From Our Members: Observations & Opportunities
Join us every other week as ULI San Francisco leaders and members share their experiences and perspectives in this ever-changing world.
When the COVID crisis sunk in and became quite real, I went into the muscle memory of the other crises of my professional lifetime — the S&L crisis, 9-11, and the GFC. As in each of those other crises, for the first weeks, I woke up expecting that the crisis was a bad dream, but each day having to find the ways to adjust, survive and hopefully, one day, thrive.
I sort this into three tranches. First is the immediate term – how we deal with the mass lockdown? This phase is almost over. Second, is the mid term, which is how do we cope over the next 1,2, god forbid, 3+ years prior to a cure, with this threat being omnipresent but somewhat controllable. Third, is the long term impact, post vaccine, on our lives and on the real estate world. I hate the phrase “we all have short term memories”, suggesting a blind return to the past. We know, through the long term changes from past crises, that there will be forever changed behavior in our lives, and real estate, around long term trends that would’ve happened anyway. We will continue to explore this in our podcast, Leading Voices.
I do not believe that density and urbanization is dead. The story of densification is the story of human evolution and a basic part of human nature. But how, in what will now be a forever requirement, will we to be able to watch, catch and turn on and off the social distancing spigot? How will this mandate affect existing and to-be-built real estate? How will it affect our different food groups? And, I have the deepest questions around how this will affect government and our social compact.
Last comment is that this also affects us differently based on where we are in our lives and careers. I am 63 and lead a national recruiting firm, so I think a lot about phase of career. For me and Terra Search, this is a time to invest in our next decade rather than slow down. But the crisis means very different things to my daughter, a year from graduation with a planning degree, and entering into her career; for mid-career people looking for the next cycle to make their mark; and people like me planning the coming years as their legacy.
I believe that all real estate asset classes will be retooled, in greater or lesser ways, both in the mid term and in the long term from this crisis. The challenge will be to make immediate term capital investments that that will serve as wise investments and amenities that will be demanded over the long term.
Crisis and retooling means opportunity not only for owners, investors, developers but planners, architects, prop tech and all other aspects of the real estate ecosystem to make a meaningful difference. I am an idealist more than an investor, so I prioritize the question of “where do I make a difference over the next phase of my career” rather than “where can I get the greatest returns”. But we we know that cycle turns and crises have traditionally been the place where fortunes have been made – opportunity abounds.
Finally, this crisis could cause our industry to better articulate its essential benefit to our society as the builder of our shared built-environment. Maybe we can replace NIMBYism with thoughtful discourse on how to best build our cities and we can replace rent-strikes and rent control with a public perception that “landlords” have a symbiotic, functional relationship with tenants. Maybe we can demonstrate leadership in helping resolve fundamental issues like homelessness and housing affordability collaboratively, instead in conflict. Again, I am an idealist, but I do believe that this crisis provides these across-the-board opportunities and challenges to which our industry can rise.
COVID-19 was an unwelcome addition to our daily lives as it virally made its way into our early conversations with family, friends, and colleagues. As we enter week nine of shelter-in-place, it has made us realize that no one is immune to uncertainty. We face uncertainty daily as it is not solely related to COVID-19. Still, the global impact, magnitude, and unknown duration of the current situation have us wondering when we will return to a more certain future.
With physical distancing, we quickly realized aspects of human nature that we may have taken for granted, and the importance of community became more obvious. This pandemic has humbled many as we acknowledge human acts of kindness, courage, and engagement in their communities. Through Zoom, we have adapted to still have meaningful connections, but it has also empowered us to connect beyond our normal physical reach. We greatly enjoyed organizing our first ULI Virtual New Member Coffee last month as we convened over Zoom. Our members continued their conversations in randomized breakout rooms as they shared their thoughts and interests.
As physical distancing policies impact the new normal, headlines globally began to address the future of cities. We now see more clearly aspects of public health intersecting with urban planning, and how our real estate and built environment professionals, businesses, government, and community alliances can tackle these issues through design. As a society, this pandemic has identified our strengths and challenges, but many opportunities lie ahead of us to overcome this and emerge stronger together. Now, we’re just a little Zoom fatigued, and so ready for real (safe) in-person social interaction.
We should all be optimistic as we begin to overcome this pandemic. The earth has hard reset, and nature has recalibrated the baseline. Now more than ever, our cities have an opportunity to come back stronger and innovate post-COVID-19.
Design will play a tremendous role in how we think about the built environment, from the scale of a door handle to how we manage our ecosystems. Urban mobility will undergo a series of corrections while we determine how to safely move our citizens. We have seen a dramatic reduction in transportation greenhouse gases, resulting in cleaner air, but this could be short-lived, and cities need to work to implement policies and incentives that continue to reduce vehicle miles traveled and consider flexible working alternatives.
Spaces for socializing and gathering such as venues, bars and restaurants, and open spaces, will always be critical elements in our cities. A renewed focus on studying the relationship between community and behavior may provide solutions for a healthy balance between the physical and virtual engagements. Sustainability and resilience of our cities must be prioritized to strengthen and repair our infrastructure, and these strategies must be identified in a roadmap with pragmatic near-action implementable solutions.
