- 3 days ago
On this episode of Power House, Zeb Lowe sits down with developer Austin Tunnell to explore a bigger question than housing itself: how the built environment shapes the way we live.
Austin shares his unconventional path into real estate, from accounting to the Peace Corps to hands-on construction, and the realization that much of modern development is optimized for efficiency, not human connection. He argues that today’s neighborhoods often prioritize cars, uniformity and short-term returns at the expense of community and daily life.
The conversation explores an alternative approach: building walkable, mixed-use neighborhoods designed for long-term value, human interaction and quality of place. But that approach comes with real tension—because traditional financing models, comps and investor expectations don’t naturally reward it.
For professionals in housing, the takeaway is clear: what gets built isn’t just real estate—it’s the foundation for how people live, connect and build their lives.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Austin Tunnell's LinkedIn
https://www.linkedin.com/in/austin-tunnell-2a41894a/
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
Austin shares his unconventional path into real estate, from accounting to the Peace Corps to hands-on construction, and the realization that much of modern development is optimized for efficiency, not human connection. He argues that today’s neighborhoods often prioritize cars, uniformity and short-term returns at the expense of community and daily life.
The conversation explores an alternative approach: building walkable, mixed-use neighborhoods designed for long-term value, human interaction and quality of place. But that approach comes with real tension—because traditional financing models, comps and investor expectations don’t naturally reward it.
For professionals in housing, the takeaway is clear: what gets built isn’t just real estate—it’s the foundation for how people live, connect and build their lives.
Related to the episode:
Zeb Lowe’s LinkedIn
https://www.linkedin.com/in/zebulon-lowe-a02353a4/
Austin Tunnell's LinkedIn
https://www.linkedin.com/in/austin-tunnell-2a41894a/
The Power House podcast brings the biggest names in housing to answer hard-hitting questions about industry trends, operational and growth strategy, and leadership. Join HousingWire’s Zeb Lowe every Thursday morning for candid conversations with industry leaders to learn how they’re differentiating themselves from the competition. Hosted and produced by the HousingWire Content Studio.
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NewsTranscript
00:00Hello and welcome back to Powerhouse. Today I'm joined by Austin Tunnel, a developer who sits at the intersection of
00:06liberal arts, architecture, construction, and real estate.
00:09Austin designs and builds community-oriented homes in pocket neighborhoods, guided by a philosophy that design and culture are inseparable.
00:17The home sits at the center of the American experience.
00:20If you are in any way a part of the housing industry, you play a role in a larger cultural
00:25and societal conversation that is often difficult to fully understand.
00:28In today's conversation with Austin, we discuss why building with beauty and people in mind is a matter of utmost
00:35importance.
00:46All right, Austin, thank you for joining me.
00:49Zeb, good to be with you.
00:50Yeah, Matt. So I'm a major fan of both your work and your podcast, Building Culture.
00:56So for anyone in our audience that's interested in the sort of conversation that we're going to be delving into
01:02today, I cannot recommend it enough to anyone listening.
01:06You've got a really interesting backstory that is actually really similar to mine in a lot of ways that we
01:13kind of discovered on our introductory call.
01:16But I was wondering if we could kick this off with you sharing your backstory, starting with, I think you
01:24kind of started in the accounting world or the accounting space, and then moving to the Peace Corps, and then
01:30what's kind of led you to where you are today?
01:32Can you walk us through that?
01:34Yeah, yeah. Let me do that quickly.
01:35So I grew up in the suburbs of Houston.
01:37Houston, I went to college with an accounting degree because my dad was an accountant, but I made a mistake
01:42right before I graduate, well, right after I graduated college and before taking on my first job, I had like
01:49a three-month gap.
01:50And so I was like, I had a job lined up and had, I don't know, $20,000 saved or
01:54something.
01:55And so I decided to go backpack around Europe for a few months.
01:58And I'd been out of the country once before in Italy, and it was pretty mind-blowing in college.
02:03But here I went three months by myself backpacking around in Spain and Portugal.
02:08And the reason I bring this up is growing up in the suburbs of Houston, this is like the opposite
02:15of that, you know?
02:16And I didn't know anything about architecture or real estate or development or anything like that.
02:20But I just walked around going, this is stunning.
02:23It's so beautiful.
02:24The lifestyle, being able to walk to places, just kind of the vibrancy in the community and kind of the
02:31intergenerational use of the city and public spaces is the first thing that kind of turned me on to something
02:37of like, why doesn't the U.S. look like this?
02:40Why doesn't Houston look like this?
02:43So then I started at KPMG and was just pretty miserable realizing, okay, I don't want to be an accountant.
02:49I don't want to be here.
02:49I don't know what I want to do, though.
02:51And because I'd had this kind of little real estate, you know, in my mind for my travels, I ended
02:57up in Panama.
02:58I quit my job, sold my car, and moved to Panama for an unpaid internship for some people trying to
03:02build a sustainable town in the jungle.
03:04And that ended up being pretty serendipitous because I met a master mason there who ended up, I ended up
03:12apprenticing four years later.
03:13So I went off to the Peace Corps, did that for a couple of years, actually met my wife there.
03:16She was another volunteer.
03:17When I got back to the U.S. in 2015, I'd been reading about urbanism, traditional neighborhood design, real estate,
03:24and realizing this is really what I want to do.
03:26But I want to learn.
03:27I already understand spreadsheets.
03:29I want to learn how to build.
03:30I want to learn how to build from the ground up.
03:31And I want to learn how to build differently.
03:33And so I called this guy up, this guy I'd met in Panama, who was truly a master mason and
03:39craftsman, said, hey, can I come work for you?
03:42And I ended up apprenticing for him for two years, you know, making $12 an hour, newly married in my
03:46late 20s, laying brick, putting, digging foundations, doing timber framing.
03:51So kind of really like these authentic old world materials.
03:53I say old world.
03:54We still have timber.
03:55We still have masonry.
03:57But structural masonry, not veneer, structural triple-white masonry.
04:01The walls are a foot thick of solid brick.
04:03So you really learn the materials themselves and how arches work and how lintels work, and then also timber framing,
04:09like mortise and tenon.
