PATRICK SISSON

Curbed

July 2019

Nearly everything about The 78, a massive redevelopment project reshaping an abandoned 62-acre parcel just southwest of Chicago’s downtown, is big. Vacant for 90 years, the riverfront property will be transformed into space for 24,000 workers, new corporate campuses, a high-tech research center, and 12 acres of riverfront parkland after an expected $7.2 billion construction process. Even the name screams outsized ambition: The city currently has 77 designated community areas, or neighborhoods, with this project gunning to be the latest added to the list.

“It’s the biggest thing I can think of in Chicago for years,” says Whet Moser, a Chicago author and urbanist. “As part of the return to the city and movement of companies back downtown, there’s a good reason to expect that you can sell that space to corporations, and all the stores and services and housing that come with having so many people working there.”

Like other big American cities, Chicago is experiencing a wave of megadevelopments: large-scale, mixed-use, multibillion-dollar projects. Lincoln Yards and the renovation of the Michael Reese Hospital endeavor to harness the desire for urban living to create new neighborhoods from scratch. And, like similar projects in other big cities, The 78 is being handled by a division of Related, a development firm that’s made a name for itself with megaprojects such as Hudson Yards and the Time Warner Center. As Curt Bailey, president of Related Midwest, says, the company operates at a scale that few can match.

“We are willing to operate on the fringes of real estate so we can get to these incredible parcels and do special things on them,” he told the Real Deal. “So yeah, we don’t do small as well as others. We don’t do easy as well as others. I think, given our history and our level of expertise, we do better when it’s big and complicated.”

If the game of urban American real estate today is dominated by the megadevelopment—massive, city-changing projects that often marry public and private financing—Related has become one of the signature players. Owned by Stephen Ross, whose net worth is pegged at $7.7 billion by Forbes, Related, and its wide array of domestic and international divisions, has over $50 billion in real estate assets.

Coming off the opening of phase one of Hudson Yards, arguably the most talked-about addition to Manhattan in years, Related shows no sign of slowing, with the 78 ramping up in Chicago, a $8 billion Santa Clara megadevelopment in Silicon Valley planning to break ground next year, and a Frank Gehry-designed mixed-use complex in downtown Los Angeles, the Grand, pouring its foundation earlier this month.

Bigger and better isn’t a new real estate strategy, says author Steve Bergsman, who interviewed Ross in 2006 for his book Maverick Real Estate Financing: The Art of Raising Capital. But Ross and Related operate differently than their competitors. When Ross started and grew the company in the ’70s and ’80s, many developers were about transactions. Ross wanted to build an integrated firm that could do everything, from gather financing to plan mixed-use urban villages. It was an approach that would prove prescient for urban development.

The meaning of the megadevelopment era

More than a decade into the current economic cycle, demand for downtown real estate hasn’t abated. Since most of the easily developable land has been bought and sold many times over, cities and developers have been giving more complicated locations a second look.

The remaining areas ripe for redevelopment—such as waterfronts, rail yards, and huge abandoned industrial sites—are generally in prime locations and well-connected from an infrastructure perspective. But developing them requires expertise, capital, and planning. It requires being able to wait out years of approvals and planning meetings and navigate bureaucracy, to think big and master plan entire new neighborhoods, and to risk money for what can be a decade-long process.

Related has earned a reputation for being able to thrive on that complexity, thinking in “decades, not quarters,” according to Crain’s New York. The firm’s most famous deals, Time Warner Center and Hudson Yards, were both projects unsuccessfully pursued by other massive real estate firms (Mortimer Zuckerman and Tishman Speyer, respectively). When they couldn’t figure out how to close their deals, Related stepped in. These firms are far from the only ones who see potential in post-industrial landscapes. But when table stakes for such projects start in the billions, and require extensive negotiations with local government, only a few players can compete.

Take Related’s forthcoming Santa Clara project, which seeks to turn a 240-acre golf course into a combination of high-end residential, upscale retail, public parks and a public square, and office space for tech firms, along with 170 affordable housing units. Related needed to weather six years of planning and a pair of lawsuits by the cities of Santa Clara and San Jose before even getting the green light. Kim-Mai Cutler, a Bay Area urbanist and partner at Initialized, says that development in the region is so lengthy and unpredictable, it’s very hard for small actors to survive the process.

“The Bay Area loves small, bespoke things, but if you make the process so onerous, only certain actors will have the wherewithal and resources to make it through,” she says. “Small players can’t take the risk.”

From affordable housing to a symbol of urban luxury

Born in Detroit in 1940, Stephen Ross was driven from a young age to become a business tycoon. His uncle, Max Fisher, a financier and oilman who made the Forbes list of richest Americans, loomed large over Ross’s childhood. He gave Ross’s family a secondhand car and showered gifts, such as prime seats for Detroit sporting events, on his nephew.

“Why is the University of Michigan business school named after me?” he told Town and Country magazine. “Because the Ohio State business school is named after him.”

Ross, who graduated as a tax lawyer, moved to New York in the late ’60s and worked on Wall Street for a few years before being fired from a job at an investment firm. He decided to try his hand at real estate and started the Related Housing Company in 1972 with a $10,000 loan from his mother (“everything is related,” he said at the time). Even that name shows Ross thinking big from the start: He decided against his initial name, First Housing, because he couldn’t register it in every state, as he could with Related. He also felt that naming the company after himself, like so many other developers, was a mistake. “People don’t want to work for a person, they want to work for a company and be part of a company.”

As Ross would tell Bergsman, he saw a huge opportunity in developing affordable housing. By focusing on financing and developing government assisted multifamily housing for long-term investment, and using his skills as a tax attorney to take advantage of government-backed financing and tax credits, he was able to, in effect, become vertically integrated. His innovation was being a creator of affordable housing credits, a mortgage financier, and a developer. Eventually, Related would manage capital for large institutions and pension funds, as well as sovereign wealth funds, attracting $4 billion in outside investment capital.

“I started in affordable housing so I could learn the business using my skills as a tax attorney,” he told the Real Deal. “Meanwhile, I was selling the tax shelters that accompanied the projects to wealthy investors. The financial arm eventually became the largest supplier of debt and equity for affordable housing.”

“He thought about it on a broader scale,” Bergsman tells Curbed. “Ross wanted everything under one umbrella, that was his big innovation. He’s an investment builder, not a merchant builder, he keeps the properties. He was able to grow like that because he had the financing capabilities. Most don’t have those deep pockets.”

As Ross built out his affordable housing business in the ’70s and ’80s—the company claims to be one of the largest owners of affordable housing today—the growing number of properties under the Related umbrella created a “river of cash” that helped the company weather real estate booms and busts. By the ’80s, Related had begun opening new divisions across the U.S. and the world, and started diversifying into retail and mixed-use projects, including CityPlace in West Palm Beach (recently renamed Rosemary Square).

A turning point with Time Warner Center

The turning point for the company was the Time Warner Center, the renovation of Columbus Circle in Manhattan into a mixed-use complex consisting of high-end office spaces, luxury residential living, and extravagant dining and retail. Opening in 2004, the complex would presage the next decade and a half of high-end development in the city and help open up the west side of the island to projects like the High Line; New York magazine’s Justin Davidson calls it “the most influential construction project in New York.”

While the twin towers of the Time Warner Center have become landmarks in New York City, at the time, the project was far from a guaranteed success. Ross, whose offices overlooked the site of what was once the New York Coliseum, a bland convention center, was fixated on the possibilities. His intuition, that New York could support a mixed-use project with an indoor mall, seemed daring at the time (Related Urban, helmed by Ken Himmel, has also been instrumental in the company’s push into this type of development). Since its opening, it’s been seen as a huge success, and the project that enabled Ross to later take on Hudson Yards.

“They were looking at what the economics could afford at the time,” Ross told Davidson. “The predominant use they had in mind was a convention center-hotel, with maybe some condos and rentals: very pedestrian. I saw it as a world-class site.”

The project also saw Ross wooing Time Warner CEO Richard Parsons, telling him that the opportunity “isn’t about real estate; it’s about showcasing your brand.” Architecture critic Ada Louise Huxtable, writing in the Wall Street Journal, said the result was “exactly what a New York skyscraper should be—a soaring, shining, glamorous affirmation of the city’s reach and power.”

Hudson Yards and the commodification of the city

If Time Warner Center helped show the potential of mixed-use downtown development at a larger scale, the $26 billion Hudson Yards took that several steps further, with a single developer creating an entirely new neighborhood. The gleaming constellation of new buildings, supporting office space, high-end retail, and residential projects, built atop a functioning rail yard, was one of the most complicated and costly projects in the city’s history, taking more than a decade to complete. It was “the last frontier in Manhattan,” according to Dan Doctoroff, current Sidewalk Labs CEO and founder, and previously a deputy mayor of development in the Bloomberg administration trying to realize the potential floating above this grid of train tracks.

The high-end city-within-a-city has been called “the Rossian lifestyle at a supersized scale,” and showcases the company’s diverse interests. Related and Ross own the Equinox Fitness luxury health-club line (the first Equinox Hotel opened in Hudson Yards) and was once a partner with Union Square Events, the catering division of celebrity chef Danny Meyer’s business. Ross’s own private investment company, RSE, which was launched in 2012,invests Ross’s capital into companies such as Momofuku, Milk Bar, and the reservations platform Resy, all dining options preferred by the wealthy millennials who are the prime audience for the new apartments at Hudson Yards.

And Ross was able to devise the financial tools to make it all work, despite numerous setbacks. After winning a bidding process for the site in 2008, he lost his lead tenant when Rupert Murdoch pulled out, and had to cede to site to Tishman Speyer. Then, as the economy took a nosedive, Speyer pulled out and Ross was able to recover, restructuring the deal to include stalling mechanisms that allowed the company to wait out the economy. Related raised over $600 million for Hudson Yards through the EB-5 visa program, which gives foreign investors residency status.

Now that Hudson Yards has opened, Related may have its crown jewel. But as the company continues to break ground on new projects and diversify its business, fundamental critiques of this model remain. Are the public subsidies for these kinds of public-private projects, which help support private businesses, in the city’s best interest? Lincoln Yards in Chicagohas been pilloried for tapping into tax-increment financing, and the Amazon HQ2 development was pushed out of Queens by local advocates and activists against the notion of tax breaks for one of the world’s wealthiest corporations. Curbed critic Alexandra Lange called Hudson Yards a neighborhood for the wealthy, with “no weirdness, no wildness, nothing off book.”

Related and Ross would say that Hudson Yards creates big benefits for the city: In addition to adding more than 3,000 new affordable housing units and eventually paying off the bonds that funded a subway extension to the neighborhood, an economic analysis prepared for the company by Appleseed, a local consulting firm, estimates that Hudson Yards will add $19 billion annually to New York City’s GDP, 2.5 percent of the total, and contribute $477.3 million in annual city tax revenues.

During an interview at the recent Future of Everything Festival, organized by the Wall Street Journal, Ross said that critics of Hudson Yards have created an atmosphere hostile to business, and that labeling the mixed-use project as being too focused on wealthy customers is “newspaper talk” and “politicians trying to make an example of things.”

Ross, for his part, doesn’t think there will ever be another Hudson Yards. “But I think people will come and look at it, from a sustainability standpoint, and say, ‘I want a Hudson Yards in my city,’” he told Surface Magazine.

In addition to the projects in LA, Chicago, and Silicon Valley, Related announced a $3 billion urban senior living project with Atria, taking advantage of the “silver tsunami” of baby boomers entering retirement. As Ross and Related evolve on all fronts, the company continues to find new opportunities to meet the changing housing needs of U.S. cities.

“Real estate hasn’t changed since the Greek times,” Bergsman says. “Find your plot of land and build your Parthenon. But the people who succeed find something different in the obvious.”

Curbed

September 2019

For Michael Pickens, a 31-year-old working in tech sales in the Bay Area, buying a home for his family isn’t an option. He lives with his wife and two kids in Campbell, California, the same town where he grew up, in an apartment across the street from the middle school he attended. He’s seen all the signs of an affordability crisis: Friends can’t afford to live in their hometown and have scattered to Texas and Arizona. He’s put in offers on $700,000 condos only to lose out to wealthy buyers making all-cash bids. The 1,100-square-foot house he grew up in, built in 1952 and barely renovated, now costs $1.2 million. Campbell is simply a “different town.” Even if Pickens could afford to buy a single-family home, he isn’t sure it’s worth the financial risk, especially in a downturn.

