Introducing Commonplace
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Introducing Commonplace
A new project connecting emerging real estate developers with impact capital providers, while sharing their stories.
Really Good Buildings is a blog about design-driven real estate development written by Fed Novikov.
In this letter, I would like to give you a preview of the project I have been involved in over the past few months: Commonplace. It connects real estate developers and capital providers who share a mission to build for the social good.
Commonplace is launching by featuring curated stories of developers and capital providers, with plans to introduce dedicated fundraising tools in the near future. It focuses on:
Impact development and investing. Commonplace celebrates projects that promote inclusion, equitable development, housing affordability, historic preservation, and sustainability, among other important themes.
People over transactions. Commonplace centers the conversation on the people who develop, fund, and occupy the buildings. It aims to balance the often impersonal, numbers-driven narratives in the real estate industry.
Developers are good
I joined Commonplace earlier this year, drawn in by its founders' mission to help emerging developers get more projects funded and off the ground. Commonplace originated from REDIST, a New York City-based company founded a few years ago by Atif Qadir and Jonathan Kuo to simplify access to real estate development incentives. Over time, Jonathan and Atif decided that it's crucial to go beyond incentives and assist developers in obtaining funding across the capital stack: from equity and debt to alternative forms of capital such as credit guarantees and grants.
I especially loved that Commonplace challenges the familiar narrative of "greedy developers" and "ruthless capital." Frankly, I was not always immune to the "developers are crooks" stereotype myself. When I was growing up in Moscow in the '90s, the most prominent developer, as well as the richest woman in the country at the time, was then-mayor's wife. During the 20 years of that mayor's reign, development was pretty much synonymous with corruption.
Naturally, I thought that any developer had to have shady government and criminal ties to secure entitlements through covert deals. My interest in studying urban planning for my master's degree was driven, in part, by the desire to counter this corruption with more transparent and fair rules for development.
Over the last decade, since moving to the U.S., my attitude towards developers has completely changed. I now see them as the unsung heroes of today, building much-needed housing and other infrastructure despite crippling bureaucracy, excruciatingly long timelines, and huge risks to their own financial well-being. This is especially true for many small to mid-sized developers who often have to risk all of their personal assets to guarantee new loans.
Sam Zell, the late legendary real estate investor, famously said: “I was cured of any inclination to become a developer. I think that to stay in that business, most developers must get 50 percent of their returns from real cash flow and the other 50 percent from the intangible benefit of seeing their phallic symbols rise out of the ground. Otherwise I can’t see the reward.“
What Zell seems to imply here is that the sheer risk involved in development makes it an extremely difficult occupation, oftentimes to the point of business irrationality. Instead, let me offer an alternative perspective on the intangible reward that development carries: rather than pure ego, perhaps a calling or a sense of public duty justifies the many sacrifices and motivates developers to stay in the game.
The real estate industry faces numerous issues, including housing affordability, rising rates and construction costs, structural racial disparities, and barriers for minority developers. To address these challenges, it is important to celebrate and support developers and capital providers who make a conscious effort to effect change for the better.
For instance, Matt Temkin restoring historic housing in Detroit while keeping rents affordable; Jenny Shen who is reviving Boston’s abandoned streets and odd lots with design-driven projects; or Louis Joachim who is creating mixed-income housing in Florida.
Increasingly, capital providers are adopting a similar philosophy. A growing number of investors and lenders now explicitly consider social impact as part of their underwriting process. This includes not only non-profit foundations and Community Development Financial Institutions (CDFIs), but also for-profit impact investors.
Coined by the Rockefeller Foundation in 2007, the "impact investing" spectrum includes responsible investing, sustainable investing, impact investing, and philanthropy. Impact capital aims to make measurable social impact on top of market-rate returns.
The global impact capital market is estimated to be $1.16 trillion (GIIN, 2022). Currently, real estate represents only a small fraction of that market ($7.5 billion, ULI and DLA Piper), but it is growing rapidly. Commonplace aims to support the maturation of this niche.
People over transactions
Throughout the hundred of research interviews with industry professionals conducted by Commonplace's Atif Qadir and Jack Lei, one word really stood out: "relationships." It vividly illustrated that, at its core, the real estate industry revolves around personal bonds and trust, not just sticks, contracts, or dollar bills.
Finding the right balance between fostering new relationships, facilitating profitable deals, defying biases, and doing it all in a tech-enabled, scalable way is a formidable challenge. However, we know from the likes of Airbnb that it's possible to bring a human-centric experience even to mass market and financial products. Commonplace aims to apply similar principles and humanize real estate networking and fundraising.
To make meaningful connections between capital providers and developers, Commonplace needed to solve the chicken-and-egg problem of having a relevant audience on both sides. To achieve this, the team chose to start with a media-forward approach, inspired in part by the product strategies of companies like Capital and AngelList.
Through Stories, Commonplace provides in-depth, long-form interviews with founders, executives, and senior leaders who are pioneers in the world of impact real estate. Stories share an insider's perspective on their approach. Each Story also provides an opportunity for readers to reach out directly to the featured developers and capital providers, making new connections easier.
This is only the first humble step, and the team will keep working on other ways to make capital more accessible for emerging developers. In the meantime, I invite you to explore Commonplace.us and stay tuned for updates.
Team credits
Jonathan Kuo, Co-founder and CEO
Atif Z. Qadir, Co-founder and Chief Impact Officer
Jack Lei, Associate
Rasheem Henry, Software Developer
Andrey Yazev, Software Developer
Zeba Iqbal, Events Program Manager
Fed Novikov, Sr. Product Manager
Introducing Commonplace
As an independent developer, does Commonplace have a place for me? I often have gaps of time between projects because personal capital (and sometimes family and friends) needs to be spent efficiently. I’ve had to bail on large infill lots that I’ve wanted to build density because of competition that end up sitting or flipping to turn a quick buck.