and a number of technology start-ups. She also ran a non-profit that she spun out of her role at HP. Janine has consulted to corporations, government agencies, start-ups, and non-profits around the world.

You can email Janine at [email protected] if you want to know more.

Insights and Inspirations

  • Figuring out what “impact” means in real estate investing is difficult for someone starting out. It’s impossible to find consistent metrics.
  • According to Janine, not only can you expect financial return when you make a socially responsible investment, you can meet or beat the market! 
  • Only 5% of the US population is a millionaire. That means that 95% of the population does not have access to investment opportunities that are largely available to millionaires. 

Information and Links

  • Some of Janine’s cash is invested in CNote, which offers a 2.75% return with great liquidity after 3 months. Janine loves that their updates track how her money is helping women entrepreneurs
  • Being part of the Next Wave Impact has been a great way for Janine to learn about angel investing in the company of other women, all of them committed to making an impact by supporting women-led companies.
  • Janine is also investing Nia Global Solutions a female-led public equity fund. This fund investing in companies that promote sustainable agriculture, good health, quality education, affordable housing, and sustainable life, all the while beating market returns!  
Read the podcast transcript here

Eve Picker: [00:00:03] Hi there! Thanks so much for joining me today for the latest episode of Impact Real Estate Investing.

My guest today is Janine Firpo. Janine is a writer, values-aligned investor and entrepreneur. Janine’s background is fascinating. She left a career in the tech world many years ago to pursue a more meaningful work experience. This led her into the world of microfinance and philanthropy. She has consulted and lived all over the world. And now for almost 10 years, she has been on a personal mission to invest all of her assets so they create a positive impact. It’s a bold move and she is all in.

Be sure to go to EvePicker.com to find out more about Janine on the show notes page for this episode. And be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve: [00:01:21] Hello Janine, thanks so much for joining me today.

Janine Firpo: [00:01:24] It’s my pleasure, Eve. Thank you so much for asking me and for being interested in what I’m doing.

Eve: [00:01:30] Yeah, well, you’ve had a really fascinating career, starting with technology companies when they were startups, and are household names now. And you left that path to follow a very different one. But I wanted to ask you how you started your career?

Janine: [00:01:45] I’d be happy to tell you. So, I actually started my career very early in 1981. It’s a long time ago for many people. And I sort of fell into the computer industry, first in Louisiana, and then when I really got into it, I moved back to the Silicon Valley where I was originally from and I’m still here. And I worked in high tech for about 15 years, worked at Apple Computer in the 80s, and then also did some startup work. And then in 1995 I left a job and I did a solo backpacking trip through sub-Saharan Africa. And what was really interesting about that is when I left on my trip, I was in something called the CD-ROM and multimedia industry. And when I came back, everyone I knew was in the Internet industry. So the internet literally turned on in the four months that I was away.

Eve: [00:02:37] Wow.

Janine: [00:02:38] And I was perfectly positioned to get on that ride, that dot com ride. But when I was in Africa, I saw poverty like I had never seen it before. And I decided that I wanted to use my life in a way that had meaning. And so I set out on a track to figure out how could I use the skills I had, technology and business knowledge, to bring change to the levels of poverty that I was seeing in Africa. And so that launched me on then what became a twenty-year career in international development and bringing technology into Africa, Southeast Asia and other parts of the world. And while I was on that trajectory, I got involved in something called microfinance, which is making loans to poor women, primarily in developing countries around the world. And in looking at what is the role that tech could play in really scaling microfinance, it was reaching 100 million people in the world when I started, and the need was to reach two and a half billion people. That inquiry, other people were involved in it as well, led to something called ‘mobile money,’ which is using the cell phone as a bank for the poor.

Eve: [00:03:50] I was at the Bellagio Foundation in Italy, a few years back, with someone who was writing a book about the M-Pesa.

Janine: [00:03:58] Exactly! M-Pesa, which was one of the first incidences of this, it actually started in the Philippines, but M-Pesa was the example that just shot off the charts within the first year. It came out in 2007, and within its first year it had a million people using the service. And in the second year it was many more millions. And it’s now serving, over 85 percent of the population of Kenya uses M-Pesa now, and it has become a de facto way to move money. And now people are getting loans over it. It’s being used as a financial mechanism for all sorts of things. So, it became an amazing industry. There are now over 250 incidences in more than 90 countries around the world.

Eve: [00:04:44] But it really started because people had cell phones. Right? And they needed to move money.

Janine: [00:04:51] They had cell phones, well, actually the way it really started was  the people behind M-Pesa was Vodacom, and they were trying to apply the cell phone technology to microfinance. And they started in 2004 with a microfinance institution in Kenya. And it just didn’t work for a lot of reasons that I won’t go into. But what they found that was really interesting when they were trying to help this microfinance industry scale its business was that people were using the phone just to move money back and forth. And they saw a real opportunity. So, they retrenched. They rethought everything. They set up all the infrastructure that they needed. And then in … February of 2007, they launched M-Pesa as we know it today, which was a money transfer service. Now, super-fascinating the way it all unfolded.

Eve: [00:05:40] Yeah.

Janine: [00:05:41] Yeah. And then so I had this great career for 20 years. I traveled all over the world. I’ve been to more than 80 countries. I worked all over the world. It was amazing. I loved it, but I was also traveling 50 to 70 percent of the time for 20 years. And the industry became huge. And I was always more interested in startups and new things. And so it just became time, a couple years ago, for me to leave that. And so I retired from that career. And along with being involved in all of that, so, I was sort of a social entrepreneur before that kind of word became a thing. And because I was in the Bay Area I was involved in all of these conversations around what has ultimately become known as impact investing. I was working at Hewlett Packard in the corporate social responsibility world. So, part of just that entire conversation about the new philanthropy and different ways of using our money. And about 10 years ago, even though I am not a high net wealth individual myself, I realized I’d made the choices in my life to live and lead from a life of value, and something where I was making a difference in the world, and I realized my money was working against me. And so I decided I was going to figure out how to invest all of my own money, from my cash to my public stocks to private stuff. If I could do that to real estate, all of it, how do I invest all of that in a way that lines with my values and is supporting the world I want to see.

Eve: [00:07:18] That’s a pretty powerful step to take, Janine.

Janine: [00:07:19] Well, it just was really in alignment with who I was. And it was because I was watching, I was going to these conferences and I was seeing these ultra-rich people and financial, you know, foundations and institutional investors doing this. And I thought, well, why can’t, why can’t the rest of us do this? Why is this yet another thing that’s just being left to the very rich? And so I decided to try on my own. And in the 10 years I was working super hard, so I had financial advisors. They didn’t get me where I wanted to go. And so when I retired a couple of years ago, I took a lot of my assets back. And I’ve been working on this myself.

Eve: [00:08:01] Wow.

Janine: [00:08:03] And I have realized that in the 20 years that I was, have been sort of watching this space, it’s really evolved. And I now think we’ve gotten to a point where the goal of investing your money in alignment with your values is becoming mainstream. At this point, one of four dollars that are invested by institutional investors are invested in socially responsible ways. It just hasn’t trickled down enough to those of us who aren’t wealthy. And it shouldn’t be that way, because there are now products across virtually all asset classes that you can invest in a values-aligned way, even if you’re a non-accredited investor, which means even if you don’t have a million dollars in net worth, you can invest this way. And so I have corralled a bunch of the brilliant women I know who are now helping me develop a book, helping people, primarily women, because we have been really left out of the financial services conversation in a lot of ways, to help them think about how to be smarter about their investing overall and how to do this in a way that aligns with their values, too.

Eve: [00:09:12] That’s pretty fabulous. So, just shifting gears a bit, when we talked awhile back, you mentioned that you were interested in investing in impactful real estate, the next step in this process for you. And …

Janine: [00:09:25] Yes.

Eve: [00:09:25] First of all, I’m wondering why that’s an interest now?

Janine: [00:09:28] Because, well, I currently own real estate. So, when I was a kid, I actually learned a lot about money from my mom, and my mom when I was a really young kid, we didn’t have very much money. In fact, we were kind of poor. We didn’t always know where we were going to get food. We were wearing secondhand clothes. My mom was a coupon shopper. And at some point along the way, she decided that she needed to find a way to make more money. And so she got herself into real estate. She became a real estate professional. And she started learning about buying property, buying and selling property. And so she, we’re talking like back in the 60s, I think, she started going to the courthouse steps and buying foreclosed property and sometimes sight unseen. She would buy them and then she would turn my sisters and I into her crew and we would go … we were, like, this is how I spent my summers, my teen years. Ripping up carpets, refinishing carpets, painting interiors, painting exteriors, cleaning, you know, all of that. We were her crew. And then she would rent these properties out. Sometimes she’d sell them. So, I learned about real estate and I’m in the Bay Area. This is a really hot real estate market. And so I’ve, you know, I’ve learned something along the way. And … I bought my first house when I was 30, and have purchased real estate. So, I have those assets. Now, if I am truly aligning all of my money with my values, then that has to include my real estate. And so I’ve gotten to the point where I’ve pretty much figured out a strategy for all of my other asset classes. My cash has all been moved in alignment with my values. I’m working on doing that with my public equity stuff. My fixed income is moving that way. I’m an angel investor. I only invest in socially responsible businesses and I primarily am investing in companies that are started by female CEOs, because women get less than two percent of the private equity capital in this country. So, we need to support more women founders. So, I’m doing that with a lot of my money already. It’s time for me now to start shifting my focus to the real estate. So how do I get out of, so I’m starting to think about, how do I get out of single family residences, and what might have more values aligned real estate set of opportunities look like.

Eve: [00:12:02] That’s really interesting. I have the reverse problem, so I’m going to probably ask for your help in dealing with my other assets.

Janine: [00:12:11] Happy to do that.

Eve: [00:12:12] So, you’ve been looking. And what does real estate impact investing look like to you? What does that mean?

Janine: [00:12:19] Well, that’s a really good question. And I have to be honest that I’m in the early days of this journey. And so I’m just starting to learn and that’s how I found you. Actually, I was out on the Web and I was kind of searching around and thinking, well, who’s doing anything out there in real estate? And that’s how I found you. So, I know a little bit. So, and I’ve invested in a little bit. So, my last job was up in Seattle working through the Bill and Melinda Gates Foundation. And when I was up there, I heard about a company, that basically what they were doing was they were buying distressed property in Seattle, and they were single family, and they were gutting a lot of these places and then rebuilding them green. And could actually tell the buyer this is what you’re energy saving is as the result of buying this house. So, green is one way of thinking about this. I’m also somewhat familiar with affordable housing. And my current financial advisor actually has me in an affordable housing fund. I forget the name right now. I apologize for that. But they had me in that kind of fund. I’ve been aware of the whole opportunity zone set of things that are cropping up around the country. Although I’ve heard varied things about those opportunities. And, you know, those are basically things that I know. I also am invested, a very small amount of money, this particular deal could only take a thousand dollars from each investor. But it’s a woman here in Oakland, the city that I live in, who is basically raising down payments through gathering money from many, many investors. And then she’s getting loans and she’s buying multi-unit properties that already have tenants, low-income tenants, and what she’s doing is, she’s setting up structures where these tenants, as they’re paying rent, are actually in basically a buy-to-own situation. And she’s turning these buildings into cooperatives that are owned by the people that live in them. So, I think there’s some interesting models out there. I just don’t, I only have seen a smattering of them so far.

Eve: [00:14:40] Yeah, actually, I think, I just interviewed Rebecca Foster, who is also in the Bay Area on the Housing Accelerator Fund, which is a different model, they are working on raising money to preserve existing affordable housing in San Francisco. Yeah, I think there’s lots of ways to make impact and you’re just really scratching the surface. Right?

Janine: [00:14:59] Exactly. And there’s a, yeah, there’s a man that I met recently through something I’m involved in who’s in the real estate business out here. And he’s starting to think about building his career around socially responsible real estate. So, he and I have had a couple of conversations. And one of the things that he sort of suggested to me, although I don’t know that I have enough assets to do this, but he talked about wouldn’t it be cool to like have a building where you could have businesses in it and and tenants in it, residential and office space combined. But really determine that you want a certain kind of business. Like create a space where these are all businesses that are run by women, or these are, you know, so … or these are all businesses that are in this kind of vertical and they’re helping each other and that particular vertical is good for the world. That was kind of an interesting thought.

Eve: [00:16:02] I think a lot of people are thinking about this in many very different ways. Like, I built a portfolio of what I believe are socially responsible projects, but really starting before green was the theme. And I focused on underserved neighborhoods and blighted architecture …

Janine: [00:16:26] Right.