Pickens is among the many millennials priced out of homeownership in the expensive coastal city where he works. But that doesn’t mean he’s not in the real estate game. To the contrary, he and his wife now own six properties in multiple cities. Thanks to Roofstock, an online platform for buying and selling investment properties in midsize, emerging markets across the country, Pickens can buy buildings from Pittsburgh, Pennsylvania, to Memphis, Tennessee, via his laptop.

“It’s very video game-like, like buying stock,” he says. “I’m physically buying these buildings, and managing property from afar.”

Roofstock, which has overseen more than $1.6 billion in transactions since it was founded in 2015, allows Pickens and other users to choose rental properties with varying degrees of expected returns, based on numerous risk factors, including location and tenant history. (Each listing contains extensive photos and inspection records.) Pickens picked up his first buy, a duplex in Memphis worth $129,000, a year ago, putting 20 percent down. After taxes, management fees—a property manager recommended by Roofstock oversees the building—and the mortgage payment, he makes roughly $200 a month. He’s already picked up five buildings in five other markets and spends less than an hour a week operating his property empire. It’s so easy he compares the process to fantasy football; Roofstock’s 30-day property return policy makes it “like buying a pair of shoes.”

“I’ve never been to the places where our investments are,” Pickens says. “I know nothing about these towns or cities.”

Making money with the real estate investment cloud

Pickens and others like him remain confident—even after living through the housing crisisand feeling the crunch of rising home prices—that it’s worthwhile to begin climbing the property ladder. And while investors have always picked up out-of-town properties, new technologies make it seem more natural than ever to buy a building on a block you’ve never seen. This technological ease has coincided neatly with larger real estate trends: rising costs in large coastal cities, the increasing appeal of midsize metros, growing interest in the idea of passive income and the cult of FIRE (Financial Independence Retire Early), and cynicism about the investment markets and the long-term fate of social security.

The old adage about real estate is that it’s all about location. That’s still true, but it’s less and less necessary for landlords to live in the same locations as their properties. Smaller cities and rising markets offer the best chances for more consistent monthly returns, and emerging investment platforms offer a channel for capital to flow from the coasts. According to CoreLogic, 11 percent of single-family homes purchased in the U.S. last year were bought by investors, the highest number on record and twice the percentage in 2000.

“We find that millennials see the investment landscape very different than their parents do,” says Alan Lewis, co-founder of DiversyFund, a site that lets users invest in large-scale multifamily developments online, and that controls roughly $100 million in assets. “They’re jaded by the homebuying story, they’ve seen people overpay during the peak and be upside-down in their homes, and they see stock market volatility and don’t have an appetite for it. They want something that offers a departure from the rollercoaster ride.”

These services aim to do just that. Whether they’re buying a stake in a new commercial building through real estate crowdfunding or investing in a unit in a building made for Airbnb, a new generation of investors suddenly has the tools to seize opportunities in dozens of cities. According to Gary Beasley, co-founder of Roofstock, before this era of innovation, roughly 70 percent of rental and investment property was located an hour’s drive or less from where the owner lived. Roofstock users have flipped that formula: Roughly 93 percent of investors on the platform are buying out of state, he says, and 75 percent are first-time buyers. It makes a lot more sense to buy a great home in Cincinnati for $120,000 than gamble on a $1 million starter home in Los Angeles.

“The idea of separating where you live and own has been happening for a while now,” Beasley says. “Since we’ve created the real estate investment cloud, you can plug into it and access opportunities across the country. The country is your oyster.”

Buying the dream home once the dream is gone

Due to the rising number of jobs that allow telecommuting, and the potential to have a career in a creative field even far from a big city, many young investors from places like Brooklyn or Boston are investing in second homes in rural areas. They’re using them not just as traditional vacation homes, but with the goal of turning them into short-term rentals, summer escapes, and eventually primary residences.

Alissa Hessler, a 37-year-old former public relations exec and founder of the Urban Exodussite, did just that, moving from Seattle to a property in coastal Maine and in the process creating her own career, which includes documenting others making similar moves. Today, Hessler and her husband offer creative services “based in Maine, available worldwide.” She works out of an office in a converted barn, and believes more and more of her generation will do the same thing, since rural property ownership, unlike urban property ownership, is still achievable on a creative professional’s income. In addition to dreams of authenticity, farmhouse living, and connecting with nature, a rural house offers a place to park money and actually turn a profit.

“Due to the golden handcuffs of having a high-paying job, people feel trapped in the city,” she says. “There’s also this general discontent from the millennial generation and the one behind it. We’ve always been sold this American dream: go to college, get a degree, move to the city, make a career, and have kids. But it’s just not possible. Cities are just too expensive, and young people are saddled with school debt. I have friends in their mid to late 30s who have multiple roommates.”

Hessler’s work with Urban Exodus argues that it doesn’t have to be that way. Many of the couples she’s interviewed were cautious about the transition, but slowly eased their way toward being totally remote workers.

Hessler warns that those contemplating such a move need to be aware of significant risks, including the high cost of property management services for rental properties (up to 20 to 30 percent of a landlord’s intake) and the price of repairs and utilities. Hessler once had a $2,000-a-month heating bill for her farmhouse before adding adequate insulation, and when a fridge broke, she had to wait three months for the only local repairman to fix it. It’s all part of being in what she calls the “Pop Tart generation”: raised on conveniences, and unfamiliar with the kind of repairs and common-sense skills required to maintain property.

“It’s not as easy as people think,” she says. “I’ve had friends in this scenario dip their toes in the Airbnb market. While 85 percent of guests are amazing, 15 percent are awful. And that 15 percent can push people over the edge.”

Despite those hardships, she still feels like rural property is a good investment. She sees it in the part of mid-coast Maine where she lives: So many young buyers are coming from Portland, Maine; New York; and Boston.

“Maybe I’m being overly optimistic,” she says, “but because of telecommunication, desirable rural communities will become even more desirable. It’s possible to thrive in smaller areas. You can start something yourself; cities take so much investment capital and are so risky.”

Investing in the cash-flow generator

While the millennial generation may be jaded due to the Great Recession and skyrocketing housing prices, the idea of investing in real estate is still extremely appealing to many millennials. They just need to find the right inroads.

Riley Adams, who lives in the Bay Area, in Pleasanton, California, and runs the Young and the Invested financial blog, says that real estate is an exceptional investment for multiple reasons. It provides rental income and cash flow, which can be partially shielded from taxation by numerous deductions, as well as relatively consistent returns over time. Adams has his own investment property in New Orleans, a studio condo downtown that cost him $100,000 and makes him roughly $400 per month after costs and mortgage payment are taken into account.

Smaller markets, Adams says, allow for greater monthly income for property owners. In expensive cities, it’s hard to charge enough monthly rent to cover the mortgage and expenses and still make a solid return. In cities such as New Orleans or Des Moines, Iowa, a landlord can charge a competitive rent and make a decent return on a much cheaper home. Pickens found the same thing with his Roofstock investments; he couldn’t find any properties in the Bay Area that provided solid cash flow.

In the major markets in the U.S., most money is made through appreciation of the real estate asset, not monthly cash flow. That’s why there’s so much institutional money in cities like New York or Los Angeles: Big players who can front millions of dollars see steady returns over time, but smaller landlords aren’t able to make the extensive initial investments required.

That’s why Roofstock, which now operates in 65 markets, has focused on properties in the Midwest and Southeast, says Beasley. The company finds that users, many of whom are tech-savvy early adopters, are concentrated in higher-priced cities.

“You can get a lot of house for your money, the rent money is very attractive, and the yield on these properties is pretty nice,” he says.

What about the tenants in these properties? The Roofstock system actually works to their advantage, Beasley argues. Since the new property owners don’t live in the cities where they own these apartments, they tend to hire professional property managers, who often do a much better job than inexperienced mom-and-pop operators. Roofstock often acquires property from the large portfolios of institutional investors and sells the units without asking renters to vacate. The transition is seamless, according to Beasley, without the need for showings that disrupt the renters’ daily lives.

“I bought a home through our site,” says Beasley. “I’ve never seen it, and I’ve never talked to any of our tenants. The tenant doesn’t know who owns it, could be me, could be anybody.”

How investment technology continues to evolve

Many of the tools and platforms allowing remote real estate investment expect the market to keep growing. It’s capital finding a way, allowing frustrated millennials to realize their ambitions to own. Lewis says DiversyFund has a lot of millennial investors, who are just starting to “dip their toes” into the investment world, and will eventually see more value in partnering with a service like his, where investors are guided by professionals and can take a more passive role.

“You see properties converting themselves into something of a hybrid, fluid enough to be lived in part of the year and rented out for another part of the year,” says Amiad Soto, a cofounder of Guesty, one of the world’s largest property management platforms. “Real estate is becoming more of a business, instead of something that’s fixed, and that’s enabling a lot more small- and medium-sized businesses to flourish, and for self-made entrepreneurs to grow.”

As more and more of this investment capital flows into these smaller markets and rural areas, it also brings displacement and rising prices. Hessler says that she’s conflicted about the idea of purchasing just for income: She wants to highlight those buying into an area to make a long-term investment and commitment, not just money. She’s seen how remote property owners can hollow out regions built on seasonal travel. Local owners have more competition for tourist dollars, and more speculation raises prices and turns vibrant towns into shells of themselves when locals can’t afford the rent anymore. It’s already happening in places like Joshua Tree, California, and Asheville, North Carolina.

“Make sure that you really love the place, if you’re trying to buy in that area,” she says. “The best investors are those involved in the community.”

“Filling a Roofstock-sized hole”

Pickens sees himself as a responsible property owner, one who is careful to find real estate that has been taken care of by tenants and to keep it in good shape.

“We don’t want to be renting out a bad place to a person in a bad neighborhood, barely making it or doing illicit things to make rent,” he says. “We don’t want to deal with the implications of those types of environments.”

That’s one thing Pickens loves about the service: It’s easily customizable (neighborhoods are rated on a five-star system, which takes into account a number of socioeconomic criteria at the census tract level). He can pick quality places in “quality areas,” while other investors can go for riskier locations, which possibly bring in more returns. He says a coworker who also uses Roofstock just wants to “be a slumlord,” and says he doesn’t care how terrible the house is—he just wants the highest possible return. (Roofstock doesn’t vet buyers: “As a marketplace open to all investors with the funds to invest we do not do independent vetting, but we do encourage investors who are not buying with all cash to get pre-approved by a reputable lender to signal their ability to perform,” Beasley says).

Pickens’s end goal isn’t to create a real estate empire. He simply wants enough passive income to provide for his family, and be able to work if he wants to, not because he needs to work (he declined to say how much he was currently making on these properties, or his final goal). So far, Roofstock has helped move him toward that goal. In a conversation with coworkers about what they were going to do with their bonus money last year, one looked at Pickens and said, “he’ll do what he always does: buy another house.”

“We had a Roofstock-sized hole in our life, and this filled it,” Pickens said. “We knew we wanted to invest out of state, but didn’t have the time to do it. It’s been a year of me interacting with people on Roofstock. I can say this is legitimately awesome, and everyone should do it. ”

When asked what his favorite property was, Pickens cited the Memphis duplex, his first purchase, which has offered great returns. When he was then asked what neighborhood it was in, he replied “That’s a good question. I don’t know.”

Curbed

September 2019

A good place to start to understand Milwaukee is on a street with two names.

During a bus tour earlier this month of the city’s near north side—a mostly residential stretch of homes, past the more familiar downtown and the districts of squat brick brewery buildings that have been converted into lofts, condos, and retail—Frank Cumberbatch explained why Old World Third Street, which runs through the business district, turns into Martin Luther King Jr. Drive as it heads north, through the city’s majority black neighborhoods.

A Trinidadian who emigrated to Milwaukee nearly 40 years ago and now works as vice president of engagement for local charitable group Bader Philanthropies, Cumberbatch has focused his career on bringing equality and opportunity to the city. When he introduced himself and his work around community health and housing, he said that, in the 40 years he’s been in Wisconsin, “I’ve wondered why the kids that look like me can’t get educated, why the men who look like me can’t keep a job, and why is it that our city leads the nation in the incarceration of African-American males.”