04:10And since then, 2017, I launched Building Culture.
04:13I ended up teaching myself design, which sounds funny.
04:16I know we talked about this a little bit.
04:17But, like, when you start using just simple proportions, looking at things I found beautiful, and kind of these authentic
04:25materials, just realized, oh, wow, you can design a beautiful rectangular house that looks wonderful, you know?
04:31And then, so since then, in 2017, we've grown Building Culture from just a design and build company to we've
04:39got six people on our team now, and we're doing design, build, and really develop now, too.
04:44So kind of integrating that CPA back into it where we're raising money syndicating to do walkable infill neighborhoods is
04:51what we're focused on.
04:53Was there a specific moment for you where you realized that you wanted to, like, I'm not just going to
05:00build a house, or I'm not just going to build houses.
05:02I want to build neighborhoods that influence or push forward a certain type of culture.
05:12That was something that, in some ways, evolved over time.
05:15Because when I started building these wonderful houses, these, you know, just real, authentic, like, structural masonry houses that feel
05:24so good, what I realized is, like, the context that you are building really matters.
05:29You know, take one of the greatest buildings in the world or something, you know, Notre Dame or something, and
05:33put it at the end of a cul-de-sac.
05:34And suddenly, it's completely meaningless.
05:37You know, technically, it's still a really great, beautiful building, but, like, it's not a civic monument anymore.
05:42There's no squares and plazas around it.
05:44It's a completely different experience and a completely different meaning.
05:48And so I realized context really matters, and I happened to be building in a new urbanist community, which I
05:53was already reading about and working in.
05:57And so if you call urbanism kind of the design, the overall design of neighborhoods or towns and neighborhoods and
06:04cities, if that's the recipe, buildings themselves are the ingredients.
06:09And so when I started off, I was just really working with ingredients, but going, you know, if you want
06:13to make a great meal, you really have to have a great recipe and ingredients, you know?
06:18And so that's what started turning me on to, okay, I want to be part of placemaking.
06:22Like, what makes great places?
06:24Yes, it's the buildings and background buildings, but it's really the space between the buildings, the spaces that those buildings
06:30create, not just thinking of things so linearly in terms of just thinking about it as a building, but thinking
06:38of it as more whole, a more complex system.
06:40So that's what really got me into placemaking and realizing I really need to be a developer to be able
06:45to participate in placemaking and the creation of it.
06:49Yeah.
06:51A bit of your backstory, like I said, ours is similar in a lot of ways.
06:55I grew up on the Louisiana coast in Southeast Texas, so not too far from, I mean, I'm an hour
07:00and a half from Houston, very much that, you know, cookie cutter, kind of suburban, you know, sprawl, and no
07:10focus on beauty and the influence that architecture and city planning has on a person.
07:17And my background is a liberal arts background as well.
07:21I have a master's in English and philosophy.
07:23And so from an abstract point of view or an abstract standpoint, I kind of understood the calling and the
07:30need for beauty in a person's life and the search or the revelation of truth through design.
07:39I didn't understand until I, too, went to Europe when I was 21 years old and just bummed around for
07:48a while and made my way to Venice.
07:49And it was a revelation for me as well, seeing how important spaces play a part in just highlighting and
08:04the bettering of the day-to-day for not just an individual, but for a group of people, you know,
08:12for a community.
08:13And I know your work is, it's, I think, whenever we talk, it's like, I think you said it, it's
08:18a fusion of liberal arts with construction and real estate.
08:23And we can talk about that.
08:24I mean, this is kind of my jam.
08:26Like, I'll talk about the abstract stuff all day long, the heady stuff all day long.
08:29But for our audience, like, when you're standing on a job site, like, to ground this in reality, what does
08:36that look like on a day-to-day basis?
08:37Which I know is a wild question because everything that you do, you're probably doing something different and new every
08:43day.
08:44But can you kind of ground this conversation in the day-to-day for our audience?
08:49Yeah, I'll say two things first and then kind of get to something very realistic and tangible.
08:54Well, piggybacking off what you're saying, you know, we talk about the world as the built environment, but really that
09:01is the human habitat.
09:03Like, just like animals have habitats, the built, we as humans get to shape our own habitat.
09:08So the built environment is the human habitat.
09:11Another analogy I like to use is the built environment is the hardware and life is the software.
09:19And the reason this is important is if you have bad hardware, you cannot run good software.
09:25Imagine, you know, the original iPhone from 2007 or something.
09:28You can't run the apps and things that you can today.
09:31And I would argue in the U.S., we largely have bad hardware.
09:35You can't fix the world and all the world's problems by fixing the hardware.
09:38But what I would also say is you can't fix a lot of the problems in the U.S.
09:42without first fixing the hardware because the human habitat and the built environment affects so many things.
09:48It affects how we interact with each other, communities, social cohesion, how much we're outside, what kind of businesses can
09:56thrive.
09:56Is it national franchises or can a small business?
09:59Do you have a local sense of culture and identity?
10:02It affects, obviously, the environment.
10:04There's financial implications of whether cities can actually afford the infrastructure, the levels of sustainability.
10:11Like, it really is across all financial, environmental, and social aspects, the built environment affects us.
10:15And I'll give you two examples.
10:17I grew up in the suburbs of Houston, as I mentioned.
10:21And, well, I kind of grew up in the late 90s where the suburbs was still the ideal of the
10:27suburbs in that we were a long ways from downtown.
10:29We lived in a single-family detached house in a decent, I don't know, half-acre lot or something like
10:33that.
10:33But I had a best friend in the neighborhood, and there was tons of woods around and bayous, and we
10:38would go off on our bikes.
10:39That's how I grew up in junior high and high school is just riding my bike 10, 15 miles away,
10:43all over the place, you know, staying up all night in woods around us.
10:46So it was kind of like the ideal of the suburbs.
10:48The problem with the suburbs, though, is that the more people come, the worse it gets.
10:53And guess what?
10:54More people always come if you're in a growing city.
10:56And you don't want to not be in a growing city because your city will die.
10:59It can't actually afford all the infrastructure and services.