Eve: [00:16:27] And so what I think is interesting about the real estate impact investing world is there’s really 1001 ways to make an impact. You just really need to figure out what matters the most for you.

Janine: [00:16:41] I totally agree. In fact, that’s one of the things that I’m talking about in this book I mentioned is I am moving away from the words impact investing and socially responsible investing and all of that, because I think so many people use those words and they mean different things by them. And what I and it’s, so it’s hard to get a clear definition on it. And what I’ve found is when push comes to shove and you talk to people who are thinking about impact investing, they’re usually talking about private deal flow, private debt and private equity. And I’m really interested in looking across all of your assets. So, what I’ve come to realize is even though I believe that if enough of us move our money this way, we can change the economy. At the end of the day this is really about our individual choices and who we think we are as people and how we want our money to reflect who we are in the world.

Eve: [00:17:35] Yes.

Janine: [00:17:36] Right?

Eve: [00:17:37] When you take money, you use it, you spend time on it as well. So, for me, it’s even more than money. It’s how I spend the time around it.

Janine: [00:17:47] Exactly. In fact, I realized the other day, it’s, for me … so much of this conversation about values align or impact investing, it’s always the extra thing that people have to talk about. It’s, like, here’s your financial issues and how you invest in all of that. Oh, and then there’s this impact investing thing. And I realized, particularly for women and millennials, who the vast majority of us want to invest our money this way, it’s not the extra thing. It’s sort of like the icing on the cake. Yeah, you can go out and you can invest your money to maximize return or whatever. But it’s really kind of boring, in a way, to do, at least to me, it’s like, yeh, so my money is out there and it’s doing whatever and I don’t even know what it’s doing, and all I really care about is the return? No, I want more from my money than that. I’ve worked hard to get it. I care about everything I do in my life. Why wouldn’t I care about what my money is doing? And when I get feedback from the people that I invest in about how my money is being used and what it’s doing in the world, that makes me so insanely happy. And it’s really fun to be able to talk to people about the cool stuff that my money is doing. I love it. It changes the game.

Eve: [00:19:08] Are you still getting your return?

Janine: [00:19:10] Oh, my God, yes! This is not about giving up return. This has never been about giving up returns. I can meet or beat the return that you that any other investment is giving. So, for example, if you look at public equities markets, so, one of the things that I’m invested in is the Vanguard Total Stock Market Index. This is like one of the things that people talk about all the time. Go into an index fund, Vanguard is really cheap, blah, blah, blah. Right? Great thing to be invested in.

Eve: [00:19:41] Right.

Janine: [00:19:41] But if you actually look at that from the perspective of environmental sustainability, there is a website out there called As You Sow that ranks, if you look up As You Sow ‘Invest Your Values,’ you will go to a page that you can say, “I care about fossil free stuff” or “I care about gender diversity” or whatever. And you can put your stock tickers into this tool and it will tell you, it’ll show you a grade that that particular holding gets across all of these different variables. And it will show you how much of that fund is invested in the things you don’t want it to be in it. What are those holdings? And so that stock gets a D on As You Sow. Now, I did some homework on As You Sow and I actually found another Vanguard Fund, an FTSE Social Index Fund, and other funds that not only are getting a better grade like A’s and B’s, but they also get better returns over a 10 to 15 year time horizon than what I’m in, that’s getting a D.

Eve: [00:20:54] Wow.

Janine: [00:20:55] So why am I in that?

Eve: [00:20:57] Yes.

Janine: [00:20:57] I’m going to get out.

Eve: [00:20:59] Well, I have to ask, you spent a lot of time on this, right?

Janine: [00:21:02] Yes.

Eve: [00:21:03] What about those who are just trying to find time in between the cracks to figure out where to put our money?

Janine: [00:21:12] Right. Well, that’s why I’m writing a book, because I realized that this shouldn’t be this hard, and people shouldn’t have to do the level of work that I’ve had to do to figure this out. So, the book is going to tell you how to do it. It’s going to basically, what it’s going to do, it’s going to have three different sections, and the mid-section goes asset class by asset class and tells you this is what this asset class is, here’s how it works, here’s how it’s generally thought about, and here’s all the ways you can invest in this asset class in a values aligned way.

Eve: [00:21:42] Wow. Let’s go back to real estate. So, on your journey to find impact impactful real estate … Now I’m feeling very self-conscious about the word … What information haven’t you been able to find? What’s missing out there for someone who wants to figure this out?

Janine: [00:22:00] There is no place that really says these, this is what this space looks like, and here’s all the different kinds of deals that are available. And, you know, this is what’s going on, these are the cool things that people are doing. I mean, I think that you’re trying to do that through your podcast, and I applaud you. And that’s it. I mean, I realize in order to figure this out, I’m going to have to go do serious homework and talk to a lot of people and see what other people are doing and then start to piece together what feels like an interesting way for me to move forward. Finding the information is super, super hard.

Eve: [00:22:46] Yup, it’s very hard. There’s a lot of high level information that I’m aware of that I, that is really for sophisticated investors. I find it difficult to follow myself and, there is sort of an … exclusiveness around it … investing that I agree with use a little bit disappointing.

Janine: [00:23:10] So, there are financial advisers out there who are socially focused, but they don’t share information about the things that they invest their clients in.

Eve: [00:23:21] Oh.

Janine: [00:23:21] Because that knowledge is sort of their intellectual property. Right? So, there has been an opaqueness around this for a long time. And I feel like it’s time to blow that up, too, and just make this stuff completely transparent. There’s no reason why this information shouldn’t be easily available and easily accessible.

Eve: [00:23:43] Well that’s very exciting. So, have you found anything you want to invest in real estate?

Janine: [00:23:48] Not yet, because I haven’t gone far enough down the path. But I will say the other thing that has intrigued me is the idea of co-living or shared housing kinds of situations. I’ve been intrigued by some of the things that you’ve had on your show and, you know, have added them to my list of possibilities. But I’ve been so focused on the other asset classes and just trying to get this book, bringing this book to life, that I haven’t had the time to do the real homework on real estate.

Eve: [00:24:24] I mean, I think if I was starting out now, I’d be making a list for myself and not expecting to check every box, you know? Certainly if I think about moving other assets, top of my list would be women-owned businesses. You know, it’s just things that you, that I care about, that really matter to me that the next person, you’re about something else more.

Janine: [00:24:48] That’s exactly right. And there is there will be a chapter on this book, in this book about private debt and revenue-based financing and private equity and how women can get involved in that. Angel groups that are women-based angel groups, and some new innovative models that are coming out to bring women in, even at relatively small value points, and online platforms that are available now if you’re not accredited investors. So, there’s actually tons of ways to start investing in women, in businesses and things like that for anyone.

Eve: [00:25:24] So, I’m in the early, right at the beginning stage of talking to a group about a women’s development fund, a fund, not a huge one, a small one that would invest in women-led real estate projects.

Janine: [00:25:36] Oh, interesting.

Eve: [00:25:38] It’s going to take a little while to develop, but I’m very excited about that. I think it’s a, you know, a very strong purpose, right?

Janine: [00:25:47] Yeah, no, it’s great. So, I actually have a question for you. Because I seem to remember and I may have gotten this wrong, but I seem to remember in listening to one of your podcasts at one point that you talked about the fact that people who do impact real estate investing aren’t necessarily going to see the same kind of returns as people would in regular real estate deals. So, first of all, did I hear that right? And if I did, could you say more about that and why that’s the case? And also, what do you think is a good return?

Eve: [00:26:21] I think that’s not necessarily true across all types of real estate; affordable housing is the most difficult.

Janine: [00:26:30] Ah.

Eve: [00:26:30] And that’s because the more you return to an investor or a bank, the higher rents are going to be for the tenants.

Janine: [00:26:38] Right. I get it.

Eve: [00:26:39] So, if subsidy goes away as it has been, and we get a bigger and bigger and bigger need for affordable housing, which we have, this gap, ok? And if investors continue to want to be, quite frankly, a little bit greedy and expect 20 percent internal rate of return, I don’t know how you build those projects and keep housing affordable if that continues. So …

Janine: [00:27:09] Yeah.

Eve: [00:27:09] There are many examples of affordable housing projects we’ve done on Small Change that are offering quite generous returns. But they can do that because they have, they are a mixed-use project, they have new market tax credits, they have a grant from the city, they have, you know, historic tax, they do public-private financing, maxxed to be able to squeeze out the best return they can for investors. Very difficult. And so I think that’s not true for all real estate, but definitely for that class of real estate. I think a lot has to happen for it to be kind of a normal market driven …

Janine: [00:27:55] That actually makes a ton of sense. I totally hear what you’re saying. And I think those kinds of things in real estate and other verticals like health and education, perhaps. That not everything is going to deliver market rate returns. I mean, I think one of the fallacies and the problems that have come out of the impact investing movement, if you want to call it that, is the belief, or that’s come out of our very, the way we think about capitalism, is that everything has a market … everything can be done through the market. And that’s just totally not true. There’s a, there are brilliant things that can happen, like what you’re talking about with affordable housing that can deliver a good return to an investor. If there is a subsidy brought in, or if there is a recognition that, you know, this business model is not going to completely wash its face, it’s not going to completely be able to return what it needs to return. But there’s lots of ways that you can bring in guarantees or you can bring in first tranches of money that are willing to take a greater loss. Or very interesting things you can do with a financial stack.

Eve: [00:29:23] But ultimately is it right for a private investor to get a 15 to 20 percent return on a project that will only move forward if there’s tons of subsidy. Kind of wrong.

Janine: [00:29:37] I’m not sure it is because, look at the alternative. The alternative, and this is kind of what happened in the microfinance world. So, in microfinance, it was reaching 100 million people. It definitely was shown to help bring people out of poverty. It was completely driven by grants. And there was, when I got involved in it in 2002, there was this huge battle going on between proponents of, like, the Grameen Bank, of keeping it completely the way it had always been and fully driven by grants, and a new group of players who were saying, yes, but we can actually commercialize these microfinance institutions and turn them into commercially viable institutions. And there was this huge battle between those two. They hated each other, actually. And what ended up happening is the commercial play actually got proven out. It was shown that you can, in fact, commercialize microfinance and you can reach a lot more, and the whole technology piece that I talked about came out of that as well. And now you’ve got, from the time I got started, so that two and a half, in a basically a 10 year span in that two and a half billion people who were previously unbanked. It’s now gone below two billion. So, by bringing capital that was seeking a return into the mix, that whole thing was able to scale in a way that it would never have scaled just on grants. Right?

Eve: [00:31:18] But I think when I’m talking about is, we had an offering on Small Change that was an homeless housing project in L.A., just a small offering. But the developers were determined to open it up to the community. And the funds they get, the rent they get is actually from the government. So, it’s going to be affordable housing in perpetuity. It’s not going to, you know, increase in value and be sold at a profit. So …

Janine: [00:31:48] Right.

Eve: [00:31:49] … was a fixed return, OK, return over years, which was a nine percent return, which I thought was pretty generous. And that offering actually filled up faster than any we’ve had.

Janine: [00:32:01] Yeah. I’m not surprised.

Eve: [00:32:03] So that question to me was, do you think we could offer a little less and still raise money, because that’s hard, to add in a nine percent return to a project like that? And I don’t know the answer.

Janine: [00:32:14] Well, you try. I mean, I’m … I think the thing is, you know, people are going to look at this like anything else. They’re going to look at it from a risk returns scenario. So in my own personal portfolio, I have money in bonds that are returning me three or four percent. Right. So that’s OK, because I know that those are pretty secure and chances are I’m not going to lose my principal.

Eve: [00:32:42] Right.

Janine: [00:32:42] So getting three or four percent is OK. But if I’m going to put money into a private business where in five years, 50 percent of private businesses will be out of business, then my risk is a lot higher because I don’t know that that business is actually going to succeed and I could lose everything. Right? So I’m looking for a better return in a three to four percent. The same thing is going to be true in a real estate deal. I mean, if you’re asking me to invest in something and I’m going to get a five percent return on it, then I’m going to need to feel pretty dang confident that I’m going to get that five percent return and I’m going to get my principal back. And that’s not always possible in a real estate deal.

Eve: [00:33:27] And you get to feel good because you’ll be housing most people, right?

