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Coby Lefkowitz, the co-founder of Backyard, a real estate development company focusing on infill development in Southern California, joins us to discuss the topic of Accessory Dwelling Units — also known as ADUs. These relatively inexpensive homes can be used to help ease the burden of the current housing market by providing more affordable options. Coby shares with us some of his thoughts on underlying ADU legislation and smaller infill development projects.
In today’s episode, we also discuss Coby’s 3322 Nile Street project in San Diego. Located in the heart of Altadena, the neighborhood features mostly cozy homes with Spanish influence. It is a four-unit property with a contemporary design. We also discuss how projects similar to this one can be an answer to our country’s challenge of producing housing that all Americans can afford.
Join us on this week’s episode of American Building as we discuss the importance of ADUs in addressing the current housing crisis, including some of the challenges and benefits of building smaller detached housing units.
Coby Lefkowitz is the co-founder of Backyard, a real estate development company focusing on infill development in Southern California. Previously, he worked with ASH NYC, Washington REIT, and the Runyon Group. Coby was raised in Westchester County, New York, and graduated from the University of Virginia Architecture School with a Bachelor of Urban and Environmental Planning.
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[00:00:00] Announcer: What goes into making an iconic building in America? What are the stories and who are the people behind the next generation of architecture? If your work touches the real estate industry in any way or you’re just curious about what goes into one of a kind cities and towns all across our country, join us on the American Building Podcast.
In season two, we learn about everything from skyscrapers to single family homes. From the famous and soon-to-be famous designers and developers responsible for them. This season focuses particularly on the pandemic and how our buildings will change in response. Our sponsor is the iconic design firm, Michael Graves Architecture & Design. And now your host award-winning architect-turned entrepreneur Atif Qadir, AIA.
[00:00:59] Atif Qadir: This is American building. And I’m your host Atif Qadir. I’m the CEO of Redis, a technology company focused on innovative public financing for real estate projects. We are recording from the historic home of world renowned architect, Michael Graves in Princeton, New Jersey. Check out this amazing space for yourself at the Michael Graves, architecture and design YouTube channel.
Now let’s build something today.
Our guest is Coby Lekovitz. Kobe is the co-founder of backyard, a real estate development company, focusing on infill development in Southern California. He began his career at developer Ash, New York. Washington REIT and Runyon group. He is a graduate of the university of Virginia.
We will be talking about Kobe’s 3, 3, 2, 2 Nial street project, and San Diego. More broadly. We will talk about accessory dwelling units, also known as Ady use and how they can be one answer to our country’s challenge of producing housing that all Americans can afford. Thank you so much for being here with
[00:02:08] Coby Lefkowitz: us.
Thanks so much for having me out there. I’m really excited to be here and talk a little bit about AWS and what we’re doing at backyard. Perfect.
[00:02:15] Atif Qadir: So let’s get started by saying I love Charlottesville. It’s one of my top five places that I visited my year of work from home road trips last year. So what are your impressions of the city and how did your time there influence your career path?
[00:02:31] Coby Lefkowitz: Uh, it’s amazing. Charlottesville is one of the best small cities in America. I’m glad you got to spend some time down there. Becoming a more popular destination to go to with the wineries and beautiful scenery and restaurants. And of course, UVA, I’ve really fond memories down there so much packed into such a small city that a lot of other places don’t get.
Of course, the food, the winery is a scenery, but also one of the few remaining pedestrian malls in America for enters urbanists. They’re great architecture, but I started off at NYU before transferring to UVA playing bass. No, it was a senior in high school. I had a kidney transplant, which reprioritize things in my life for sure.
Uh, and change where basketball fell into place, really blessed and fortunate to have gotten a kidney for my mom. Who’s a guardian angel in more ways than one, but as it wasn’t as important to me, then as it had been my whole childhood, I was ready for a little. Just so happened around this time. Uh, I visited my brother.
Who’s the same age as me. I’m a quadruplet he’s number one, I’m number four at UVA, and instantly fell in love with the city, school and community, and always great to feel some comfort when you’re going down a w with your big brother, even if it’s only about seven minutes. So I, you know, being born and raised in New York, uh, going to school.
I was working in New York at that time and assumed I’d just stayed there forever. Definitely itching to see a little bit more of the world. UVA provided that opportunity, even if it was just a small town in the south. That was a big departure from being in the city and Westchester and kind of around New York.
Funnily enough, I don’t know if I’d be in Southern California if it wasn’t because it showed me there was a world outside of New York. Uh, you know, there’s that famous new Yorker. Where you have the city eighth avenue, ninth avenue, the Hudson, then California, all the way on the other end of the country.
And that’s pretty, that’s how the world is when you’re from New York. But thankfully I got to experience life outside of there. And you know, NYU and UVA are polar opposites to get perspectives from both. Those places was amazing. And I really valued. It gave me a lot of perspective from both ends of the spectrum.
NYU of course, gives you the energy dynamism and. Values that really isn’t possible at most other schools. Um, almost all my friends are international and doing really incredible things. They were operating as professionals, you know, full-time jobs or part-time jobs, actors, actresses traders, very different experience than what most people get in college.
We still close with many of them today, still keep up with them. But, you know, UVA was sort of more that traditional college experience that I wasn’t necessarily looking for when I first started my. Yeah, college journey, but became one that, that I think I sought out after that, that year at NYU, it’s a much more organic, smaller, more incremental place in, in many ways.
