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Adam: [00:04:08] So, I’m talking about workforce development. So, this has a direct relationship with skilled labor shortage and the global housing crisis. And so, my ascent here into trying to roll out with, which ultimately became the Center for Infrastructure and Society, was the need to bring this understanding of construction, of infrastructure and development to this place of, of empowerment. Those were sort of the two worlds throughout my career that I was always interested in. And so, that ultimately led me to creating a new organization that initially started by guiding mass housing builders in underbuilt environments on the things that, and by the way I’m am based in Silicon Valley, so here in Silicon Valley, it’s very common to hear conversations about you know workflow and KPI and, you know, career trajectory.
Eve: [00:05:27] Maybe you can explain a project that you’re currently working on.
Adam: [00:06:55] We actually started to take a step back and look at, like, what we call in regeneration, you know, the whole ecosystem. So, right now in Nigeria, for example, we’re working with a mass housing builder to help them, who already has some of these technologies in-house, so they’re not stick building or they’re not building with block, they are actually already using panel systems, which is great. So, they’re manufacturing that, so they’ve reduced some aspects of that supply chain. Though we are recognizing that one of the things that development tends to ignore, at least conventional development and I know in many of your projects, you guys do this as well, and it’s the partnerships with local community. It’s co-designing with people who are actually going to live in these places so that when the project is over, at least when it’s installed, now there’s a foundation for perhaps social enterprise for those folks that are living in the new community. There is, you know, maintenance programs to keep these projects standing strong and looking great. So, that’s one project that we’re doing in Nigeria. It’s advising a mass housing builder to…
Eve: [00:08:37] So, when you’re in a place like Nigeria with a company that maybe wants to introduce co-designing, is what I thought I heard you say, how do you go about doing that?
Adam: [00:08:48] That’s a great question. Ultimately, for us, it comes down to having a model and a framework for the discussion because that helps guide everyone into at least a direction. We start out with workshops and you know, where you might consider a town hall as an opportunity to explore relationships in the community, town halls tend to be a kind of space that is just as, let’s say, conflict ridden as the typical fragmentation of our, of our industry, where everyone’s sort of protecting their own idea. And so, with a model in place, we’ve got a four-part model. And so, it’s broken down into benefit capital, regenerative technology, community engagement and strategic partnership. And so, we sort of give some context and background and we kind of set the stage for the conversation. If it’s initial conversation versus, even if it’s you know, we’ve been doing this now for two weeks or three weeks with a specific group, we’re at least all coming from a similar perspective and that helps keep us focused on what you very astutely observed, that it’s actually quite overwhelming. We’re talking about an ecosystem, right? Who’s in the ecosystem? It’s governments and it’s corporations and it’s labor unions and it’s non-profit organizations. And yeah, to your point, very correct.
Eve: [00:10:23] So you have a structure that you’ve thought through that can sort of help guide people and companies to some sort of commonality, by the sound of it.
Adam: [00:11:29] And so, what we realized early on was, our clients didn’t only want the advisory, but they also wanted access to finance. They wanted to be able to grow. They wanted access to stronger relationships. And so that also helped influence us on how we present a model. My partner, Peter Coughlan, has been working in the world of regeneration. Prior to working with me on infrastructure specifically, he had started to develop a similar model in regenerating oceans and regenerating the coral reef and in soils.
Adam: [00:12:11] And that, he found, was, while very interesting and obviously much needed, it was hard for investors to get behind that and understand where the return on investment was coming or how it was coming. So, we partnered up when he noticed how focused on infrastructure I was and recognizing that infrastructure is actually quite bankable. Why is it that we have such a mature real estate development system? Anywhere in the world, you can go and these, and this is something that you know probably much better than I, it’s because infrastructure is easy to see a return on. It’s what’s the next step after that right? How do we care for these properties that are built and how do we care for the lives of the people that are living within them?
Eve: [00:13:18] I mean, if you were to talk about your big, hairy, audacious goals for the next five years, what would they be?
Adam: [00:13:24] That’s exciting, yeah. To go from working from the workforce development advocate role to now, where we want to be our own fund, has actually happened very quickly. But that’s ultimately where we’re going because we recognize that, and I think a lot of other organizations that are in the regeneration space and in the social impacts space, recognize how important it is to be able to fund the projects and the partners that you’re starting to work with.