11:02When I came back from college, back to my same neighborhood, all the woods were gone.
11:07There was nothing left.
11:08There was no land left.
11:10It was just suburban sprawl, concrete, strip malls everywhere.
11:15And I remember thinking, if I had grown up like this, I would have been utterly miserable.
11:20I'd have been totally dependent on my mom or my dad to drive me around to every little thing.
11:25I would have had no free range, you know, call it like free range childhood.
11:29And that is what most suburban sprawl is.
11:32Yeah, we're not built for isolation.
11:33And the suburban sprawl leads to more isolation.
11:36I grew up very, very similar environment as you.
11:39And in the neighborhood, there were woods behind my house and there was marshes.
11:44I mean, I had alligators in my backyard.
11:48But the neighborhood kids, we would meet kind of like Lord of the Flies, like in the woods.
11:54You know what I mean?
11:55And play tag.
11:56And so, but that's not like the suburbs of the 90s are not the suburbs of 2026.
12:02So now you have all of these people that are truly crammed together.
12:05They might as well be in an apartment building.
12:07They've got a yard that you can't even fit a lawnmower in.
12:10And there is, there's no connectedness.
12:13There's no community whatsoever.
12:15They're just all stuck in their homes, staring at the computer screens all day.
12:18Yeah.
12:18And you leave out of your garage and drive out of your neighborhood.
12:21There's nothing you can do in your neighborhood.
12:22And contrast this with the neighborhood I live in now in Oklahoma City, which, you know,
12:28people listening might not know what new urbanism is or a T&D, traditional neighborhood design.
12:32But it's really simple because I'll just tell you like the ingredients of it.
12:37But there are, I live in a neighborhood near downtown.
12:40There are houses that sell for $300,000.
12:43There are houses that sell for a million and a half dollars.
12:45All in the same neighborhood.
12:47That is super rare.
12:48You know, most neighborhoods is like the range is like three to $400,000.
12:51If you're in the $700,000 range, you're in a totally different neighborhood across town and all that.
12:55So, you know, there's all sorts of implications there that you can never really stay in the same community.
12:59But there's also small fourplexes and rentals and apartment buildings.
13:03There's live work units with little, you know, 600 square foot shop fronts.
13:07There is, you know, there's multiple little restaurants and coffee shops and a taco shop and a brewery and playground.
13:12And we call it like a town center, like it's a little village center.
13:15People in the neighborhood use it.
13:17People come in and use those things.
13:19And I live on a quiet residential street, which within this neighborhood, you know, and my house is X price
13:23and other people's houses are different prices.
13:26But what this enables, the houses are a little bit closer to the street.
13:29We still have a nice little backyard.
13:31A lot of the houses have garages.
13:32Some of them don't.
13:33But it's really that you have a mix of housing types.
13:35I would call it a more compact neighborhood.
13:38That doesn't mean high density.
13:39People think when you say urban is all Manhattan or Chicago.
13:43It's like, no, I mean, that is one version of that.
13:45But like you can totally have an amazing neighborhood between two and three stories.
13:50Maybe your house are a little bit closer together.
13:52Maybe they're a little closer to the street to really shape space.
13:54We have front porches in all our houses, which does a lot of little things in terms of you get
13:59to wave at people walking by.
14:00And this is like totally real.
14:02This isn't makeup.
14:04I've lived here for the past almost year now.
14:08And I just walk around and say hi to people, have casual conversations.
14:11I know the baristas.
14:12We go over there and eat dinner kind of outside.
14:15And it's just very neighborly.
14:17And what it enables is these more casual relationships, which are absolutely impossible in most of today's U.S. societies.
14:24You have your best friends that you're going to have over for dinner.
14:27You might have your work friends.
14:29And maybe you'll go out somewhere to a happy hour or something occasionally.
14:32But that's it.
14:32There is no opportunity to have casual relationships with people in your neighborhood.
14:36And a lot of people in my neighborhood, I wouldn't want to invite over for dinner.
14:40I don't have time anyway.
14:42But also, by the time you invite someone over for dinner, you're at a completely different relationship level of trust
14:47and maybe sharing values.
14:49Versus when you're able to have casual relationships, you see people in the park, you see people at the coffee
14:54shop, you walk by the same people, you can wave, you can say hi, you can have a short chat
14:58on the sidewalk.
14:59And people talk crap about small talk.
15:01I think small talk is an essential ingredient to human flourishing, to belonging, to community, to cohesion, and to culture.
15:11And I don't mean shallow small talk.
15:14It's like it's life-giving kind of like small talk and interactions.
15:17And the way that we build shapes whether that can happen organically or not.
15:22So when you think or when you look at the typical American subdivision today, what do you think?
15:29I think we probably touched on this.
15:30What do you think that they've gotten the most wrong about how that built environment shapes how we live?
15:37So, one, they are monolithic in terms of housing type.
15:41It's like this neighborhood over here is going to all be three-bedroom houses, you know, between, you know, a
15:45very, very narrow range price point.
15:48And this neighborhood over here maybe is the four-bedroom with, you know, this price point over here.
15:52And the problem that creates is twofold is, one, as you move up in life or change circumstances, you have
15:58kids, your kids move out, you get a raise.
16:00You literally have to pick up where you've been for five, ten years, whatever, and move to an entirely new
16:04neighborhood somewhere else with all new people.
16:06And so you never really create community.
16:08There's that.
16:09Of course, there's implications on your kids.
16:11Also, no one in the neighborhood has an incentive to really take care of their house.
16:15You can't really remodel a house.
16:16If you do an add-on, you're going to lose money because of the comp because none of the other
16:20houses in the neighborhood support it.
16:21So you've kind of, like, capped what your neighborhood can become.
16:24It can't evolve.
16:25The houses are pushed really far back.
16:27The garages are, like, right up front where you just drive in, you know, and then get in there.
16:31Maybe you walk outside to get the mail.
16:33If you're lucky, there are sidewalks.
16:34But guess what?
16:35There's nowhere to walk to.
16:36So maybe you go on a walk to get some, like, fresh air.