As he showed a group of writers around the city, pointing out some of the new and upcoming developments, such as a $100 million medical college taking the place of a shuttered department store, he said that the abrupt cut-off of Martin Luther King Jr. Drive is indicative of the city’s deep inequality and racial segregation. King Drive passes through an area called Bronzeville, once a thriving black entertainment district that hosted artists such as Count Basie and James Brown, but suffered through white flight, highway construction, and job loss and only recently started to bounce back via the efforts of Bader, developers, and other community leaders.

“That shift in names makes people feel less like human beings,” he says. It’s only called Martin Luther King Jr. Drive in the majority black neighborhoods, though some local leaders are discussing plans to make it the street’s only name. “It’s our intent that next time you come into town, Martin Luther King Drive runs right through the city, because that’s how we start the healing.”

A city in the spotlight

Next summer, Milwaukee will find itself in the national spotlight when it hosts the Democratic National Convention. It’s a strategic choice: After the Democrats lost the presidential election in 2016, in large part due to the crumbling of the so-called “Midwest firewall” of states such as Wisconsin, thought to be reliably blue, the party decided it was vital to communicate that it hasn’t forgotten this region.

Milwaukee will have plenty of reasons to show off to out-of-town guests, including high-profile developments such as the new $524 million Fiserv Forum, a multipurpose arena for the Milwaukee Bucks and other concert and sporting events that kickstarted a development boom in the city’s Westown neighborhood when it opened last year, and the sail-like Northwestern Mutual Tower, a 32-story high-rise that opened its doors in 2017 and reassured developers of downtown’s potential. Rocky Marcoux, the city’s commissioner of development, said he can’t wait to show off investment opportunities to those who haven’t been here before.

“It’s not that people have a negative impression of Milwaukee; they have no impression of Milwaukee,” he said. “I’ll bet roughly 80 percent of the people who will come haven’t been here before.”

Marcoux is understandably excited about the convention and the chance to show off to investors from the coasts. But he wants to make sure the whole city is in focus, including still-in-progress efforts to overcome a legacy of segregationand disinvestment.

“We want to show everything, the good, bad, and indifferent,” he said. “We want to talk about the challenges we have, and hear new ideas, too.”

Milwaukee’s formula for urban renewal

Media stories about the Midwest often depict the region’s working class as struggling white autoworkers, but in Milwaukee, which is roughly 40 percent black and 10 percent Hispanic, it is working-class people of color who face some of the greatest inequalities.

Cumberbatch said it can all be seen in a single zip code on Milwaukee’s northside. The majority-black 53206 postal code has some of the highest rates of unemployment, incarceration, and childhood mortality in the nation, the results of decades of segregation and discriminatory housing laws. Documentaries have focused on the neighborhood’s post-industrial plight, and Matthew Desmond’s searing, Pulitzer-winning book Evicted looked at the deplorable state of rental housing for many of the city’s low-income black residents (last year, he returned to Milwaukee for a lecture and said that “little has changed”).

“When you look at the old redline maps of Milwaukee and look at the racial breakdown of neighborhoods today, it hasn’t changed,” says Joaquin Altoro, the new executive director of the Wisconsin Housing and Economic Development Authority.

The old A.O. Smith/Tower Automotive factory, now rechristened Century City, a former GM plant in the center of the near north side that was abandoned in the late ’80s, has left a scar that’s just beginning to be filled by new businesses. Cumberbatch called the site a “total travesty,” and would ask candidates and all party officials at every level to stand on the ground, amid the rusted steel, and explain what they’ll do to help this neighborhood. He said the residents here are so down, they’re “looking up at the belly of a grasshopper.”

“What I’d like politicians and convention visitors to understand is, poor people care about their environment,” he says. “Poor people care about their children and their families, just like everybody else. Poor people have contributed greatly to the success of the Democratic party. This is what they should focus on. If this boat rises, then all boats across the nation rise.”

A few blocks from the Century City site, the Sherman Phoenix, a local hub of entrepreneurship and a potential model for community engagement, suggests one route to neighborhood rebirth. The name aims to be symbolic. A former BMO bank branch that was burned out in 2016 during an uprising over the fatal police shooting of black 23-year-old Sylville Smith, the building is crowned with a mural of a woman clutching a flame.

When the New York Times wrote about black Milwaukee following the 2016 shooting, the article’s closer—“Help us be the Phoenix that rises from the ashes”—caught the attention of Joanne Sabir, a black entrepreneur and community leader, and Juli Kaufmann, a white woman who founded Fix Development, which focuses on a quadruple bottom line (projects that promote economic stability, environmental stewardship, social equity, and cultural continuity). The two teamed up to create a business hub to help the area rebuild.

The Sherman Phoenix focused on giving local businesses a place to thrive, offering mentorships with other business leaders, access to a commercial kitchen, and affordable space near like-minded companies. Banks wouldn’t loan money due to the location of the project, in the Sherman Park neighborhood: It’s a $4.5 million project, Kaufmann claims, but banks value the land at $300,000. So Sabir and Kaufmann sought funding from local foundations, as well as community crowdfunding. Roughly 100 equity investors pitched in at least $1,000 each, making up 10 percent of the project’s total funding and guaranteeing the neighborhood was engaged.

“Essentially, I built a mall with my partner and we didn’t know what we were doing, we just listened to the community,” said Kaufmann. “People are starved for interaction, and government isn’t supporting the main streets of America; they’re chasing places like FoxConn.”

Now, after a year of operation, Sherman Phoenix has more than two dozen new businesses in action, including a clothing store that helps victims of human trafficking with employment and job skills; professional services such as family therapists, a yoga studio, and jewelry makers; an artist who customizes sneakers; and a number of restaurants, including an organic Buffalo wing shop and a place that sells booze-infused popcorn. There’s a waiting list of entrepreneurs trying to get in, and even formerly dark corners of the bank building’s basement are jam-packed with new ideas and fledgling companies.

“There’s no surprise there’s a waiting list to get in here, or that none of the businesses have failed here so far,” Kaufmann says. “There are a million black entrepreneurs and black ideas for job creation. It’s white privilege and institutional racism and systems built into our city that have made these things less possible. We have to innovate through those challenges and work through them and disrupt them.”

Diversifying the development world

Milwaukee’s also home to other pioneering programs that seek to empower local communities to shape their own development and destiny. The ACRE program, or Associates in Commercial Real Estate, has been a catalyst for supporting real estate projects by and for people of color in Milwaukee. Created by professor Mark Eppli and the Marquette University College of Business in 2005, after Eppli attended a real estate event at his school and noticed not one of the 360 attendees was a person of color, ACRE is a 26-week crash course to get more diversity in the development field.

When Eppli launched the program in Milwaukee, he discovered that, in 2003, less than 1 percent of the 100,000 professionals who worked in commercial real estate development nationwide were black. Though the program temporarily shuttered in the years after the Great Recession, it restarted in 2014, and has graduated dozens of real estate professionals, as well as aldermen and business leaders, who, slowly but surely, have helped reshape Milwaukee and encourage more black entrepreneurship. The new Ikon hotel development taking shape near the city’s Fiserv Forum is led by Kalan Haywood Sr., the first black developer to build a hotel in Milwaukee, who’s also building a mixed-rate housing development near Fiserv Forum. Melissa Goins, a black developer and ACRE graduate, is working on a number of developments across town, including new lofts set to go up opposite Century City.

Milwaukee has also utilized tax-increment financing districts, or TIFS, to spur development in underinvested neighborhoods. On the near north side along Martin Luther King Drive, which Cumberbatch spoke of as a symbol of the city’s divide, a number of new business openings have started to revitalize the near north side, picking up on the momentum created by the King Drive Business Improvement District, which was launched in 1993 (more than $400 million has been invested in the area since). Mi Casa Su Cafe, Rise and Grind Cafe, and DreamBikes have opened in the last few years, “breathing new life into this once overlooked part of Milwaukee,” as the local paper Shepherd Express describes it.

On North Avenue, a block away from King Drive, the America’s Black Holocaust Museum (ABHM), which explores “the harmful legacies of slavery in America and promotes racial repair, reconciliation, and healing,” is set to reopen as part of a larger mixed-use development, spearheaded by Melissa Goins, an ACRE grad, and Sabir, who cofounded Sherman Phoenix. Cumberbatch says the city and other developers have contributed to King Drive’s redevelopment, but before ACRE, there weren’t black developers involved.

Part of the challenge is to help the near northside, and its black residents, avoid being pushed out by development creeping up from Westown. While showcasing developments on a hilly stretch of Sixth Street, located due north of Fiserv Forum, commissioner Marcoux said that black residents could look down the hill, see the stadium, and “count the days before they’re out.” That’s why the city needs to redouble its efforts to apply anti-displacement efforts and neighborhood development (a Brookings study this year found the city is the most segregated major metro in the country).

Cumberbatch says that it’s important for everyone—locals as well as visiting politicians—to see how hard developers are working and how far the city needs to go. The changes on King Drive, like those in Sherman Phoenix, show the potential of community-led development.

“We’re very excited about the future of our town, and leaders like us in this community realize it’s on us now,” he says. “It’s the guys on the ground, it’s upon us to create wealth for families, create opportunity, and beautify our space, and bring dignity to people of color.”

Curbed

October 2019

Kate Yanov was working in Singapore last November when she heard about the program. A 38-year-old “digital nomad”—she runs her own company, Property Protect, that offers automatic protection for Airbnb hosts—she was looking to move back to the U.S. with her husband, settle down, and have kids when friends and family started sending her links to a story about Tulsa Remote. Applicants could receive $10,000 to move to Tulsa, Oklahoma, and live there for at least a year.

Carrie Hawkins, 37, a Cisco customer-experience designer and remote worker, had been living in an Airstream trailer with her husband, Zach, and their dog, Kyla, when other office-free colleagues told her about Tulsa Remote. After three years and 48 states in a trailer, they were also looking to get off the road.

Ron Walz, 64, who works in IT for Wells Fargo, had worked remotely for a decade, and, along with his wife, moved to Atlanta to be closer to his daughter. He was visiting his son, who lived in Oklahoma City, last fall when he heard about a program that would pay him to move to Tulsa.

Today, all three new Tulsans have not only lived in the Oklahoma city for months, but all own houses (Hawkins’s is a modern home designed by local organic architect Bruce Goff) and plan to stay for years. They’re all part of what’s proving to be a successful first year for Tulsa Remote, a program funded by a grant from the local George Kaiser Family Foundation that’s trying a new tactic to build and energize the local economy.

Instead of trying to, say, lure a corporation to open a new office and bring jobs and wealth, the strategy is to create a program that welcomes remote workers and travelers with the hope that they can put down roots and add something interesting to the civic fabric. Think of it as an influencer program for urban relocation.

“They’re looking for people doing interesting things with their life, who have interesting stories and have started interesting businesses,” says Yanov. “This is about finding people who are very into trying new things.” Including living in Oklahoma.

A new way to spark local growth

While many mid-size cities in the U.S. are in the midst of a renaissance—due to a combination of renewed urban development, new business opportunities, and affordability—others are still hoping to kick off that renaissance (see the competition to host Amazon HQ2) by finding new opportunities as the manufacturing workforce shrinks and the population ages.

Most commonly, increasing opportunity has meant cities paying for jobs via corporate incentives. Tulsa Remote is taking a slightly different route. The program gives $10,000 to winning applicants, as well as membership to 36 Degrees North, a local coworking space; housing assistance; and access to special events, speaking engagements, and community-building get-togethers.

Not everyone has the freedom to change cities without getting a new job⁠, but the program does sound promising to the growing, well-paid group of remote workers, says Aaron Bolzle, Tulsa Remote’s executive director. A quarter of the roughly 4 million remote workers in the U.S. make more than $100,000 a year, compared to just 7 percent of the total in-office workforce, and 13 percent of those remote workers are remote full-time. New Census Bureau data found that 1 in 20 workers now usually work from home, making telework the third most popular “commuting” method in the U.S., just ahead of public transit.

“People tend to focus on the $10,000,” Bolzle says. “That’s just one part of the program, and easy to understand. That just covers the cost of relocation, and removes the barriers and complexities of moving here. They’re highly in-demand people, and we’re showing them that Tulsa is a good place to work. We’re here to promote community integration.”

