Today, Jackson is chatting with author and developer Joel Anderson. They discuss how to attract young professionals in an era of remote work and how to develop new neighborhoods.
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[00:00:00] Jackson Steger: Hey everyone, it's Jackson. And before we start the episode, I wanted to let you know that Cabin has officially opened coliving at its first neighborhood at Neighborhood Zero outside Austin, Texas, which you've heard about on the show. And if you're interested in long-term coliving at beautiful locations with nature out the front door, high speed internet, actual campfires, and unlimited sauna use, you could sign up today by visiting www.cabin.city. Spots for Neighborhood Zero are extremely limited, but there will be other neighborhoods that we will add soon across both the country and the world and move-in is as early as October 1st. All right, here's the episode.
[00:00:41] Hi everyone, this is Jackson Steger, and you're listening to Season 2 of Campfire. Let's get it.
[00:00:48] This season of Campfire seeks to understand how to build new cities. Each week we are joined by experts and practitioners from different startup cities who will share the stories and lessons that they have learned from experimenting with radical new models of living. Cabin is building its own network city and coliving brand, which you can learn more about by visiting www.creatorcabins.com or by following us @CreatorCabins. You can also visit www.cabin.city.
[00:01:11] After a few months of doing this podcast, I've noticed, as I'm sure you have, the emergence of this sub-industry within real estate and city building, and that is holistic neighborhood development. And I tweeted as much after recording the episode that you're about to hear with today's guest, Joel Anderson. And Joel is a neighborhood builder, which is just an amazing thing to be, something that many of us, including myself at Cabin, aspire towards. Joel is currently leading the development of a project, called West Village, which is a new development district in downtown Florence, Alabama. He also writes the Jambalaya Substack that explores new kinds of urban environments.
[00:01:51] In today's conversation, we discussed how economic development has changed across American towns. Our city's, big and small, now compete with each other directly for people, whereas before, they may have tried to attract corporations and industry rather than the people themselves. Our cities are competing on an international landscape now too. We also discussed two projects that he's helped to steward, including Remote Shoals and West Village.
[00:02:16] All right. Enough of me talking. Let's all listen. Here's the episode.
[00:02:24] Joel Anderson, welcome to Campfire. Excited to have you.
[00:02:27] Joel Anderson: Thanks very much for having me, Jackson. I'm excited to be here.
[00:02:30] Jackson Steger: So, I want to start just talking for a second about you, and you've done a lot of like really awesome things. And just to give the audience a sense of where you're coming from, what is like the common thread that ties your career or professional life together?
[00:02:49] Joel Anderson: Sure. Yeah. So, I'm from a fairly small town in Alabama. The region is about 200,000 people. And growing up, I was just so excited to leave and get out of Florence, that's the name of the city where I live, and go see other places and live somewhere for a while. And I did that and enjoyed the new experiences I got. But as I was away, I started to realize, hey, there's something really special about the community that was in Florence. There's a really strong community, there's a lot of people, everyone knows each other and is really friendly, and I just never found that anywhere else.
[00:03:21] And so, that kind of prompted me to think about maybe I should consider moving back there, and ultimately made that decision when I realized that today most of the career opportunities that at least I wanted to have or was interested in could be accessed through Twitter or through email and things like that, and through Zoom rather than through having to live in a specific city for a specific job or employer or anything like that.
[00:03:43] And I would say that's the common thread that's tied everything together. What’s really fueled all this kind of experiments, both with economic development but also with real estate, is that idea that people can now choose where they want to live and choose how they earn an income completely independent from one another. And that's just an unprecedented change, that it's going to take a long time for everyone to fully realize like the implications of that.
[00:04:09] But I think the coolest thing about it is it means people can think about this rather than being tied to a specific city because their employer happens to be located there, that maybe the first job they got out of college or whatever, they can be very deliberate about, oh, I'm looking for something very specific. I'm looking for a very specific type of community, and I can move to wherever that is.