16:39But it's not like, let me go walk to get the mail.
16:41Let me go walk to get a coffee.
16:43Let me go walk to the park.
16:44Let me go walk to the pool.
16:45Whatever it is, to a little grocery store.
16:48So, you know, you have to be really motivated to walk.
16:51So they're monolithic.
16:52They lack anything, not only monolithic in housing type, they're monolithic in their use.
16:58They're not mixed use.
16:59It is only single-family detached rentals or, you know, for purchase.
17:04There is no school nearby.
17:06There is no little corner store.
17:07There is no third place where you actually get to have these organic interactions.
17:12The streets are too wide.
17:14They're not interconnected enough.
17:16So people drive as fast as they feel comfortable.
17:19It doesn't really matter the speed limit.
17:20Suburbs have massively wide streets a lot of times and huge turning radiuses, quote, unquote, for fire trucks.
17:26And guess what?
17:27It makes it a place that's not for people.
17:30It's not people first.
17:32We're not against cars.
17:33You know, the neighborhood I have.
17:34We have two cars.
17:35It's about designing for people first and then making room for cars.
17:38The suburbs, we design for cars.
17:41And then technically, people can kind of be there.
17:44Right.
17:44So you kind of evolved from this, you know, building firm to a holistic development company that controls, you know,
17:51you control everything from or oversee everything from acquisition to construction and I believe even kind of management after the
17:57fact.
17:58So where did you decide or what what did you learn?
18:03What lesson did you learn that made you say, like, OK, well, we have to own this whole stack if
18:07we want to do this properly or do this right?
18:11Yeah, it was really learning that the real estate developer controls everything, you know, and so like you can be
18:16an architect, you could be a great GC.
18:18You could even be both design build.
18:19And I do like design build as a workflow because there's a lot of interaction like design and construction should
18:24go together, you know, and in today's society, we have this hyper silo.
18:28It's like architects went to art school over here.
18:31You know, GCs, maybe they went to some kind of business school or didn't go to school at all.
18:34Well, neither knows what the other things real estate developers went to the business school, no finance and banking, and
18:40they have no idea about architecture or engineering or anything like that.
18:43So we have a super siloed industry where no one really knows what the other person does.
18:47So that's just like a problem in general that bothers me.
18:50So taking a more multidisciplinary approach is already on my mind.
18:53But then being the real estate developer really is important because it is your deal.
18:57You are the one raising the money.
18:59You are the one putting it all together.
19:00You are the one at risk.
19:01And a lot of developers, you know, just go hire an architect and GC and you can still build great
19:06things like that.
19:07But you have to find the right architects that understand urban design and 98% do not.
19:12That's what people don't understand.
19:13They'll go look at something and be like, hey, this is cool.
19:15And they'll go hire an architect.
19:16People don't.
19:17Architects do not learn this stuff in school anymore.
19:20They don't even learn urban design.
19:21They don't even study old great cities.
19:22At like 99% of the universities, the architecture schools in this country are very broken.
19:28There are some good ones out there.
19:30You had an episode.
19:31It was one of my favorite episodes where you had the two.
19:36They were architects.
19:37It was like, I forget their title.
19:38It was like cognitive something.
19:39Cognitive and Sussman.
19:40Yeah.
19:41And Kelsey.
19:41From the happy.
19:43And they study the built environment and its effects on people scientifically.
19:48Yeah.
19:49And what blew my mind, because I often like over the past several years, I've felt like the,
19:52I guess the ugliness of modern architecture was a choice that people are choosing to make ugly buildings.
19:59And one of the things that they talked about was the, the downstream effect or the ripple effect of World
20:04War II and these architects coming out of World War II that had PTSD.
20:09And the more that they learned about PTSD and the way that that reshapes your brains, the way that that
20:14makes you view shapes, you know, if you look at a lot of modern architecture, it's like, oh, this was
20:20influenced by people that had PTSD.
20:21And then just the downstream effects.
20:23And, you know, if you're going to live in an environment created by people with PTSD, that's going to obviously
20:29rub off on you on a very negative way.
20:31So this downstream effect, like I said, was really fascinating to me in that episode.
20:35Yeah, I, I love that episode and they do some incredible work and I don't argue for like, when we
20:42talk about modern architecture, traditional architecture, you know, people tend to think of traditional architecture as like, you know, columns,
20:48you know, Greek Corinthian columns and stuff like that.
20:50And of course, that is a traditional architecture, but the way I think about it is traditional architecture is really
20:58a set of values and principles.
21:00And that, of course, is going to evolve.
21:02All traditions were once new.
21:05And so like, I like to call tradition is proven innovation, innovation that actually worked over time.
21:10And so I'm not about like one architecture style and everything should look Georgian or everything, you know, actually not
21:15that interested in doing it myself.
21:18And so when you look at our stuff, what we're designing and building, it's on like the more traditional angle,
21:23but people will ask, well, what style is that?
21:25I'm like, I don't know.
21:26Like, it's not like we're trying to design period architecture.
21:28It's like, I think it looks beautiful.
21:29And we're using these kind of principles of proportion and human scale.
21:34And a lot of that's just intuitive to versus modern architecture.
21:38It's not modern because it was designed in 2026.
21:42It's like almost a lack of style.
21:44Yeah, it's almost like a philosophy that, you know, that produces really crappy, ugly architecture.
21:52A lot of because not all modern architecture is bad.
21:54Some of it might not be my favorite, but I can I still think it's good.
21:58And I know designers who are like human scale minded that are doing more modern stuff with us.
22:04And it's cool.
22:05But that's not what most people are doing.
22:07Yeah, right.
22:08Well, you'd said something I don't know if I heard on a podcast or it was on a LinkedIn post,
22:13but that these walkable places, they become more valuable or most valuable real estate over the long term because demand
22:22increases with the supply as more people and businesses show up to them.
22:27And I'm curious as to how you underwrite that risk, you know, as a return or when you're trying to
22:34figure out a return on a project.
22:36That's such a good question.
22:37So I like to be up front.
22:40I don't want to present myself as someone that knows everything.
22:44Now, I have been running a business for eight years and that's been really hard.