Yanov agrees. She’s lived in Tulsa for just three and a half months, and already bought a home in a neighborhood called the Heights, just eight blocks from downtown. The community interaction, both at events and in 36 Degrees, has made the transition much easier.

“I’ve moved all over; you rent an apartment, maybe meet your neighbor, and then you go to work and the gym and that’s your circle for a couple of months,” she says. “This has been a lot quicker. We never would have met so many people if we moved to Phoenix.”

Bringing the tribe together

According to Bolzle, Tulsa Remote has been a big success thus far. The program, which launched in November 2018, originally planned to welcome 25 applicants, but after getting more than 10,000 applications, they decided to accept 100. Since the spring, 70 have moved to Tulsa, and a dozen have already bought houses.

Of course, the program doesn’t exist in a vacuum. Tulsa has benefited from years of growth, development, placemaking, and other moves that have gotten national attention, such as the opening of the Gathering Place, a huge riverfront park.

Part of what participants of Tulsa Remote say has made the decision to move to this city of 400,000 so easy has been the way the program helps them tap into what makes the city unique and authentic. Yanov mentions taking an tour about the city’s wealth of Art Deco architecture, diverse cuisine, and even the 1921 Tulsa Race Massacre, one of the nation’s worst incidents of racial violence.

Hawkins decided to trade in her Airstream in part because of the networking opportunities in Tulsa. As the fourth person accepted into the program, she got used to greeting new members as they arrived. The monthly dinners that gathered members of the program helped everyone make friends, she says, and events with community leaders helped them start to feel rooted in Tulsa. Once, they were asked to submit questions to Mayor G.T. Bynum, who then gave the program a personalized speech.

Walz says that “you wouldn’t know we’re part of the first class” of the program, since it’s so well organized. After working from home, he relishes the chance to socialize at the coworking space, and already feels more comfortable here than he did in three years in Atlanta.

Yanov agrees that the coworking space offers more opportunities for connection than similar spaces in larger cities. At Tulsa networking events, members can actually talk and interact with everybody; she remembers going to similar events in San Francisco where you’d fight crowds of 500 or more just to say hi to someone.

Tulsa Remote is often cited alongside the Vermont program that gives $10,000 to every worker willing to work remotely. But that’s not a fair comparison, says Matt Dunne, founder and executive director of the Center on Rural Innovation (CORI). For one thing, Vermont’s program applies to the entire state, without the concentrated community of the Tulsa Remote program. Dunne has spearheaded programs to create remote work and innovations hubs in rural locations, and he says one way to think about this kind of economic development work is as “rural urbanism”.

“Even if you loved living on a hundred-acre farm, which you can get for a fraction of the cost of a loft on the Lower East Side in New York, if you’re aspirational in your career, you want to work for a company making an impact, and perhaps an impact not just in your immediate location,” he says. “You want to be by other people doing different and impactful stuff; you want some density and interaction.”

The Tulsa program’s early numbers suggest that a key ingredient to the success of this type of program is storytelling.

“I’m having conversations with rural communities considering similar ideas, and the concern that I have with them doing incentive-based programs is there’s a negative perception of life in rural communities that will cause people not to apply,” says Tulsa Remote’s Bolzle. “They need to work on changing that perception. People are very brand-aware these days, I’m afraid. Smaller communities need to understand what the talented people they’re trying to attract are looking for.”

Banking on the growth of remote working

While the first full year of Tulsa Remote hasn’t even finished yet, Bolzle and others running the program are already thinking about how the program will evolve for 2020. The goal is to make it more efficient—to figure out how to build a bigger community engagement team to assist new arrivals. Program coordinators are already certain that remote workers are a bankable bet for Tulsa.

“We’re going to build a support network for remote workers in Tulsa, even those not in the program,” Bolzle says. “We want to continue to expand the program to bring even more people into Tulsa. Predicting how many remote workers [there will] be in the future is like predicting how many people would own a computer back in 1996. Our understanding of what computers do is so much different today than it was back then, and the same with remote working.”

Remote working can be seen as a technological and social shift, mirroring our new economic reality. As Bolzle see it, people used to move where the jobs are, but today, jobs move to where the talent is; why else did Amazon pick D.C. and New York? If you want to attract those people, and that business, building community is the way to go. If you want to influence business, then why not follow the influencers?

“We’re going to be ambassadors for the city,” says Yanov, “whether we’re here for a few years or decades.”

Curbed

October 2019

The mural, a train trailed by ribbons of color, is wholesome enough for a children’s book. It’s actually a paint-by-number artwork, which various residents colored in. For Arvada, Colorado, the Denver suburb that placed the mural downtown for the grand opening of its new Gold Line commuter rail station, it’s a symbol of the town’s newest chapter.

Amid recent reinvestments in Olde Town Arvada, a neighborhood of brewpubs, independent stores, and restaurants, the arrival of a rail link to Denver this past spring, after years of delay, is another catalyst in the suburb’s growth. Arvada has already seen$400 million in investment since 2006, including streetscaping and downtown redevelopment, according to Daniel Ryley, executive director of the Arvada Economic Development Association, but it’s the arrival of the rail link that has fueled even more new development and a spike in economic activity. Sales tax revenue in Olde Town grew 75 percent between 2013 and 2018 as new businesses opened in anticipation of the train’s arrival.

Within a half-mile of the station, more than 1,100 new apartments, condos, and townhomes have gone up in the last few years, according to Maureen Phair, executive director of the Arvada Urban Renewal Authority, as well as a Hilton Garden hotel. An additional 250 units will break ground next year right next to the station.

“What we don’t want to do is contribute to sprawl, traffic, and pollution,” says Phair. “The best way to avoid that is building density around these stations, and really building a place, so people can ride to work and walk to dinner.”

The new rail line, Ryley says, and the 20-minute ride to downtown Denver, is making it easier for businesses to retain and attract workers, building on the successful development of a walkable commercial district. Like other newly connected communities along the 11-mile, seven-station G line, such as Wheat Ridge, Arvada is becoming more walkable and urban, with denser housing. These developments are changing perceptions of what Arvada can be.

“We were fortunate to be able to host a station right in the heart of our Olde Town community,” Ryley says. “It’s a real unique asset.”

Growing cities see rail as a ticket to world-class status

The new G Line, part of a number of recent and planned expansions of Denver’s Regional Transportation District, shows how growing metros in the West and the Sun Belt are betting big on improved suburban transit, including expanding light-rail lines and building new commuter rail services. It’s a trend that’s taken off over the last 15 years, according to Paul Lewis, vice president of policy and finance at Eno Center for Transportation. The American Public Transportation Association says commuter rail use has been steadily increasing since the late ‘90s, and grew 9.2 percent, or by more than 42 million additional trips, in the last decade alone.

Mimicking the commuter rail lines that stretch out from Northeast cities like New York, these new suburban transit options tend to be renovations of underutilized or unused freight lines. Similar plans propose or plan to open new lines in the next five-plus years in Seattle, Houston,Massachusetts, Dallas, and Miami.

“As cities grow and want to be world-class and compete on a global scale, they need to show a map with transit and rail lines,” says Lewis.

The price is certainly right: By repurposing existing lines, transit agencies forgo costly land acquisition and rail construction costs and focus on stations, parking lots, and passenger cars. Around these stations, transit-oriented development has spread and walkable and profitable downtown suburban developments have increased.

In the northern suburbs of Dallas, where Dallas-Area Rapid Transit (DART) plans to open the 26-mile Silver Line extension in 2022 to knit together growing cities such as Grapevine, Carrollton, Richardson, and Plano, roughly $1 billion in commercial space, multifamily, and retail is taking shape in and around planned stations, according to David Leininger, a former DART executive helping Richardson and Addison on transit-oriented developments.

This new generation of commuter rail is far from perfect. Because the routes are built on existing freight lines that run like spokes out of downtowns, they may not connect the densest areas of housing, jobs, and entertainment in each region. This problem hinders Denver’s growing rail system, which doesn’t terminate in the densest part of the city. And in many cases, bus rapid transit could do a better job of connecting the city to the car-dependent suburbs by utilizing existing high-use roadways and traveling on a more strategic, flexible route at a much lower cost.

These new lines also run on hours designed to appeal to more affluent downtown office workers—sometimes called “choice riders,” as opposed to “dependent riders”—when the majority of transit users don’t actually work a 9-to-5 day. And while local transit measures have been mostly successful at the ballot box over the last few years, high-profile defeats, especially in North Carolina, Nashville, and the Atlanta suburbs, where local voters rejected big-ticket rail expansions, show that not everyone is convinced commuter rail is a bargain for taxpayers.

But in cities where funding has come through, many of these new transit options have spurred building booms along transit corridors, and they’ve shown that a more sustainable, car-free commute is possible, at least for a small group of riders.

How rail lines link the suburbs to jobs and growth

Ryley says that just the announcement of the new G Line station in Arvada ramped up development. A new wave of construction broke ground in 2011, way before the G Line was supposed to be finished (delays pushed the projected 2016 opening date back to this May). When it was clear the line had enough support, funding, and momentum to be completed, a wave of multifamily projects began breaking ground, such as the 26-acre Water Tower Village, and new independent businesses opened their doors in Olde Town, including the Bluegrass Lounge, Hunter Bay coffee lounge, Homegrown Tap & Dough, and Steubens Restaurant.

Ryley says that by linking the city to customers and workers, the G Line is helping business boom. Other developing or expanding rail systems have seen, or are betting on, similar growth. South Florida’s Tri-Rail, which has served the Miami area since opening in 1989, has seen 6 percent passenger growth over the last five years to 16,000 riders daily, and a proposed 9-mile Downtown Miami Link would let system riders take the train all the way to the forthcoming MiamiCentral Station.

Texas cities also have high hopes for rail-led development. Houston will ask voters to approve a $7.5 billion expansion of transit, including more light rail and a rail link to Hobby Airport. Dallas’s Silver Line, a $1.2 billion investment in a radial line linking northern suburbs and other existing rail services, aims to better intertwine a crescent-shaped swath of emerging cities and job centers from Plano to the stockyards near downtown Fort Worth.

According to Leininger, the former DART exec, the suburbs see commuter rail as a significant infrastructure boost, and have responded with investments and policies stimulating new development. Grapevine is modeling its station on Denver’s Union Station (“You walk off the platform and feel like you’re walking into a development,” says Leininger), Richardson established a tax-increment finance district to raise $25 million to assist with construction, Addison bought up 12 acres near the station that it’s selling to a master developer, and the University of Texas-Dallas, which will get its own station, has pushed development on the north side of campus adjacent to the station.

“Suburbs have actually embraced transit-oriented development more enthusiastically than the city of Dallas,” says Leininger. “That urban-suburban combination is a big selling point these days.”

When the Silver Line finally opens in 2022, there will be developments already open for business near every station. And the transit nodes created at stations where the Silver Line hooks up with the Green and Red lines will really create dense areas of development. Leininger, who also works with the Urban Land Institute, contributed to a study of all 100 rail stations in the Dallas-Fort Worth Metroplex, including DART and other systems, and found that developments adjacent to a rail station always commanded a premium compared to the same project elsewhere in the region.

Limits to the commuter rail rebirth

Dallas-area developers, sadly, seem to be an exception to the rule. The DART Silver Line will start operations just as community efforts to encourage dense development near stations, through investments and land use rules, begin to bear fruit. But most U.S. commuter rail still fails in this regard, surrounding stations with parking lots instead of shops, jobs, and homes.

“The big problem we see with lots of these new train systems isn’t the distances they travel, it’s the land use,” says Eno’s Lewis. “Surrounding areas aren’t incentivized for dense land use, only riders willing to park and ride downtown.”

The other big downside is transit frequency. U.S. systems run paltry service past peak hours, making it hard for these lines to function like true everyday transit. By comparison, mature European systems, like the RER commuter rail servicing areas ringing Paris, run multiple times an hour and act as extended light-rail or subway lines.

Still, while transit ridership has seen troubling declines across the board, Lewis and others do see commuter rail and efforts to increase service becoming more popular. Even the defeat in Atlanta’s Gwinnett County was the closest the area has ever come to transit expansion.

