All posts in “News”

Marilynn Davis Joins HR&A

March 17, 2022 / No Comments

HR&A is proud to announce that Marilynn Davis has joined the firm as our newest Senior Advisor.

Marilynn, who most recently served as the Chief Real Estate Officer at Clark Atlanta University, will help expand the firm’s impact across Atlanta and beyond.

Marilynn’s career has placed her in leadership roles across sectors, including Assistant Secretary of Administration at the U.S. Department of Housing and Urban Development, nominated by President Clinton, Managing Director of the New York office of real estate development firm IMC Octave, CEO at landscape architecture firm, Martha Schwartz Partners and other roles at FleetBoston Financial Corporation (now a part of Bank of America), American Express Corporation and General Motors Corporation.

In April, Marilyn will represent HR&A on a panel at the Urban Land Institute (ULI) Spring Meeting in San Diego — Redefining Excellence in Real Estate with Equity at the Core.

Learn more about Marilynn’s story below.

What inspired you to join HR&A following such a defining chapter of your career at Clark Atlanta University (CAU)?

For over 150 years, CAU has provided young African Americans with the intellectual and leadership tools to shape “the future of the global community.” As the institution’s first-ever Chief Real Estate Officer, we aligned our 50+ acre portfolio with our mission by actively seeking to generate revenue while also reinvesting in the Atlanta community in which the University is situated.

CAU is successfully leveraging the booming real estate market in Atlanta to create economic opportunity and prevent displacement of our neighbors. As we see in Atlanta, universities, cities, and real estate professionals are uniquely positioned to develop projects that meet financial metrics, but also provide avenues for economic and social uplift. Joining HR&A enables me to advance these opportunities across the country as part of a firm operating with equity as an intrinsic part of the solutions it proposes to clients.

How do you approach turning vision into action, especially for projects that feature public, private and community stakeholders?

The most successful development projects enable public, private, and community priorities to converge. While the community remains engaged, and their concerns actively addressed, public leaders advance solutions to improve quality of life for all residents. The private sector acknowledges the connectivity between developing visionary projects and sustaining good quality of life to attract the talent that they will need to sustain their investments. In addition, it’s critical that we incorporate the perspective of education systems, cultural, non-profit, and philanthropic institutions in building ecosystems that lead to successful planning and development.

How can the Atlanta Metro region continue to address equity through real estate and economic development?

This region is experiencing an unprecedented economic boom from an array of industries, so a critical precedent for promoting equity exists. Historically, large-scale real estate development has been conceptualized as projects in isolation, rather than parts of communities that embrace housing, education, culture, and public space for everyone. Large-scale real estate development should be considered the ultimate platform for building an ecosystem that will interact with and respond to the needs and aspirations of the people who the project will inevitably impact.

What are three of your favorite things to eat, see and do around Atlanta?

  • Ponce City Market: This former Sears warehouse on the Atlanta BeltLine features curated food and retail concepts alongside public event space, as well as commercial and residential property. This is where I eat, meet friends, and explore. The historic renovation has been a catalyst for the resurgence of the Old Fourth Ward community, and I hope the broader corridor along the BeltLine continues to more fully prioritize inclusive development.
  • High Museum of Art: The exhibitions and programs are remarkable while also being accessible to a range of visitors with various experience in the arts.
  • WCLK 91.9 FM: Check out CAU’s 24/7 jazz station, which features live programming and the best from the Marsalises, Coltrane, Davis, and others. You can support the non-profit station from anywhere in the world via their app.

What advice would you give to a young person exploring a career in real estate and urbanism?

A liberal arts education empowers a young person to embrace their intellectual curiosity and find creative solutions. Since building cities and developing real estate present a multitude of challenges with monumental impacts, I strongly encourage young people not to limit their exploration. Rather, dive into a wide range of relevant topics, from history, architecture, and design to economics, sociology, and science. This diverse knowledge can expand can a young person’s perspective, enrich their life, and prepare them to lead.