Eve: [00:15:08] Explain to me what regenerative means here, the way you’re using it.
Adam: [00:15:13] I’ve been using it and I’ve been writing some articles about it and trying to campaign these ideas, at least in a way that my clients, which were all like builders, so it would resonate with them. And so, I was using the term as regenerative housing. So, a regenerative housing project is a housing project that produces positive impact on local economy, environment and society. So, what does that mean? So that means that, let’s say we build a development and there are 60 homes in it. Maybe they’re multi use, maybe they’re multifamily but it’s the housing project. And so, one of the ways that we can have positive impact on the environment, and many of your listeners are probably very familiar with sustainable building practices, so essentially using materials that don’t hurt the Earth any more than it already has, right? So, using lighting that doesn’t use as much electricity or, you know, using insulation that doesn’t, you know, overuse energy as well. There are great technologies that can be used that actually rebuild. So, for example, there’s concrete that can be used that actually sequesters carbon from the air, right? You can have a micro-grid in a development that produces enough energy for the whole development. These are just examples. But that would be positive impact on the environment.
Adam: [00:16:45] In the same way, you’d have positive impact on society. So, you can have positive impact on society by using a housing project as a means of training local folks who had not known how to do any of these tasks to build this project prior to the project. Now this society walks away with a positive impact. Now they had training and they’ve been up skilled. And likewise, I had mentioned maintenance before. Maintenance is huge. And I think for a lot of builders and developers, it’s not always, or at least it hasn’t traditionally been, a part of the conversation. It was like, build as much as you can, build the best product you can, but then pass the keys over to the new tenant or the new owner and go after the next one.
Eve: [00:18:07] I think I heard you say you want to build your own fund as well. Is that right?
Adam: [00:18:12] Yeah. And I am not a finance person. I’m not an investor. And so, for me to say something like that is pretty ambitious. Fortunately, I’m surrounding myself with some smart folks who understand that world. But I very much come from the, you know, the operations side of things and the strategy side for builders. You know, like I said, when I first met our current client who’s based in Nigeria now, they first said Adam, you know, one of the biggest things we need is, is access to money. And that was like, yeah, no, that makes sense. And so, who knows where that’ll take us?
Eve: [00:18:49] Well, it took me to Small Change because I was pretty much in the same. But maybe it’s not about access to money, it’s about access to the right money or money that understands these projects.
Eve: [00:19:38] That’s right. OK, so what’s your background? You touched on it. I’m wondering how you got to this place.
Adam: [00:19:47] You know, I was a student of economics and geology and local economic policy, economic development policy as an undergrad. After school, I taught English and traveled and got into construction much later. I did social service, you know, social, I did case management after 9/11 in New York.
Eve: [00:20:09] It’s all coming together now, right?
Adam: [00:20:13] Exactly. And so know, I grew up in a family of builders. My father’s and electrician, grandfather a carpenter, you know, there’d always been that understanding. And I, I missed out on it as a young person, although I was always around it. And so, yeah, after college and while I was in grad school, after I was doing social work, I took a job as a carpenter’s apprentice and it, it really took off. The Bay Area, as you must know, is a great place to be in the trades because there’s a huge demand for housing and construction and there’s actually quite a low supply of skilled workers here, at least skilled construction work.
Eve: [00:22:00] Do you think socially responsible real estate is necessary in today’s development landscape?
Adam: [00:22:06] I mean, I think so. If we’re hoping to reduce the kind of vulnerabilities that we’re all quite aware of now, you know, all being in shelter-in-place for the last couple of months, every one of the clients that I work with here in the Bay Area has been rethinking strategy. So, one of the assumptions, or one of the conclusions that people are coming to is that, the general like extractive approach of just producing as many products as possible and getting as much volume of work done as possible is not…you know, because once things shut down or, you know, once there’s another market shock, you know, if your only tool is to, is volume, well, then you’ve got, you’re little bit vulnerable. But if you are building relationships and are able to leverage those relationships to activities, you’re likely going to be in a just more resilient place. And that’s, that’s where the social impact piece really needs to be a part of people’s business models.
Eve: [00:23:08] Yeah, I do agree. So then, are there any current trends in housing development that interest you the most, or you think might have the most legs for rapidly filling the current affordable housing need?