Lewis believes change requires investment and consistency. Cities and states that propose and pass funding for these systems, invest in land-use plans that develop areas around stations, and create service schedules that serve all users can create a virtuous cycle: better transit service, more business in tax-collecting transit-adjacent developments, and more money to support transit expansion.

Arvada has seen a boom with the G Line’s arrival, and wants to make sure it stays. Ryley says the city will soon embark on a comprehensive rewrite of zoning and land-use policies to help develop more density, as well as draw more foot traffic and more diverse businesses. Opening the rail line is just the first step.

Phair says that the city is already looking at a second hotel and adding more commercial real estate around the new station. The parking garage near the station is full every day, and many residents of the new apartments nearby have been able to give up their cars. But development in the Denver area is “such a four-letter word.” There’s lingering public sentiment against change, new development, and rising rents.

“This is great planning, and smart development, and we need to find out how to communicate the value of these developments,” she says. “When we don’t take advantage of the proximity to transit, that’s not good for the future. It’s a shame when development occurs and doesn’t take advantage of a transit link.”

Curbed

October 2019

The latest high-end real estate amenity: living longer.

At least that’s the view of South Florida real estate developer Rishi Kapoor, whose Location Ventures has begun selling units in a forthcoming development in Coral Gables that Kapoor believes will deliver the promise of a healthier home, which he says is “not just science fiction, but fact.”

The forthcoming Villa Valencia development, set to open in mid-2021, features 39 units, all offering some of the latest features of the burgeoning wellness real estate trend. The sales pitch highlights “hospital-grade air, energizing light and pollutant-free water to protect from contaminants, free radicals and aging.” Kapoor says when all is said and done, the units, which start at $1.65 million, will benefit from a “five-figure investment” per unit in air purification systems, circadian living lighting, a Savant home audio system, and the Darwin system, a new smart-home solution that monitors environmental pollutants (Delos will have over 1,000 contracted projects by the end of 2019). Residents can set alerts for certain allergens and be notified when they reach a critical level indoors, which turns on the HVAC to remediate and circulate fresh air. Along with access to landscaped rooftops and a hammam spa, the features within each unit can, according to the sales material, create a home that “makes you live longer.”

“We’re catering for a clientele, an affluent clientele, and what we want to provide—and I’m careful to say this, it’s important—we want to create the healthiest home environment possible,” he says. “What is wealth without health?”

Many buyers agree; so far, seven of the units have been sold.

Can a building really extend your life?

Villa Valencia is just the latest example of the growing and somewhat nebulous wellness real estate industry. The Miami, Florida-based Global Wellness Institute, an industry trade group, claimed in a much-cited 2018 study that it’s a $134 billion industry, growing at a rate of 6.4 percent globally a year and expected to top $180 billion by 2022.

While pitches promoting colored lighting and life extension may sound like GOOP for the Restoration Hardware set—there’s even a term, “well-washing,” for projects that dress up designs with bogus health claims—the idea of wellness as a new amenity or real estate category has gained credence due to emerging knowledge about health and air pollution, especially the indoor variety.

Studies by acclaimed researchers and stories in the New Yorker and elsewhere have highlighted the danger of living a life mostly indoors, surrounded by stale, unhealthy air and a cocktail of toxic chemicals. Additional research points to the importance of environment over genetics in determining health outcomes. A recent World Health Organization study that found that 80 to 90 percent of our health outcomes are intimately tied to where and how we live, and another analysis by the group found that preventable, non-genetic chronic diseases are expected to account for almost three-quarters of all deaths worldwide by 2020. A 2014 study by Texas A&M University researchers, looking at a wellness community called Mueller in Austin, concluded that the community’s design “led not only to more walking and biking by its residents, but also to greater social interaction and neighborhood cohesiveness [i.e., community feeling].” Combine those results with consumer shifts on diet, exercise, and general wellness, and it makes sense that our homes, often our biggest investments, would receive scrutiny over whether they’re as healthy as they could be.

“People have recognized that in the last 50 years, our lifestyles have changed, and we’ve seen a rise in chronic disease and obesity, and people being less active,” says Katharine Johnston, a researcher and co-author of the Global Wellness Institute report. “All of those issues relate back to our lifestyles, habits, and daily life, and where we live. With real estate in particular, younger generations don’t want to live in a suburban neighborhood with no sidewalks and drive everywhere.”

It also doesn’t hurt developers’ bottom lines to extoll the virtues of a healthier home. The Global Wellness Institute suggests homeowners are willing to pay an average of a 10 to 25 percent premium for houses within wellness communities. That may explain why, as of 2018, roughly 350 such projects were in the pipeline globally. Johnston says the trend is only in the early stages of mainstream development, and will continue to ramp up.

Or, as her colleague, senior research fellow Ophelia Yeung, believes, broad consumer awareness is “just being awakened” and in a few years, it’s “going to come like a tsunami.”

How wellness living is being defined today

Designing homes and communities for wellness isn’t new. For centuries, resorts and escapes have been created with health in mind, and even early examples of midcentury modern architecture evolved from the wellness trends of the early 20th century.

Today’s nascent industry, though, inspired by new research and empowered by new and more affordable technology, is attempting to set standards. Just as in the green building movement, some organizations and builders have attempted to create checklists for certification. Two of the competing standards are the Delos Well Standard, introduced by the Delos development company, founded by former Goldman Sachs partner Paul Scialla(“If you believe in the wellness trend, why wouldn’t you apply it to the largest asset class there is?” he says) and the Fitwel standard. Johnston says both are based on quality research and take into account factors such as access to green space and natural lighting and the use of nontoxic building materials, but the Well standard is considered more high-end, while the Fitwel is “simpler and more cost-effective.” Johnston says that as standards and systems are evolving, many of the best projects she’s seen in terms of actual health outcomes aren’t certified (the 2018 report lists a number of studies of wellness communities undertaken by university medical centers).

“I wouldn’t be doing this if I didn’t think it was the future,” says Gregory Malin, CEO of Troon Pacific, a San Francisco-based builder of custom, wellness-optimized homes that’s been a leader in the field for years. “People are much more educated today about health and wellness. Think about it: How many meetings would you have started with meditation five years ago?”

Malin says his firm, which now offers sleep-optimized luxury homes that shield residents from electric and magnetic fields and vent dangerous gases from chemicals under the sink, has been thinking about these trends for more than five years, after seeing major employers, such as Kaiser Permanente, offer wellness options to their employers. That led to Troon Pacific joining the US Green Building Council’s Building Healthy Initiative.

Being in the Bay Area, Malin says he’s accustomed to working for tech industry clients who dig into the mechanics of the technology and “go down the long tail” when it comes to health and wellness. Those who see health as a means to “open up a wealth of ‘super’ powers” that include “thinking ‘better, faster, and smarter’” are a key segment of the wellness market, according to Global Wellness Institute reports. Their interest has fueled a mini-boom in high-end wellness clubs, such as The Well, a “Soho House for wellness,” according to cofounder and chief creative officer Kane Sarhan, which opened late last month and features fitness and meditation space and a bar for biodynamic wine. Backed by Deepak Chopra and Keith Pyne, a sports medicine doctor whose clients include Kobe Bryant and Alex Rodriguez, the company is already scouting out additional locations in New York and Los Angeles.

Another aspect of the rise of wellness real estate is growing public awareness of climate change, and a deepening understanding of air pollution and its detrimental impact on our health. Malin says climate awareness is a growing factor in how his firm designs home; the record-breaking wildfires near San Francisco last summer inspired Troon to begin designing a new smoke sensor that shuts windows and recirculates filtered air inside homes.

Location Ventures’ Kapoor says climate change awareness and wellness real estate are linked.

“It’s such a common and present topic in our lives,” he says. “If I’m worried about my external environment, I’m worried about my internal environment.”

Wellness isn’t only for the rich

Talk of top-of-the-line air filtration systems and climate catastrophe suggest the specter of increased environmental inequity: the rich living in cocooned, climate-safe bubbles while the rest of us breathe a more polluted atmosphere.

But all the developers and experts interviewed for this story made a point to discuss how they see this technology and development approach trickling down, and all hope to develop more affordable and workforce-focused projects in the future. Kapoor says the tricked-out filters, sensors, and lighting he used for Villa Valencia would have been three times more expensive just five years ago. And Scialla is amazed at how fast the industry has grown.

“It’s amazing wellness real estate is a category of conversation today,” he says. “Wellness real estate was three words written on a napkin 10 years ago.”

And increasingly, planners and residential developers are making wellness a feature of affordable developments, says Johnston, encouraged by new partnerships with health care systems or policy changes that encourage healthier developments, such as new healthy housing incentives by Fannie Mae. Johnston points to Seattle’s Breathe Easy Homes, a public housing development oriented toward making life easier for those with asthma and respiratory health issues that has shown real promise and results: Asthmatic children living there had 63 percent more symptom-free days than in their previous homes, and showed a 66 percent drop in the need for urgent medical care.

“We have so many issues with our health care system and prevention,” she says. “As more people wake up to these issues, it can have downstream impact on health and disease. As people think about this holistic picture, it can have so much impact.”

That includes community connections and mental health. In Venice, California, the new Haven coliving development, a wellness-focused housing option featuring organic group meals as well as yoga and meditation, offers room for 96 members spread across four converted homes (each room houses four people in Japanese-style sleeping pods). Developer Ben Katz, inspired by coliving companies, such as Starcity, Common, and WeLive, felt he could take the idea in a direction that would be especially meaningful and impactful to the lives of members.

“Community is one of the main determinants of healthy living,” he says. “Living densely means sharing nicer things, and having people around you that care about you predicts your wellness and health. Isolation and depression are synonymous. We’re trying to build community connection.”

Haven, which costs $995 monthly—a deal in a neighborhood where a one-bedroom can be north of $3,000—attracts many in the fitness and startup communities, Katz says. The cost is another aspect of mental health, he says. The freedom to “cross-pollinate ideas” with other members, and to explore passions and projects without the weight of a high rent payment, can be freeing.

Katz already says the company has plans to open three more locations in LA, as well as to expand to New York, Seattle, and Washington, D.C.

Johnston says one of the more intriguing aspects of wellness communities are developments like Haven that combine the cliched “life, work, and play” concepts into something that’s more urban, dense, walkable, and ostensibly car-free. Many wellness residential projects are looking to offer coworking for freelancers and entrepreneurs and expanded fitness amenities.

In fact, perhaps the most heartening aspect of a turn toward health and wellness in real estate development is how these concepts underscore the wisdom of traditional urban planning principles. Much of the change that this trend promises is, in many ways, a rewriting of the car-centric compact embedded in sprawl and most suburban development.

“Car-centered development is a huge barrier here, and it’s embedded in our zoning laws and building codes,” Johnston says. “If you want to do a green, healthy residential development far from the city, how do you get people to jobs with our existing transportation system? It’s going to be a long time, and take a lot of work, to make the kind of changes necessary to make many of these suburbs healthier.”

Curbed

November 2019

Before Walmart became the nation’s biggest employer, before it was synonymous with big-box retail, and before it was an international business competing with Amazon, it was a simple local store selling home goods in northwest Arkansas. In the company’s hometown of Bentonville, visitors to the Walmart Museum can see a to-scale replica of one of the company’s first locations, a quaint corner store captured in amber.

Today, Walmart’s footprint in Bentonville is much larger than a handful of folksy five-and-dime stores, and poised to become larger still. In May, the company announced plans to build a new campus spread across 350 acres just blocks from Bentonville’s downtown. A vast reimagining of the company’s headquarters, complete with of-the-moment design trends—mass timber construction and bike paths bisecting cafes and outdoor meeting rooms—the planned campus offers a vision of corporate evolution, showcasing the retailer as a high-tech, cutting-edge talent magnet. An early rendering shows a bolt of sunshine streaking across the campus, as if corporate Eden has arrived in northwest Arkansas.

It’s also a prime example of how corporations use—and, some might say, co-opt—the language of urbanism to present themselves as good neighbors and more attractive places to work. Walmart seeks to build a new neighborhood that will not only be a destination for tech workers, but also a new amenity for everybody in Bentonville.

In some ways, the design is a return to the walkable neighborhood feel that customers of Sam Walton’s original stores might have experienced, after decades in which Walmart became more closely associated with suburban sprawl and car-centric planning. With a wave of store redesigns, forays into urban markets, and investments by the Walton family foundation in the region near its main offices, Walmart, and Walmart money, has begun to support a vision of mass retail beyond big boxes.