It’s a lot more tight-knit than NYU, which doesn’t really have that. You’re kind of just in the city by yourself. I went to architecture school there, which is an even more insular community. We wore the black tees and the black jeans, which stood out even more with the pastel colors and the Sperrys and pop colors
[00:05:31] Atif Qadir: people did that
[00:05:32] Coby Lefkowitz: will do it is very much a part of the scene at UVA, uh, you know, in the architecture school.
Uh, wasn’t. Us, but it gave me the time and space to consider what I really wanted to do in New York. You don’t have that. It’s moving so fast. There’s so many influences that you can’t step back and see, you know, what’s, what’s important for you. So I’d say in very literal terms, I went from thinking about the projects that only get done when you’re in a larger city and that type of influence to.
Wanted to do more fine grained, intimate spaces at a neighborhood level, a more informed by a small town or a small city more community-based I’d say both of them still in many ways, inform what I’m doing today. If I was only in New York and I had never gone down to Virginia, it’s very easy to kind of get in this bigger is better large New York real estate scene mindset.
And going down to Charlottesville, you know, helped me show that this is not what most of America is. And, and they’re really different. And in some respects better way. Uh,
[00:06:35] Atif Qadir: I just want to mention in full honesty, one of my best or my favorite basketball games that I’ve ever watched was when you NBC beat UVA in the first round of the 28th.
And I think there’s probably half of America that would agree with me
[00:06:48] Coby Lefkowitz: on that one. So it was tough. Uh, my brother’s a die hard fan. I was, you know, obviously a fan of UVA and, you know, we didn’t, we didn’t mention that. That year, but then the next year we came back one, then we won the tournament. So it redeemed, I’m happy to have lost a 16 seed because got be one the next year, but sure.
I’ll take that.
[00:07:10] Atif Qadir: So you started off at a Washington. A value add owner operator of multi-family assets in DC and the Southeast and at ashed New York city, which is known for its iconic hotels. And you also worked at the Runyon group, which is a west coast, east coast, real estate company. So what did you learn from each of these experiences and how did you know that it was time to start your own.
[00:07:34] Coby Lefkowitz: Yeah. So Runyon was my first experience of being on the west coast and being in Southern California, being a new Yorker, there’s kind of this rivalry or this thought that you have with, with Los Angeles and certainly in California, there’s a clash of cultures and it was wasn’t something I considered, but going down to UVA, like I said, broaden my mindset and it became a compelling place that I wanted to understand and explore.
I got an opportunity through. Cold calling and emailing and annoying that the main principal there, a guy named Joey Miller who remains a close mentor and confidant today to go and see what he was doing and basically shadow him. They were doing a lot of mixing continue to do a lot of mixed use retail, a little bit of office, a little bit of residential in Los Angeles, working with really interesting creative tenants.
It was different than anything I’d seen in the past because it required. A lot more qualitative work with working with smaller retail tenants. You know, these, aren’t the big boxes of the world Joe’s surf shop, right. But it’s, Joe’s Uber luxury boutiques or shop next to this great oscillate you place. And, uh, you know, uh, we had a Tom Dickson in, in platform and incorporate city.
It not only brought me to the west coast to see more of the country and work with these really unique and creative partners, but it exposed me to, uh, for the first time, I’d say in a meaningful way, the extent of our housing crisis, which informs a lot of my work today. Took a pit stop in between there and Nash.
Where, where I just, uh, laughed at Washington REIT in C it’s a much more institutional shop than what I’ve been used to at Brentwood. Some of the smaller experiences I had, I joke with people that, you know, even though it wasn’t very big from it, The biggest place I’d ever been everywhere else. It was 10 people or less.
It was much more the environment that I was used to, but it gave me a lot more to chew on because of the size of it. And it being a publicly traded company. I was on the asset management team, uh, but picked up a lot of other skills there. But within that core asset manager role. My job was really getting into the nitty gritty of how buildings operate, how portfolio comes together and then forecasting that to the street, which has a lot of, you know, stressors to it.
And you need to make sure that your numbers are right and your pencils, and then understanding organized. Those larger institutional imperatives. Uh, it’s not an that I think a lot of people get in real estate and w was one that was really powerful, great start, uh, you know, place to get my feet wet. Ash was a much different experience.
It’s a design firm and a developer, which was. A really cool place for me to be, especially being in my architecture school background. But to give you a sense, you know, we’d listened to seventies, Bollywood music remixes in our Brooklyn warehouse and then our Soho loft. It was much more my speed. Or you said Bollywood.
Yeah. You know, whatever. So our creative director, our chief creative officer will Cooper, uh, had gone on a trip to India for design inspiration for some of our latest products. Ash, this may be misappropriated, but I believe it’s the largest stager in America, certainly in New York and in a large presence.
And so he, we went there to produce some more, or he went there rather to produce furniture for our apartments that we had staged. He went there on a several week trip and brought back the influenced experiences. We had a, you know, Bollywood remixes playing in, in the office, which was a ton of fun. But, you know, before diving into all of that, I do have to thank Ari Heckman and Jonathan Minkoff for giving me the chance at Ash.
Um, similar to my experience at Runyon, I just cold called them cold, emailed them a couple of times, uh, and said, look, I just want to talk with you guys are doing some really inspired and interesting work, not asking for a job, you know, just want to know how you guys see the development process. Um, because it’s something I really admire.
They ended up carving out a role for me, which was, you know, at a dream company, the type of work that I did certainly hotels as you touched on. But, um, it was really creative, mixed use multi-family work as well, bringing you back. Some of my experiences in LA similar types of things. On the retail front and the residential was, was very inspired.