HR&A study leads to Philadelphia establishing the country’s first municipal public bank

March 3, 2022 / No Comments

On March 3, the Philadelphia City Council voted to establish the country’s first municipal public bank, which will lend capital to small businesses and address the historic racial disparities in commercial banking. This decision accelerates a different path for a city with one of the highest poverty rates, as well as the highest rate of un- and underbanked residents among major U.S. cities.
 
HR&A built on the vision established by the City of Philadelphia and authored an independent feasibility study that sets the direction for an optimal public bank structure that could achieve the City’s dual goals of uplifting the power of small businesses, many in the Black and Latinx communities, and upholding autonomy over the City’s financial resources. A public bank will help the City channel its banking powers in the public interest and offers a launching point for both immediate action and systemic change.
 
We commend the City of Philadelphia for launching an autonomous and equitable financial system for the people who live and work across the city.
 
Learn more about HR&A’s work with public banking here.

HR&A structures and closes $15.6 million loan by Amazon’s Housing Equity Fund in Washington, DC

February 28, 2022 / No Comments

HR&A structured and closed a $15.6 million loan by Amazon’s Housing Equity Fund to support the redevelopment of Parcel 42, a District of Columbia owned parcel in the heart of the Shaw neighborhood. Parcel 42 is being redeveloped through a public private partnership between the District of Columbia, Dantes Partners and H Street Community Development Corporation. The development plan is to construct a 10-story building with 108 affordable units, 2 market-rate units, and 1,800 SF ground floor retail space that will serve community needs. The project has already broken ground and is expected to deliver in 2024. 

  

The closing of Amazon’s loan signifies an exciting next step in a high-profile development that has been stalled for decades. Three previous RFP processes failed to result in a workable development plan. One of the continued sticking points was the community’s insistence that the resulting development be deeply affordable. Shaw is a historically black neighborhood where displacement and gentrification have defined the last twenty years. Thus, it was critical to the community that the District owned parcel be accessible to existing residents. Parcel 42 benefited from significant public sector support including discounted land acquisition costs paid to the District of Columbia, tax-exempt bonds, allocations of federal Low Income Housing Tax Credits and the newly created DC local Low Income Housing Tax Credits. Yet, there was a financing gap. 

 

HR&A worked with Amazon to subordinate loan with a twenty-year term that filled the financing gap and ensures long term affordability. The project will be deeply affordable with nearly half the units available to households at or below fifty percent of area median income. HR&A’s work helped to ensure long term affordability that matched the terms Amazon was looking for and conformed with the various public funding sources.  

 

Dantes Partners is a leading Black-owned affordable housing developer in the Washington DC region. 

 

Amazon’s Housing Equity Fund (HEF) is providing more than $2 billion to preserve and create over 20,000 affordable homes in Amazon’s home communities of Washington’s Puget Sound region, Arlington, VA and Nashville, TN. HR&A works with Amazon as a credit underwriter for transaction in the Washington DC Metro Area and Nashville.  

 

Read the full press release from Mayor Murial Bowser’s Office of Community Affairs.

 

Racial Equity in Real Estate: Two Conversations about Recruiting and Elevating Diverse Professionals and Leaders

January 31, 2022 / No Comments

By Candace P. Damon
 
Candace Damon, a longtime senior leader of HR&A, was elected to be its Board Chair in December 2021. She also sits on the jury of the Urban Land Institute’s recently renamed ULI Prize for Visionaries in Urban Development.
 
Eighteen months ago, my colleague, HR&A’s CEO Eric Rothman, published a statement in this forum that called on our firm and its collaborators to act on a shared responsibility to interrogate our roles in perpetuating racist systems in urban development. He went on to suggest that the Urban Land Institute (ULI), the oldest and largest network of cross-disciplinary real estate and land use experts in the world, should be a leader and collaborator in this effort. The specific steps he urged ULI to take were the recommendations of a coalition of BIPOC and white ULI leaders, many of whom had been concerned about these issues for years and who had seized the moment.
 
Since that piece was published, ULI, we at HR&A, and virtually all of our collaborators have engaged in a process of self-examination and change, to address both who is represented in our industry and how we do our work.
 