[00:04:31] And so, that's a really big unlock, and I think the real estate side of it is, there aren't a lot, in my opinion, of really good communities in the United States today, and both from a planning perspective, but also from an affordability perspective. There just aren't that many places that are both pleasant to live in and affordable for the average or the median person. So, that's the thread that's really fueled all this, is people can now practically choose where they want to live or effectively choose where they want to live, and we need to build more communities to support that and to give people what they want.
[00:05:04] Jackson Steger: Yeah. The trends that you're describing are ones that I've very much lived. And let's talk about cities for a second and kind of their function in society, because 50, 70 years ago, if I got a job at Ford Manufacturing, like the reason why I'm in Detroit is because I work for Ford and Detroit itself that is organized around this larger industry of producing cars at the time. But now, like the job I work, the job that many of my friends work, is location-agnostic. You don't even have to be in the U.S. unless maybe you're in like health tech and then like the data server location matters.
[00:05:42] So, as remote work trend and other trends increase, what is the point of cities? Because I think there still is one, but maybe you can help us articulate what that is.
[00:05:56] Joel Anderson: That's a really good question and really interesting to think about because, to your point, cities have always primarily functioned as labor markets, and that's been the driver of practically everything that goes on in them, how they grow, how good their transportation networks are. It's all in service of this greater idea of people come there because they can earn a better living, they can access a better life simply by being in proximity to that city and everything it offers them.
[00:06:22] I don't necessarily think that cities as labor markets idea is really going to change. I think, if anything, remote work just changes I guess kind of the scale at which it operates. So, I think about it, before, there was really no upper bound to agglomeration effects in cities. Like the more people you put together in one city, the more stuff was going on. The idea that some of those particles are going to smash together and produce something interesting.
[00:06:49] What I think remote work kind of unlocks is a new, I don't know the exact right word for it, but almost like, for that process to be a little more deliberate and for those communities to be a lot smaller, which is really conducive for humans to live in a kind of like smaller but close-knit human scale environment, but to be oriented around either a specific purpose or a specific set of shared values rather than simply, hey, let's try to get as many people in this particular metropolitan area as we can and squeeze as much efficiency out of that as we can.
[00:07:24] So, I think, in more concrete terms, what that could look like could be communities that are set up for either with a deliberate mission, okay, all the people here either work in the same industry, or are trying to achieve this one mission and you can make it up and say, it's going to Mars or whatever. But I think that's a really interesting approach because then cities are still doing all the other things that they need to do, provide housing, provide food and energy to their inhabitants, but the reason people are there is a lot different. So, that's one of the interesting threads that I keep trying to pull on, is like, what could a more intentional kind of community look like.
[00:08:02] Jackson Steger: Sure. Yeah. I think also you'll now see that, as more and more cities realize this, the dynamics of how they operate and what they're designed to do will change. So, now I think cities aren't just competing with other neighbors. They're competing against every other city in the U.S. for remote workers, and with that, actually every other city in the world – Estonia, Próspera, who we've had on this show. There's plenty of examples of the international competition for talent, for lack of a better term.
[00:08:31] So, you wrote cities are moving from providing the minimum services necessary to still attract tax revenue to now using all means possible to attract new residents. And I know that you've also led a program on this. So, yeah, what can cities do to attract new residents? And then maybe within that you can introduce Remote Shoals .
[00:08:50] Joel Anderson: Yeah, that's a great question. I think existing cities absolutely have to really evaluate, to use a startup term, how compelling of a value proposition they are to people who don't yet live there, because cities have never had to really think that through before. They've been able to collect tax revenue, again, from those people who are there trying to access the labor market. But once those people are completely untethered from that and completely free to move to any city they feel is right, you naturally see people start to compare cities on the basis of, by far, the most common is cost, because people are being priced out, left and right, of the largest and most expensive.