As we deal with this uncertainty, we must dream big, stay creative, and be actionable. Today is not an end, but a beginning. Human beings are social by nature, and civilizations have stood the test of time. Some cities will flourish, emerging more resilient than ever, correcting many of the problems that we faced in our cities in the last century. Our notions of the future city will be enriched due to this pandemic, and we have the responsibility to help lead and shape the San Francisco Bay Area to become the benchmark for healthy future cities.
This health crisis has highlighted our human capacity for adaptation and resilience in the face of immense change and loss. As we move into our second month of shelter in place in the Bay Area, many of us have now experienced the impacts of COVID in painful, personal ways – the loss of loved ones, a shift in financial security, the mounting toll on our sense of wellbeing. No matter our personal circumstances prior to this health crisis, each us has had to grapple with a changed world and disrupted routines.
Yet, in the face of this unprecedented societal change, we can all point to ways in which our communities have demonstrated the resilience to adapt to our new realities. This is especially true in our real estate community: local governments have found creative ways to keep essential services – including development and construction –moving forward; many banks, landlords and tenants have worked together in a time when they could easily drift apart; developers have transitioned community outreach to virtual online formats. The list goes on.
However, this crisis has also made undeniable that too many of the people who contribute to the vibrancy of the urban life that we are mourning have been living at the razor edge of financial insecurity. Data suggests that the health and financial impacts of this crisis have been inequitably borne by many of the people who contribute to the richness, diversity, and uniqueness of our cities. The recovery of the way of life that drew many us to the Bay Area will be determined by our response to the fragmented socioeconomic reality that this crisis has brought into plain sight.
As leaders in land use and real estate, we have an opportunity, and I would argue, an obligation, to harness these attributes of the human spirit – adaptability and resilience in the face of immense change – into the way we plan, finance and develop our built environment moving forward to create a more equitable urban fabric.
Pre-COVID, it was estimated that more than 100,000 workers in the Bay Area commute over three hours a day, largely due to the housing affordability crisis. We can do better. For the people and families impacted by this dynamic, for the environment that quietly bears the burden, and for our communities that are stronger when each of its members are on solid ground.
In my role as a land use attorney, I have observed that a major impediment to implementing big, progressive solutions is a fear of change. Yet, our response to COVID has shown us that human capacity to adapt to change is immense.
We have the opportunity to channel our adaptability to push forward “resilient” development. There are countless ways to do so. Planning for smart density that is proximate to jobs, food, transit, and safe outdoor space. Streamlining development of affordable and moderate-income housing, including for-sale housing, that provides opportunities for people to gain strong financial footing. Developing alternative housing solutions such as ADUs to allow families and communities to affordably live together. And on.
Much of the legal framework to do this already exists; we now need to implement it on a much broader scale. To do so, each of our actions matter: community meetings attended, development applications reviewed, deals financed, and votes cast at local elections. This health crisis is teaching us that small contributions have the effect of adding up to a much greater collective result. We each have a role to play in making sure the Bay Area that emerges from this crisis is representative of the truths we have learned during it.
As we enter into our eighth week since the six Bay Area counties mandated shelter-in-place, we can see clearly the severity of COVID-19; the federal, state and local efforts to manage the pandemic; the willingness of the population to respond accordingly; the bravery of frontline workers; and the ingenuity so rapidly being developed to improve the panoply of environments to which we’ll be returning.
Our work patterns and habits were disrupted, our social interactions were blanketed with rules and restrictions and even our food and household supplies became subjects of some real concern – along with some needed levity. But many families and workers were able to adapt to a dramatic shift in behaviors – from homeschooling to videoconferencing, how and when to shop, eat, new methods of transportation, exercise etc. “The trains kept running” – for the most part – but this is not sustainable and there is a need for more of our past normalcy.
It has become clear that this health crisis is perhaps the ultimate Black Swan. The global problem isn’t restricted to a single demographic, income level, or industry. The impact of Coronavirus has touched every market and every developer. As a result, I believe that the Bay Area and much of our country is rallying together against a common enemy, much akin to what our nation did during the second World War.
I see this in my daily work with our partners, lenders, contractors, competitors and tenants. Everybody is working together towards the goal of avoiding both the healthcare and financial worsening and, of course, losing more lives.
TMG Partners has been successfully developing real estate in the Bay Area for more than three decades. We have seen cycles start and end and numerous shocks to the system – some that changed business for a time, such as after 9/11. And we have found opportunities in each cycle, many of which we discovered before the market had recovered. Today, our industry is considering how to improve homes, offices, hotel, and retail spaces for a cleaner, healthier environment and one that is reflective of the economic conditions as we begin the next cycle.
In the short run, we are planning how to open and operate our buildings safely. We are working with vendors and tenants to implement cleaning and wayfinding strategies so that as our community returns to work, it can do so safely and with confidence. As we do this, we are strengthening relationships with our tenants, lenders and partners by providing information and resources, and sharing transparently. Open communication has been key in the past eight weeks and will be critical going forward.
Virtually we have already come together. Soon we will begin to congregate – though with more and candidly needed improved protocols – and continue to deepen the ties in keeping what are now collective and enduring new goals.