We are pleased that since our initial call to action for change within our industry, ULI has renamed its most prestigious award, which had been named for a developer and philanthropist who perfected the use of restrictive covenants; appointed a senior executive who is charged with supporting DEI within the organization; launched a variety of other DEI initiatives, including the recent publication of a report on diversity efforts within commercial real estate; and significantly diversified its leadership.
 
Indeed, among the first steps virtually all of us have considered is how we can diversify the racial and gender composition of the industry. At HR&A, we sought guidance from outside experts and consulted with members of our staff and alumni to interrogate our recruiting, hiring, and evaluation practices. Our firm is now the most diverse it has ever been, with more than 40% of staff identifying as Black, Hispanic, Latino, Latina, Asian, or two or more races.
 
While we’ve made meaningful progress in how we recruit and hire, we have ahead of us the much harder task of ensuring that our diversity of staff feels welcomed and has access to training, sponsorship, and other support necessary to succeed. HR&A is committed to ongoing work on diversity, equity, and inclusion; to incorporating new approaches to equity in our work; and to continued partnership with our industry, all of which will strengthen us as a firm.
 
Many of our readers have been grappling with these issues for years. This issue, we seek to elevate some of that experience, viewed through the lens of two conversations about diversification of the industry that I’ve recently had with two longtime friends. Of particular interest to me in these conversations were these colleagues’ perceptions of the different requirements for building diversity in the industry at different career points: while one conversation reflects on what it takes to engage an adolescent in imagining a career in real estate, the other considers what it takes to support a young professional seeking leadership opportunities.
 
My longtime client and collaborator, Tyrone Rachal, is a founding Principal of Red Rock Global and President of Urban Key Capital Partners, both Atlanta-based, and was recently appointed a ULI Global Governing Trustee. Over the course of a career that has also included stints in financial services at some of this country’s largest private firms and in public development and development finance, Ty has been deeply engaged by how, having excited individuals from under-represented groups about a career in real estate, do you position them for success and leadership. His conviction is that, by doing so, there will be people in positions of power who are willing to commit the time, political capital, and resources to resolve the issues that often stymie investment in under-served communities.
 
My colleague Joseph Cahoon, a Senior Advisor at HR&A, is the Director of the Folsom Institute for Real Estate at the Cox School of Business at Southern Methodist University (SMU). Over the past 18 months, he has renewed a personal commitment to ensure that the classes entering schools like SMU are more representative of this country’s communities than today’s classes are. Over this past summer, he led SMU’s effort to support a group of mostly Texan high schoolers, mostly BIPOC, who were participating in the Real Estate Executive Council’s (REEC) Real Estate Exchange Summer Program (REEX). The REEX program engages diverse high school students in a three-week long, first exploration of a career in commercial real estate, culminating in a competition among university-sponsored high school cadres. In its first engagement with REEX, the SMU-sponsored team won the 2021 summer competition.
 
I hope you will enjoy these excerpts of my conversations with Joseph and Ty as much as I did the longer conversations.
 
After you listen to Ty and Joseph, I hope you will reach out. I would like to hear from those of you who are also working on these issues; I speak for all my colleagues in saying we welcome your continued partnership and leadership.
 
 

Introducing a new class of leaders

January 13, 2022 / No Comments

HR&A is thrilled to announce a new class of leaders at our firm, including a new Chair of our Board and additions to our executive leadership team.

 
As a group, they exemplify our mission to ensure implementation of our clients’ aspirations. They are motivated by complex challenges, dedicated to clients, and fulfilled by making lasting impact. They come from a diversity of backgrounds, have a breadth of lived experience, and share a passion for cities.
 
This class, together with the rest of our Partners and employees, will continue working to create vital places, build more equitable and resilient communities, and improve people’s lives.
 
Happy New Year and stay tuned for more from HR&A in 2022.
 
 

Chair of the Board

Candace Damon has been a senior leader at the firm for over three decades, advancing from Director to Principal to Partner to Vice Chair and now, Chair of the Board of Directors.
 