[00:09:28] There are also other amenities, like how walkable and bikeable, is it pedestrian friendly. Yeah, I saw a funny metric the other day that was on Twitter that was like, how many non-chain restaurants per capita does it have. So, kind of like how good is the food scene is that metric. And you find that college towns score really high, and college towns are actually becoming really popular destinations because they're still quite affordable, and they're used to new residents coming in all the time because they have big universities in them. But they still offer all the things that people want. They have like lots of good restaurants and nightlife and things like that. There’s just not millions and millions of people.
[00:10:02] That's actually the scenario that my city, Florence, is in, is we have not the biggest but the fastest growing university in Alabama's, and it's a very cool and hip place. I feel old just saying that. But it's an attractive place because it almost, not in spite of, but because of the fact it hasn't grown throughout most of the 20th century.
[00:10:21] So, I think we've really, you know, I've taken on that role with some other folks and looked at it and said, okay, what uniquely does our area have to offer that other areas don't? Or what basis can we compete on? And we created a program, called Remote Shoals, to offer a $10,000 relocation incentive for anyone with remote job who wants to relocate here, because for the local economy, it's a no-brainer versus trying to incentivize big industrial manufacturers and that kind of thing.
[00:10:50] It's been really successful, we've had several thousand applications, but most people are like, hey, I heard about your community through the program, but I'm going to move whether or not I get accepted to the program or whatever. Like the $10,000 is pretty inconsequential in the grand scheme of things, but because of the program, I learned about your community. It told the story of and showed what the community is like there, what it's like there. And so, I'm just going to move anyway. So, that's been a pleasant surprise, but I think it points to this bigger idea that people, if given the option, a lot of people, not everyone, but a lot of people are going to look at, hey, if I don't have to be in New York anymore, or San Francisco or Chicago, then I'm going to move somewhere else. I'm going to sell my million-dollar condo and buy a much bigger house for $300,000, and I'm going to pocket the difference and retire early, or whatever. Whatever you want to do. But yeah.
[00:11:38] Jackson Steger: Yeah. I remember, I think it was 2019 where the Amazon HQ2 hunt kind of really accelerated and then concluded. And I remember reflecting two years later, as I was looking into programs like Remote Shoals for myself, how Amazon HQ2 hunt was probably the last time that cities competed for corporations rather than directly for telling itself. Correct me if I'm wrong there, of course. But I’ve looked at a lot of these programs, and they're really cool. There was one, I think it's an Arkansas that offers you 10K and a mountain bike. I'm a big biker, so I thought that was fun. There's a Morgantown, West Virginia one that offers $12,000 in cash plus $2,500 of outdoor recreation credit. And so like with each of these, like I imagine it is a large project to steward, and to convince people is a good idea because it is so different from the ways of the past.
[00:12:35] So, my question for you with Remote Shoals, I have many, but my first one is, how does one build a coalition to make a program like that?
[00:12:44] Joel Anderson: Yeah. So, I have to give all the credit to an existing organization. So, I actually found the idea through Tulsa Remote or Remote Tulsa. They were the ones, the first program I saw that did it, and I was like, hey, I see what they're offering, that makes a lot of sense, why don't we do that? And I had recently joined the board of an organization here that's our regional economic development authority. So, it's a publicly funded organization, but its job is to recruit industry to the area. And it was organized back when all the manufacturing was going overseas, and we lost a lot of that in the area. And the initial reaction to that was, hey, we need to get that back.
[00:13:20] And they've done a lot of that through the years, and sometimes successfully. But now I think when I joined, I looked at it and said, isn't it almost better to incentivize individual remote workers because you don't have the risk that the employer closes overnight or goes bankrupt and you have 600 unemployed people overnight, which has happened before, but everyone is working for a different company, there's a diversified kind of tax base there, you don't have to worry about it.
[00:13:46] So, I pitched the program to the board, but it's been the administration of that organization that has put it all together, two people in particular. But they’ve overseen the whole thing. They do all the interviews for Remote Shoals, all the visits when folks come here to help them find housing, get them plugged into the community, all that. I wish I could take more credit, but I was absolutely, I have not done a lot of the work, I guess, I should say.