22:48And so I do know some things.
22:49I mean, if you were asking me about Mace Ray, I would give you some very definitive answers, but I
22:54will tell you what our thesis is and how we underwrite and how we're thinking.
23:00I what you just said that the some of the most valuable real estate across the country is the most
23:05walkable places, whether that seaside Florida or, you know, Beacon Hill in Boston.
23:10I mean, you can just look all over in Colorado or Texas.
23:12Sometimes the most valuable real estate is going to be in a walkable area of some kind.
23:18And what you also said is that the more people that come, the better gets.
23:21It's the opposite of the suburbs.
23:22The more people that come, the worse traffic.
23:24Everyone gets mad.
23:26NIMBYism gets worse with good urbanism.
23:29It doesn't just mean, you know, indefinite density and high rise buildings, but it just means that you have more
23:36options, more housing options, more business options.
23:38The place becomes more vibrant.
23:40You want something quieter.
23:41You can move to the perimeter a little bit.
23:44And we've seen that play out over and over again.
23:46And so in Oklahoma City, where we work, we've targeted.
23:49Areas that are already walkable, but obviously in these Midwest cities, there's not like some just insanely walkable place existing.
23:56It's more like some kind of district or near downtown or something that has like some ingredients of walkableness and
24:03it's up and coming.
24:04And we're saying to our investors, hey, we're doing this project here.
24:08We focus on unlevered yield on cost to kind of like underwrite the deal to understand what does this deal
24:14look like the moment it's done.
24:15We don't want to assume appreciation.
24:17We don't want to assume outside of growth.
24:19Like if you have to make all the assumptions to make the deal work at all, that would probably be
24:23a not smart real estate deal.
24:25So we want to make sure like the rents or the sales price or whatever it is can work right
24:30now.
24:30But, you know, we're not really focused on IRR because IRR requires you to sell in three years and five
24:37years to actually hit an IRR and all this kind of stuff.
24:39So we are taking a longer term approach where we're saying we're being smart.
24:43We're being good stewards of money.
24:44We're putting this project here.
24:45And here's why.
24:46And here's why it looks like this.
24:48And we believe in the long term trajectory of this area.
24:52We think it's going to be more valuable in 10 years than it is in two years than it is
24:56in five years and even more valuable in 20 years.
24:58And you can kind of tell if you know a city where the areas are that are that's happening.
25:03I'm sure you can think of areas in your own city that are like that.
25:05We're like, hey, that's kind of a cool place.
25:07Maybe the hipster started there and it's gentrifying or whatever it is.
25:11And taking a long term view and saying we're going to we're going to cash flow.
25:16We'll do tax advantage distributions over time.
25:20If you sell, you immediately trigger a tax event.
25:23You know, you got to go replace that money somewhere.
25:26Maybe you can do it on a 1031.
25:27You're in a hurry versus if you actually invest and hold.
25:31There's a lot of tax advantages to that.
25:33You know, as you paid out debt, as appreciation happens, as rent goes up, you can pull out cash and
25:38have capital events and give it back to your investors completely tax free.
25:41And of course, we always want to maintain somewhat conservative levers like I'm like like to be in the 60
25:46percent or below.
25:47So that way, as downturns happen, you can weather those.
25:50And this is how real estate used to work like this is not some crazy idea I've come up with.
25:55This is how family offices, individuals have worked largely throughout history until, you know, I don't know exactly when it's
26:03like maybe the 70s or 80s were kind of like more like Wall Street thinking financing where most real estate
26:10isn't funded locally or whatever.
26:11It's funded by, you know, big institutions and, you know, which are managing pensions and endowments and maybe private equity.
26:19And so it's just real estate is financed differently now in a lot of ways.
26:23And one of the things we're working on is we're not taking institutional money, really not taking private equity.
26:28We're looking for family offices and high net worth individuals that either live here and want to see, you know,
26:33want to see this happen in their neighborhood or their national, but just believe in the philosophy of what we're
26:38doing and also understand the economics of it and saying, hey, yeah.
26:42And so family offices already think longer term, they're thinking generationally, how do I grow our money, but do it,
26:47you know, not conservatively, but just steward it well so we can pass it down to future generations.
26:51So it takes a different mindset than, oh, my gosh, we got to sell in four years, hit a 21
26:55% IRR so we can, you know, hit our pref and blah, blah, blah, and get stuff out.
26:59You know, you're really betting in a lot of ways at that point.
27:02There's some, you know, there's a lot of statistics that go behind it, but no one knows what cap rates
27:05are going to be in three years.
27:07You're guessing.
27:08And IRR is completely based on that.
27:11You know, this long-term thinking, obviously, it ties directly into design and material choices.
27:16And I was curious.
27:17100%.
27:18What are, what's one or two, either it can be designed or material choices that you make now that most
27:24of the industry would, I don't know, consider overkill or unnecessary, but you still insist on them?
27:30That's such a great point because, yes, incentives matter.
27:32If you're selling in four years, no one cares because by the time the problems show up, you're going to
27:36be long gone.
27:38And our mindset is, you know, we've got to hit, you know, we've got some luxury product.
27:42We've got market rate rent products.
27:43We kind of do both.
27:47And even in just kind of the market rate, I'll talk about a few things is foundation waterproofing.
27:52Super important.
27:52We still like to do when we're not doing our full structural masonry.
27:55I love masonry as a veneer because it's so low maintenance.
27:59You don't have to paint it.
28:01Even hardy board quality materials, that stuff has to be repainted every seven years.
28:04And once you start getting cracking, water is going to get in and create problems.
28:07We liquid flash our sills.
28:09You know, even on our rental products, at least we're trying, we'll see if we can do aluminum clad windows
28:13versus vinyl.
28:14They just have such a longer shelf life.
28:16Now, obviously, that's a premium.
28:18But a few things like that that we really look at, insulation and just kind of air sealing and to
28:25prevent moisture penetration and long-term mold and rot issues.
28:29So just caring about the details.
28:32And, of course, a lot of that comes to waterproofing and things like that.