Her career at HR&A has been dynamic: she has focused on effective public capital program management, downtown and waterfront redevelopment strategy, incentivization of investment in energy efficiency in commercial real estate, non-profit institutional growth, and the crafting of sustainable funding structures for parks and park systems. She has worked in virtually every major city in the U.S. and has consulted internationally.
 
Candace has shaped the firm’s trajectory and instilled a culture of excellence and mentorship across HR&A’s six offices. She serves and has served on multiple local and national non-profit boards and is an Honorary Member of the American Society of Landscape Architects.
 
As Chair, Candace will champion the firm’s growth in both traditional areas of strength and emerging practice areas, ensuring that we continue to create lasting impact in communities across the world.

 
 

Partner

Bret Collazzi / New York
Over eight years at HR&A, most recently as a principal, Bret has shaped ambitious urban investment strategies across New York and nationally, including more than $100 million of downtown investment in New York State, plans to transform Rikers Island into a green economy hub, and the development of NYC’s long-term plan, OneNYC. He recently led successful applications for the $1B Build Back Better Regional Challenge, a marquee Biden Administration program to transform regional economies and support equitable recovery across the country. Bret is a proud Bronx native with prior experience as a journalist and legislative aide. As a Partner at HR&A, he is excited to continue shaping the future of New York and beyond.
 
Jonathan Meyers / New York
Jon started his career at HR&A in 2001 in the New York Office and returned in 2016 after serving as the COO of the Trust of Governors Island. He’s provided unwavering value for a range of public and private sector clients, including the preliminary analysis of saving the High Line as a public open space. As a Partner, he will continue advising on the financing and implementation of complex real estate projects in the New York City metro, while also advancing a range of emerging policy issues, including equitable economic development, real estate and housing policy and open space governance and operations.
 
Jose Serrano-McClain / New York
Jose has been a leader in the HR&A Inclusive Cities and Urban Tech and Innovation practices since 2018. He is currently serving as the Co-Executive Director of NYC Speaks, a large-scale public engagement and government transformation initiative in NYC. As a Partner, Jose will advance a range of projects focusing on people-driven transformation of local government and economic planning for cities requiring strategies at the intersection of equity, innovation, and environmental justice. Jose is currently working on a comprehensive economic plan for Miami-Dade as it grapples with expanding opportunity in the green economy. Jose has worked in the NYC Mayor’s Office of Tech and Innovation, as a Community Organizer in Queens, and at the Federal Reserve Bank of New York.

 
 

Executive Management

Alex Lebow / Head of Growth
Alex most recently led a range of external sustainability initiatives at Nike and served as a senior aide to former New Orleans Mayor Mitch Landrieu. He will launch the firm’s Growth team and evolve HR&A’s approach to business strategy and development, marketing and communications, and product development.
 
Joy A. Lo / Chief of Staff
Joy returns to the firm after most recently serving as the Director of Communications at the Berkman Klein Center for Internet & Society at Harvard University and previously working for Microsoft and the Urban Green Council. She will lead HR&A’s focus on strengthening culture and systems, improving internal communications, and developing the firm’s executive leadership.
 
Niki Stanley / Head of People
Niki previously served as both the Director of Human Capital and first ever Chief Diversity Officer at the NYC Department of City Planning, following a nine-year career at the NYC Department of Education. She will launch the firm’s People team and evolve all talent, recruitment, human resources and professional development initiatives.

 
 

Managing Principal

Aaron Abelson / Dallas
Aaron will continue leading the HR&A Dallas office while also advising clients on public-private real estate development, open space planning, and equitable economic development. He provides analysis and strategic guidance to move large-scale visions from plan to implementation, including Rice University’s development of The Ion District in Houston and the City of Dallas Economic Development Policy.

 
 

Principal

Our Principals lead teams and clients through strategic analysis, strategy development, and implementation planning.
 
Nina Bennett / Dallas
Jane Carlson / Los Angeles
Jonathan Haragold / New York
Sarah Kirk / Raleigh
Ignacio Montojo Segura / New York
Kristina Pecorelli / New York

 
 

Director

Our Directors lead analysis, research and project management across practices and the executive team.
 