[00:14:09] Jackson Steger: Sure. Yeah. So, shoutout to those folks and to the folks in all these programs across the country doing it. Obviously, the intent is to attract new folks to the city. I think even your program has, yeah, you can't be from like this county or maybe even the surrounding counties either. But say you are successful in attracting new cohorts of people to the city, how do you think about retention and keeping them there?
[00:14:33] Joel Anderson: Yeah, that's a really good question, and something like we monitor. So, we've done our first couple cohorts now, and we've seen how many folks stay here. And we considered, if you can be above 50% with a program like this, then that's already a net win. We've seen that with a relatively small sample it's like 85% to 90% in the first two cohorts. But the third one is a lot bigger. So, we'll get some more data there over the first couple years.
[00:14:57] But what we've found is people, and we're very open about this, we understand people likely don't make that decision overnight, especially if they've never visited the community. So, what we’ve assumed most people want to do is to move here for six months or a year and try it out to see what it's like. And if they, at the end of the period, really like it, then most of them go on to purchase a home, some rent. But as an aside, that's the biggest bottleneck by far to this program's growth, and the growth of the community overall is housing. We can talk more about that in a little bit.
[00:15:31] But yeah, retention, we found, mostly comes down to how do folks get plugged into some relevant community, not organization necessarily, but some network in the area that they can relate to and that they enjoy being a part of. But we found as long as folks do that, then this area, there's, you know, really good feedback as far as it's so funny being there because like I'll be in a store and not even the person who owns the store, but just a random person will be like, oh, can I help you find something? It's a culture shock for a lot of people but in a good way, where people are just surprised by how nice strangers are. So, we found a lot of folks found that element like really charming once they're here, and then that makes them want to stay, or at least consider staying.
[00:16:15] Jackson Steger: Yeah. It's almost like the southern charm of Alabama is one of your competitive advantages in the marketplace.
[00:16:22] I'm curious to this regional economic development entity. Could you, for the audience and for me, share what is the intent of economic development? How has it changed other than this remote work piece from the 20th century to the 21st century? And I'm like asking this with the intent of then asking you what the right kind of ownership is, but just to let you get there on your own.
[00:16:46] Joel Anderson: Yeah. As I've learned, economic development is extremely broad and deliberately so because it really depends on the type of community and the type of industries they’re intended on attracting. In a lot of areas, that has a very clear answer or natural answer. We're very close to Huntsville, Alabama, which is a big kind of aerospace and defense community. And so, I don't know details on their economic development kind of group, but I would imagine a lot of it is focused on, okay, how do we build industrial parks and industrial buildings for these different contractors? How do we build our office parks for them, or whatever it is.
[00:17:24] Jackson Steger: Yeah, great example. I saw the same thing in Houston when I was there for a health tech conference. They have basically these two huge industries. The oil and gas industry is propagated by being close to the Gulf. But then also they have the most dense health hospital hub in the country. And I went to an economic development presentation in downtown Houston, and it was all dedicated to those two industries. So, yeah, I appreciate you providing that example, if you wanted to have another for sense of scale?
[00:17:50] Joel Anderson: Yeah, for sure. And I would imagine a lot of places maybe do it for certain types of office space and things like that. Economic development agencies will often build out spec buildings and things like that with the idea that if a company is kind of interested in multiple sites to locate like a manufacturing facility, the easiest one for them is going to be the one that has like a readymade building with plenty of power, and they can move in like in a month and start operating rather than take two or three years to plan and build something. So, that's a lot of the activities, but only if they're in that kind of manufacturing or distribution kind of economic development.
[00:18:26] Jackson Steger: So, with that as context, you've written about something that you call the right kind of ownership. So, what is the right kind of ownership as it relates to our cities?