Janine: [00:33:34] Yes. Yes, I get that. And I also get that people need to make enough return on their money to be able to retire and have the things that they want, too. And they’re not going to put that at risk. So, I think there’s a, but I, you know, I talked to a woman yesterday who’s on the other side of this discussion, and I really liked her a ton. She was great. She’s very committed. She is very, you know, in integrity with herself. And she really believes that people should be willing to make investments and get no return if they’re doing good stuff in the world. And that that is the way the world should go and that we should stop even thinking about return at all. So, she’s got a very different perspective on it.

Eve: [00:34:19] I think if you have enough wealth that you can do that with some of your money, that’s fantastic. But you’re right, most people can’t,.

Janine: [00:34:26] No, they can’t.

Eve: [00:34:27] They need to live, too.

Janine: [00:34:29] So, yeah, in fact, in doing the research on this book, I found that in the United States, there are 14 million people who are millionaires, about 14, 15 million people. Right? Five percent of this, five, six percent of the country. So, if that’s true and if 95 percent of us aren’t millionaires, then, you know, asking people to not get a return on their money is a pretty big ask.

Janine: [00:35:03] Yeah. An I don’t think, and I don’t think that one percent of us who really have wealth are sufficient to solve this problem.

Eve: [00:35:15] Yes.

Janine: [00:35:17] So, we have to find ways that the majority of us can participate in solving this problem. And that means that we need to do this in a way that they can feel comfortable with the return they’re getting. And I think subsidizing to help them do that is not necessarily a bad thing. And I actually think that’s where the really rich people could come in, is that they could provide some of those subsidies, so they can take lower return to help other people’s money come in at a higher level of return.

Eve: [00:35:51] So do you think that these new crowdfunding rules, like my platform, Small Change, where we use regulation crowdfunding to let anyone invest? Do you think that is a path towards a solution?

Janine: [00:36:02] I think it’s one of them, and I think it’s, Yes, I do. I think it’s a really interesting path. And I think that people who are non-accredited, it’s been kind of fascinating to me as well how differently wealthy people invest than people who aren’t. And it’s not right that people who aren’t wealthy shouldn’t be allowed to invest in vehicles that can provide them with more direct opportunities to have impact with their money and to provide them with greater return. I mean, there is way more risk, for sure. And some people could make bad decisions. You need to do your homework with this. But there are a lot of really smart people out there who are non-accredited who would put in the time and effort to make the right decisions and they should be allowed to.

Eve: [00:36:56] No, you and I agree about that. And I also, I really don’t like the idea of classes of investors. So that, you know, I’ve had discussions with developers who think that accredited investors want more, deserve more, and I …

Janine: [00:37:14] Yeah.

Eve: [00:37:14] … can’t agree with that. I think money should be given the same opportunity. And unaccredited investors who had absolutely zero opportunity to get, you know, a half a percent return from your bank account if you’re lucky.

Janine: [00:37:26] Right.

Eve: [00:37:26] That’s just not OK. So …

Janine: [00:37:29] No, it’s not. And you know, the truth is, there’s a great book I read a long time ago by a guy named Nocera about sort of the evolution of money. And, you know, actually even before him, if you go back, San Francisco history. So, this is a story I absolutely adore. The Bank of America. Do you know the origin story of the Bank of America? It’s sort of incredible.

Eve: [00:37:53] No, I don’t.

Janine: [00:37:55] So, quick version. So, it started in before 1906. There was an Italian immigrant in the San Francisco, in San Francisco itself, actually, who decided that, at that time, the only people who could have bank accounts were extraordinarily wealthy people. J.P. Morgan, you know, that kind of ilk of person. And so he decided, you know what, I think the average man and woman should have bank accounts and be able to get loans. And so he started this bank. It was called the Bank of Italy. And nobody used him because nobody trusted banks. And so then came 1906, the famous earthquake of San Francisco. And he rushed to his bank. He took all the cash out of his safe. He put it in a wheelbarrow. He put, you know, fruit and vegetables over this thing that he had all his money in. And he carted it out of San Francisco. And then he met with the other bankers and they were talking about what they were going to do for the city. And the other bankers were saying, well, we’ve got to wait six months before we can open our banks. It’s too dangerous. You know, bad stuff is going to happen. And so this man, his name is A.P. Giannini. He took that cart or whatever he had of money and he brought it to Fisherman’s Wharf and he set up a little table using barrels and a log, and he started giving out money.

Eve: [00:39:30] Wow.

Janine: [00:39:30] People came to him and he gave them loans. And all he asked was their signature. He trusted them. And the people were so responsive to that,  they had so much gratitude, that his bank grew and the Bank of Italy became the Bank of America.

Eve: [00:39:50] That’s a great story. Yeah.

Janine: [00:39:51] Right? So, and if you look at the history of money and you look at, what you find is that time and time again, there was some innovator like him who said, “You know what? This shouldn’t only be for the rich.” That’s how we got money, mutual funds, and that’s how we got invested in, that’s how anyone can invest in the stock market. It wasn’t always that way either. That was also just something for the rich. So, time and time again, we have seen these things come online for wealthy people. And then some innovator says, you know what? It doesn’t have to be this way.

Eve: [00:40:32] Yes.

Janine: [00:40:34] And then the rest of us can participate.

Eve: [00:40:35] Fascinating. So given all of that, what do you think the future of real estate impact investing lies?

Janine: [00:40:43] I’m going to take a step back first and say, where does the future of impact or values aligned investing lie first, and I believe it is going to become ubiquitous. I believe that ultimately this is the way people are going to invest writ large, that their values are going to matter to them as much as their return. And they’re going to realize they don’t have to give up both. And I think that the real estate piece of this, because it’s more complicated for people, is going to be a little longer to come online. But I think there will ultimately be a lot of really interesting opportunities, for all of us, to invest in real estate, too, because it is a great diversifier.

Eve: [00:41:23] Yes.

Janine: [00:41:25] And I’m a huge fan. When I was a young girl, my favorite movie of all time was Gone With the Wind. And, you know, I totally love that she always goes back to the land and she realizes that regardless of what’s happening around her, the land is something tangible and real. And it’s something that she can hold on to. And I think that’s still true today.

Eve: [00:41:49] Well, that was some really fascinating conversation. Thank you so much for joining me, Janine. I’m sure we’re going to be talking again soon.

Janine: [00:41:58] My pleasure. Thank you so much. I enjoyed it, too.

Eve: [00:42:03] That was Janine Firpo. Here are some of the things I learned during our fascinating conversation. First, not only can you expect financial return when you make a socially responsible investment, you can meet or even beat the market. Second, only five percent of the U.S. population is a millionaire. That means that 95 percent of the population does not have access to investment opportunities that are largely available for the wealthy. Finally, figuring out what impact means in real estate investing is difficult for someone starting out. It’s impossible to find consistent metrics. You can find out more about impact real estate investing, and access the show notes for today’s episode at my website, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities. Thank you so much for spending your time with me today. And thank you, Janine, for sharing your thoughts with me. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Janine Firpo

Superlofts. Super fantastic.

Marc Koehler is the founder of Marc Koehler Architects (MKA) and the creator of the fabulous Superlofts project. The studio is located in Amsterdam, the Netherlands. While his firm works on many architectural projects, with Superlofts, Marc is stretching his role as an architect.

For 15 years, MKA has developed an analytically innovative, research-by-doing approach to ambitious, original ideas directed at the future of sustainable urban living.

The Superlofts project pursues the idea of community first, building second. Rather than design and build a condominium project in the hope that the market will follow, MKA are creating curated living experiences and providing highly-flexible living spaces set in urban sites, all the while building with carbon neutrality in the foreground. Superlofts accomplishes this through a customizable co-living and development model which allows people to design their own living spaces from scratch and lets new homeowners co-create their shared spaces, all in service of building a sustainable co-living community. Every aspect of each project is thoughtfully designed – from the exterior facade, to the number of families in each “pod”, to the shared amenities that will encourage community, to the extreme flexibility of the living arrangements.

Having started as a local project, Superlofts is growing into an international movement. Five Superlofts have been completed in Amsterdam and Utrecht, and projects in Groningen, Amsterdam and Delft are under construction. Sites in other international cities are also being researched.

Marc’s studio, MKA, practices a full range of design disciplines from start to finish: concept, architecture & urban design. with a team that includes four core associates and 29 architects, designers and engineers. Their work has been recognized with the World Architecture Festival Housing Award (Completed Buildings) and Director’s Special Award in 2017, World Architecture News Award for Best Housing Project in Europe 2017, Best Dutch Building of the Year (Housing) in 2018, architectenweb award in 2018 and Dutch Building Award in 2015. Recently, MKA won design bids for ambitious new developments such as Poppies, Bosrijk, KBF-Dock, Peak and commissions such as Republica Circular City and MARK that promote the transition towards a circular economy and inclusively built environment.

Marc Koehler (1977) grew up in a Dutch Portuguese family in the northern Dutch town of Naarden. He holds a Masters in Architecture from the Technical University of Delft (TU Delft). Since 2017 he has an advisory role at the municipality of Amsterdam as a member of the Spatial Quality Committee. The committee reviews planning permits in light of the city’s urban design ambitions across themes such as densification, urban renewal, sustainability and cooperative developments.

I can’t wait to visit a Superloft.

Insights and Inspirations

  • We already live in the future if successful urban housing can be modular, co-living villages, co-created by their inhabitants.
  • Building community should be the primary goal of any urban design process.
  • Sustainability is just as much about people as it is about resources.

Information and Links

  • On the Superlofts website you can explore the tools that MKA uses to help home owners, real estate pioneers and architectural partners create buildings for the future.
  • MKA has also launched the Superliving community. Here you can see residents in their dream home and meet MKA’s interior design partners.
  • Open Building is an emerging group of Dutch architects and engineers who are devoted to radically changing the building industry and the built environment to enable a sustainable and personalized way of living.
Read the podcast transcript here

Eve Picker: [00:00:00] Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing.

My guest today is Marc Koehler, the founder of Marc Koehler Architects and the fabulous Superlofts. His studio is located in Amsterdam, the Netherlands. While the studio works on many architectural projects, Superlofts is perhaps the most exciting project that you will want to hear more about. With Superlofts, Marc is tapping the desire for city living and combining it artfully with flexible living opportunities, carbon-neutral living and community consciousness.

Be sure to go to EvePicker.com to find out more about Marc Koehler on the show notes page for this episode, and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Marc Koehler: [00:01:09] Hi, Eve.

Eve: [00:01:10] Hi, Mark. Thank you very much for joining me today.

Marc: [00:01:13] Yeah. Nice to be here. Thank you.

Eve: [00:01:15] Yes. So, you know, I wanted to talk to you today about the very fascinating work that you’re doing in your studio, Marc Koehler Architects. And, you know, I was especially fascinated by a statement on your web site that says you are in the business of bringing people together and that you build the new ways that people want to live. And that’s a pretty unusual set of statements for an architect. Architects usually focus on buildings, not people. So, I’d love you to tell me what you mean by “the business of bringing people together.”

Marc: [00:01:51] Yeah. Well, our company started 15 years ago. Small architects, boutique design agency, doing private houses, transformations of apartments and so on. And we really had to listen to what people wanted, and how they would like to live. So, what we developed is a methodology which we called ‘The Ideal Day,’ in which we ask people to write down their ideal dream day in their ideal future home … as a film script, starting in the morning, ending in the evening. And then, it’s about how do you want to wake up, or how do you want to come home after work? So, it’s not about how big is this? How many square meters do you need in your bedroom, or in your entrance hallway, but what is coming home for you? What do, what is the routine, the ritual of coming home or going to bed or waking up or cooking or showering? And by describing this as scenes, as, let’s say, scripted scenes of a movie of your ideal future life, people start to imagine the power of change, of possibility. And that’s the real quality of architecture and interior design, is that it can really change your life if you take the opportunity and really think of what you want to achieve with your new space.

Marc: [00:03:13] This is something that grew out into several projects, beautiful houses we did for different people. And then in the middle of the financial crisis, when nobody wanted to invest into, let’s say, apartment buildings in the Netherlands, the only sector of the building industry that continued was private housing. So, townhouses, family houses in the suburbs. And there was a lot of land available around the city center of Amsterdam that wasn’t developed. Banks wouldn’t give anyone a loan because it was a very, very deep financial and real estate crisis, from 2008 to 2015. We, though, had this network of private individuals that did want to develop their dream home. They didn’t want to live in the suburbs, though. So what we created was a framework. Basically an apartment building existing out of concrete frame, with double-high spaces of five or six meters tall, and invited people to design their dream house within that framework. And this is what became Superlofts.