Ada Peng / Los Angeles
Christiana Whitcomb / New York
Eri Furusawa / New York
Giacomo Bagarella / New York
John Morgan / New York
Kimberly Taylor / New York
Mary Jiang / Washington D.C.

 
 

Senior Analyst

Our Senior Analysts support a wide range of critical services across practices.
 
Syed Ali / New York
Mara Basich-Pease / Los Angeles
Keiley Gaston / Washington D.C.
Hannah Glosser / New York
Jenna Gray / Los Angeles
Landry Doyle-Wiese / Los Angeles
Mark Kubaczyk / Dallas
Ashley So / New York
Claire Summers / New York
Amelia Taylor-Hochberg / Los Angeles

 
 

Analyst

Our Analysts supports research and analysis.
 
Ariel Dames-Podell / New York
Benjamin Cole / Los Angeles
Carl Hooks / New York
Ethan Paik / New York
Solomon Abrams / Washington D.C.

The National Broadband Resource Hub launches

December 8, 2021 / No Comments

The Broadband Equity Partnership, powered by HR&A Advisors and CTC Technology & Energy, have announced the launch of the National Broadband Resource Hub: a first-of-its-kind, integrated online platform for state, county, local, and tribal government officials working to deploy broadband funding.
 
The Hub provides access to a resource library, online community forum and message board to connect with other leaders, and a help desk featuring the option to book an appointment to speak with broadband experts.
 

 
 
The National Broadband Resource Hub is an initiative of HR&A Advisors and CTC Technology & Energy, and is made possible through the generous support of the Ford Foundation and Schmidt Futures. Click here to learn about our other efforts to close the digital divide.

HR&A applauds Bipartisan Infrastructure Investment and Jobs Act and appointment of Mayor Mitch Landrieu

November 16, 2021 / No Comments

HR&A applauds President Biden and Congress for passing the Bipartisan Infrastructure Investment and Jobs Act.
 
As a firm, we support this historic opportunity for local, state and federal leaders to advance more equitable and resilient communities.
 
We also congratulate former New Orleans Mayor Mitch Landrieu for being named as Senior Advisor and Infrastructure Coordinator. HR&A has been honored to collaborate with Mayor Landrieu and the City of New Orleans on critical green infrastructure, economic development and affordable housing initiatives.
 
HR&A strongly believes in the vision and priorities established by this legislation, including addressing climate change, closing the digital divide, and creating economic opportunity that reaches everyone.

Thinking outside of the campus

November 4, 2021 / No Comments

Strengthening colleges and universities by creating vibrant local communities
 
Written by Giacomo Bagarella, Kate Collignon, Ariel Dames-Podell, and Mason Ailstock
 
Colleges and universities serve as economic anchors of their communities. This is especially true in small and mid-sized cities where universities are frequently the largest local employers and a primary source of young and ethnically diverse residents. As higher education institutions face demographic and financial challenges due to pre- and post-pandemic trends, they can bolster their surrounding communities – and support their long-term viability – by investing in neighborhood improvements and economic opportunity for local residents.
 
There are more than 3,200 public and private nonprofit colleges and universities in the United States. Beyond awarding degrees, these institutions attract new workers and residents to their towns; provide white- and blue-collar employment; and support economic mobility through their educational and training missions. This is true at a variety of scales. Texas A&M University brings federal research funds to College Station (population 114,000). In Meadville, Pennsylvania (pop. 13,000), Allegheny College attracts students from around the world and creates a pipeline into industries such as aerospace and marketing. In Greencastle, Indiana (pop. 10,000), DePauw University has supported a public-private partnership to restore downtown’s historic facades and catalyze alumni investment in formerly vacant space.
 
Relationships between schools and communities have been decades or centuries in the making, yet current conditions make collaboration essential to buttress shared economic interests. Many institutions operate at a deficit, seeking to balance growing expenditures on facilities and programs with tuition revenue in a highly competitive market. Multiple forecasts project a significant decline in high school graduates and college enrollment in the next 10 to 15 years.
 