[00:18:35] Joel Anderson: That's a great question. That's a use case where, I think you made this point maybe before we started recording, where I think crypto can be especially interesting. So, I've thought about this a lot. One idea I've come across is that you find, especially on the aspect of affordability, when it comes to housing, it mostly does not come from the construction cost to build new housing. It comes in some way from land, either the value of land or the restrictions on what you can build on certain pieces of land. And this is a well laid out argument. But my kind of position is that if you want to solve issues with housing, it does not make a lot of sense to be thinking about construction, because construction, there might be some innovations there, and I could be completely wrong about this, but the bulk of the cost of construction is simply in the materials it takes to build it, and it's proven very difficult for any company to achieve any kind of significant cost saving.
[00:19:31] And when you look at big cities, real estate in San Francisco can be easily 10 times as expensive as it is here, but it's not 10 times as expensive to hire the people, to build the building, and to get the materials. It's mostly the land value. That's the question there. So, part of me thinks that there's an answer here in the way we treat land ownership, whereas today, you know, you have private individuals, you subdivide land, and give land to private or sell land to private individuals. You may they trade it back and forth amongst themselves and build things on it.
[00:20:02] But we found that kind of causes a lot of problems, and this is a lot of the thinking of Henry George, where he tried to trace the boom and bus cycles in the economy generally to land speculation specifically, and says that until you fix the way land is valued and treated and owned, you're going to get really expensive cities where they continue to get more expensive, wages can't keep up, and people are priced out of those markets.
[00:20:27] But I think, in short, I guess my opinion is that the right kind of ownership of cities is one where the land value is held in common by the residents who live in that city. And you absolutely need private use of land, which you can accomplish through a land lease system. But it's important that the value of the land is held in common by all residents as a requirement to live there. That way, everyone kind of benefits from the value they contribute by living there, by going about their day there, which is significant value, but instead of it being appropriated by a couple private landowners, it's shared among all the people who live there.
[00:21:07] Jackson Steger: Yeah. Thanks for that. Maybe could you talk about why that's helpful in the context of what I believe you've coined, the tragedy of the privates, like how is the shared ownership of a city able to help overcome things like nimbyism?
[00:21:24] Joel Anderson: Yeah, for sure. I love that you said that out loud because when I was writing that, I was like, this is just such a silly name, but I've got to use it for that reason. Obviously very tongue in cheek. There's a lot of discussion right now about some of America's housing crisis, we need to build more housing. Well, why can't we build more housing? Well, zoning and permitting laws are really restrictive. It's really hard to get approval for new construction. And that's 100% true. And then on top of that, there's a lot of red tape and bureaucracy, but then you get to the point where you need the approval of all of the people living in an area, and that's when the real trouble starts.
[00:21:55] So, this is the famous like nimby argument of people just usually say, oh, I'm in favor of growth and new development and that kind of thing, but yeah, not in my backyard, and as long as it's not near me and doesn't affect me in any way. And there's a lot of different, you can make different arguments for why people behave that way, but they do almost in every scenario. And when you think about why that is, it's not immediately obvious, but it is, it does make sense. So, like most people own a single piece of land, they have virtually their entire net worth tied up in this single, extremely illiquid, obviously immovable asset, usually with a really big mortgage attached to it. And the thing about debt is that you really don't want anything to change for good or for bad. You just, you want to smush like the entire distribution as much to the middle as you can. You just don't want anything weird happening, anything to change really.
[00:22:48] So, that kind of makes sense to me, again, but the impulse is like pretty understandable. And that is to me in a way kind of the tragedy of private ownership, especially pernicious in cities where land values are so high, and again, you have to finance it with debt just to be able to afford housing there. So, you have these really big mortgages on essentially high land values.
[00:23:08] The way I think you could solve that – so then, you know, people's kind of first reaction is like, hey, I'm going to oppose any new development because I don't want anything changing or going wrong for me. But when you think about that, the way that I think could flip that dynamic on its head is if you do have a system where a land is held in common by all residents of a city because then, instead of feeling the negative effects of new construction, you know, you feel all the negative effects, but you don't really feel any of the positive effects in the current system. You do get a bigger tax base in your area, it's maybe more culture and more job opportunities and things like that, but none of it benefits you directly.