28:35And just creating something that's going to be beautiful 10 years from now, not just, you know, four years from
28:40now because it's like, I don't know, some style or something.
28:42We want to use timeless materials, timeless principles, and then just basic quality construction as best as we can within
28:49that budget.
28:50And when you're laying out a block, and I know that this, like the environment and the purpose has everything
28:57to do with the answer to this question, you know, where doors go, where windows face, how people move.
29:03What, I mean, but you're solving for human behavior or platforming the best possible experience for the human.
29:10And so what human behaviors are you trying to encourage and discourage or whatever you're when you're planning out these
29:18blocks?
29:19I'll get let's think about one of them working on it.
29:22It's only an acre, 1.1 acres.
29:25We're near kind of like five minutes from the center of downtown.
29:28I mean, it's not like it's these are like one and two story building main street kind of downtown field.
29:31You just broke ground on this, right?
29:33That's Townsend, and that's kind of a luxury one.
29:35And they're very similar.
29:36One's more market rate.
29:37One's kind of a luxury product, and they're similar concept where these townhomes are, they're not just lined up off
29:44a street.
29:45You know, like if you just like go to a street and just put a bunch of townhomes facing the
29:48street, that might not be like a wonderful environment.
29:50If you've got great townhomes on the other side of the street, like maybe it works, but in a lot
29:54of areas as they're evolving and turning over, you know, you can't always control what's right across from you.
30:01So we focus on like inner block development, creating kind of an inner world.
30:05And an acre doesn't sound like a lot, but it actually is when you're doing townhomes and things like this.
30:09And we create all these inner block courtyards.
30:11And when you kind of like enter into our projects, it's still totally beautiful to walk by, totally beautiful from
30:16the street.
30:17But your front door probably isn't off the main street on at least a lot of the houses.
30:21So we create inner courtyards.
30:23We care.
30:23You have to really pay attention to privacy.
30:25You know, that's super important to people.
30:26So window placement, a little thing that we do that I love in the neighborhood we have is we have
30:31central mailboxes, even the neighborhood.
30:33Like it's a, I don't know, four or five minute walk to go get my mail.
30:37Some people maybe think that's a pain or whatever.
30:39I love it because I'll just take my, hey, let's go get the mail.
30:42And you're just out of the house for 10 minutes.
30:44Maybe you linger.
30:44Maybe you stop at the playground.
30:46Maybe you run into someone.
30:47It's just, they do that on purpose.
30:48It's not like, oh, we didn't have money to put a mailbox.
30:50It's like we intentionally put a central mailbox here inside.
30:52So it's just like another place for like little small collisions of, of people.
30:59I think, you know, people talk about amenities, like everything, the amenities arms race in real estate.
31:06You have a dog in the pool.
31:08Yeah, all these things.
31:09And sometimes maybe if you're in a whole big neighborhood, sure, maybe that matters.
31:13But like what I care about is like, let me find a place that is the amenity.
31:18That's the whole point of living in a walkable neighborhood.
31:20So for our Townsend project, for this other project, Townsend, yeah, we've got beautiful gardens outside.
31:24The house are nice.
31:25All that we've thought through things.
31:26By the way, congregated parking is another thing we don't do everywhere, but sometimes.
31:30But it's like the neighborhood, the district you're living in is the amenity.
31:34There's a park over here.
31:35There's a grocery store there.
31:36There's 35 restaurants that you can walk to.
31:39That's the amenity.
31:40I don't need to like try to pretend like there's we've got more amenities than we do to try to
31:46sell something.
31:47It's like create something beautiful, create something timeless, care about little things like privacy and all those things that really
31:53do matter, especially as you start getting closer together and do it in the right place.
31:58And you can have a really incredible experience, just daily life experience.
32:02And that's what I think about.
32:03What is someone's daily life living here?
32:06In the U.S., we tend to think about the big things.
32:09The weekend, when we go do this, the vacation, the holiday, like that's when we're going to have like our
32:13up and fun, like whatever.
32:15But it's like, what if every day could just be a little more pleasant, could just be a little bit
32:19more beautiful, could just be a little bit more social where you see people and hang out and just kind
32:25of like walk outside and you feel like being social and you go over here for a bit and then
32:28you walk home.
32:29Like that's that's an amazing and that's going to be such a better quality of life than occasionally having a
32:35nice vacation or occasionally doing something on a weekend.
32:39I'm curious to know what you've either had to what story you've learned to had to learn to tell or
32:48if you've had to really sell this for me personally.
32:51Like if I had if I had the capital and the land to invest, I'd be begging you to come
32:56work with me.
32:58Right. Like I'm all in on this, obviously, and I and, you know, talking to you and your passion really
33:04radiates for every sentence that you that you speak.
33:08But whenever you're talking to investors is, do you have do you find yourself having to sell this or tell
33:15a narrative or other people that you're working with more?
33:19I don't like like us, like we're already kind of all in on this thing as a philosophy and as
33:25a belief, as a sound and wise investment moving forward in the United States.
33:32I think it is very narrative driven, and I find that most of our investors, not all, but most of
33:39our investors are already aware of the built environment.
33:44They don't work in it. They're probably not developers or architects or whatever.
33:48Like they might be a banker. We've got technologists, you know, and people in Silicon Valley.
33:52But like they're aware of the built environment and just how crappy it is in the U.S.
33:56and want to be a part of the solution and also kind of believe the value proposition that, hey, walkable
34:01neighborhoods end up being the most valuable real estate over time.
34:04They've already know we're going to build something quality, you know, and kind of be honest and all that doesn't
34:10mean things can't go wrong.
34:12So what I found is really being up front with what are we doing and why are we doing it?
34:17And also here's the economics of it.
34:21That's going to weed out a lot of people really quick.
34:24The institutional guys and like the professional real estate investors, the moment they start seeing like narrative and beauty or
34:30something like that, they're out.
34:31Like, I'm not even kidding.
34:33Like they don't.
34:33I went to a workshop once and they're like, if you are raising money from an institutional investor and these
34:38people, you know, want to write $50 million plus checks.
34:40They were like, do not make your slide deck look like it was designed.