Amid these economic and enrollment challenges, schools face a need to adapt to changing student profiles and preferences. High school graduates are becoming increasingly diverse, reinforcing the imperative for all higher education institutions to ensure both the school and its surrounding community are welcoming and inclusive. Moreover, one fifth of the high school class of 2020 reported changing their first-choice institution following the onset of the COVID-19 pandemic, favoring schools that were public, closer to home, and more capable of supporting remote learning. At the same time that colleges were grappling with the shifts resulting from the pandemic, their host communities were grappling with lost revenue, activity, and cultural assets – a preview of more permanent challenges that could result without the public/private partnerships to ensure environments that sustain enrollment.
 

Source: Forbes evaluation of financial data from private nonprofit 4-year institutions.
Note: “F” category excluded due to lack of data. 2015 sample size: 909. 2021 sample size: 921.
 

55

Private nonprofit colleges or universities that closed, 2016-2019 (Forbes)
 

-5%

Decline in high school graduates,
2020-2036
(Western Interstate Commission for Higher Education)
 

-10%

18-year-olds enrolling in 2- and 4-year schools, 2020-2029
(Prof. Nathan Grawe, Carleton College)
 

57%

Share of high school graduates who are BIPOC in 2036, up from 49% in 2019 (Western Interstate Commission for Higher Education)
 
 

As campus life slowly returns to “normal,” administrators should work with local stakeholders to keep host communities vibrant and diverse over the long term. Students, faculty, and staff are more likely to choose institutions with dynamic retail and dining offerings, a walkable downtown and attractive streetscape, and vibrant local and school communities. Likewise, residents benefit from employment and business opportunities as well as cultural and other amenities offered by the institution. Several recent efforts offer promising models:
 

  • In Philadelphia, the 25-year-old University City District partnership has brought together the University of Pennsylvania and Drexel University with community organizations, nonprofits, and private companies to improve quality of life and economic vitality in West Philadelphia. Its goal is to support neighborhood vitality by transforming public spaces, providing workforce development programs, and organizing events and programming for residents, workers, and visitors. As a result, University City attracted retail and employers; local residents gained access to better job opportunities and higher wages; and the universities experienced improved public space and amenities around their medical and research facilities and saw increases in the number of graduates who found local job placements. It is of course also necessary to acknowledge that University City lies on the former Black Bottom neighborhood, thousands of whose residents were displaced by university- and hospital-led development starting in the 1950s.

    •  

  • At a smaller scale, since 2014 Colby College has catalyzed alumni and philanthropic investments in downtown Waterville, Maine, a city of 17,000. The College purchased and redeveloped multiple properties, creating its first downtown student housing to reinforce ties between undergraduates and the community, building a new hotel, and establishing facilities for visual and performing arts. Moreover, Colby has committed to keeping the downtown properties it acquired on the City’s tax rolls permanently. These investments are helping Waterville pivot from its status as a former mill town to an attractive destination for students, businesses, and tourists. The City expects increased fiscal revenues and has already seen employment growth and reuse of formerly vacant historic buildings, while Colby believes its efforts will distinguish it from competitor institutions, attract students and faculty, and provide a richer experience by integrating students in civic life.

    •  

  • In Salt Lake City, the University of Utah is planning to convert the neighborhood around the Rio Grande Depot, a former train station, into an innovation district that achieves civic, educational, and economic goals. The urban district, which would connect to the University’s main campus through a light rail line, would contribute much-needed teaching, lab, and office space for the university and industry in the rapidly growing biotechnology and health sciences sectors. The university plans to co-locate with employers to accelerate education, research, and commercialization, benefiting its programming and students, generating revenue by leasing space, and boosting the region’s economy. As part of its master plan, it will increase the district’s density, contributing affordable housing, a public green, event spaces, and streetscape upgrades to support the City’s goal of revitalizing a previously neglected neighborhood.

 
The end goal of these and other efforts is to strengthen both universities and cities: neither can succeed if the other is left behind. Producing improved quality of life and education is a mutually beneficial imperative to strengthen finances, attract and retain talent, and foster thriving places and communities.