“The new home office is designed to be integrated into the community, to be an inclusive, seamless part of the natural beauty of Bentonville,” says Walmart spokesperson Anne Hatfield.

Hatfield wouldn’t talk about the costs of the new home office. But as new phases of the project take shape through 2024, when it’s predicted to be complete, Walmart’s hometown presence will shift from a decentralized series of 20 buildings to a landscape of offices and cafes featuring smart building design, solar panels, and regionally sourced materials, connected by outdoor spaces landscaped with native and drought-tolerant plants.

“There have been investments over time to create a new urbanism in Bentonville,” says Nelson Peacock, president and CEO of the Northwest Arkansas Council. “It all fits with the new urban planning in town that’s creating a more walkable downtown.”

How Walmart is building its own hometown

Walmart’s massive Bentonville expansion—in part an attempt to lure talent to Arkansas—stands in sharp contrast to the way other megacorporations are seeking out real estate near talent. Amazon tried to play municipalities against each other for subsidies, Google has quietly acquired extensive real estate holdings in major cities, and Apple has created an isolated spaceship campus near Silicon Valley, California, but Walmart will build its new home in the place it was born, on land it already owns, a warren of warehouses and office buildings on the fringes of downtown Bentonville, bordered by Central Avenue, 14th Street, J Street, and Martin Luther King Jr. Parkway.

Devised by a team of design firms including Gensler, Sasaki, and SWA, the plan for the radical new campus still speaks the language of wellness, efficiency, employee connection, and non-hierarchical corporate structure found throughout modern management theory. Better buildings mean happier workers mean a more agile tech company (and Walmart will not let you forget that it is in many ways a tech company, having made significant investments in online retail, machine learning, and artificial intelligence).

“All their buzzwords are the same ones Google and Amazon are using,” says Curbed architecture critic Alexandra Lange. “There are two things to examine with this design: the message it’s sending for talent retention, and the benefit it provides to everyone in Bentonville.”

According to Doug Gensler, a firm principal who co-leads Gensler’s Walmart team, which is in charge of workplace buildings and the overall campus, the home office offers a unique opportunity to reimagine corporate campus design, especially in contrast to the archipelago of corporate HQ islands found in Silicon Valley.

Gensler describes the plan as a series of quads, like a college campus, arrayed amid the urban grid to create “neighborhoods within neighborhoods.” Meant to be flexible and adaptable as work styles shift over the decades, the buildings play second fiddle to the walkable landscape. The abundant natural light also answers a constant critique of Walmart’s infamously windowless offices.

“This isn’t miles of surface parking lots, loop roads, and controlled entrances,” he says. “You can drive through here like you drive through a city. The balance around security is very mindful, between being urban while reflecting the control necessary for a modern corporate campus.”

The home office will be near enough to downtown, as well as developing parts of town such as Eighth Street, which runs through the center of the development, to help pull development southeast.

“They’re not trying to build a 30-story skyscraper in a town where there isn’t anything else over five stories tall,” says Peacock. “It’s thoughtful. The only complaints I’m hearing are that the investment will raise property values and make traffic worse, but those are challenges found in any growing community.”

Can Walmart urbanism make a difference?

The planned campus, to be developed within an existing city that utilizes sustainable building practices and walkability, is much more sustainable than most ground-up campuses (“recycling” existing company-owned buildings is, the company argues, simply the “everyday low price” culture at the urban scale). But while a plan that includes bike paths—the goal is to have 10 percent of workers bike to work by 2023—native plants, and 15 acres of lakes is laudable, it’s still a relatively low-density plan that features a significant number of parking lots. Without new and nearby housing, will the campus truly change transportation patterns for thousands of employees? The environmental angle and the “shaft of sunlight across the campus,” according to Lange, seem as much about rhetoric as they are about results.

“Landscape architecture is being used the way an art program would have been at the corporate campuses of old,” she says. “The rest is kind of generic and faceless.”

Walmart’s new headquarters also come at a time when the company is rethinking the design, dimensions, and even purpose of its nearly 4,800 stores, the true measure of the corporation’s environmental footprint and community impact. In 2019, the company planned to remodel 500 stores, according to Hatfield (an outside source estimates a cost of over $1 billion), part of a larger effort to embed technology and delivery options into the shopping experience. The company’s training academies even utilize virtual reality to train associates, and a test store has deployed AI to restock shelves.

As retail shutters in response to the Amazon e-commerce onslaught, Walmart finds itself in a historically odd position, that of underdog. Increasingly, brick-and-mortar locations are seen as bulwarks against buying online, and have been remade in recent years to be more engaging and entertaining. The purest example of this is the company’s “exploratory concept” of reimagined Supercenters, the name for its larger locations, a project dubbed Walmart Reimagined. Strictly an idea at this point, these theoretical new stores would include adjacent “town centers” with lawns, entertainment stages, and places to sit and relax.

Separate from the company, the Walton Family Foundation has invested millions of dollars in its Home Region Program, which has funded new and ongoing design and architecture initiatives to benefit the community in and around Bentonville, with a focus on promoting a “sense of place.” The Design Excellence Program has hired progressive architecture firms, such as Arkansas’s Marlon Blackwell, to design civic buildings in the region, and the Waltons were the primary funder of the Crystal Bridges Art Museum and the forthcoming Momentary, a contemporary art space in town. The region’s bike renaissance, including the 36-mile Razorback Regional Trail that connects to the new campus, also comes thanks in large part to funding from the Waltons.

For decades, placelessness was a key part of Walmart’s game plan; its mastery of logistics and holding down costs made it a retail machine that could work anywhere. But now, it seems, the twin priorities of attracting top talent and making an existing store network more amenable and attractive to shoppers attuned to one-click consumption have given place a new importance.

Perhaps that’s the true takeaway of the proposed campus; retail, even for giants of the form, needs to adapt. Gensler says that the main goal isn’t to create some showy, super-contemporary campus, but rather achieve success with a campus that encourages local to enjoy the space. He says it’s rare that architects “want to be the supporting player,” but that’s how Gensler sees its role.

“We want to do it in a way that extends the city and becomes an extension of the city,” he says. “At the same time it embraces what people love about urban environments, it’s also a campus that fits the region and the context.”

Curbed

February 2020

Les Sandler has seen the future of the American mall, and it involves blacklight mini golf courses, archery tag (foam-tipped arrows, don’t worry), and interactive batting cages.

Sandler and his son Jonah run Scene75, a Dayton, Ohio–based company that’s found a niche in the new retail economy renovating old warehouses and big box stores to create massive entertainment centers. Since launching in 2009, their company has transformed furniture warehouses, former Kmarts, and other retail real estate into family-friendly venues filled with attractions and games.

The company’s newest location, which opened last October at the Tuttle Crossing Mall in Columbus, Ohio, converted a former Macy’s store into a 224,000-square-foot indoor entertainment center filled with go-karts, arcade games, and rides. The chain’s existing locations in Cincinnati, Dayton, Cleveland, and Pittsburgh welcome roughly 250,000 to 500,000 visitors a year per location, Sandler says, and Scene75 is looking to expand, weighing several new sites across the Midwest.

“Mall developers are trying to use entertainment and restaurants as the new anchor tenants,” says Randy White, CEO of White Hutchinson Leisure & Learning Group, a consulting firm focused on location-based entertainment. “Today, it’s about real-life socialization. Potential shoppers can have all the digital entertainment experiences at home.”

An entertainment renaissance

For years, analysts have talked about the retail apocalypse, and how in an e-commerce age, the future of malls would be around an experience economy: food halls, “fitness clusters” of gyms and spas, programming, and other events that give online shoppers a reason to show up in person in their communities. Many commercial landlords and mall owners have responded, introducing pop-up shops and events, yoga classes, and other means of attracting foot traffic such as standbys like Sears, Pier 1, Kmart, Walgreens, and Macy’s locations.

But the growth of companies like Scene75 signifies something different, as the very idea of malls as gathering places seems nostalgic in an increasingly online age. Americans aren’t just shopping at home, they’re more likely to stay at home, period. From 2000 to 2017, out-of-home entertainment spending dropped 3 percent, according to U.S. Department of Labor consumer spending data, while spending on audiovisual equipment and services rose 6 percent and spending on cellular phone equipment and services shot up 534 percent.

“Entertainment is a zero-sum game,” says Nick Egelanian, president of retail consultancy SiteWorks. In fact, he says, “the amount Americans spend to go out is actually going down, because they’re staying home more.”

Faced with the challenges of drawing crowds and ringing up sales, malls across the countryaren’t just adding new experiences as an added attraction, they’re giving over large swaths of space to entertainment companies and expecting them to become the main draws. This includes expansive family entertainment centers, destination experiences such as the new American Dream Mall in New Jersey (which includes an ice rink and indoor ski slope), and experimental installations by art collectives such as Santa Fe-based Meow Wolf. Meant to be a recreation of Main Street, malls are quickly becoming, in part, theater districts for entertainment.

As Egelanian says, mall owners are moving beyond basic “101-level” entertainment options to attract larger, more complex entertainment venues that can attract repeat customers.

But as the industry turns to entertainment as a way to save the shopping centers that have traditionally served as focal points for many cities and towns, Egelanian believes this concept can’t be a long-term solution for more than a relatively small number of malls.

“The A or B-plus level malls will survive,” White adds. “The rest will turn into Amazon distribution centers or other uses. We’ve always had too many square feet of retail, and now it’s insane.”

White is especially bearish about the future of these kinds of family entertainment venues. It’s simple demographics: the percentage of households with kids continues to decline.

“The adults are the ones who spend the money, and they want to go to venues that suit their taste, so that’s the market to chase,” he says. “The family market is on the decline.”

Can existing mall designs be repurposed?

To understand why mall operators see large-scale entertainment as a potential solution, it’s important to go back to the way malls were originally designed, says Egelanian. In a bid to replicate Main Street America, early mall designers laid out these new shopping centers with large anchor tenants to draw in large numbers of shoppers, and small “streets” of specialty stores in between that would benefit from the foot traffic. This is known as the dumbbell model.

But over the last few decades, as department stores have collapsed, the model has fractured. Egelanian says just the 200 or so highest-tier malls of the roughly 1,000 currently operating will be left when the current wave of contraction and changes in consumer behavior are complete.

“A mall is a body with a circulatory system,” says Egelanian. “If it’s only getting blood in one section, say the torso and not the head or the feet, it’s going to die.”

Mall owners hoping to stem the slide into irrelevance are employing three main strategies, he says. The first is simply opening up the empty space to any entertainment venue that can fill it, such as an amusement park. He sees most of these as being underfunded, under-capitalized, and just not done very well—attempts to reuse space on the cheap that aren’t sustainable, and not the highest and best use of the property.

The second option is when landlords seek out quality, national chains with name recognition, such as Andretti Go Karting (five locations in the U.S.) or Legoland Discovery Centers (13 malls across the U.S.) or the Crayola Experience (five locations). They’re attempting to sustain the mall with upscale entertainment options as a magnet. This strategy has seen mixed results; the new tenants often bring in traffic, but it’s not always shopping traffic.

A number of new companies and concepts use this type of strategy. Esports are being courted as a new way to make malls relevant. (Pharrell Williams is co-investor in a project in Virginia Beach looking to include a 2,000- to 3,000-seat arena for live video game competitions.) Allied Esports signed a partnership with Brookfield and Simon, two of the nation’s largest mall operators, and plans to open up dozens of regional video game arenas across the country in the next five to six years, says CEO Frank Ng. The Void, a VR entertainment concept, just signed a deal with mall operator Unibail-Rodamco-Westfield (URW) to open 25 new locations in malls in the U.S. and Europe by 2022. Chains like Topgolf have, according to White, successfully reinvented the driving range and found ways to bring in non-golfers.

Then there’s the wave of immersive pop-up museums, such as the Museum of Ice Cream, or Candytopia. White says these types of temporary events have proven successful in the short-term, but he doesn’t see them as sustainable anchors in the long-term. Cycling through pop-ups requires set-up costs and extra promotion, and they don’t draw repeat traffic.

“The visitors that flock to these limited-time events are looking for new things all the time,” he says. “Once you post about it, there’s no value to post again, or visit.”