34:43Let the text run off.
34:45Do not talk about some other value of beauty or community or what they do not care.
34:51And it will actually be a net negative on you.
34:52And it's like, that's a real shame in the real estate industry.
34:55And I think, you know, this it investing real estate developers, brokers, just all bankers appraisers.
35:03When do you go to a conference of professional real estate architects, even GCs and hear the word beauty, you
35:11know, and like really like quality of life.
35:12It doesn't come up on you out of the village was like, get out of here, hippie.
35:19Right.
35:19So if a few people think I'm crazy, you know, or just kind of like idealistic, that's that's fine.
35:23But it's like, I like to be both idealistic and real realistic.
35:26It's like, here's the vision.
35:27And by the way, if I was just idealistic, we would build all structural makes for it, you know, but
35:32it's like, I understand business.
35:34And like, you can't do just don't let perfect be the enemy of the good.
35:37So it's always just like, do the next best thing you can make sure it's, you know, as smart of
35:41a decision as you can work within constraints and be honest with people.
35:46And I've just found and I'm really kind of newer on the syndicating, you know, past few years.
35:51So I've got a lot of experience to still gain and all that.
35:54And I'm excited about that.
35:55But I am excited about the number of people out there who are passionate about this issue, who may, you
36:01know, be because it's in their own neighborhood or they're just national.
36:04And they're like, that's kind of what's cool about now used to you wouldn't be able to go directly to
36:08a person like a wealthy person would give their money to a money manager and the money manager or read
36:13or whatever would go invest.
36:14And at that point, it's that there's no relationship whatsoever now with some new rule changes with the SEC and
36:21social media and even just software that allows smaller companies to, like, say, manage investors at scale.
36:27You know, 30 investors on one of our deals would be really hard 10 years ago without software and some
36:32AI stuff.
36:33Like, how do you give everyone their K1s every year?
36:34Like, that becomes a whole thing if you don't have software to help you.
36:36But now, because of the regulations, the social media and the software, it's opened it up where I can go
36:43find personal one-on-one relationships with someone and say, hey, here's what we're doing.
36:48Here's what we're doing.
36:48And then they're looking at me.
36:49You know, we have a conversation that is a completely different investment than, hey, let me give my money to
36:54someone and they're going to go invest it.
36:55Like, a completely different mindset once it's relational.
36:59And I think in the U.S., we really need more relational capital.
37:02Like, stop just giving money to, I'm not saying you shouldn't give money to money manager.
37:06But, like, take a little ownership of this stuff and, like, help invest in the world that you want to
37:10see, whether that's in building or something else.
37:13If there was a lender or a banking institution that, you know, came to you and they said, we want
37:19to align or develop products that align with the kind of products, the kind of neighborhoods, excuse me, that you're
37:26trying to build.
37:27What's the first thing that you would change about how a lender thinks about, I don't know, credit boxes and
37:33product designs and even, like, time horizons?
37:37Boy, yeah.
37:37Lenders are – that banking is just so regulated now, especially if you're over a billion dollars bank.
37:44So, we focus on, like, small local banks.
37:48The one that's banking Townsend, I forget how big, but they're under a billion dollars.
37:53And, you know, we're really working with local banks who kind of understand the market.
37:56You can have a personal relationship with.
37:58Your guarantors really matter.
38:00But one of the frustrating things about working with banks is, you know, it is all about comps.
38:06And in some ways, you understand that.
38:08And in some ways, it's like if no one did anything outside – imagine venture capital or technology.
38:14If the only technology companies that were funded were doing something that already worked that someone else was doing making
38:20money.
38:21You know, you just copy and paste what someone else is doing.
38:23You're like, well, that works.
38:24So, I'm going to do this again over here.
38:26You know, you get no innovation.
38:28So, just the way real estate's financed today, there's really – it's really hard to do innovative projects.
38:32In some ways, I understand because you can't, like, hit it out of the park like you can with VC
38:36money where you could, you know, 100 times your money, 1,000 times your money.
38:39You're not going to do that with real estate.
38:41So, you know, it's hard for me to answer exactly, like, with a bank besides focusing on local banks.
38:48You know, focusing on local banks for a project like this that understand the area you're talking about, understand the
38:52vision.
38:52And that takes – we talked to 15 banks, but ended up with someone that was awesome.
38:56They love our project.
38:57They love what we're doing.
38:59They want to be a part of the next one.
39:00You know what I mean?
39:01We still have to go find guarantors for it.
39:03But, yeah, I think relational banking, too.
39:07You don't want to be a deal go wrong and you're with Chase.
39:10There's nothing you can do.
39:11They're just going to, like, screw you, you know?
39:13And a lot of banks will anyway.
39:14But, I mean, to be able to have a relationship and say, hey, we're having this issue.
39:17How can we work it out?
39:19So, we have – this audience is comprised of originators, lending executives, real estate agents, real estate executives.
39:28I think we have a couple of appraisers that actually listen now and again.
39:31Sorry, appraisers, yeah.
39:33There are really good appraisers out there, by the way.
39:35Yeah.
39:35I appreciate.
39:36I have a running joke about the appraisers are most closely aligned with the Unabomber.
39:41Like, it was out in the woods by himself, you know?
39:45Like, if there's anybody that's in this world, like, they're in mortgage, they're in real estate, and they are –
39:51they feel just pulled to this topic, to this world.
39:58Because it's kind of – like, it's its own unique subculture in and of itself.
40:03And they don't want to necessarily, like, quit their job or anything, but they want to explore more.
40:07They want to learn more about this or perhaps in some small way get involved in this.
40:11You feel like a movement.
40:12What's a – like, from your advice or from your experience, what's a realistic first step into this world?
40:18Do you meet people often that are – again, they're pulled to this as a philosophy.
40:22They're pulled to this, like, as a movement.
40:25But they don't – like, you kind of want to get into it, but you don't know what to do,
40:29and you don't know what you can do.
40:32Yes.
40:32And the cool thing is there's lots of ways.
40:35I am not the only one talking about this.
40:39There are entire groups.
40:42And so there's actually – I think if you go to thebuildingculturepodcast.com, I have, like, a resources tab.