Marc: [00:04:22] And Superlofts basically allows private individuals to design with us their dream home in a vertical kind of village, in the sense that we have multiple floors on top of each other, with collective facilities and a strong community that actually then is the result of this. Because people become engaged, in the process of design and also in the process of, let’s say, co-owning a project with other neighbors. And we manage this whole process. And this is when we discovered that the sense of community, something that was really missing in the city. So, we started to also select people for these projects that actually match with each other, and organized, let’s say … co-creation sessions, in which these future homeowners decided together upon what kind of parking situation they wanted for their cars? Did they want electrical charging points? Did they want a shared car? Or maybe they wanted a roof terrace with a barbecue pit or a shared garden for the kids to play. And we really became real estate developers focusing on how people want to live together in the future. And this is what made us stand out to other real estate and architectural concepts in housing. Superloft is really based on individual freedom and, let’s say, the power of doing things together with your co-owners in the building, and developing shared spaces. And it creates very successful building complexes with a lot of happy people that have a very strong social cohesion, do things together, take care of each other, like in a village, but then in the middle of the city.

Eve: [00:06:21] Wow, so that’s a pretty powerful concept, and it must be very different from, you know, where you started 15 years ago. I’m wondering what sort of shifts in lifestyle you’re responding to.

Marc: [00:06:36] Ah, well, there’s many global trends that also resonate in the Netherlands, which is the shift from suburbs towards living in the city centers, or around the city centers, so people are moving back into town. People are moving closer to the facilities that the city offers. They don’t want to sit in their cars, in traffic jams, bringing their children to horse-riding classes and ballet classes and football class the whole day. So, they choose to move back into the areas where they can have everything close by. So, they don’t lose valuable time in the car.

Marc: [00:07:14] So, that’s one thing. So, in Holland, you see that, all this in … also in London and many other cities. Also in the U.S., you see that former industrial areas are gentrificating into mixed-use residential zones close to the city hubs. And this is kind of, let’s say, a potential area for a new kind of mixed and diverse city where working and living and leisure and mobility – all these aspects are kind of like combined in a new way, a lot of potential for new experiments. The old city centers are, of course, overprotected and with all kind of building codes and historic preservation codes, but especially these zones in this transition zones like called old harbor districts and light industrial areas. They are potentially the new cities where the middle class moves too. And, yeah, Superlofts is often used as a catalyst in these kind of areas. So, we are hired to bring an area that is now underused and mono-functional into movement with maybe 20- to 100-apartment building with shared facilities. This attracts pioneers that … often creators, designers, makers, thinkers and marketers, real estate developers that think, hey, I have an idea of how I want to live, and I think I can develop my ideal home within this Superlofts framework.

Eve: [00:08:49] Well, I want to move in.

Marc: [00:08:52] And then you see that these pioneers are often rewarded with a very strong increase of value of the property over the years, and then surrounding properties profit from that Superlofts has had … let’s say, a function of putting the area on the map, showing as a proven concept that it’s a nice place to live. And this is then where more commercial housing projects are being developed around it. So that’s one an important trend.

Marc: [00:09:22] But I think the second one is that we are moving towards more compact and smart living so that the apartments are becoming smaller but more smartly designed with less space for owning things, more for sharing space, collective sharing services. So, we don’t need our CD collection anymore in the house. We have it on our phone. So, we don’t need all this space to own things. And you see that also in Superlofts. They are becoming more and more compact and therefore also more affordable to broader groups of people.

Marc: [00:09:57] And the third trend, I would say, is sustainability. Climate, positive approach in which we use all these different aspects from water retention to natural cooling in nature, inclusive façades, smart energy and heating concepts to make a real circular approach to how we deal with energy and materials. In the sense that we tried to create closed cycles and loops in which energy is not being used for … spoiled, or wasted. And the same in terms of net nature and water. And yeah, that’s how … we achieve, to make, let’s say, projects with this positive climate, positive footprint in which we we store CO2 in the buildings rather than that the buildings produce CO2.

Marc: [00:10:48] And yeah, and the fourth trend is the one that I described in the beginning, the search for community. People are looking for a sense of belonging, of social interaction.

Eve: [00:11:02] You know what I’m hearing is that you must have a lot of people who are interested in what you’re doing. I’m hearing first you curate the people that are going to live in the next building, whether it’s 20 or 30 or 40 people. And you essentially address the way they want to live rather than create an apartment building with two bedrooms and two bathrooms and some of them with a den, and hoping that you can find people who want to live like that.

Marc: [00:11:26] Exactly.

Eve: [00:11:28] Wow.

Marc: [00:11:28] Yeah. So, what we do is we propose through social media and a website, a proposition for a building that is still very open in terms of offer. So we provide a menu of housing types, very diverse, from apartments on one level to duplex apartments, to work/home combinations, to apartments for seniors with everything on one level with all kinds of facilities or with a little elevator connecting two floors. And then we see how the market responds. So, we do market research and see how, what people’s interests are. And then we make the, based on that, the ideal mix of apartments. And allow people to get an option, like, to take an option, or, how to call that, to reserve an apartment for an amount of money so that we are sure that they are serious in wanting to join the community. And then we kind of puzzle with these people so that everyone gets their ideal type of apartment on the floor they want. And then we’ll have a second round to fill up, let’s say, the empty spaces within the building. And we do this all based on online communication, but as well through interactive meetings, live meetings, let’s say, group meetings in … we rent a place where we invite future homeowners to come together so they can get to know each other and see if they really like each other. And then you still see that people are still moving to the building, because they see, oh, there are these other two families with kids. Well, that would be nice to live together on one floor and share this large roof terrace together, for instance. So, you … meetups create all kinds of social interaction that leads then to a strong community.

Eve: [00:13:34] How fascinating. And then how long does this whole process take from when you sort of make the offer online and start to organize people until when they move in?

Marc: [00:13:45] Well, I mean, the last project we’re now doing … within Hoorn, in the north of the Netherlands. It has 45 apartments, large ones, a tower of 50 meters. And we started six months ago. Now we are offering the website of going live within a month and we will start construction in one year. And then it’s about a year to build it.

Eve: [00:14:12] About two and a half years.

Marc: [00:14:13] So, let’s see. That is one, two and a half years. Yeah, it’s about two and a half years from beginning to end.

Eve: [00:14:20] And do you find that a lot of people drop out if they commit like the half year point and they have to wait two years. Are they happy to wait?

Marc: [00:14:29] No, because this is almost common in The Netherlands, because the difference between how we built in the Netherlands or develop in the U.S., is that people … we don’t we don’t start to build before the apartments are sold. So, the project first needs to be designed. Then it’s, 70 percent needs to be sold before the developer and construction company will actually start constructing the building. So, people are used to have, to wait two years before they are actually moving in. If they are first buyers, in the beginning of the process, of course, you start later. The last 30 percent of the project is always sold in the latest stage.

Eve: [00:15:15] Right. It’s not that different because for condominium projects, which this would be in the States, you would have to have pre-sales in order to get financing. For an apartment rental building, you would build it before …

Marc: [00:15:31] Ah.

Eve: [00:15:31] … but if, yeah, but condominiums are a little bit riskier and I think banks on the whole want to see pre-sales. I am not sure they want to see 70 percent, but it’s a similar process.

Marc: [00:15:42] Ok. And that will also then take about two and a half years?

Eve: [00:15:46] Well, I don’t know. It depends on the project. You know, it depends on what sort of permits you get. It could take a lot longer in a place like San Francisco with, where permitting is really, really slow …

Marc: [00:15:55] Yeah.

Eve: [00:15:55] … versus a smaller place where permitting is faster. So, it depends.

Marc: [00:16:01] Right.

Eve: [00:16:03] So, yeah.

Marc: [00:16:04] Here, by the way, we had our buildings also can be larger than just 20 to 40 apartments. We are now also working on, like, complexes with hundreds of apartments. I don’t think that this way of developing is just possible only in a niche market, tailor-made situation. I think it actually can be done better, when you have a larger scale and more apartments. So, we are, in this sense, also talking to developers abroad, like in London and in Bremen, in Germany, for really large-scale projects. Because the return on the investment is more interesting in terms of software development that is tailor-made for this project. And you can make a much more smooth process really working on, let’s say, online customer journey that done with an interface that is really allowing the future homeowners to customize their homes on their iPad. But the investment of this is so large that it actually pays back only on a larger scale.

Eve: [00:17:11] But how do you keep community in a very big scale project? I know I talked to Jeremy in Australia about, sort of, the ideal size of a community. And I think when you have hundreds of units …

Marc: [00:17:23] I think ideal would be 20 people. 20 apartments, for me, is an ideal size of, let’s say, a basic cell. And then if you do hundreds of houses, you build it up with several cells. So, every entrance and elevator is then one unit of about 20 apartments. And it has its own homeowner association, so they can make decisions with a small, trusted group of people. They share their roof terrace and they make their choices together. It can also be 30 apartments. It’s not, or even more. But, ideally, let’s say, between 20 and 30. And then in a neighborhood development, you just built several of these blocks and then they again communicate on a higher level about how do we deal with the street?What do we want the municipality to offer in terms of bicycle parking in the street, garbage and waste recycling facilities? What do we do in terms of architectural co-ordination so that different blocks actually create a nice ensemble? How do we deal with sun and shading and wind and sound issues that … we can discuss that on a larger neighborhood scale with different communities.

Eve: [00:18:49] Right. So what does a Superloft actually look like?

Marc: [00:18:53] Well, that is very diverse, but we like to see it in the basis as a stripped down core and cell building in which we expose the concrete structure that has a very beautiful, deep facade made out of timber on the inside. I think it’s important that this is something that is very beautifully designed, like we are using like a very deep 40 centimeter, deep timber frame on the inside that allows you to sit in it and to put books or plants in it. And then the rest of the space is very stripped to concrete. And then people are able to customize that space with interior design elements. It can be a mezzanine floor, can be staircases, kitchens, bathrooms, walls, etc. And, in that way, can give their own expression to the space. The facade zone is something we like to control because it’s very important how the building looks to the outside. The building should stand there for hundreds of years and we don’t want to make something that looks cheap or unattractive over time. So we spend a lot of quality time on how the facades are designed.

Eve: [00:20:15] And the building facade is, you know, the wall of an open space that’s shared by everyone. So that’s really appropriate.

Marc: [00:20:22] Each unit, its apartment is then sold as as an open space, but then filled in … with a specific layout of the inner walls, and so on, by each client. They can then choose to do this themselves as a do-it-yourself project. But most of them, they choose from a palette of standard options that we are offering, and we still offer them all kind of finishing options that to customize the space in the way that they really like. Everyone has the feeling that they are part of a creative process, even if you don’t have much time for it. And you choose a basic layout. There is still a lot of nice decisions you can make about how to give expression to your space, and not everyone has time and the creativity to do so. So we offer a whole spectrum of, let’s say, paths, routes more or less intense to make your ideal home. Then, in terms of rental apartments, which we also do, we give these choices to the developer and the real estate agent to together customize the building in the way they think would work best. And then we still try to make the layouts in a way that people have several options in how to place their furniture in this space so that they can decide to put the sofa in at least three positions. So that there is really a choice to make even if you cannot design the layout of the apartment, you can design the layout in a way that you can customize the seating area, and even the kitchen that we’re designing now – a hotel co-living brand with a kitchen that is kitchen island on wheels, so that you can really customize the space to your taste, even if you don’t own the space.

Eve: [00:22:12] Very nice. So, you know, the world has a huge affordable housing crisis. And I’m wondering, I don’t know if the Netherlands has an affordable housing crisis.

Marc: [00:22:23] Yes. Yes.

Eve: [00:22:24] What … who is addressing that in any way?

Marc: [00:22:27] Definitely. And Dezeen maand Business Insider and The Independent newspaper have written all about Superlofts in the light of housing crisis and affordability. And basically what they were analyzing is that Superlofts allows starters, first buyers, an affordable home, because, let’s say, 20 to 30 percent of the value or price of an apartment is in the finishing of the apartment. And often this is too expensive for first-time buyers. And this is what makes them move to rental. However, if you buy the apartment in a core/shell way and it’s already attractive to start living there just with minimum investments, which is basically what Superlofts does, because the basic quality of the empty, open space is already does, so nice that you can just put a bed, kitchen and a bathtub and you can live there in a very nice way. And then in that way, phase your investment over time. So, then you don’t need to invest that 30 percent upfront. But you can wait until you find a better job or your fixed contract. So, it allows younger people to enter the housing market and save their investment in the apartment.

Eve: [00:23:53] And shared amenities also must reduce the cost. I mean, do you have shared laundry rooms? Are you able to limit parking areas?