You know, I remember I was going on tours of the buildings and we had properties in Providence and I was just amazed at the level of detail on the smallest things from the cabinetry to the millwork. It’s even the appliances. A lot of these were adaptively reuse the structures
[00:12:01] Atif Qadir: that you’re talking about or
[00:12:02] Coby Lefkowitz: other properties I stayed in the Dean, which is a great property.
The first hotel may or may not at one point the pad ghosts, but you know, not today as an, in a long time in its past. But, uh, I, I don’t know if you touched on that with Anthony Pellegrino, who was, was, you know,
[00:12:21] Atif Qadir: he was on the podcast earlier this season for Ash. So we spoke about, uh, ghosts at the hotel, uh, Peter and Paul and I let him know about the ghost that I’ve met on my travels this year and in Maryland.
[00:12:35] Coby Lefkowitz: Okay, so just pick you up more ghosts as we go. I didn’t want to speak out of turn and, you know, in case Anthony hadn’t, you know, uh, spread that out to the world, but you know, there’s stories when you’re working in older properties and older cities, these things happen. So it wasn’t at the Dean. Uh, these were on way Boston street and we had someone only though, and we had some on.
Really lovely assets. Providence is a gorgeous city for people
[00:13:01] Atif Qadir: who love Providence. Love it, love it. I jokingly call them Hoboken. Half-price more beautiful cleaner version of Brooklyn, but I think Providence is essentially the same thing.
[00:13:09] Coby Lefkowitz: Yup. It very, very much the same, but it’s a really cool town and the quality of work, there was something that I.
Hadn’t truly experienced in the residential realm. It was simple apartments, but it really spoke to the importance of considering the smallest details and not to be overly or concentrate overly on the minutiae. But these things tend to matter really. Throughout Ash and the types of projects we got to work on to be with a team of superstars.
Kevin Sievers Jen Weber, of course, AP Anthony Pellgrino, John and Ari and ton of others. I got a chance to work with, um, was really special. When I got to Ash, I was 23 years old, young wide-eyed I’m still young. And wide-eyed, you know, it was about to say that side. Right. But even more than today. Right. And they gave me a ton of rope and a ton of opportunity in very real terms to empower me to think like an owner and everything that comes with.
Wearing a hat today, but they gave me a ton of hats to juggle and put on really as much as I reached out and grabbed for, they gave me the opportunity, very rare at development firms, because these are risky, large assets. There’s a lot of money at play and they’re very
[00:14:22] Atif Qadir: hierarchical
[00:14:23] Coby Lefkowitz: companies, too. It’s very hierarchical.
Working at Ash. It was amazing. You know, our, our smaller team was me, Ari, John, Kevin, and Jen that I’d mentioned there is, you know, of course there’s some structure, but I felt as comfortable voicing opinions saying what I thought and, uh, as anybody else and not just that, it wasn’t just lip service and opinions I felt and, you know, represented through my work.
There were three. We’re heard and implemented in many ways, which was such an awesome experience that a lot of people never get and to get it at such a young age was, was incredible with all that said, you know, this sounds great, awesome experience. What leads you to go to start your own thing? Ash was moving more towards a director of doing hospitality and hotel, which not, you know, shameless plug.
I think there’s some. Best boutique hotels in America. I stayed in them and they’re really lovely, but that’s, hasn’t been my experience or background. And as much as I waited into that world and got more familiar with it and comfortable with it, ultimately my heart is more in housing and, and. You know, I’m an urbanist, I’m an urban planner by training, how buildings meet the street and interact with broader communities and how you marry that within the development paradigm.
That’s where the opportunity for backyard first arose going back to not quite my roots in Southern California, but several years before with this notion of 80 use, which. Happy to talk about later, but that was it. It came about at a time where all trajectories were just kind of diverging not saying that I learned everything I could’ve learned.
You know, it’s, it’s not one of those, but it was just a natural time given, uh, where the industry is going. So what’s backyard, backyard’s a real estate development firm, infill development that I co-founded with my now partner, Roy gold, we do focus on ADU, but other tools to promote and create strong and high quality in tilt development, primarily a mixed use walkable and vibrant neighborhoods.
These are buzzwords that get thrown around a lot of people. What does that really mean? There it’s kind of intangible, but to give you some tactical or tangible proof or evidence behind this, our first three properties are in north park, in San Diego, which is not the dense urban neighborhood you might find in Midtown Manhattan or central business districts around the country, but it’s very much an urbane walkable, buzzy neighborhood where all the trendy kids hang out.
There’s great restaurants, cafes, and. Lots of fantastic cultural institutions. Those are the places we like to operate near on and along and in those neighborhoods, not just because they’re exciting places to be with demographically. We think there’s a massive shift towards living in these types of places, historically, without going too much into it.
You know, America has been quite polarized for the last a hundred years. We’ve built almost exclusively. Single-cell family subdivisions. Right? Uh, and re in recent years, we’ve built 3, 400, 500 unit apartment building. You don’t quite have this missing middle concept notion, right. But neighborhoods like north park and, uh, you know, like society hill and Philly and Georgetown DuPont circle in DC.
And I can go down the list that were built more than a hundred years ago, had these really lovely fine-grained human scaled environments that are mixed and all these great words that we believe in and we throw around, but we believe that are so in demand that they’re the most expensive place to live in America.
The opportunity that exists through backyard is to incrementally add, uh, units of housing supply to hopefully alleviate these pricing pressures. There are more homes for people to live in and get to experience these places that are quite frankly, just, I think the best places to live.