40:48And, frankly, I've not updated it in a couple years.
40:50But I even have groups and workshops and other things that you could go to.
40:54It's not, like, you know, something for originators.
40:56But, for example, there's the Congress of the New Urbanism, and they have a yearly gathering.
41:00This one's in Arkansas.
41:01It moves around every year.
41:02It's in May.
41:03You could go to that.
41:04And, of course, it's a lot of architects and urban designers, but you get all kinds of people.
41:08You'll get students.
41:09You'll get real estate developers.
41:10You'll get brokers.
41:11You'll get bankers.
41:11You'll get policymakers there.
41:13So it's like, just go to – you know, check it out.
41:16Look at – ULI is increasingly interested in this, but they're not, like – they're – you could still –
41:22it depends.
41:22The local chapter matters a lot with ULI, and there's that.
41:26There's the INTBAU, and I know I'm just kind of throwing things out there, but, like, once you go to
41:30my website, you can click the links.
41:32International – oh, goodness, I forget what it is.
41:34There's the NTBA, the National Town Builders Association.
41:38There's small – the IncDev Alliance, or Incremental Development Alliance, which is trying to train small developers or even non
41:45-developers how to take a next step.
41:47Say you're a realtor or whatever, and you want to, like, participate.
41:51Well, maybe you remodel a duplex.
41:53Maybe you build a brand-new fourplex, you know, something like that where you can actually become a developer a
41:58lot easier than you think.
42:00I don't mean that's not hard, but, like, if you want to do it, it's actually better to keep a
42:03job and, like, remodel a duplex or build a new fourplex when you've got a job and you can make
42:08some mistakes, but you learn so much.
42:09So I would just say, like, take that step to go to a group, and once you go to a
42:15group, it kind of, like, spreads out from there.
42:16There's so many potentials of things you can get plugged into, YIMBY things, depending on where you are.
42:23But there's so much out there, and there's books and resources about the things I'm talking about to educate yourself.
42:30And so there's a lot out there.
42:31There's still a minority of people, if you could say.
42:33But the kind of cool thing about that is that tribe tends to be very, like, self-supporting, you know,
42:39and, like, welcoming of people, I would say, because it's, like, people are very passionate about it.
42:44Right.
42:45The last question that I'll leave you with is whenever you look down the road 15, 20 years from now,
42:52do you feel like you've – I mean, this is your lane, and you're going to be building these communities
42:58at this scale?
42:59I think it was on your podcast a couple episodes ago.
43:01You were talking to a fellow that was building an entire – he's building a whole city in California, right?
43:06Is that something that's on your radar, big picture down the road?
43:09What do you see for yourself?
43:11I love the people that are going and building whole new cities and neighborhoods, and I would call that, like,
43:15green fill development, you know?
43:16And, like, maybe I would be involved with a project like that at some point, but, like, that's not my
43:21passion.
43:21I'm super supportive of it because, one, it's just more good building.
43:24It helps shift the narrative.
43:26It shows people an example, all these things, so it's all positive.
43:29I really love infill, where you're kind of, like, looking at these places in your own city, in your own
43:34backyard, where you live or near where you live, and saying, like, ah, you know, like, I see this area
43:39coming up, and I want to be placemaking.
43:41So if I were to end up the next 30 years focusing in a few areas around the Oklahoma City
43:45metro and really making them better, not just our own buildings, but paving the way for other great developers to
43:51come in, the right, you know, philosophically-minded developers.
43:56So that's kind of one element of building to, one, make a place better, but not just – like, I
44:01have a very national vision, but I really think that's best accomplished by working locally, where you can create a
44:09compelling alternative,
44:10where you can show people what's possible, where you actually create an incredible place, and you invite someone to Oklahoma
44:15City or downtown, and you say, see what you can do.
44:18You can show policymakers.
44:19You can show developers.
44:20You can show architects.
44:21All these things is showing a compelling example, and the way that I really think of scale is one day
44:27I would like to – I say one day, like, hopefully, you know, in the next 10 years, raise a
44:31fund.
44:32Right now, we're doing SPVs where we're raising money for that project, and it's that project, and there's just investors
44:37in it.
44:37And I'd like to raise an evergreen fund of some kind where you pull money in, and not only for
44:42our own projects, but to start seeding other small, qualified developers around the country.
44:47You could give me $5 billion right now, and I could deploy all of it to people I know just,
44:52like, in their own city because capital is so hard.
44:55So you've got people that are, like, capable developers, or maybe they're capable architects.
44:59Maybe you need to pair someone up with someone or whatever it is or provide some back-end support.
45:02But a lot of it's how do you even raise the money because that's an entirely new, different thing that
45:08most people just don't know how to do.
45:10And so if we could come in and be, like, the main LP for people and basically enable small developers.
45:15So I really see it as a bottom-up kind of revolution.
45:17It's like we're going to focus locally, and then our kind of, like, national plans would be to empower other
45:23developers across the country,
45:24both with resources, money, capital, whatever it is, structuring to help other people do this in their own community.
45:32I can't go build better in Dallas or Houston than someone who knows Dallas and lives there and can meet
45:37the city counselors
45:38and really be part of the community.
45:39And so I want to help them do it.
45:42Right.
45:43Austin, I feel like we – I could talk to you about this for hours.
45:47I feel like we really just barely kind of scratched the surface on a lot of what I wanted to
45:51talk to you about.
45:51So we're going to have to get you on again very, very soon.
45:54But I appreciate you taking the time to share with us and teach me a bit.
45:59Well, thanks, Seb.
46:00And if you ever come up to Oklahoma City, we'll be starting our masonry on this Townsend project in April
46:05by, like, May or June.
46:07It's going to look really freaking cool.
46:09It'll be our first kind of, like, public building like this.
46:11It's all structural masonry that we can experience.
46:14So if you ever come up, I'd be happy to show you around.
46:17Careful what you wish for.
46:18I'll make a – I'll make a – I'm serious.
46:20So –
46:21Me too.
46:21All right.
46:22All right.
46:23All right.
46:31All right.
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