Marc: [00:24:02] Exactly. And then also the larger apartments are actually a solution to the housing crisis, because what happens is that they are built in a way that they have multiple front doors, they have two front doors. So, you can split each larger apartment into two smaller ones, which results in, people rent out part of their house as a unit, as a rental unit. So, they buy an apartment and rent out part of it to two young people that need a 30 square meter studio, or something. And so it also, in this way, contributes to at least a diversity of housing types in an area, and also affordable rental apartments within a condominium.

Eve: [00:24:47] Interesting. So how Superlofts evolving, then? What do you see in five or 10 years?

Marc: [00:24:53] Well, I think that, several things. One is that we are really moving to timber construction and we are developing our first timber project at the moment in the Netherlands, which is six stories, mass timber. Still, there are smaller units that you can connect into larger ones on top of each other or next to each other. That creates kind of infinite possibilities to make floorplans and adapt them over time to changing lifestyles or market demands. So, when this mid-segment rental project, in 20 years, is released by the government, because there is a 20-year, let’s say, deal on the land-lease that needs to be respected before you can alter the configuration. In 20 years, the owner of the building can reconfigure it without, with minimal costs, because it’s already built in a very flexible, adaptable way. The timber construction is helping a lot. If you make things in concrete, it is more hard to connect units on top or next to each other. You have flexibility within the unit, but not between them. When we move to timber we can make this kind of Tetris game much more flexible and allow in 20 years from now a much higher, let’s say, rest value or repurpose value for the owner of the building. And he can then or she can then transform it into another second market segment. Maybe make smaller units, maybe sell part of it without having to demolish anything. So it actually allows a much more healthy and sustainable way of building if you build in a flexible, adaptable way in timber, because you don’t produce waste. And secondly, you store CO2 in the building because each tree that you, let’s say, take out of the forest and put into your building is a lot of CO2 that you take out of the air and store in the building – as long as you replant the tree, of course …

Eve: [00:24:53] Yes.

Marc: [00:27:09] … which is the case in Europe, in all the forests that you are allowed to take wood from. So, we are really believing that this is going to be a huge solution, or help, a contribution to solving climate crisis, is to mass build, massively in timber. Secondly, we are moving into diversifying our products, into rental, into co-living. And we’d like to partner with developers and real estate pioneers to, let’s say, create a global brand for Superlofts that connects all these different projects both in condominiums and rental into one strong brand that the Superloft members identify with, that activates the community, that offers all kinds of services, such as if you want to rent or sell your apartment, you can do that through our platform. If you want to share services or start a community event, we will allow that. And we offer all kinds of inspiration, creative inspiration on how to decorate your home or a platform of preferred suppliers where you can get design advice or buy really cool stuff for your house. So, there’s a lot of opportunity still to activate a community and to develop Superlofts further into a global brand. And we are looking for partners in different countries at the moment to produce to do so.

Eve: [00:28:42] Fabulous. That’s pretty exciting.

Marc: [00:28:44] Yeah … I don’t know if it’s gonna work, but it isn’t really … my dream already for five years is to actually connect now to different buildings. We have built eight in the Netherlands. I know these people are super-excited to tell about what they are, about their lives and how they are using the building and how they decorated their homes. And we have photographed twenty five of them, interviewed to them, and we are now starting to post that on the website, on what’s called Superlofts.co with ‘co.’ And then there is the Superliving page. And that’s the blog where we are kind of like starting to share this inspiration.

Eve: [00:29:27] That’s wonderful. Are real estate investors in the Netherlands interested in your work?

[00:29:32] Yeah, in general. Well, it’s … In MKA, definitely, in our architect firm, for sure. So, there’s a lot of spin-off for my architect firm because of Superlofts. So, we being hired, as I said, to to design a new co-living hospitality brand that is going to operate globally. So, these kind of people see that energy and creativity that we put in Superlofts can also be put into new housing concepts, that we are being approached by different investors and developers to start new specific concepts for their own properties or investments. And about Superlofts to find partners. It is. Yeah. Actually, when I am thinking, yeah, actually it is going quite well.

Marc: [00:30:19] So, there are there is different developers in both the Netherlands and abroad that would like to do Superlofts projects with us, and I think that in a couple of years from now we will we have projects in London and Germany and maybe the U.S.

Eve: [00:30:37] That’s pretty fabulous. Do you know where in the U.S.?

Marc: [00:30:41] Well, we’ve been looking in Newark. We’ve been looking in Brooklyn, in San Francisco. And the thing is that all these developments, they kind of stalled because of the complexity of legal issues in condominiums. So, this kind of development of Superlofts in the States that, where we were like one and a half years ago, which was really still focusing on condominiums, not so much on rental and co-living, but in that phase when we were in the U.S., we discovered that there was a lot of fear of people suing each other in condominiums …

Eve: [00:31:25] Yes.

[00:31:28] … and that this is what stalled the developments and what made it more difficult to pull it off. But I think that in terms of rental, when we customize the building, not with the end users, but just with the developer and the local design team, that this is actually going to be a much more interesting approach for the U.S., which means we’ll make rental buildings with shared facilities with a lot of diversity and types of lofts, in which the people can actually still belong, become a member of the Superlofts community, and enjoy the creative energy that that we are spreading. But then not in co-designing their building, but more in, let’s say, customizing their apartment decoration or, let’s say, configuring their, the furniture settings of their apartments, the types of furnishings that they choose. This is something we are now looking into, but our focus is really now in London and Germany.

Eve: [00:32:41] Okay, cool. So, I have some final questions for you. And I want to know whether you think socially responsible real estate is necessary in today’s development landscape. Because not everyone thinks about it the way you do, right?

Marc: [00:32:56] Yeah, I think it’s it’s just it’s crucial for two reasons. One, is that we are having a climate crisis that really demands for people that have power to change things, to really step up. And I think real estate pioneers are having a great responsibility and potential to show that we can do things in a radically different way. It doesn’t cost much more. It’s not so much more complicated. It just needs a little bit more time to do the right thing. You need more attention. Slow down a little bit the process so that we have time to really think things through in a more original and sustainable way than just choosing for the standard options. But I think we all know that the world deserves this attention. Right? This is just there would be a kind of crazy not to take the time to really do the right thing at the moment. And secondly, I think in terms of social sustainability, we see that our societies are polarizing a lot. Societies are falling apart in different groups that are standing more and more opposite to each other, even within families. Well, this is partly the result of that we have created cities with a huge segregation between different groups and that we allow ourselves to just go from place to place with our car or on public transport with our headphones on, not talking to the so-called other. We’re not meeting others really anymore. And we’re meeting the same kind of people in this, in the gym as in the offices and in the members club. And that’s, and so on.

[00:34:45] So what is really important is that we create communities around the home so that the home sphere, let’s say that what we in Germany called the meinschaft sphere is, let’s say, a local area network around your home includes maybe the school for your children, your local shops, but also places where you meet your neighbors, that we really start to revalue the neighborhood and the street and the building block as a social structure that allows you to get to know people from your own kind and tribe, but also from others. And that your children, our children aren’t that they become used to the fact that the world is very diverse and that there is diverse ideas and diverse kind of people, and that that is actually enriching our lives and our potential as open societies to survive in this competitive world against other continents in which there is much less freedom and much less diversity. I think the strong potential of the United States, of Europe, is that we can be proud of having these open societies that are diverse and inclusive, and that we really need to revalue the position of the home and the neighborhood in this city as important social catalysts. And I think that community-based residential developments that are not gated communities, but that are designed to interact with their surroundings and that are diverse socially and economically. Small and large, rich and poor apartments, everything mixed. That is the responsibility we have as real estate pioneers to create, let’s say, a better world.

Eve: [00:36:40] So, in a sense, I think, I feel like we’re going backwards. When I first moved to Pittsburgh, I lived in a neighborhood of houses built around 1900 and they all had front porches, and that’s where people congregated in the evening …

Marc: [00:36:55] Exactly.

Eve: [00:36:56] … talked to their neighbors. And then, you know, TV came along and everyone went inside. And the front porch was no longer used in that way. And I think it was sort of replaced all the time in apartment buildings with individual small balconies, but without really sort of understanding the …

Marc: [00:37:14] Yeah.

Eve: [00:37:14] … the loss of that place. Right?

[00:37:16] I so agree. And, you know, it’s so simple to solve this. If you look at an entrance lobby of an apartment building or a condominium, maybe it’s three meters wide. That’s 30 feet wide, a hundred feet long and you just have mailboxes. But if you would make it a little bit bigger and you put a large table there for where you can sit with 10 people, you put the newspaper, you put some flowers. You have Internet. Then suddenly you have an office space or flex-office place in your apartment building. People will start to use it as a place to work. Of course, you need to have a little bit nice design of the space and of the facade and good light and a nice carpet and so on. But it’s a little bit of effort, and then suddenly people that have that are independent workers that work from their home or their apartment can use that space as their meeting room as their, you know? It doesn’t cost anything extra and you have a fantastic social interaction space where you meet your neighbors, where you talk to each other. The same for children. You can they can do their homework with one parent together in that space rather than that every parent has to do their homework with their children separately in their homes. What we see in our buildings is that parents share this responsibility, and say, ok, one of us stays at home every afternoon to take care of the kids coming home after school, because they’re playing in the street around the house. And then at least one parent is there working in the space for something when something happens or if they need some guidance with their homework. This is what my ideal world looks like. Basically, you know, where people choose to live together because they see the advantage of sharing things.

Eve: [00:39:08] What wonderful ideals. Thank you very, very much for joining me. I thoroughly enjoyed the conversation. And I want to come and look at your Superlofts sometime very soon.

Marc: [00:39:17] You’re very welcome. And let’s find a nice spot in the U.S. to do a Superlofts U.S. prototype with a very nice lobby space where people can work on the ground floor. And with all these dreams that we have just discussed, maybe we all we can find an interesting opportunity in the future. I’m sure that there is a lot of interesting developments in American cities at the moment, like in Europe, that really are very interesting to work within. And when you come to the Netherlands, I would love to show you around. We have another website that I would like to tell you about, which has an audio tour along all these kind of community buildings in Amsterdam. So it’s nice for you and for any of the listeners. It’s called the Open Building Audio Tour. And you’ll find it on openbuilding.co, ‘co’ again, which is a platform that I’ve created with 15 Dutch architects with all kind of, everyone showcasing buildings similar to Superlofts which the architect has created, let’s say, community buildings, flexible and adaptable over time, often very sustainably built and, that’s really worth doing when you come to visit Amsterdam.

Eve: [00:40:47] Absolutely. I’m going to, I’m going to get there. Thank you very much, Marc, and enjoy the rest of the day.

Marc: [00:40:53] Thank you. Bye bye.

Eve: [00:40:55] That was Marc Koehler of Marc Koehler Architects and Superlofts. This architect is thoughtfully pursuing the idea of community first, building second, rather than design and build a project and hope the market will come. Instead, his team design their Superlofts around a curated community of people. Every aspect of each Superloft project is thoughtfully designed, from the exterior facades to the number of families in each pod, to the shared amenities to encourage community, to the extreme flexibility of the housing units. I can’t wait to visit a Superloft. You can find out more about impact real estate investing and access the show notes for today’s episode at my web site, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities. Thank you so much for spending your time with me today. And thank you, Marc, for sharing your thoughts with me. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image of Marc Koehler by Jordi Huisman.

When public outcry drives change.

We’re facing significant challenges in the housing and real estate market these days. And still it seems hard to convince people that change is necessary to respond to the enormous challenges of climate change and the affordable housing crisis. This is especially true in the real estate industry, where trends and practices have developed over many years and are a little set in stone.

So how does one trigger change? Sometimes unwittingly when an unusual or noteworthy event captures people’s attention. One great example is a planning battle that was fought by an architect in Melbourne, Australia.

Stripped unfairly

Jeremy McLeod, director of the architecture studio, Breathe, is committed to providing affordable and sustainable housing to the Melbourne community. When Jeremy tested these objectives with his first project, The Commons, a mid-sized condominium project in the heart of Melbourne, the project was an unequivocal success, as it quickly sold out, won various awards for sustainability, and was completed on budget.

Sustainable, affordable and pretty gorgeous, people wanted more just like it. And so, with a waiting list of over a hundred people, Jeremy decided to pursue a second project right across the street and went about getting a planning permit to begin the project. The planning permit was approved. And then a neighboring developer challenged it in court. Breathe was building apartments that were 20% bigger, 20% cheaper, and substantially better than traditional apartments in the area, and better than the developer was planning to build. As you can imagine, other developers were concerned that this was going to create issues in the market.