[00:18:17] Atif Qadir: Okay. Let’s talk about project.
That backyard is pursuing. So 33, 22 Nile street, and also Dina is a neighborhood in San Diego. Uh, tell us about the.
[00:18:28] Coby Lefkowitz: Yeah. So Altadena is kind of a little pocket in this broader north park neighborhood. It’s about a 10 minute walk to the heart of, of all the restaurants on 30th street university. Uh, you know, a couple of other main cross streets as well.
It is really charming being a new Yorker, working in Southern California. Every time I see Palm trees, my eyes light up. It’s very much the. Palm tree lined streets, the charming craftsman homes, a lot of Spanish influenced smaller structures as well, two to four units with a real great diversity and mix of housing stock.
It’s not just exclusively single family homes, but it’s, you know, you’re charming single family homes, but next to a two-story. Mid-rise development, missing middle, you know, type of a typology that isn’t around in most places. Nile is a four unit property, or will be a four unit property within this context.
Slotting nicely between its neighbors. There’s an existing duplex on the front of the lot, uh, on the back because of these nascent you laws, we’ll be able to build two more units. So in total, on stabilization for, it’ll be a really lovely new design that we it’s contemporary, but nods to some of the contexts and vernacular of the area, but that’s the high level of the project.
[00:19:46] Atif Qadir: Okay. And then what. Specific challenges and opportunities. Um, you had on the site and I’m guessing that given there where it’s a relatively new context there might’ve been pushed back. There might’ve been other issues. What w what was going on as you were developing this development?
[00:20:03] Coby Lefkowitz: Yeah. So I’d say first and foremost, these are smaller lots.
So anybody who’s familiar with development knows, you know, the more space you have the better, how wide, how deep. So the, this is about a 4,000 square foot lot. And so we’re about 4,900, a little, a little bit narrower and a little bit shorter, but those are roughly the dimensions. And that’s difficult when you have neighbors on either side of you.
It’s made a little easier. One of the great opportunities in San Diego, but certainly Western cities is most of them have alleyways, so structured materials. We can use the alleyway really helpful, but it also provides almost a second entrance for the property. So that back home, you won’t have to walk through effectively what feels like someone’s sliding around, along or shimmying along your house to get to the back that’s
[00:20:52] Atif Qadir: in Georgetown.
[00:20:54] Coby Lefkowitz: Exactly that feeling, which some might say intimate. I might, my friends ridiculed me for that. You know, when I see a small alleyway, I think that’s so charming. Others might think it’s an invasion of a personal space, but it mitigates that by having, having these spaces, the biggest opportunity that we see through these types of projects, which are enabled by underlying ADU laws, the accessory dwelling unit laws is that, um, we can site the new structure at the back of this.
The front structure is not quite at the front there’s front setbacks, which is a conversation for another time. It’s a very frustrating institution. I think that limits a lot of, um, fine-grained in, in good urban ism, but we have this core courtyard space is backyard as work that informs our practice. And that will let enlight to both of the units.
Sure. But it’s a place where people can come to the. And this isn’t a co-housing concept where we’re saying everyone must live in, in apartments together. You know that you need to all be friends, whatever. If you want to be friends, you make friends. That’s fantastic. But you know, what’s shocking to me as a new Yorker going to Southern California.
I don’t want to put a number on it, but maybe it’s 89% of apartments. Don’t have any outdoor space. It’s 75 and sunny in Southern California, most days of the year. And yet you have an asphalt parking strip and your build-out max the lawn. It’s a huge opportunity to offer a little bit of greenery, a little bit of outdoor space.
You know that that’s not often. And we have a lot of four legged friends at our properties currently, and we planned for them to be parts of our communities in the future,
[00:22:29] Atif Qadir: even dogs and cats
[00:22:30] Coby Lefkowitz: and rabbits, and anything else you want to bring. And so that gives some space for them as well. They’re not cooped up in a, in a, an apartment.
[00:22:39] Atif Qadir: So let’s talk about the approach for entitlements for this unique type of residential product. The listeners know I’m a city planning commissioner in Hoboken, so I can just go off pop off. I’m a lot of what that entails. Uh, so tell me, what is your approach?
[00:22:57] Coby Lefkowitz: So we’re lucky that these are, as of right.
I know in New York, certainly. And in other parts of the country, there’s significant challenges with delivering projects because they might not hear the underlying zoning, or they might have to get a certain amount of community input and review, which can very powerful tool, but it can also be. An obstacle for some, for some projects.
I, as I think we’ve seen in San Francisco over the last decade and in getting projects built, there are of course community concerns that must be heard and considered. But I think perhaps sometimes the pendulum swings too far where nothing gets built and that exacerbates the housing crises and community crises that are a lot of people are facing.
So in that sense, we’re, we’re lucky that we don’t have to go, you know, cap in hand. For every single product that we want to do, as you will know, as well, intimately, the longest part of our process almost longer than construction is going to be approval permits in several California cities and increasingly elsewhere as they adopt these, these, uh, more progressive infill development laws.
There are these standardized plans that can be approved. We’re currently not using any of those standardized plans, but our hope is in the future in near term future. We will be able to submit those, which will reduce our time in the city. We think quite materially, those are probably the two main considerations that this is as of right.
And that if we can standardize it, it’ll help us to build more housing and not just more housing, more houses, more housing, but very thoughtful and considered housing in a quicker and more efficient. Now.
[00:24:33] Atif Qadir: So my, my thought, and you tell me is one of the strains or one of the lines of pushback that you get is about a lack of a lack of beauty, a lack of design that it’s prefabricated, that it looks like it was offered assembly line.