[00:23:46] Whereas the new construction next to your house you see every day and it's really annoying, and you're worried about how it is going to affect your property value and all that. If you're in a situation where, you know, land value is shared or the land is held in common by residents, then that dynamic completely flips on its head because all of a sudden there's a direct financial incentive for every resident of the city to build as much new housing as they can generate demand for. And so, I guess it does away with that whole issue because they're not trying to guard their tiny little piece of earth from anything changing, but they're incentivized because they own a claim on the value of the land as a whole, rather than their tiny, again, tiny piece of land.
[00:24:25] So, that to me is I think an interesting argument because I think all the discussions about policy somewhat missed the point because policy emerges as a result of the people who live in a place. It's not this thing that they just cast down from on high. It's a result of people living there and making these choices based on the way land ownership is treated today.
[00:24:49] So anyway, I think ultimately trying to say change policy, I don't think it'll work frankly. I just, I don't think that's the solution. It might work a little bit in a couple cases, but overall that's not really going to change anything, because those people who, again, have those same incentives, the incentives haven't changed, they’re going to push back and try to keep it the way it is.
[00:25:10] Jackson Steger: And so, everything you're saying is very aligned with how we think at Cabin. We want to incentivize people that are part of Cabin to own the collective network, to all share in the upside of the growth of our network of neighborhoods that we have across the world. And what you're describing is this positive sum game of, hey, let's all benefit when the neighborhood collectively improves. And then you don't have people who don't want their tiny pieces of the neighborhood to improve because there's this supply side way that actually like affects the price of their asset negatively when it’s their one precious thing. So, really appreciate that explanation. And I want to frame you as this, yeah, this neighborhood developer, which is I think in line with Culdesac, who we've had on, and other projects that we've talked to.
[00:25:54] So, I want to ask you questions about how one develops a neighborhood from the ground up, but maybe let's do that in the context of West Village. What is West Village and what are you working on in your home in Florence?
[00:26:05] Joel Anderson: Yeah. So, the catalyst for this project came from two directions at once. One, there was this site where I live, it’s actually in the neighborhood where my wife, Sophie, and I live, and it was formerly a hospital that was demolished and us included, but everyone in the neighborhood was like, hey, what's going to go there? And being super interested in urban design and things like that, I was like, hey, I can see a perfect thing here or what would make a good addition to the neighborhood. And to the city as a whole, there was that. But then also that was at the same time I was developing this line of thinking of, hey, millions of people in the U.S. now can choose where they want to live separately from what they do to earn a living. So, if you can offer, again, a compelling value proposition in the form of a neighborhood that's just frankly better than a lot of what else is in the United States, then I think you could do pretty well.
[00:26:54] So, that informed the design of the site in a big way. So, West Village is like a new neighborhood center for this kind of, it's hard to show without a map, but like for the part of Florence, just west of downtown. So, it's an area that has a lot of existing housing already but simply has no center for any of that activity to congregate in. We've designed the site to be that center. It has all the things that, in my opinion, a great neighborhood should have. It's very walkable and bikeable, it's at a human or a pedestrian-friendly scale yet has enough density to provide vitality and a lot of activity. It's proximate to everything. It's within the existing kind of urban fabric of the downtown Florence area. So, it's very close to the historic part of downtown. It's very close to the university, which just crossed 10,000 students. It's approximate to everything, but it also contains most of your daily needs, maybe not within that neighborhood, but definitely within a 15-minute walk or a 5-minute bike ride to anywhere downtown.
[00:27:54] Jackson Steger: Yeah. Speaking my language, listeners will know that I only have a bike and no other way to get around.
[00:28:00] So, you talked about a little bit like what are the table stakes of this new kind of neighborhood that is walkable, it's beautiful, your daily needs are met nearby, but you also talked about worshiping the small business owners. Can you talk about why the small business owner is so important? And maybe also share in the context of what is the larger state of American retail?