Well-funded and with a powerful legal team, the challenging developer was successful and Breathe was stripped of its planning permit for the building, Nightingale. This put them back to square one, with the task of starting the long planning application process from scratch again. For Jeremy it was a devastating moment and one that nearly broke him and his team.

The public response

While the loss of the permit was beyond disheartening, it unexpectedly became a turning point for the project, bringing waves of public support. The press heard of the permit challenges and became very fired up over the loss of the permit. The idea of shutting down a project that had high community aspirations – affordable, carbon-neutral housing for first-time home buyers in a very expensive housing market – did not sit well with many and got lots of attention. It seemed objectively contrary to the goals of the community. As a result, it worked to spark a powerful public response.

This outcry was only strengthened when the reasons for the permit loss were highlighted. In the Appeals Court, the issue turned over the car parking, namely the fact that there wasn’t a parking lot in the basement. However, the project is on a train line, with a bikeway leading to the CBD right next to it, and 30% of future residents didn’t even have a driver’s license. At least 40% of future residents had already committed to either getting rid of their car or parking it in one of the many lots in the area. All in all, it was a decision that didn’t seem to make much sense.

The result was that support for this type of carbon-neutral, affordable housing literally grew overnight. The waiting list for Nightingale went from 125 to 400 people in one day. Now, there are 8,500 people on the waiting list.

It was a difficult and unusual way to gain support, but the seemingly unfounded stripping of Nightingale’s planning permit was ultimately an incredibly effective way to raise support for a new type of housing. This battle brought some central issues to light, helped frame important topics for the community, and drew attention to what types of changes were possible. In Melbourne, the community responded with resounding support for innovative designs and a new housing model. Hopefully, this is momentum that will carry over to other communities and areas. 

If you want to learn more, listen in to to Eve’s interview with Jeremy about this project and the work that Breathe is doing.

Image of Nightingale I, Melbourne, by Eve Picker

Revitalization strategist to barista.

“Nobody should have to move out of their neighborhood to live in a better one.”

Majora Carter is an American urban revitalization strategist and broadcast producer/host from the South Bronx in New York. Her career has spanned environment, economy, social mobility, and real estate development. Her work has won major awards in each sector including a MacArthur ‘genius’ Grant, a Peabody Award, the Rudy Bruner Award Silver Medal, nine honorary doctorates, and accolades from various professional groups too many to mention here.

The quote, on the walls of the Smithsonian Museum of African American History and Culture, is attributed to Majora. In fact, that’s just the opposite of what Majora was taught to do as a young woman growing up in the South Bronx. She believed, as she was taught to believe along with many others, that her only hope was to get out and abandon her neighborhood.

But she defied the norm and moved back to the very street she grew up on, bringing back with her what she had learned through her corporate consulting work. Her take on real estate and economic development is based on this understanding – that talent retention is key to building better neighborhoods.

Majora believes in talent retention. By placing higher quality third space enterprises for social gathering (cafes, bars and restaurants) ahead of the typical market curve, she believes that talented successful people who would ordinarily migrate out will stay, and keep their spending, reinvestment acumen and day to day example where they grew up. In a stagnant neighborhood , their only option is to flee, leaving communities in a constant talent deficit situation, that (again) makes the place a bargain for those who see value.

Majora is uncompromising about her mission. She lives and works in Hunts Point in the South Bronx, one of America’s lowest status communities just two blocks from the house she grew up in. And she is undaunted by taking new and necessary steps. When it became clear that no coffee shop operator wanted to operate out of her space in the neighborhood, she created her own business to achieve her goal. She’s committed to further developing the neighborhood where she lives and has her sights set on the conversion of a vacant building into a food hall. She lives in a brownstone, two blocks from the one she grew up in.

So listen. You must.

Insights and Inspirations

  • Majora uses the term “low-status” to describe communities where the schools are worse, where there are more environmental burdens, where the air is more polluted, where there are fewer and less well-maintained parks and trees and where the local population’s health statistics are worse. While philanthropy and elected officials acknowledge these endless disparities, they do little to change them except to use them as campaign tools to get elected, raise money and congratulate themselves.
  • South Bronx is one of the lowest-status neighborhoods in the country.
  • Talent retention is key to stopping the typical, stagnant economic cycle of low-status communities.
  • Billions go into low-status communities every year, but with little impact. You need to mix it up to lift a neighborhood up.
  • Mixed income and mixed use are key to building stronger communities.

Information and Links

Read the podcast transcript here

Eve Picker: Hey, everyone, this is Eve Picker, and if you listen to this podcast series, you’re going to learn how to make some change.

Eve Picker: Hi there. Thanks so much for joining me today for the latest episode of Impact Real Estate Investing. My guest today is Majora Carter, and, wow, you won’t want to miss this. It’s hard to know where to begin describing Majora, who is, quite simply put, a powerhouse. Described as an urban revitalization strategist, her career has spanned environment, economy, social mobility, and real estate development, and her work has won major awards in each sector, including a MacArthur Genius Grant, a Peabody Award, the Rudy Bruner Award – Silver Medal, and nine honorary doctorates amongst many, many more.

Eve Picker: Majora is quoted on the walls of the Smithsonian Museum of African-American History and Culture as saying, “Nobody should have to move out of their neighborhood to live in a better one.” There is no way around it; if you are really interested in impact investing, this podcast is a must-listen. Be sure to go to EvePicker.com to find out more about Majora on the show notes page for this episode and be sure to sign up for my newsletter so you can access information about impact real estate investing and get the latest news about the exciting projects on my crowdfunding platform, Small Change.

Eve Picker: Good morning, Majora. I’m so delighted that you’re on the show with me.

Majora Carter: Good morning. Thanks for having me.

Eve Picker: I was reading a little background on you, and the thing that stood out to me is this quote, “Nobody should have to move out of their neighborhood to live in a better one.” These are your words, and they can be found on the walls of the Smithsonian Museum of African-American History and Culture. I just wonder how these words play into your work?

Majora Carter: Oh, those words are- were actually not my words, but they’ve certainly been attributed to me. They were the words of a woman who worked with me – Marta Rodriguez – as a organizer, when I ran Sustainable South Bronx, and it really embodied exactly what we were trying to do at the time, when I was running a small environmental and economic development organization – which is this is our community. How are we not creating the kind of community of our dreams here? It really continues on, as we’re thinking about real estate development, and how do you use real estate development to truly transform your community into something that you can age into, and stay there, because you feel as though everything that you need and want is actually part of it?

Eve Picker: Yeah. So, you’re working- are you still working mostly in the South Bronx?

Majora Carter: No, I work nationally. I certainly do have some projects that I’d love to get off the ground, here in the South Bronx, and some that we’re working on, but we actually work nationally, as well. We’ve got a really amazing real estate development project, a mixed-income housing, mixed-use development, going on out in Mapleton-Fall Creek, Indianapolis, which I’m absolutely delighted about. There’ll be about 50 units of home ownership; another 150 units of mixed-income housing, and about 50,000 square feet specifically for light manufacturing, commercial, and cultural space. We’re delighted to be the developer on it.

Eve Picker: Wow. You weren’t a developer when you started out, right?

Majora Carter: Oh, no! Although, interestingly enough, I’ve been developing a lot longer than I actually gave myself credit for. I was a card-carrying member of the non-profit industrial complex, and moved out of my neighborhood, or left my neighborhood for college, and didn’t really want to come back, because it’s really like America’s low-status community – one of America’s low-status communities.

Majora Carter: I want to just articulate what I mean by ‘low-status.’ We don’t generally use ‘disadvantaged,’ or ‘low-income’ to describe the communities that we want to work in most; but low-status are the kind of communities where there are more liquor stores, and corner stores than there are opportunities for good, affordable, different, diverse options for food. You’ll find, instead of banks, or credit unions, you’ll find payday-loan places, and check-cashing stores. You’ll find the kind of places where there’s an enormous amount of very highly subsidized affordable housing, and very little economic range between.

Majora Carter: Essentially, in those areas, inequality is assumed, both inside, and outside the community. These are the places where, if you’re a bright, talented kid, you are taught to measure your success by how far you get away from those communities. We don’t have a way to think about retaining talent in those neighborhoods.

Majora Carter: When I was growing up in the South Bronx, I was one of those bright kids who was definitely told, “You’re going to grow up and be somebody,” which meant you get out of the neighborhood. I embraced it hook, line, and sinker. Only when I came back to the neighborhood and realized that the way our communities were being used via real estate – in particular, for us, it was environmental burdens that just kept getting heaped upon us – I also started realizing that we could use real estate as a way to transform our communities to benefit us.

Majora Carter: I first started in park development, and riverfront restoration, green jobs, training, and placement, and literally just moved into real estate development, when I realized that … It seemed to me like a very natural trajectory to go at scale, in terms of creating the kind of community that you really felt you didn’t have to move out of, in order to live in a better one.

Majora Carter: My first development project was literally squatting a building across the street from the house that my parents lived in, and I was born and raised in. It was a crazy story because it kind of technically had been in my family for decades at that point. The woman who owned it died 20 years before I decided to move in, and no one in her family wanted the house.

Eve Picker: Wow.

Majora Carter: Yeah, so it was like I’d move back in, and I’m like, “I want to set some roots down.” What did I do? I moved in there, took over all the bills, the taxes, and everything. That’s when predatory speculators obtained a fraudulent deed for my house, just as I was in the process of trying to purchase it and finding – getting title. It was a crazy, crazy story.

Majora Carter: There I was, acting as an owner/landlord for years, at that point, and it was a wonderful, just crazy opportunity to realize that, no, I am actually developing this space. and preserving affordable housing in my own community, and generating wealth for myself, because it’s like, look, we’re losing that. I wasn’t thinking about the wealth gap or anything like that, I just needed a place to live. I wanted the people who were living in my building to continue to have a place to live. But I was a developer back then, and I’m a developer now.

Eve Picker: Right. That’s really interesting to me, because I’ve been lots of places lately where ‘developer’ is just a bad word.

Majora Carter: It still is. Oh, my gosh, yeah-

Eve Picker: Yeah, I know. It’s getting worse, I think. Not just still … The question is, I mean, we know that just like there’s good doctors and there’s bad doctors-

Majora Carter: Exactly.

Eve Picker: -there’s good developers and there’s bad developers. But the narrative is really all developers are bad.

Majora Carter: Right [cross talk] and there’s no space in it for those of us who are trying to use development for what it actually could be, which is a truly transformative way to support communities that we love. We really think about how do you use it as a tool, specifically, to support the visions and the values that we have, which is that [inaudible] and no one should have to move out of their neighborhood to live in a better one. You should have opportunities to live, work, and play, in wonderful ways, in ways that match your income, but there’s all sorts of opportunities for you to engage in a beautiful community that actually does not require money, but builds community, and through [cross talk]

Majora Carter: Why is it that, in low-status areas – whether it’s an inner-city community, like the South Bronx, or a Native American reservation, or a former coal-mining town that has no real jobs anymore, where it was all white – why do we think of those, of developing in those places, where it’s only two kinds of development, where it’s either the poor folks that are there are either bought it; generally bought out, or displaced by people with higher incomes  – that typical gentrification kind of phenomena – or its poverty-level economic maintenance, which is still real estate development, wherein there’s [cross talk]

Majora Carter: The whole idea is that why are there only two kinds of development that happen in low-status communities? Why can’t we use it as a way to increase economic diversity, and to build wealth creation, and just make it so that people love their neighborhoods, as opposed to feeling like they’ve got to move out of them in order to live a little bit better? I accept that challenge, and I really believe that that’s what I’m doing. So, yeah, as a developer, and as a black woman developer, whose working in this really interesting way, where I absolutely … There is no way I would ever build an exclusively affordable-housing complex for the lowest-

Eve Picker: I’m glad you said that.

Majora Carter: Never, never! I’ve been, in some circles within the non-profit industrial complex, demonized for that, because I should be doing the kind of things, where it’s like [cross talk] for the people. I’m like, poor communities concentrate- low-status communities concentrate poverty and all of the issues that are associated with it – low health outcomes, poor educational attainment, higher rates of being involved in the justice system, or being touched by it in some way, and your family … Obviously, higher rates of unemployment, and poverty, and just creating a sense of lack of hope within those communities.

Majora Carter: Why would I want to build more of that?

Eve Picker: Yeah.

Majora Carter: Unless, of course, you’re getting big developer fees, and you really don’t care about the communities that you’re working in, which is why I understand why most people hate developers so much.