So instead you have a designer on this project, that’s JSP design studio, and they specialize in remodels additions and accessory units. So how did you find them and what. Their design
[00:25:02] Coby Lefkowitz: process for this project. Yeah. So we’re working with Jose Ponce at JSP design. He’s a really terrific and talented designer, but, and even lovelier person to work with, which is very important as.
Going through these sometimes long and arduous processes. And you couldn’t ask for a better partner. We got acted to him through just internal networks in San Diego with a general contractor, Nima Hemphill, who we work with on some of our projects of Hemphill construction. And it’s been a very collaborative approach.
From a design background, even though I am not an architect by training, I did all the studios had just happened to get a planning degree at the end of it, design really matters to me. And I think existentially for a lot of our communities. And of course, Jose being the designer that he is, uh, believes that as well.
And so it’s a collaborative process of making sure when we deliver these units, they’re not just four walls in a box. Sometimes new housing is not unfairly ascribed as being, but a thoughtful approach that, you know, for example, in Southern California, we’ll probably use lighter color palettes. We’ll probably integrate, you know, more open space, but more windows open volumes to take advantage of the light and the air.
In another market, it might not make as much sense to use these processes Northeast, maybe not in the Northeast. Uh, you know, right now it is freezing rain here in New York. So it’s, uh, or maybe it’s this painted now, but, but certainly this morning, but every regional geography calls for different contexts and a big part of what we do is be mindful of that and hopefully respond to, to that vernacular.
[00:26:42] Atif Qadir: Walk our listeners through the project. It will look when it was completed. You mentioned the alleyways mentioned the front and the back. If we were at the side of the dock and we wanted to come in, what are we seeing? What are the materials
[00:26:54] Coby Lefkowitz: talk to us? Yeah. So the front duplex, which we won’t be demoing, what we’ll be keeping it in place.
Nine foot 10 foot tall stucco. The duplex is not it’s one story it’s not stacked on top of each other. They’re kind of a long, which is interesting. We’ll probably paint that white or, or a very light gray. It’s currently yellow. It’s the side entrance that takes you to the common backyard. And ultimately to this second duplex structure, materials are still being finalized and the finished package is.
Basically there, but it’ll be a pitch to two story structure with two, one bedroom units. So we’ll have two, one bedrooms on the front, two bedrooms on the back and four units in total. And you’ll have this interplay with this shorter, a little bit longer duplex with this pitch roof volume in the back. Um, that kind of rises above this duplex, but isn’t really taller than any of its neighbors.
I think in total, we’re still playing a little bit with the elevation will be anywhere. No 22 to 30 feet. So not imposing on the site by any means. When you walk into the courtyard, you’ll have the string lighting. We’re using all native landscaping and very mindful to we’re using DJ as well, but, but to not use as much grass, because water is a real consideration in Southern California.
And to be honest, I think a lot of law. It could be frivolous. I mean, certainly front front yards that see very little usage. So if we can create a really highly curated, common courtyard space without putting in the traditional trees and grass that aren’t native to the region, uh, that’s something we’re looking to do.
So it might not feel like a desert climate, but it’s kind of. And maybe Palm Springs influenced in that courtyard space. Okay.
[00:28:45] Atif Qadir: I think, uh, I I’ve been amazed at how valuable courtyards in those garden spaces are. So I own a building in Hoboken that is a front and a back. So it’s three units in the front three in the back around 6,000 square feet, total.
And the tenants love the courtyard. It’s so unique because there’s actually. Now Allie pass. It’s basically San Diego in, in the middle of Hoboken. It’s an alley pathway through, and then you have the huge courtyard and then the back buildings where the smaller studio units are. And so definitely dig. And I think I appreciate what you were saying about the landscaping.
Um, because, uh, in particular, I mean, Southern California is a desert and with the, the ability to have. Landscaping that doesn’t need maintenance. Now look at your PNL. You’re spending less money on actually operating that asset. So I dig it.
so I’m going to take a break here to let our listeners know that we will be having the wonderful urban designer. You feel my elbow on this show next month. Iphoma is the founding principle of Korean. Urban alchemy, subscribe to the podcast and check out our past email@example.com. But we just, as a new venture backed technology company that is working to trends.
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Okay, well, let’s talk about. The real income of the average office worker has not changed since the 1980s, only 20% of Americans own stocks in any public traded company. The net worth of millennials is zero and over 50% of 20 and 30 somethings either have gotten significant financial assistance from their parents.
Or lived at their parents’ homes for over a year during the pandemic, uh, algorithmic I buyers are estimated to have purchased forties percent of home sold and Phoenix driving up the price for homes in that area. And many other places like it. And these are all facts that are necessary to help bring into focus.
The ever-growing prices of wealth, concentration, and consequently home affordability in America. What does affordability mean to you?
[00:31:54] Coby Lefkowitz: So I’ll start by saying. You know, there’s this arbitrary threshold of 30% of one’s gross income allocated towards housing. That’s clearly agreed upon by HUD housing nonprofits and housing advocates generally, but that’s arbitrary affordability.
And the clarity of an unaffordable places is something people feel really intensely and intimately. One of the best references that I’ve I’ve read on affordability generally was Matthew Desmond’s evicted that I forget what year it came out, but I read it within months of its publication, uh, in two days and was absolute gripped by it.