Egelenian’s third example is making entertainment part of the strategic core of the entire mall. His best example is American Dream, the three-million-square-foot New Jersey mall and entertainment center that just opened outside of New York City. The space, when it’s fully up and running later this year, will be split evenly between entertainment options and shopping, at stores ranging from outlet-type shops to high-end brands such as Saks Fifth Avenue and Hermes.

Egelanian considers American Dream an experiment, one fellow operators and developers will be closely watching.

“The big question is, if you have that much entertainment, will it drive much retail sale?” he says. “We won’t know for another six months.”

Malls-as-entertainment arrive as consumers are staying home

Both White and Egelanian believe that the shrinking of the retail footprint across the country means that eventually, only high-end shopping centers serving the affluent will survive in a form we currently identify as a mall. In many ways, they’ll also be entertainment-based, though the entertainment will be upscale food and beverage options.

They also think that the entertainment companies trying to fill the void, both in terms of actual physical real estate and the leisure time of the public, will soon be faced with a situation where too much available real estate leads to too many competitors and not enough customers.

Sandler believes family-oriented entertainment venues can still prosper, and be long-term, consistent anchors.

“We’re proud of our model, and want to attract a community that isn’t just passing through, but one that returns,” he says. “We’re a family business that can have 20, 30, or 40 birthday parties a week.”

A big question, from a property owner perspective, is how many of these venues a metro area can support. Naveen Jaggi, president of retail advisory services for JLL, compares it to the food hall trend.

“Six years ago, we had 30 or 40 food halls across the country,” he says. “We predict that by 2024, there will be roughly 450. There’s certainly a risk at that point of being overbuilt, leading to cannibalization.”

Maybe the future of mall real estate, and the way to get people out of their houses, is something much more radical. Meow Wolf, an arts collective-turned-business in Santa Fe, became famous in 2016 when it transformed an old bowling alley into a massive DIY arts installation filled with neon plants, secret rooms, spider-like statues, and non-linear storytelling called the House of Eternal Return. It gave the grassroots creative collective the backing to form a business that employs more than 400 people, one that will soon take a step forward into a more commercial realm when it joins other tenants at Area 15, a shopping center opening in Las Vegas. Their contribution to the project—which also includes a 32-foot-high volcano made of bamboo—is a yet-to-be unveiled “immersive entertainment complex.”

Meow Wolf has been getting attention from malls and commercial property owners for years, according to collective member and executive creative director Corvas Brinkerhoff. They see expansion into these types of real estate projects as a perfect pathway for tapping into the desires of a new generation of consumers who are thought to value experience over buying and collecting stuff.

Focused on promoting art and culture, Meow Wolf will soon be part of a new wave of immersive businesses that will benefit from this influx of new space, says Brinkerhoff, when it opens in Area 15, as well as forthcoming projects in Denver and Phoenix. Malls may not be retail playgrounds anymore; maybe these new businesses can help redefine malls and their role as common social spaces.

“You see this consumer behavior moving online, as well as all this retail real estate becoming available,” he says. “What are we going to do with this space, when we don’t need to sell things in person? We think there’s still value in this space, and Meow Wolf is kind of a perfect fit.”

Curbed

March 2020

When Sara heard she was accepted to Florida Atlantic University in 2017, she was happy and excited, like so many high school seniors receiving acceptance letters. She wasn’t a bad student by any means, but wasn’t the valedictorian, either, so she was grateful for the opportunity. She planned to study criminal justice, and was thrilled about moving into the dorms. But unlike many of her fellow students, Sara wasn’t sure how any of her educational expenses—especially housing—would be covered, because she had to pay for it all herself.

Sara (who asked that only her first name be used for this article, to protect her privacy) was in foster care until she was 16, when she was placed with a family in Pembroke Pines, Florida. When she applied for college, her foster parents said that if she didn’t continue to live at home, they wouldn’t support her financially. Sara made the choice to go to FAU, which was an hour away, and since she didn’t want to commute, she decided to be fully independent and live on her own.

Sara, now 21, is part of a growing population of students at community colleges and four-year universities facing housing insecurity and homelessness, which puts them at great risk of failing to graduate. For students facing housing insecurity and homelessness today, the challenges go beyond being scrappy and surviving on the cheap, says Joe Murray, an assistant dean at FAU. Today’s students struggle with expenses and levels of precariousness that far exceed what students in previous generations faced, and that’s especially true when it comes to housing.

“Just think about something as simple as move-in day,” he says. “All these parents come with U-Hauls full of stuff for their kid’s dorm rooms, and then you have a foster youth with a garbage bag of clothes, the only thing they may own.”

Much of the stereotypical college experience centers around living spaces, such as a student’s first dorm room or first rental apartment shared with friends. But colleges are increasingly admitting more and more students like Sara, who don’t have the resources to pay for housing. That’s led to more programs like FAU’s Educate Tomorrow, which has helped her and other students who are at high risk of being sidetracked from their education by housing issues.

Murray says that of the school’s 30,000-plus students, roughly 100 to 150 are foster children or were previously homeless, and 77 were enrolled in Educate Tomorrow last year. It’s indicative of how the homeless problem, which worsened during the recession, has only been exacerbated by a lack of housing supply, which is forcing rents up and pushing renters out of their homes.

FAU’s program helps students like Sara navigate everything from applying for loans to providing a $500 stipend to decorate their dorm rooms. Since launching in 2014, the program has helped raise the graduation rate of this segment of the student population to 46 percent, compared to the national average of roughly 4 percent. Murray says he won’t rest until that rate is 100 percent.

“They have no other safety net,” he says. “If they’re not graduating from college, they’re back on the streets and the narratives aren’t good. They don’t have parents to move back in with.”

Sara found the program particularly useful when figuring out her own housing situation.

“The biggest challenge was just figuring out how to navigate student life in general,” she says. “All the paperwork that comes with financial aid and applications, it can be scary if you don’t have someone to guide you.”

That guidance enabled Sara to become self-sufficient, something that proves difficult for many students in her scenario, who often face uncertainty and housing insecurity. Through Educate Tomorrow, she was able to navigate financial aid applications with a counselor and land a job at the student union. That gig, along with student aid and loans, helps her pay for her education and room and board.

“The guidance is there,” she says. “Fall semester freshman year, I didn’t know what I was going to do, and didn’t do my best in class, and that’s when I leaned on them the most for support.”

Homelessness in higher education

At universities and community colleges across the country—places whose mission is to provide opportunity and upward mobility—many students face the specter of poverty and not having a place to sleep. Roughly 60 percent of community college students, and 48 percent of four-year college students, face housing insecurity (defined as an inability to pay rent or utilities, or the need to move frequently), according to research from the Hope Center at Temple University. The same survey also found 18 percent of community college students, and 14 percent of four-year college students, have faced homelessness. That precariousness is on full display now, as a number of schools have told students to leave campus and finish the semester online due to the novel coronavirus pandemic. Many who can’t get home to their parents, or don’t have parents to go home to, are scrambling to figure out if they can find and afford housing.

“It’s really a fairly large-scale problem, and I always worry that people don’t appreciate how many students we’re talking about,” says Howard Bell, senior vice president of Starfish, a division of the education technology company Hobsons that works with schools to help assist students facing these challenges. “Higher education comes with its challenges, and that’s fine. But we’re dealing with the fact that, systemically, we’re not helping these students at all.”

Bell, along with other school administrators and advocates, identifies many contributing factors in addition to the rising cost of education. When students turn 18, they lose many social supports, like free school lunch, and may then struggle to provide for themselves. Federal educational aid is intended to cover tuition, not housing, food, and transportation, all necessary expenses for full-time students. And then there’s the changing student population. More Americans are attending college, including those with lower incomes and those who are older and looking to switch careers (more than a third of the nation’s population has completed four years of college or more). More than one in five undergraduate students are parents. Community college students, who are often commuters and don’t have the option of on-campus dormitories, are particularly affected by rising housing costs, especially in urban areas. The existing school aid and financing system, geared toward 18-year-old high school graduates with middle-class backgrounds and family support, seems increasingly antiquated and ineffective in light of these shifts.

Dreams for Change, a nonprofit in San Diego, California, operates a parking program that creates a safe place for local students and other homeless people to sleep in their cars at night. CEO Teresa Smith says that it’s become truly challenging to help the changing community college population in particular. “They can’t ever catch a break,” she says. “In the days of old, college kids could get by with ramen and pasta, and shove five people into one apartment. Today, there’s no places to do that. That means a lot of people get pushed out.

“When we started, I thought this was a recession-based issue and that it would get better as the economy recovered,” she says. “I’m seeing the complete opposite.”

The parking lot Dreams for Change operates for homeless San Diegans includes amenities and services meant to make the prospect of crashing in your car overnight a little more bearable. Those who park here have access to bathrooms with running water, food, refrigerators, a grill to cook, a little office shack to do work, and case managers for supportive services. Smith says of the 70 or so vehicles that park here on a busy night, probably five of them are inhabited by students at nearby universities. Nearly three-quarters of people who use the lot have a source of income.

The fact that students need to utilize the lot is indicative of the challenges they, and schools, face getting to graduation while navigating financial hardships. Smith says many of them feel embarrassment, shame, and isolation around their circumstances.

Colleges and legislators are beginning to address some of the financial barriers holding back many college students, creating food banks, allowing safe parking for the homeless on campus, and creating programs, like FAU’s, that target at-risk populations. But the solutions often only address the results of the housing problem, not the roots of the issue.

Sara Goldrick-Rab, a professor at Temple who studies education, especially socioeconomic and racial inequalities in the higher ed system, points to many social safety net programs that could be altered or changed to help students. Free school breakfast and lunch, as well as SNAP benefits, are harder to access in college, and could be altered to be easier for full-time students to utilize. Increasing minimum wages would go a long way toward helping working students. “The Living Wage campaign isn’t spoken about as a tool to help college completion, but it definitely is one,” she says.

The majority of action on student poverty is focused on providing emergency food, and happening at the state level, though there is some congressional legislation aimed at campus food insecurity. California, for example, passed AB 74, a $19 million fund to create test programs across the state to support housing-insecure students.

“It’s overwhelmingly about food,” she says. “There are a few exceptions, but not as much is being done to address housing. It’s just that much more expensive a problem to solve.”

The Amarillo model

One of those exceptions is Amarillo College. In many ways, the small Texas community college isn’t much different than similar institutions around the country; it struggles with lower budgets and resources, and a more situationally diverse student body. But it also has Dr. Russell Lowery-Hart, who sums up his approach to helping students as “operationalizing love.”

“We know who our student is and what she needs from us,” he says. “We’ve named our typical student Maria, know what her needs and struggles are, and more than anything, Maria needs us to love her to success.”

Lowery-Hart is going the extra mile to help all of Amarillo’s Marias get through school. He spent a winter weekend homeless so he could better relate to the experiences of his students. He’s also pioneered a program to help students facing economic insecurity that, for all its talk of love, is firmly based in analytics, data, and strong return on investment.

“What I heard from students was that what kept them from being successful in the classroom had nothing to do with the classroom,” he says. “The top 10 things impeding their academic progress were life issues. If students are struggling to put food on the table, cover living arrangements, and cover transportation costs, federal aid doesn’t cover what it really costs to go to college.”

With that in mind, the Amarillo model focuses on rapid reaction. Students facing housing insecurity or homelessness can quickly access food pantries and supportive services. Lowery-Hart and his staff also utilize predictive analytics to figure out which students may need help (during our interview, he referenced a dashboard he had on his office computer, which tracks at-risk students, their academic performance, and their use of school services to help determine who needs extra support). In addition, and perhaps most importantly, Lowery-Hart and his staff are ready to provide emergency housing and loans at a moment’s notice. If a student who is a working mother needs a motel for a week, the school foots the bill. If someone needs long-term housing, Amarillo College and city officials have Housing and Urban Development vouchers set aside. Need a loan to fix the car you need to get to class? Or $100 to pay an electric bill that’s overdue? Lowery-Hart is happy to step in.

And he’s found a clear financial incentive behind doing good. The school spends roughly $600,000 a year on personnel and services, and another $100,000 to $150,000 in emergency aid, which has increased retention rates by 12 percent. Completion rates at Amarillo have risen from 25 to 53 percent in just the last five years, and that decrease in dropouts offers a 16-to-1 return on investment, in terms of tuition that ends up getting paid.