When 5 Days Becomes 3: Working Solutions for the “New Normal”

November 1, 2021 / No Comments

Written by Kate Wittels, Partner, HR&A Advisors & Matthew Micksin, Senior Director, Real Estate, Common
 
The majority of office workers are anticipating a new normal: a hybrid work schedule where only 2-3 days of the week are spent in the office. The implications of this shift on commercial building demand has been widely reported on, including last week in the New York Times and Vox, and the effects on workplace activity, company culture, and a wide array of other office-centric factors have also been analyzed in great depth. But what impacts will this change have on the place where we’ve spent much of the pandemic: our homes?
 
Shifting 40-60% of work activities to the home is a change of scale without much reference in living memory. Major urban metro areas will see shifts in the size, shape, location, and amenities of residential offerings. In a recent survey of potential renters, Common, the leading residential brand that manages, designs and leases multifamily properties, found that nearly 50% expected to work from both home and the office — with those expecting to either return to the office full-time or remain fully remote as most of the remainder (15% each).
 
Without new types of workspace product, the needs of remote workers will continue to be unmet by the supply and size of current residential units. New housing that simply offers larger units will deliver fewer homes, exacerbating existing supply shortages and missing this unique opportunity created by changing consumer demands. For the best results, these new products will need to be delivered using innovative strategies from developers, operators, and local land use policymakers.
 

The Goldilocks Problem

 
The rise of remote work means that the home will serve functions it hasn’t traditionally been asked to before. This is especially true for apartments, which typically lack the luxury of extra rooms for a dedicated office. In the same survey cited above, Common found that 37% of respondents desired a coworking offering in their residential building.
 
However, to accommodate coworking in-unit, a one-bedroom apartment is too small, and a two-bedroom is too big, and not just for tenants: additional square footage per unit makes deals more difficult for developers to pencil, as rent per square foot declines each time a bedroom is added. The addition of a bedroom or den area as an office space increases the rent of a unit and uses the space efficiently, but it’s unlikely developers will want to commit 100% of their units to these relatively novel solutions. Thus, developers will be left choosing between ignoring the market’s desire for more space per unit and increasing rents across the board to recover the lost revenue from expanded units.
 

Solutions

 
Developers working alone can and will introduce new work-friendly residential products. We think they are more likely to create truly vibrant communities if they partner with other private and public sector actors. Further, remote workers can’t wait for the long lead times of new construction, so these solutions must address both existing stock and new development.
 
For existing residential and commercial building stock, developers and operators have three options.
 
In-building coworking
Rather than increasing each unit’s size by as much as 60%, developers can dedicate one floor to coworking space. This approach will be especially viable in recently built Class A properties, which often provide amenity space that can be hit or miss in terms of resident utilization. Creating both living and working spaces establishes two connection points between renters and their buildings and should increase retention.
 
Neighborhood coworking
Another option for developers is to support and partner with a neighborhood coworking outlet. Companies like Daybase, a network of local, flexible spaces that offer office space close to home, offer workers more options to work from close to home rather than in their home. A readily available coworking option in an attractive location generates a higher price per square foot for residential developers and competes well with a suburban product.
 
City-backed zoning interventions
Long-term solutions will rely on City-backed land use interventions that both mitigate market pressures on developers and tenants and allow for more vibrant neighborhoods. To address the Goldilocks Problem and ease the tension between more space versus higher rents, cities should incentivize coworking products in new construction.
 
In urban areas where demand is high, the simplest way to do this is by increasing permissible height and bulk for products with coworking components and exempting that dedicated floor area. For new developments in high-density urban cores, zoning to allow flex workspace without reducing buildable residential square footage would help lower the cost burden, which work-from-home companies are shifting onto their employees.
 
These zoning changes can also help unlock new opportunities in neighborhoods grappling with the changing role of retail corridors. In many neighborhood retail areas, ground floor office use is prohibited, and lower densities limit the supply of suitable office space. Allowing coworking spaces to occupy ground floor suites – perhaps paired with design regulation to ensure a safe and lively street experience – would serve the dual purpose of generating new activity in neighborhood retail corridors and addressing the evolving need to offer new workspaces.