It tells a story of the. Very raw and intimate and real consequence of, of housing, awesome prices in America. But specifically in Milwaukee, people are faced all around the country and millions of people. Do they pay rent or do they give their kids a meal? They’re going to go to the doctors or are they going to give their landlord a check?
These are decisions that people shouldn’t have to make, but increasingly we’re being forced to make the joint center for housing studies. Harvard’s Institute has recently come out with their 20, 23 report or 2020 or 2021 report on housing affordability. Yes, exactly. And you know, the metrics. How many people can afford a rental home in the United States that are quite jarring, nearly 50% of all renters in America, which I believe is around 35 million households, but that could be wrong.
I don’t have the numbers right in front of me face some level of housing burden. So that’s more than that 30% threshold. It becomes significantly less arbitrary when you’re spending more than half of your gross income towards housing, which is roughly 25% of all rent. That is a frankly unacceptable and damning statistic on, I think American policy made that is quite literally tens of millions of people who are forced to be making these types of precarious decisions.
And I think it’s something that can continue increasingly, you know, there’s been this broader movement towards providing more places for people to live this YIMBY versus NIMBY dichotomy, if you will. And the YIMBY school of thought we’re downstairs. Effectively, building more homes for people to live in to reduce the overall cost of housing, which I think is a very compelling narrative.
[00:34:17] Atif Qadir: That’s, what’s known as small, a affordable, not big, an affordable,
[00:34:21] Coby Lefkowitz: exactly small, a affordable through increasing more supply to decentralized the place where people live. And th this is certainly needed because for, for anyone who studies, uh, housing numbers, even. 15 minutes you’ll know we’re currently facing a quite severe supply and demand imbalance the calls for unaffordability, at least as I’ve written about it.
And as I say it, and I think other people in the space, uh, or recognizing as well, is that. W we simply have, we don’t have enough housing in the places with the highest demand, which allows people who have more means we’re a little bit wealthier, even if it’s relatively. So to elbow out those who are less means and who are more marginalized, uh, this creates more isolated and exclusive communities.
It, the prize opportunity, it leads to adverse health outcomes. As those who can’t afford are pushed out to the margins of society in our places. There is only one solution to solve. Housing shortages it’s to build more housing. Now there, that, that is, I think, a precept that you have to accept if you’re in any of these conversations, but what follows from there is really important.
The quality of the housing matters, you know, I think what a lot of people who perhaps take some umbrage with the debate is it’s not just the old, as much as we can everywhere. Whatever it looks like wherever it is, doesn’t matter because we’re faced with this first pressing issue. It really does matter because if and when, and it might be sooner, rather than later, we build enough homes for everyone.
And I’m confident that we have enough momentum that it won’t be within the next five years. It won’t be within the next 10, but the next 1520, we will start to correct these massive national housing shortages. If policymakers are willing to take the right steps at the big F, but I am hopeful and I’m optimistic about that.
[00:36:19] Atif Qadir: just depends how long it is until the next election.
[00:36:21] Coby Lefkowitz: Right? Uh, very much made depend, you know, in a big part of that is people, local officials and perhaps national officials as well, like to see things that can be accomplished under their tenure, whether it’s four years or six years or two years, you know, Building housing does not take it.
It’s a very long and generational process and creating our places. And
[00:36:44] Atif Qadir: also a pile of, uh, the icing salt is not as sexy to cut a string in front of as a new housing development.
[00:36:51] Coby Lefkowitz: And it’s even less sexier to renovate the existing housing units that don’t have, uh, you know, running water or properly insulated walls is.
We there needs to be a reprioritization over. Yes, we, we need to create more places. Yes. We need to maintain the existing places we have, but those new places that we create and then, and the existing places that we maintain after be of a fundamental, good quality and high quality, because what we’ll have in, in 15 years, 20 years in my hopeful case where we have enough housing is that, which is less desired.
We’ll we’ll be the only of the realm of people. You know, who can’t afford anything else. And then we’re just reintroducing these concepts of segregation and class accessibility and affordability, but in different ways. And that’s something that I think is a real pressing issue. It doesn’t take prominence over the need to build more housing.
It’s not sit and discuss what the shutter color should be for five years and say, well, this is unacceptable, but it’s to be hand in hand. Yes, we have to build a lot of housing, but yes, it has to be of a fundamentally.
[00:38:02] Atif Qadir: To help us understand what our accessory dwelling units in comparison to things like companion units, granny units, tiny homes, and other events, long tail of terms that are related to that.
[00:38:15] Coby Lefkowitz: Yeah. So in ADU and accessory drawing unit at very base level is any accessories. Home to the main one, any additional one. So that could be one unit, a granny cottage on the back of a single family home. It can also mean two or three accessory units to a 10 unit apartment building. It is a very catchall term, a granny flat, you know, a, a cottage, a tiny home, or, or even a garage apartment above or below.
Those are all forms of 80 use. But they just look a little bit different. Um, modern eighties, such as the type that we’re building are functionally indistinguishable from really high quality infill development. It’s not the cutesy 300 square foot, tiny home. That totally Instagrammable totally Instagrammable.
I like to think ours is going to be very Instagrammable, but they’re not going to be the ones where you carved off into the woods and go hike a mountain
[00:39:15] Atif Qadir: and say, I give up on Brooklyn. I’m going to Montana. I’m not
[00:39:17] Coby Lefkowitz: exactly a Hey that might be wellbeing. Both of our futures in the next five years, Montana is a beautiful place.
[00:39:24] Atif Qadir: We actually gained a congressional seat this year, too, because of population.