Adam: [00:23:22] Well, there’s two I would say. I love seeing the new technologies and the companies that are bringing the vertically integrated solution to the market. It makes them more agile and they’re certainly able to bring a sense of client experience to the whole pipeline and the whole process. The other piece, though, is what I mentioned earlier about the need for projects to never really end. And so, you had mentioned property management and the more and more we see builders working with, or developing their own in-house property management, or even their own in-house development arms, that lifecycle really shouldn’t be ending when the project is done. And we’re starting to see that happening. There’s a great company out of San Mateo called VEEV. And, you know, they’re their own investor, they’re their own builder, and they’re their own clients. So, they’ll never not own these homes. Or if they do it, maybe it’s a co-ownership approach. They’re always going to be caring for these places.
Adam: [00:25:41] So I think that if we’re talking about encouraging traditional investors, conventional investors to consider social impact investment in housing, is that kind of where you’re going with your comment?
Eve: [00:25:56] There’s a difference between an investor just wanting a return and an investor who cares about the triple bottom line and impact and that their dollars are making a difference. I think the first group is still much larger than the second group, right? And for you, your fund to be successful, you need to find investors who care as much as you do.
Adam: [00:26:20] So, there are probably two ways that those kinds of investors might be motivated and encouraged. One is, unfortunately, scenarios like the current pandemic and other market shocks. But even prior to that, I’ve heard of investors who just say: Oh, you know what? We were going to invest this project when we thought the market was telling us this. But now the market is telling us something else. So, we’re actually not going to fund your company anymore or we’re not going to fund this initiative, which we’ve been guiding you on for so many years. And that’s traditional economics and I think the more and more they recognize that market shocks continue to present themselves, they should probably realize that these external forces are sending a message that maybe the quick return is not wise and it’s more about the long return. And so that’s one there’s the external influence of the market shock.
Eve: [00:28:24] Yes, yeah. So, I’m going to go back to the beginning where we were talking about housing and just ask you a couple wrap-up questions. And one is, you know, the big one. Where do you think, I think I know the answer, but where do you think the future of affordable housing really lies? I mean, we have a huge problem to solve and I just got a lot bigger, unexpectedly.
Adam: [00:28:46] Yeah, I know. And I’m glad you mentioned that, because I’ve also seen people, you know, online kind of touting that the pandemic hasn’t affected housing and that, you know, where the strongest, most resilient industry. And so, I’m glad you brought that up. I think when we talk about affordable housing, what we often see in, Oakland is an example but there, I’m sure there are plenty of other examples out your way and in other parts of the country that you’re aware of, while, yes, affordable housing is important, the way in which affordable housing is happening in the mainstream tends to still be quite extractive. And so, that approach is, OK, I’m going to put out an RFP and I’m going to, you know, maybe as a city government, and I’m going to receive a bunch of proposals. I’m going to look for the cheapest or I’m going to look for the one with the best return and we’re going to go along with that project. And then you get a whole bunch of people protesting or you don’t get re-elected as mayor or city council because you backed a, you know, an affordable housing developer who ended up actually just building something for entry level tech professionals.
Eve: [00:30:50] So then, final question. What’s next for you and for the Center as things evolve.
Adam: [00:30:57] Gosh. Well, call me next week and you might get a different answer. No, I hope not, because I am getting a little bit of, there is some fatigue with the rethinking but it’s all a part of the process, I guess. I think over the next year, there are five projects that we’re on right now. India, Nepal, Nigeria, Venezuela and California. There are five projects that are in a very initial stage of building the model and bringing everybody together and looking at the investor relationships. And so, within the next year, you know, we would love to be actually moving forward with the introduction of the social enterprises, the locally informed and locally co-produced campaigning of education around the regenerative projects in these places. And obviously, the building of the. The building tends to be the shortest segment of a project in a regenerative project. And so, we certainly would love to see that.
Eve: [00:33:34] That was Adam Sgrenci. Adam is building a new organization focused on human capital. Instead of just figuring out how to build more affordable housing, the conversations he leads are meant to encourage communities to plan their own destinies through co-design, co-creation, co-production and co-ownership. You can find out more about impact real estate investing and access the show notes for today’s episode at my website evepicker.com. While you’re there, sign up for my newsletter to find out more about how to make money in real estate while building better cities.
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