“Even if you don’t see this as a social justice issue, see it as an economic one,” he says. “We know clearly that our students are one emergency away from dropping out, and if they ever drop out, the likelihood they come back is in the single digits. They have one shot at changing the trajectory of their lives.”

He’s found that these students often have a different perception of themselves than outsiders might.

“People who work two part-time jobs think they’re struggling, not in poverty,” he says. “They don’t have time to figure out how to access resources. They think the resources are for people who are really struggling, and they don’t understand that they’re working, and need those resources.”

In Los Angeles’s Boyle Heights neighborhood, a program run by the nonprofit Jovenes(Spanish for youth) has a similar focus on catching students before they slip through the cracks of the existing safety net. The organization—which got its start in the 1980s and ’90s helping foster youth from Central and Latin America find housing and emergency shelter—began approaching community colleges in 2016, looking to help some of the teenagers they assisted apply for college. It was “eye-opening” to discover how many community college students needed help, says Eric Hubbard, the organization’s director of development and strategic partnerships.

“We simply weren’t aware of the large number of students experiencing homelessness,” he says. “So we started to look at the problem and figured we should expand our services to provide housing opportunities, tailored to the students, to meet them where they are and help them maintain school as a core focus.”

Jovenes created what it calls college-focused rapid rehousing. Using rental subsidies, it helps students find housing near their college campus (Jovenes has partnerships with East Los Angeles, Cerritos, and Rio Hondo Community Colleges, all of which are in Los Angeles County). The nonprofit pays full or significant portions of the monthly rent, and offers services such as financial planning, academic support, and mental health services. Like the Amarillo model, the Jovenes program is predicated on a holistic view of student support, and believes that housing is just part of a suite of services that can, when combined, keep students from getting sidetracked by financial issues. So far, Jovenes has worked with about 80 students in this program, 67 of whom have graduated or remain enrolled. Hubbard proudly noted that current community college graduation rates in the state are 70 percent, so this program is keeping up with the state average.

“With foster youth in general, half will go to community college and roughly 10 percent will graduate,” says Hubbard. “We see a growing population of young folks doing the right things by investing in their education, but facing the challenges of homelessness that create significant barriers to success.”

How do solutions for students scale up?

While awareness of the issue has increased, along with the number of specialized programs meant to help students at risk of housing insecurity, there’s still a long way to go to provide students everywhere with the tools to succeed. Higher education in this nation has always prided itself on being a stepping stone for success, a sure route to betterment and a good job. But for those facing financial strain, arguably the students who would benefit most from a degree, housing issues can still be a barrier in many places.

“The schools that can try to launch these support programs have a financial cushion,” says Goldrick-Rab. “It’s dangerous for those who don’t have a cushion, especially community colleges. ‘You want me to try what? We’re about to lay off faculty.’ We’re living with the result of massively underfunding these schools.”

But for those who can find a program, they can be a lifeline. Sara at FAU, who will graduate this spring with a degree in political science, says that the Educate Tomorrow program has helped her navigate a stressful situation as an independent adult, without feeling ashamed of her situation.

“It doesn’t make you feel like you’re an outcast or a black sheep,” she says.

It’s also provided a home when she needed it: Last week, during the school’s spring break, she called from her dorm room, where she stays during school recesses and the summer.

“I know how to handle stressful situations and how to deal with adversity with being an adult,” she says.

She knows exactly what she’ll be doing this August, after graduation: Starting a masters program in higher learning, with the goal of eventually starting her own support group for refugee and immigrant students.

Curbed

March 2020

Denver photographer Lucy Beaugard has struggled with tears and sleepless nights this week.

The 32-year-old works as a freelancer, booking mostly editorial and commercial work related to the restaurant industry (she’s shot photos for Curbed sister site Eater). On Wednesday, March 11, she lost half her business as clients called to cancel work. That figure rose to 75 percent the next day. By Friday, all her work for the next two months was gone. March was originally going to be her busiest month in her 12-year career as a photographer; now, she’s desperately trying to fill her days with running, puzzles, and Netflix.

“It’ll take a while to rebuild my business,” Beaugard says. “I’ll be seen as a luxury for a long time.”

Like many workers coping with new economic realities brought on by the coronavirus, Beaugard worries about how she’ll pay the bills—especially her share of rent for an apartment she splits with two other roommates, which comes to $612 a month.

“I probably have enough money to get through March or April, maybe just enough to pay rent, but few funds to take care of all the other bills and expenses I need to get by,” she says. “It’s pretty unnerving. Will I lose everything, or will it blow over and I can bounce back quickly?”

When trying to convey the extent of the economic shockwave coming from the novel coronavirus crisis, “unprecedented” comes off as an understatement. As paychecks and jobs disappear, the looming question for Americans is, how am I going to pay for the place I live?

Rent or mortgage payments are typically the largest monthly expense for any person or household. With April 1 approaching, and a lack of certainty from the government over the length of mandatory shelter-in-place orders, those payments have become an issue of national importance as both the federal and local governments try to figure out how to help people through the crisis.

Many cities and states have responded quickly with eviction moratoriums. That’s a great first step to prevent people from immediately losing shelter in the midst of a global pandemic. But if anything, it compounds the question of how we’ll pay the rent over the next few months.

“April 1 won’t be so bad for tenants, because so many places have passed moratoriums on evictions,” says Randy Shaw, a housing activist in San Francisco. “The calamity will be June 1 or July 1. Renters can be evicted in June or July for back rent from April and May.”

It’s all part of the domino effect that starts with tenants not having the work, or money, to pay rent. In a typical down real estate market, the daisy-chain, domino-effect reaction goes as follows, per real estate lawyer Jeff Friedman: “Apartment renters lose their jobs or take significant pay cuts and can no longer afford to pay their rent; owners collect less rent and cannot make their debt-service payments to their lenders; and lenders are not collecting enough on the debt service, with their loans now on distressed real estate assets. Evictions and foreclosures follow, with distressed assets available to vulture buyers.”

“This isn’t a time to be timid,” says Carol Galante, a professor at the Terner Center for Housing Innovation at UC Berkeley as well as a former HUD and FHA official during the Great Recession. “Millions of Americans will have trouble paying rent this month. The more money you spend now, including on helping people stay in their homes, the less you’ll spend in the long run in terms of damage to the economy.”

On Friday, March 27, President Trump signed a $2 trillion stimulus bill, the largest emergency aid package in U.S. history. Many Americans will receive a one-time, $1,200 check to help cover housing and other costs (the median U.S. rent in December 2019 was $1,343 for a two-bedroom apartment). The one-time payment gradually phases out based on a recipient’s annual income, and disappears for those making above a certain level ($99,000 for a single person, $198,000 for a married couple without kids). The package also bolsters unemployment benefits by $600 a week and expands the program to cover contract workers, and includes additional funding for food aid.

For homeowners, the federal government is instituting a program of mortgage defermentlikely to be adopted across the industry, which means borrowers who have lost income or employment due to novel coronavirus fallout will be able defer payments on mortgages backed by Freddie and Fannie Mae by up to a year.

But backstopping the mortgage market is already part of the traditional financial policy playbook. This is a long-term crisis, and will require a solution that looks ahead to the world after the current economic slowdown, says Galante, perhaps something akin to a Universal Basic Income. Moratoriums are a great, immediate action, but nowhere near enough.

“I’m a little perplexed that so many people are focused on rent and eviction moratoriums as the strategy,” she says. “It’s not a bad strategy, if paired with emergency rental assistance. I’m calling for a disaster-like response. In a hurricane, if you lose your house, you get housing assistance on a temporary basis. We need the same thing on a national level right now.”

The policy decisions made now will have an incredible impact on the economy. Rent payments ripple upward and across multiple levels, and as Shaw says, “if the renter doesn’t get or can’t earn money, the landlord doesn’t get money, then the city doesn’t get money.”

Galante argues that it’s sensible for the federal response thus far to have prioritized mortgage relief, but that that’s just one part of what’s required.

“What drove the entire financial crisis in 2008 was people not being able to pay their mortgages,” she says. “It hurt the lending institutions, it hurt the individuals, and the single-family housing market is a huge part of the economy.”

In New York City, where roughly two-thirds of the population rents, there are much stronger calls to go beyond an eviction moratorium, with some calling to temporarily cancel rent. According to Susanna Blankley of the Right to Counsel NYC Coalition, a citywide tenant organizing group, nobody should be paying rent during this crisis. The government should give renters a few months off, and have landlords absorb the cost, with emergency funding available to help smaller landlords and nonprofits. Since the state offered a 90-day mortgage suspension, she argues, landlords aren’t in a situation where they have to pay, either.

“Thirty-nine percent of New Yorkers can’t pay rent if they lose a month’s worth of work,” says Blankley. “It’s important people don’t have to worry about being evicted during this time. But we have to think about what happens when we emerge from this. We’ll have a surge in evictions and cases flooding the court.”

The speed at which the crisis is developing, combined with the anxiety of uncertainty, is leaving renters in a lurch as they weigh if they should pay rent now, or put money toward more immediate expenses.

“So many Americans are living paycheck to paycheck, and we’ll see the consequences of that when April 1 rent payment is due and so many don’t pay it,” says Justin Hollander, a professor at Tufts University. He’s proposed a rapid employment program led by the federal government, reminiscent of the Works Progress Administration programs during the Great Depression, to get money into renters’ hands as quickly as possible. “The Great Depression took years to come to fruition. The economy slowed down drastically, instead of grinding to a halt. What’s so sudden and dramatic today is the large percentage of the workforce that has been put out of work so quickly.”

Beaugard, the freelance photographer, has mixed feelings about the eviction moratorium, which is currently in place in her home state of Colorado. Her immediate reaction is that it’s great she won’t have to face homelessness on top of everything. But without relief, her only option is to put off paying rent, which amounts to just another stressor.

“Being self-employed, I don’t like to add extra bills or burdens, and with a moratorium, there’s no guarantee that later I won’t be further into debt,” she says.

Thubten Comerford, 54, lives in Vancouver, Washington—a state that also has an eviction moratorium in place—with his partner in a small apartment. He normally makes a living organizing and producing networking events for companies in the Portland tech scene, but has no idea when such events will be permissible again. He’s not sure if he’s going to pay rent April 1 because he’s not sure how long he’ll be out of work.

“Is the fabric of society going to fall apart? I have no idea what’s going to happen,” he says. “Making a choice on incomplete info is a challenge.”

It’s not just renters who are seeking relief from the government. Landlords also need federal assistance, says Jeff Cronrod, who represents the American Apartment Owners Association(AAOA), the nation’s largest landlord trade group.

Landlords have been trying a number of solutions to cut expenses and make their own mortgage payments on April 1, Cronrod says, including using tenant’s security deposits in lieu of their rent payment this month. But ultimately, existing moratoriums just delay rent payments that landlords need to pay their own mortgages and bills.

Earlier this week, the Federal Housing Finance Agency said it would grant apartment owners mortgage forbearance if they agree not to evict tenants, a move that allows apartment owners to restructure their agreements with mortgage lenders to pay later, but doesn’t get them off the hook.

“You’re talking about billions of dollars if we forgive a few months of rent payments,” he says. “Someone has to suck that up, and I assume that’s the federal government. They’re the ultimate backstop for all of this. There’s no alternative.”

Issues of rent and the long-term impact on the real estate market will be paramount. Berkeley’s Galante says it’s imperative that any rental aid reflects different costs of living across the country: a flat amount set too low could make it hard for renters in high-cost coastal markets to cover all their bills, for instance.

“It’s also important that we don’t take our eye off the housing affordability crisis,” she says. “If we don’t factor that in, we’ll be in another crisis right after this one. We saw rents really spike after the last crisis.”

Policy that helps guarantee rent and mortgage payments are still made on time will be instrumental in solving this complex economic crisis. The exact solution isn’t clear yet, but nearly everyone agrees that the kind of large-scale government interventions that would have seemed unimaginable just a few months ago are now necessary.

“We’ve been calling for a city that’s free of evictions for over a year and people say it’s impossible, and now we’re living in a city that’s eviction free,” says New York City’s Blankley. “The demands we’ve been making are now possible.”