[00:39:27] Coby Lefkowitz: Yeah, but Bozeman is a great town, a lot of fun stuff on Missoula. I was actually in Montana, uh, driving through a short aside. Uh, my sister just graduated from UCLA younger sister and my mom is a great fan of road trips. So we drove back from Los Angeles to New York and went the long way.
Uh, so was, was driving through Montana. It’s a really spectacular part of the world.
[00:39:51] Atif Qadir: Okay, so ADU. So we talked about, so now we know what ages are. We know the crisis of affordability in America. How are the two things tied together? Why 80 use related to affordability? What does
[00:40:01] Coby Lefkowitz: that mean? The way that, that we look at it, backyard and that I, as Kobe look at it as an individual is what is the easiest way to provide more housing in the place that needed the most while it’d be great.
If I could show up my magic wand and say, Up zone every single neighborhood. I mean, not every neighborhood, but allow for more intensity in density and in a lot of areas that they can support it with the existing infrastructure. That’s not possible. You can’t go through. Rewrite the zoning codes at every municipality in every locality, because many of them won’t accept it.
There’s going to be years of community review. That’s a decades long process, and we don’t have decades. There are millions of people struggling today and in California and in places around the country, that’s very visible, but people sleeping on the street, you know, homelessness fundamentally is an issue and definitionally, it’s an issue of people not having enough homes.
There are other causes beyond it. You are homeless. You do not have. How do you solve that? Provide that person at home and other attendant services, of course, but that’s the base issue. So how do you go about providing these homes? These much-needed homes in a way that can actually be carried out, not waiving our wands, not saying I wish everything was affordable, not saying developers, how dare you not do this or that or whatever.
We have to be realistic and pragmatic. in, in dense areas, such as north park in San Diego, but you know, they’re very popular in Los Angeles as well that have these existing, you know, mid level of density, gentle density to these neighborhoods is a very elegant solution that can be done to. If you so California, in 2016 passed the first ADU laws, they were a little bit onerous, which I think we may talk about in the second start with, but through iterations and various revisions, it is effectively a state level preemption of local municipalities that allows for these types of units to be built and their.
Tens of thousands of permits have been filed just in the, in the past few years, that would not have been possible. Had the underlying zoning in many cases, single family zoning in artificially constrained, single family, zoning it in place. It is not the only solution. It is not the end all solution. It will not deliver 10 million units today.
It’s a process. There’s a study that we look to that McKinsey published, I believe in 2019, that looked at the effect or the potential effect of these falls and in California alone through ADU in these smaller, progressive infill development laws could stand to add anywhere from a million to almost 2 million units of housing, you know, 1.8 million units of housing.
That’s extraordinary that that’s potentially homes for several million people, just ADU legislations and smaller infill development. This is not up zone every single neighborhood, the 25 stories. It’s can you put in a, a duplex one unit, two unit three units here. On these lots in major cities in and around California, which is, is pretty staggering.
[00:43:14] Atif Qadir: So for tech folks, when Kobe, you just said that the number of potential housing units that could be created, that’s some serious Tam. So who are you looking to serve with backyard?
[00:43:28] Coby Lefkowitz: Yeah, so the kind of go back to our general thesis of delivering high quality homes and walkable. Mixed use dense environment.
It’s primarily for people who want to live in these types of areas. We’re demographic trends are moving is from millennials to gen Z and gen, you know, whatever the new name, uh, for, for the latest generations are the
[00:43:53] Atif Qadir: generation that will save us all. That’s what the next one is.
[00:43:56] Coby Lefkowitz: Okay. It’s good to know.
I’ll start going, telling my baby cousins that, you know, Hey guys, this is, you know, And have them internalize it from a young age. So whatever those generations may be, they’re shifting much more towards wanting to live in these walkable, desirable places. Uh, Daniel parallax, who’s an urban planner and architect who actually coined the term missing middle optical design conducted a study where 60 upwards of 60% of American surveyed said they’d like to use.
Walkable neighborhoods somewhere. You can get a coffee on the corner, not somewhere where you can live in a 50 story, apartment, building a certain type of person, but just go to a park, be able to walk, to get coffee, walk, to meet friends, very base level walkability, which unfortunately in a vast majority of.
It’s not possible because of our underlying zoning and building code regulations. That is who we’re building for at a high level. Now. Yes. You know, these will have a certain level of design language they’re going to be in. You tend to be in younger neighborhoods, but it’s not as though we look at an application and say, oh, you’re this age you went to this school, you work in this sector.
You are. It’s much broader than that. We may ultimately find some trends in the types of portals that be, that are in these neighborhoods. But, um, we think as we expand from San Diego to Los Angeles and ultimately different markets that desire to be in these types of neighborhoods in quality apartments and housing accommodation will, will win the day.
[00:45:23] Atif Qadir: That’s the idea of perhaps a little bit less about defining people on male, female, this rage agent. It’s actually more about the mindset that you’re looking for. Got it. Okay. So help us understand that how there could be ties and overlaps between the work that that you’re doing and you want to do it backyard with things like prefabrication, smart home devices.
Rent to buy short-term leasing and other, other microbes.
[00:45:52] Coby Lefkowitz: Absolutely. So these are all various fields that we’re actively exploring a backyard. I’ll start at the top of lifts and work down. Prefab has been this, this great promise for decades, that housing in shorter periods of time for, for far cheaper. I don’t think we’re quite there today.
There are some really innovative companies who are doing this ones that we’re very close with and we have many relations to it’s something we’re very open to. Increasingly what we’re seeing is sips, which are these structural insulated panels, more common in the Northeast. And they are in California represent a possibility because you don’t have to build the existing home and then create it on to site and, and deal with these issues.