[00:28:21] Joel Anderson: Yeah, for sure. So, first of all, the reason I've come to believe that, and it has evolved over time, is because once you learn about what kind of makes for a healthy neighborhood, you very quickly realize, and once you've visited a lot of different, some healthy, some unhealthy, neighborhoods, you start to realize very quickly that the thing that makes a neighborhood great are the businesses and the daily kind of commercial activity that takes place there. Residents are important and necessary, but on their own, just having people living in housing is obviously not enough. That's the suburbs or that's the suburban apartment complex. You need this ingredient of commercial activity. And for 80 years in the U.S., that commercial development, most people think of that as being the Walmarts and the big and really massive suburban retail centers and things like that. But there hasn't been a lot of development focused exclusively on small business owners, which I think is really strange because the barriers to starting a small business today are extremely low, and more and more people are quitting their jobs and being, hey, I would rather own my own business, or I would rather at least do something else.
[00:29:26] So, that kind of catalyzed that. And then you find out very quickly too that the traditional model of retail shopping center development, obviously you can't really use that because it's based on everyone driving. So, you have to think about and look at works of Christopher Alexander, and people like that, who very clearly explain what you need to do to create really active, exciting vital areas, which is you want smaller units, smaller commercial units. You want many of them. So, you want to have a diversity of small businesses, just like you want diversity in an ecosystem. You don't want one or two species there. You want preferably 10 or 15 or 20, the more the better. And you want those things to all be mutually dependent, and maybe not dependent, but reinforcing. You want the people coming for one business type also to walk over to the cafe or restaurant and that kind of thing.
[00:30:13] And it's funny because, you know, this was the original idea of how every neighborhood was built, was you could just walk or bike to most daily needs. And then both Walmart and the mall kind of took that idea and made it auto dependent. But, ultimately, I'm of the belief, I don't think that's really the future we want to build, and I think we want to build more of not replicating the past but trying to copy the things the past did get right, which in my opinion is having relatively compact neighborhoods with plenty of residents, but also plenty of neighborhoods serving small businesses.
[00:30:44] And the reason we worship them is because, to most developers, it's like, hey, the commercial tenant is just made to generate my return. I don't care if it's a bank, I don't care if it's a Chipotle. Just get in there and pay me rent, I really don't care. I care as long as you don't go bankrupt, which means they typically don't like small businesses.
[00:31:01] But that just to me doesn't make any sense because if you acknowledge that's the heart of the neighborhood, what gives the neighborhood life, then the developers should be working hard to make things good for the small business, not the other way around. So, that's where that conclusion came from. And I touched on your second question about what is the state of American retail today?
[00:31:22] Jackson Steger: Well, you have a great stat. Europe has 2.5 square feet of retail space per capita. The U.S. has 23.5 square feet of retail space per capita, and that's almost an entire order of magnitude, 10x difference. I'm curious, like as a neighborhood developer, what are the tangible steps you're taking to counteract that?
[00:31:44] Joel Anderson: Yeah. So, retail, I don't think there's any doubt about it, has been dramatically overbuilt. Okay. Maybe not overbuilt is the right word, but there is certainly, like you said, an order of magnitude more in the United States than there is in Europe. So, it's interesting to look at what kind of causes that, but I think most of the reason is simply we've had almost a century now, or maybe 80 years, 70 or 80 years, of extremely, you know, our country practically grew, most of its kind of maturing phase was during the era of the car. And so, all the retail that was built was with that kind of mode of life in mind. And it's a good question and something I mold over a lot of, but should, so should you really be building more retail? And I think ironically the answer is yes. You're not building the same type of retail.