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

Eve Picker: Yeah, no, I get it, too. But I’m really fascinated by what you’re saying, and I totally agree with it. I’ve watched, for years, in Pittsburgh, the affordable housing product sort of live in neighborhoods that all start looking the same – this cookie-cutter affordable-housing product. It doesn’t … While, definitely, people need decent places to live, and it accomplishes that, it doesn’t change the nature of what’s happening in those neighborhoods. The moment you kind of push that edge of that, that’s when … I don’t know, how do you stop speculators? It’s something I think about a lot.

Majora Carter: We [cross talk] try to and are still trying a number of things. One of them is to continue talking about the approach that we’ve taken with our own real estate development and actually putting our own money where our mouth is. So, as developers, we did spend a lot of time within our own community just really understanding what are some of the hopes, and dreams, and aspirations, and, of course, needs within the community.

Majora Carter: We did hundreds and hundreds of surveys; realized that what people in a neighborhood, like the South Bronx, which is one of the poorest parts of the country within congressional districts, are the kind of the same things that anybody in a middle-class community wants. They want great places to work, with housing that- quality housing that matches their income. They want places where they could afford to buy new things that they need. They want lifestyle infrastructure, like cafes, and coffee shops, and bars, and things of that nature. They want those kind of things so they can feel a sense of value that is inherent within their own community. That goes back to that …

Majora Carter: What happens within low-status communities a lot … Because, of course, real estate developers, they take the kind of 20-, 30-year long-term view of what’s happening, in terms of how communities are going, to plan; whereas, in our communities, we’re taught that there’s no real value in them. So, it’s easy, I think, for them, if your family owned a home during a time of severe financial disinvestment in America, like the way that my family … My dad bought the house I was born and raised in the 1940s. By the time the ’60s, and the ’70s rolled around, there was so much white flight and disinvestment within the community, and arson, because landlords were torching the buildings there, because there was no financial investment coming in, so the most they could do is get insurance money.

Majora Carter: It was a really bad kind of space. That kind of lingering understanding – this is what our community is … Of course, you own property. It’s going to have an impact on you, and you’re going to feel like … The second you can move, you’re going to get out. Predatory speculators understand that. They’re counting on us not knowing the value of our own home. I can’t tell you how many little notes I get under my door, or they found my cell phone … They’re telling me they can buy my house for cash, and close within a week. This is a common occurrence.

Eve Picker: Wow.

Majora Carter: For folks that don’t understand what they have, guess what? They’re going to be like, “You want to pay me what for this crap that I’m living in right now?” So, they end up selling, actually, generally for less than what the house is worth, because they just don’t know. Then the predatory speculator makes out really well.

Majora Carter: Since there isn’t a whole lot, from what I’ve seen, within the non-profit industrial complex and communities like this, that’s actually going to support homeowners within a community; which I think home homeownership is actually often – especially in areas where there’s a rental unit in them – there’s very little support to support those folks, like there’s [cross talk] non-profits or government. They’re like, “Oh, we’re going to focus on the poorest people in those communities,” and anybody else, it’s like sucks to be them, because it’s almost like they’re invisible.

Majora Carter: What we’ve actually been doing on our own is trying to identify what are … First of all, some of the homeowners, and just letting them know, “You’re sitting on your family’s legacy. You should be using this to help create wealth and retain it within your own family. Or, if you want to sell, at least understand what you got so that you’re not being reamed for it.”

Majora Carter: The other thing is we’ve actually hosted things like small zero-percent-interest loan workshops, and low-interest-loan workshops and you specifically – on our own dime – just so that folks have an understanding of what that is. On another level, and I think funny, because this is, again, on my own time, because we don’t have funding to do this; it’s just that we saw that it was a need … We’re really hoping that we are going to be able to convince somebody or other to develop some kind of a fund that supports low-income homeowners in low-status communities.

Majora Carter: You know there’s that cooling-off period, if you change and get insurance, or you buy a house, or whatever, and you’ve got a little bit of time where you’ve got to prove that this is what you want? Wouldn’t that be kind of great that before any kind of real estate transaction goes down in a neighborhood like this, that there’s actually folks just making sure that folks understand what their options are?

Eve Picker: That would be great. What would the fund ideally do?

Majora Carter: It would, number one, support folks to actually be in that role, to play that kind of adviser role to the folks to let them know what their options are. But also, people may need … We find that some folks are selling their homes [cross talk]

Eve Picker: -could not repair the roof.

Majora Carter: Yeah!

Eve Picker: I know, I know.

Majora Carter: One little thing, and it’s just like [cross talk]

Eve Picker: So, a neighborhood fund- a neighborhood fund for people who really need help to keep them in their homes. I thought Philadelphia was doing a program like that.

Majora Carter: It is … New York is definitely not; New York City, at least [cross talk]

Eve Picker: Yeah.

Majora Carter: -sad how little they think about it-

Eve Picker: I think there are ways to do a fund like that. Do you think there are people in the neighborhood that would contribute to a fund like that, themselves, in their own neighborhood?

Majora Carter: I’m not sure about that. I think it’s something that, frankly, should be a part of city government. I really do, because I feel like they’ve just- they watch the tax rolls in communities like ours, and it does fall along racial lines, as well. Nobody pays attention in poorer communities of color to supporting the homeownership right here. It’s not in our government. There are non-profits; there are a few nonprofits that work on- none in the area that I’m in, actually, which is why we’ve been posting those type of meetings and bringing those resources in. It’s really challenging.

Majora Carter: Another thing that we’re working on and is literally building our own projects to prove this talent-retention strategy that we have. It’s like if you build the kind of community that makes people feel like they don’t have to move out of it, in order to live in a better one … But you’ve got to build it. One of the things that we saw in all of our research, in the market research that we did here, was that people were leaving the community across income levels; not because they thought the neighborhood was dangerous or anything like that.

Majora Carter: It was because it was- there was no real lifestyle infrastructure here. There was no place to get a drink, if you’re an adult, that wasn’t a topless bar; there wasn’t a coffee shop, or a bookstore, anything like that. Even the kind of cute stores that people want to go to, or a place to get dinner. There’s plenty of greasy spoon places, and, of course, fast-food chains, et cetera, but nothing that actually spelled quality in any real way, and no attractive third spaces that made people want to stick around, like a coffee shop with Wi-Fi.

Majora Carter: We actually were able to acquire the lease on two very inexpensive leases on the main street in our community. It was just a wonderful deal that we got, long term. So, we were just like, “This is great.” We looked, actually, for a coffee-shop operator for years-

Eve Picker: For years?

Majora Carter: Oh, yeah, literally. We had that lease for a while [cross talk] and basically, it was clear, because it looked like the market here wouldn’t appreciate anything like this, even though we knew that our data proved otherwise, because we knew people were leaving the community to experience things like that-

Eve Picker: I know what happened. You started it yourself, right?

Majora Carter: Exactly. I was never planning to be a barista [cross talk]

Eve Picker: Well, there’s not many developers who’ve done that in areas where no one sees the market potential, because our financial institutions – I sound a little bit like a broken record, because there’s lots of reasons to say this – financial institutions, really, they’re crushing the innovation of the cities-

Majora Carter: Exactly.

Eve Picker: They’re really just financing cookie-cutter projects, so the moment you do something different  … I mean, I get it. They have regulators, but shouldn’t someone step up?

Majora Carter: Yes! Yes! You know what? What was wonderful is that, in our example … We decided to open- we first started- it was a joint venture with a really amazing coffee shop and roaster downtown. They’d never had a Bronx presence, and was kind of interested in the idea, called Birch Coffee. So, we partnered with them for almost a year. First, it took six months just to understand the business. Then, we actually opened in the latter half of the year. We learned everything from them about how to actually operate a coffee shop, and bringing people in, all that stuff. It was amazing. It really was their guidance [inaudible] I am so grateful.

Majora Carter: But it was sort of clear that the market up here was a little different than this very high-end big coffee shop downtown, where there’d be no flavors, or whipped cream, and syrups, and people … That’s what, frankly, people wanted up here. We also wanted to provide healthy options, as well, but we had- in order to stay in business, we actually had to respond to the market. So, we actually [cross talk]

Eve Picker: They wanted over-the-top luxury, right?

Majora Carter: Yes, and it’s just like no. I know expertly steamed milk is beautiful, on its own, but, look, if somebody wants whipped cream on top of it, I’m going to give it to them.

Eve Picker: Yes!

Majora Carter: Oh, it was just [cross talk]

Eve Picker: That’s a Viennese, right? [cross talk]

Majora Carter: -we should start calling it that now. You’re totally right.

Eve Picker: Yeah, and they’re all over the … Call it a Viennese.

Majora Carter: What was so interesting is that it … It also gave us an opportunity to stick our own swagger on it, quite frankly-

Eve Picker: Right.

Majora Carter: -because, after all, this is the South Bronx. It is the birthplace of hip hop. We are all about innovation. We were like, we need this cafe to pay homage to that. We literally ended up moving it to a larger space, and then we actually hired a two hip hop historians to actually help us curate the actual wallpaper, which is literally the early days of hip hop, mostly [broad] space. We just built this … It’s like an homage to graffiti, and it’s just beautiful.

Majora Carter: We use it as this tremendous third space for open mikes, and art shows. It’s just really this beautiful community gathering spot. It did take us a while to get to that point at a place where we won’t be losing money soon, which is awesome. But what was fascinating about it was the fact that, early on, we literally ran out of money to do it, because we were not anticipating … First-time coffee shop owners not knowing anything [cross talk] One of the members of the advisory board that we had that was literally giving us intel about how to do our projects better, actually, they volunteered to invest- her family volunteered to invest in our project-

Eve Picker: Isn’t that great?

Majora Carter: It was just like … What was amazing was that we didn’t talk about it. We socialize a lot of things, and it’s a small community, but what was interesting is that the way people found out that another family in the community had invested in this business was just like, “Wait, we can do that?” I’ll never forget some of the conversations we’ve had about it. It was just so beautiful that it was … Because people just did not realize that this was like within their grasp.

Eve Picker: Yeah.

Majora Carter: For our next project, we acquired [cross talk]

Eve Picker: I think you should- I think you should be the spokesperson for Small Change [cross talk] that’s really what my hope is for it, that people can invest in the way big investors can invest and they can get the same return. Because, you know, hey, it’s money, right? Why should they get less than someone else? Anyway, I’m sorry to interrupt you-

Majora Carter: -powerful place.

Eve Picker: Very powerful.

Majora Carter: -just to even know that you can add value. Literally, you are adding the value to make this project grow. It is really amazing. Our next project, we acquired a rail station, a former rail station, that was designed by the same architect that did the Woolworth Building, and the U.S. Supreme Court building – his name’s Cass Gilbert. Of course, I’m sure you know who that is. I owned a little piece of Cass Gilbert, like Woo-Hoo!, Which just makes me very happy. It really does! It’s only about 4,000 square feet. Our goal is to transform that into a restaurant incubator, or a food hub for local chefs, because we’ve … Interestingly enough, the Bronx has some tremendous culinary talent that comes out [cross talk]

Eve Picker: I’m sure it does, yeah.

Majora Carter: There’s this one group called Ghetto Gastros. It is four young men from the Bronx; [cross talk] one of them I mentored 20 years ago, which I’m so proud of. Now, they’re like these ridiculous caterers that are flown all over the world to do their version … Haute couture is- I think that’s a fashion term. That’s not a food term. It’s like nouvelle cuisine, except they put their spin on it, because they’re these wonderful boys from the hood, but they’re all trained chefs. It’s unbelievable what they do, and it’s just extraordinary. Ghetto Gastro – you look it up [cross talk] There are folks like that literally come from our communities, but then kind of parachute out, because there aren’t many opportunities for them to open up businesses here. I’m like, how cool would it be if we had this restaurant [cross talk]

Eve Picker: Yeah, that’d be awesome. You know, we have an incubator like that in Pittsburgh that’s done very well. I think they’ve got three stations, and they have like rotating startups in there.

Majora Carter: Because the restaurant incubatees, all they do, they cook … In our version, we would manage the bar and the dining area, and each one of the restaurateurs, either three or four, depending on what we can fit, is literally what … They would, instead of rent, we would get a gross percentage of sales [cross talk]

Eve Picker: Right, right, right, right.

Majora Carter: -they get a chance to really hone their craft-

Eve Picker: Right.

Majora Carter: -and at least focus on building their market, but the-

Eve Picker: What’s the holdup? Why can’t you get that off the ground?