You’re basically get the walls or these. You put them up site, um, it’s, it’s almost like a Lego set, which is, which is pretty cool. It’s not something that we’re committing to today. I think our first several projects will be stick-built with traditional construction techniques, but it’s something we have our eyes on.
And that grand promise is probably, you know, I, I can’t put any degree of certainty on it, closer to reality in the next few years, and sooner than people might expect. From smart home devices. You know, there’s a lot of money that’s been raised on prop tech and smart property management solutions. And I think a lot of them are really important.
They don’t need to be reinventing the wheel. I think sometimes there are companies that say, this is the greatest thing in the world. How could you have ever lived with this before? But without this before, but they’re a solutions in search of a problem. We keep it very simple. So what does that mean using your phone?
To enter your apartment. Maybe you have a code that they get sent to your phone, or you have a QR code that you can use every time you go into your apartment. So you don’t have to fumble around for your keys, paying your rent on the app instead of having to pay it by check, which is very, you work and most places in the country.
I mean, when was the last time you’ve used a check other than antiquated systems that require you to use it? I love
[00:47:54] Atif Qadir: sending checks by bill pay. So I basically just go in and have all my stuff for, for Redis and for a model properties. And I just send checks to people. And it’s the best, because I don’t have to like know anyone’s like account numbers or anything.
So I don’t, I don’t touch it. So the bank prints it out and sends it, which sounds a little archaic. It’s actually
[00:48:15] Coby Lefkowitz: really easy for me. What worked for you. And I think, you know, at the end of the day it matters what the user interaction experiences for you as a user. That’s fantastic. It’s the same thing with settlement times in, in finance, like you use, uh, or as I see it use a credit card or you send a wire transfer or you Venmo somebody and it might look like that money is instantaneously in your account, but the two or three day period where it actually takes us.
It doesn’t matter as a user. I think I have the money today. That’s that’s what matters. It’s the same thing with paying of these out. Or using these payment processing for whatever it may be. There are other things like using a nest thermostat and controlling your phone service requests on your phone, very basic, but important issues or, you know, things that people deal with every single day.
Those are things that we’re actively integrating into our properties. I can’t say that we’re using anything more than these bare bone, essentially. But when you start to stack them up, there’s 5, 6, 7, 8 of these that are critical. And I think the differentiating factor between someone living in an apartment that doesn’t have these and you do, it goes from something that you never think about.
Oh my God, I moved somewhere and, or my keys now I left them on my backpack or a different pair of jeans and, oh man, it’s the 29th of the month. I don’t have an automated payment. I have to go run down to the, you know, the office and it’s a bit my check or whatever it might be. So we’re definitely in that space.
As for the rent to buy in the short-term leasing, we are fundamentally a rent, not a, not a rent to buy, but a built to rent, which is this large trend in real estate. So that again, build
[00:49:54] Atif Qadir: to
[00:49:54] Coby Lefkowitz: rent, to rent. So there’s this notion of a, I don’t know if you’re familiar, SFRs single family rental. And increasingly there’s been single family rental communities that are built ground up.
There are so many acronyms. I mean, look, 80 youths were talking about it today. There’s so many acronyms. It’s tough to keep track of all of them, but this is important because you know, to talk of the missing middle and the type of housing that’s been built, we haven’t had much adult to rent as for rent to buy.
It’s probably not something that we’ll explore just because our goal is to build, you know, a larger, more comprehensive. Portfolio of communities, but something that I think holds a lot of promise as the housing price to income ratio continues. Move off of the charts exponentially to be able to pay down some of your principal and with your existing rent, you’re going to pay for rent anyway, might as well go towards a down payment.
I think that’s great. You know, in short term, leasing something that we may explore, remain. To your point of, you know, your, your last year’s experience of going around the country and getting to stay in cities and work remotely and experience different places is an incredible unlock. And when I think that is difficult to grasp, because it’s happened in real time, you know, the biggest change in urban mobility patterns in one could argue.
You know, in millennia, you’ve always had to be connected to where you work crazy now. Right? Like as we’re zooming in what we’re talking about, this it’s crazy, but now you can be disaggregated from that, which is incredibly powerful. And. You know, many histories written about this moment. And so to sit back and appreciate that is something that I try to do and, and remind myself of.
And I think the nature of where our properties are and the type of communities they will be, they will be desirable if we were to open up them to be short-term rental opportunities. It’s on the table. It’s not something we’re committing to right now. Okay.
[00:51:57] Atif Qadir: So. This has been wonderfully enlightening. Thank you so much for joining us today on the American building podcast code.
[00:52:06] Coby Lefkowitz: Thank you so much for having me. It’s been a lot of fun. This is, uh, something that I don’t get as much. Being at home for the past two years as with everybody else. So it’s been
[00:52:17] Atif Qadir: great. Awesome. So listeners, if you want to hear the behind the scenes stories of how I conic buildings in our country were designed and built subscribe to this podcast on Spotify.
ITunes, Google anchor, Stitcher, or wherever you like to listen, rate and review us on iTunes to help us reach a wider audience. And please follow us on Instagram at American building podcast, we all know real estate is a tough industry to make it. So how can professionals stand out and make a name for themselves in today’s world here?
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In order to help build homes and communities today, Coby and I have made donations to habitat for humanity, which brings people together to build homes and communities and together hope I encourage you, our listeners to support their worthwhile work as well. My name is Arthur Carter, and this has been American building.
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