Every day, whether it’s moving around New York, talking with friends and colleagues, or reading the paper, I’m reminded of the desperate need for further investment in urban communities throughout the U.S. As billions of dollars in global capital continue to flow from east to west, these communities and their leaders have to crack the code to attract a greater share of that capital in order to rebuild housing, schools and hospitals.
Without a concerted, proactive effort to appeal to and attract this investment, large global investors will continue to acquire “trophy properties,” building luxury condos instead of revitalizing under-served communities. And competition is growing around the world. For example, Dubai continues to be a hot spot for real estate, and Middle Eastern sovereign wealth funds are investing billions of dollars in Italy.
In Brownsville, Brooklyn less than five miles from my home, nearly 40% of residents are below the poverty line. Baltimore continues to struggle as children there have the worst odds in the country of escaping poverty. Even historically distressed neighborhoods in Cleveland, Detroit and Washington, D.C., which are showing signs of revitalization, need a lot more work. There are still 70,000 vacant lots in Detroit alone.
These areas and others like them do have things going for them – supply chain infrastructure, a built-in customer base, a local workforce, and nearby research institutions – all things that, according to Brookings, help lure investment into communities. The PATH Act, passed in December, will make it easier for real estate investment trusts to attract foreign investments in U.S. real estate.
So why would global real estate investors and urban developers pass on communities that are otherwise perfect candidates for investment? One reason might be our, at times, unwelcoming posture. I’ll give you an example from a nearby neighborhood in Brooklyn.
In 2015, an activist movement formed in Crown Heights to oppose a local community board’s request to the city to examine potential rezoning that could lead to positive development for the community down the road. Voicing a litany of concerns – including the possibility of “tall towers” in their backyards, displacement of longtime residents, and exclusion of community input in the rezoning process – the activists successfully blocked the rezoning study.
We’re also seeing hostility to Mayor Bill de Blasio’s rezoning plan that covers several low-income neighborhoods, including East New York in Brooklyn – with opposition coming from both community activists and elected officials.
My sense is that large investors and developers – who can be helpful if engaged early on and partnered with the right way – don’t have the desire to deal with hostility when they can simply focus on more developed and affluent urban areas, or simply look abroad.
Some cities are taking a different posture. Columbus and San Diego, for example, have strategized to retain and enhance the foreign investment that currently exists in their cities. And there are examples of so-called “revitalization without gentrification,” which Dr. Hazel Edwards, a professor of architecture and planning at Catholic University, tells us results from “bringing residents and the community to the table often and at the beginning.”
My advice to urban communities: Be proactive, and at a minimum receptive, to the idea of large-scale investment in our neighborhoods. We’re right to demand a seat at the table and insist that all deals are equitable, sustainable and protect the integrity and heritage of our local communities. But don’t stop the negotiations before they start – because, frankly, the status quo is unacceptable.
And to global investors: Keep exploring opportunities in American communities. Our urban neighborhoods need you, and the U.S. is the safest bet in the world. Done right, you’ll be investing in deep-rooted, loyal communities that are willing to provide substantial returns for their partners if they are actively listened to and their voice is heard throughout the process.