Majora Carter: We’re in a neighborhood that’s not … You can read lots of real estate development articles about the South Bronx, and how it’s like the next … It’s like the next extension of Manhattan, and it’s booming, and there’s a lot of market rate development going on, and a lot of commercial things happening in it. But that’s the part of the South Bronx where that’s happening. There are other parts of the South Bronx, which is where I’m in, and born, and raised, and still live, that’s the part that’s sort of being reserved for poverty level economic maintenance [cross talk] Yep.

Majora Carter: There is one big project that’s coming up here that’s about … Basically, it’s another low-income-housing project. It’s so crystal clear that all that’s happening is they’re trying to concentrate more and more poverty here. I think that’s one of the reasons why it’s kind of like, “Well, that’s what happens here, so we can’t really think about investing in it.” Also, it seems like it might be considered a smaller- like almost too small a project for some folks, as well, because-

Eve Picker: How many square feet is that?

Majora Carter: It’s only 4,000 square feet.

Eve Picker: Oh, that’s big enough.

Majora Carter: That’s about- with all the added … We actually, interestingly enough, discovered a basement [cross talk] found the other room up top. It was- we discovered another basement [cross talk]

Eve Picker: That could be the speakeasy [cross talk]

Majora Carter: You know that to redevelop a 5,000-square-foot space, it’s almost as … The brain damage is about the same as a 50,000-square-foot space, but the returns are much higher for the 50,000-square-foot space. So, I think that’s also part of it, as well.

Eve Picker: Yes, but the return on this would be phenomenal for that neighborhood [cross talk]

Majora Carter: Oh, absolutely.

Eve Picker: -the triple-bottom-line return that really we’re talking about here. I don’t know. I think there would be people who would invest. I really do. It’s really an amazing story. I want to come see the building, and I want to eat with Ghetto Gastro, and-

Majora Carter: I know! Oh, my gosh, who knows where they are right now? [cross talk]

Eve Picker: -because the neighborhood sounds amazing, and I want to cry when I hear about more and more affordable housing being built.

Majora Carter: I know, I know, and it’s just like … I know whenever I say that, I have to preface it with, “Please don’t think that Majora Carter hates poor people,” because I think that’s the way that folks immediately go, like, “Oh, she doesn’t want any more affordable housing.” I want- Actually, I do want more affordable housing. I want affordable housing for a range of incomes, because we know that economic diversity needs economic stability and community stability. Whereas, the concentration of poverty is exactly opposite that.

Majora Carter: But again, if we’ve been led to believe that this is all that happens in low-status communities, we start to believe it, and then feel the only option is to leave, if we have an opportunity to do so. Who does that benefit? It benefits the predatory speculators and the government programs, who take advantage of the fact that there are really poor people in our communities that probably have lifestyle-related illnesses, low educational attainment, or who’ll probably be within the justice system. They make money for somebody; not for the people that are here. It just seems like such a tragically obvious thing that we see happening over, and over, and over again, and since we’re led to believe that there’s no real value in our communities, we internalize it.

Eve Picker: Yes. A lot of this is about educating community, right?

Majora Carter: Yeah.

Eve Picker: What community-engagement tools do you think work best?

Majora Carter: Honestly, opening our coffee shop [cross talk] having a presence, and being there has been so transformative. My husband and I both work there [inaudible] and work out of it a lot. We’ve met … I thought I knew a lot of people in my own neighborhood, but I have met so many more, as a result of having that space, opening it up in a way that is just- it’s not a community center that people feel like they’ve got to tip-toe in, or have a problem to be in. No, this is a place of joy, and access.

Majora Carter: I’ll give you an example of how I knew that we were really something that our community appreciated, because, again, the idea … I mentioned before that some folks within the social justice industrial complex totally demonized me and think that I’m bringing in developers to kick out poor people. Some of the stuff is just insane, and they won’t acknowledge that I’m actually a developer. It’s like, no, no, no, I’m the developer. I want to be called a developer … I have my own ideas. I don’t want to talk to these guys.

Majora Carter: We were hosting a workshop for small business owners in the community, as well as homeowners to get access to capital for zero-percent-interest loans and low-interest loans and also figure out other ways … There was going to be a presentation on how to make your building- add additional units on top of your building, to see if this is something even you could do. We were protested. We had 40 people inside the space waiting to hear more about these zero-percent-interest loans and how do you make your actual building work for you, and there were like 10-15 people outside yelling about how I was destroying the neighborhoods with bringing a coffee shop there.

Eve Picker: Really?

Majora Carter: Yeah, and I have to tell you, I was … The signs were huge. They were saying, “Majora Carter destroys the South Bronx one coffee at a time.” That I’m a community destroyer. It was just like, “Some of you people know me … You could’ve just literally knocked on my door and said, ‘Can we talk?'” But they wouldn’t do that. But I have to say, after that, I’m like, “Oh, my God, my whole neighborhood is seeing people yelling, with my name on a sign, talking about how evil I am.

Eve Picker: Yeah.

Majora Carter: I was just like, “We might have to close this stupid coffee shop. I mean, who’s going to want to come?” The next day, we had the best day ever-

Eve Picker: Oh, that’s really great.

Majora Carter: The best day ever. We had people coming in, one after another. It was like, “You know what? I’ve actually never even been here before, but I saw that, and I thought that was stupid. I’m going to buy a cup of coffee just to support you.” I was just like [cross talk]

Eve Picker: That’s really lovely. That’s really lovely. Yes, yes, it is. Many people just fear change, right?

Majora Carter: Yes, and I get it, and I understand … That’s like to your point, it is we fear what we don’t know, but if we don’t actually look at … Because real estate developers … You know that Bishop Desmond Tutu quote? A knife’s a knife. You could either use it to cut a hole in somebody or to cut a slice of bread and feed it to your child … It’s a tool. We can use it for horrible things, or we could use it for great stuff, but it is what it is. But how we use it, and unless we are empowering ourselves and other folks who are actually looking at places that actually have that triple bottom line and going, “That’s valuable. Maybe I won’t make the kind of returns …” because I’m sure … My rail station, one of the reasons why it’s also empty is because I’ve been very choosy. I am not going to open it up to another health clinic, or a tax-prep place that’s [cross talk]

Eve Picker: Yeah, yeah, yeah …

Majora Carter: We’ve said no to folks like that.

Eve Picker: Yeah.

Majora Carter: No. So, yeah-

Eve Picker: So have I, so you’re making me feel stronger.

Majora Carter: Good, good. No, I don’t mind at all; at all.

Eve Picker: I said no to a tax-prep space. I couldn’t bring myself to sign the lease. I just couldn’t do it.

Majora Carter: They have so much money, and they don’t even have to be open. It’s really crazy.

Eve Picker: No, they don’t have to be open. That’s the really bad thing. What a horrible thing to do in a neighborhood, just have a place that’s open for three months and then a shuttered storefront [cross talk] Anyway, now we’ve said what we think … Just like there’s been a wave of green-washing in this country, but I feel like there’s a wave of good-washing. People are talking about impact investing.

Majora Carter: I hope so.

Eve Picker: But when I hear you, I really wonder if they’re really impact investing.

Majora Carter: Nope.

Eve Picker: What do you think the future holds for impact investing? What do we have to do to change that?

Majora Carter: I am actually hopeful about some of the smaller-scale investment platforms that are out there, and just crowdfunding, in general, for real estate. I’m still learning about it. I do feel like our communities and our country, as a whole, is really only going to be changed when we start seeing each other in ways that we want to support. Look, I’m a woman of faith, so I think I actually really do believe that we can create a kind of heaven on earth, if we were really good at it, but I also think that- I am hopeful that … People are really tired of the expecting the status quo, because, by all accounts … I’ve got great vision. I have no balance sheet, so I don’t look good to anybody, and I get that, but I have a track record of getting things done, and-

Eve Picker: No, you don’t look good to very traditional financial [cross talk]

Majora Carter: No, I look miserable.

Eve Picker: You look great to other people, so that’s-

Majora Carter: Yes, and those are the people that I’m hoping will go, “Oh, wait …” But in order to continue to do that great work, she needs something that’s a little bit different than what she was getting before.” That’s what I’m hoping. Because I do- I also love the idea of people really taking ownership. I think that’s been one of the reasons why our low-status communities in America feel so disjointed and so destabilized is because we don’t have a way to really keep and retain roots in those areas where there’s access to capital, or predatory speculation. It’s all up in there, just [cross talk]

Eve Picker: But it’s really hard to get a neighborhood to focus, when has more than its fair share of single parents and people with two or three jobs.

Majora Carter: Those are the people that want more, and you know what? Believe me, and not to pooh-pooh it at all, yes, there are those who are not going to get out of their heads at all, but then there’s those are just like, “You know what? Why can’t I have it?” There’s always a critical mass of folks who are just literally waiting for something to do, like, frankly, the folks who saw me being bullied with this protest and who were just like, “No, wait … I see that. I know what I can do.” You may think that just buying a cup of coffee, a specialty cup of coffee, might not be an act of rebellion or resistance, but I absolutely looked at it like it was.

Eve Picker: Yeah, I think you’re right.

Majora Carter: I think there’s more of that that’s just waiting for a reason to be there, to actually stand up and be counted, and maybe even count a little bit of their own dollars to say, “You know what? Yeah, I believe in it. I believe in it so much that I’m going to invest in it.”

Eve Picker: So that’s what we’ve got to make happen at the train station, right?

Majora Carter: Yes [cross talk]

Eve Picker: I’m going to ask three sign-off questions that I ask of everyone, because I think I’ve taken up enough of your time. I could keep talking to you all day long.

Majora Carter: I know. I love it [cross talk]

Eve Picker: I think I know the answer to this, but we may as well reiterate – what’s the key factor that makes a real estate project impactful to you?

Majora Carter: Mixed-income housing, mixed-use … Well, the actual specifics – mixed income housing and mixed-use economic developments. But I think the real vision is talent retention in low-status communities.

Eve Picker: Then, do you think that crowdfunding might … I mean, you touched on crowdfunding. Do you think it might benefit impact real estate developers in more ways than just raising money?

Majora Carter: Would it impact real estate developers?

Eve Picker: Well, or neighborhoods or any [cross talk]

Majora Carter: -no, I think that you couple the idea of putting your cash into something that you believe in that is actually going to support your community creates a level of ownership that, you can’t buy that; you just can’t. It sets up a foundation and roots in ways that I think a lot of folks wouldn’t know what else to deal with.

Eve Picker: I think that’s right. Then, this is a really hard one – if you were going to change one thing to make real estate development better in the U.S., what would it be?

Majora Carter: Just one?

Eve Picker: Blow up all the Walmarts … I’m just joking …

Majora Carter: You know what? Honestly, I really would go back to  … It’s very practical. Creating a fund and education platform specifically for people in low-status communities to either retain their properties or purchase them.

Eve Picker: Like a land bank.

Majora Carter: Mm-hmm. It’s not necessarily a community land trust, although that could certainly be a byproduct or a result of it, absolutely. But I think, ultimately, right now, we just have to stop the bleeding. I just think about my own neighborhood, whereas, I think within the past 10 years, our local homeownership rate has gone down from like 20 percent down to less than seven.

Eve Picker: Oh, why? Why did that happen?

Majora Carter: Because predatory speculators [cross talk]

Eve Picker: -foreclosures …

Majora Carter: Yeah.

Eve Picker: That’s really bad.

Majora Carter: Yep, exactly.

Eve Picker: Well, on that sad note, I’m going to say [cross talk] I’m going to say thank you very much for talking to me. I thoroughly enjoyed it-

Majora Carter: Thank you. Right back at you.

Eve Picker: -and I really hope we’ll continue talking.

Majora Carter: Cool. I hope so. Yes.

Eve Picker: That was Majora Carter. I’m in awe. Majora is uncompromising about her mission. She lives and works in Hunts Point in the South Bronx, one of America’s lowest-status communities, just two blocks from the house she grew up in. Majora is undaunted by taking new and necessary steps. When it became clear that no coffee shop operator wanted to operate out of her space in the neighborhood, she created a own business to achieve her goal. She’s committed to further developing the neighborhood where she lives and has now set her sights on the conversion of a former railway station into a food hub. She lives in a brownstone, two blocks from the one she grew up in. Now that is putting your money where your mouth is.

Eve Picker: You can find out more about impact real estate investing and access the show notes for today’s episode at my website, EvePicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities. Thank you so much for spending your time with me today, and thank you, Majora, for sharing your thoughts. We’ll talk again soon, but for now, this is Eve Picker signing off to go make some change.

Image courtesy of Majora Carter Group