[00:32:30] In that statistical report, it's true. They're both on paper, the same thing. But if you're a person on the ground living within a 5-minute walk or whatever, or bike ride, with the neighborhood center, that neighborhood center feels very different to you than a Walmart. It's not like those two things are equivalent. So, I do believe if you. And I've seen this firsthand here in Florence, we have three other kind of neighborhood centers that are all doing very well and have very robust kind of small business retail spaces. The only reason we have that is because those were built a long time ago and are now being redeveloped and used again. But yeah, I do see those as like kind of two different classes of retail or commercial use.
[00:33:010] Jackson Steger: Given that you still think new retail should be built, what should we do with all of the old retail? Like with the different shops that are going out of business or like just have been replaced by with e-commerce, what should we do with the spaces that we're going to have in strip mall America?
[00:33:28] Joel Anderson: Yeah, that's an awesome question. And it's already happened. I guess in a lot of ways it already has happened because our town, and a lot of others, has what is practically an abandoned mall. And I think malls were the first thing to go, the first type of really dedicated suburban retail to go. But in city after city, malls are just either abandoned or basically they have two tenants left in them. I mean it's just, it's not good.
[00:33:51] What to do with them is a totally other question. They need to be redeveloped somehow because it's typically a very valuable land, and a lot of them are of the scale, that they are large enough to be their own town, or certainly a large neighborhood, but I don't think there's any one size fits all approach there. There is a good project in Huntsville here that I think is a former mall, but they've developed it into a, it's more of a traditional kind of suburban redevelopment into top golf, and they have a couple big suburban stores in it, but that's largely because Huntsville is a giant suburb anyway, so they have to do that. But there are good models across the country, especially of turning some of them into housing, but it's not easy because you really have to do it on a case-by-case basis.
[00:34:34] Jackson Steger: Sure, yeah. There's only so many old Abercrombie & Fitch stores that could become trampoline malls.
[00:34:40] Joel Anderson: Yeah.
[00:34:41] Jackson Steger: Given that there is going to be all kinds of property and retail that could be rehabbed into these cool neighborhoods, like Culdesac or like West Village, let's just get like super tactical into the steps one neighborhood developer, like yourself, has to go through in order for that project to be possible. So, what's first? Is it zoning? Is it funding? What's the sequencing that you've had to go through? And then maybe what would you have done differently?
[00:35:08] Joel Anderson: Yeah, for sure. So, I'll walk through the process on this project just because it's concrete and easy and that kind of thing. Because a lot of developers, they'll start with some kind of like template or idea in their head and they'll look, they’ll do a site search. They'll look for the right place to do that thing. But in our case, we have a site already. So, we immediately set to work, thinking through what does the site need and call for. And there's a lot of nitty gritty stuff you do in due diligence, like you do topographic surveys and geotechnical surveys, you see what the soil quality is, topo has to locate all the utility lines and easements and that kind of thing, the boundaries of the property and adjoining properties, and that kind of thing. Environmental surveys are all, that's all part of the kind of initial due diligence before you decide if you're going to do it.
[00:35:53] But once you've decided that, you have to put together a team. A lot of people have folks they work with project to project, the same people. Some people do it on a deal-by-deal basis. It really depends. But the really big ones are the architect or site planner/architect, they can be different or they can be the same firm. As you probably know, and I've talked to Phil about, we use Optico’s design, and they are a great. They do both. They do site planning and architecture, and they're just really nice and friendly and fun to work with and stuff. But then you have all your lawyers, your civil engineer, your geotechnical engineer, you need accountants, you need, God, there's so much, your pre-construction kind of advisor who might be your general contractor, then you have to find your general contractor. But there's lots of like consultants and things that you can bring in throughout the process or have to bring in throughout the process. Landscape architect, that's a big one.
[00:36:42] But once you do that, and you have to do all that simultaneously, and you need to initially run some rough numbers to know, hey, what kind of density can the site support, what does that mean for the overall unit count, and does that make for a profitable project. And then, yeah, how much money am I going to have to raise or how much equity am I going to have to raise, how much debt will I need, do I have an existing banking relationship, do I want to work with them, that kind of thing. And you want to have a pretty good sense of that before you go into any detail and really start spending money on site planning and architecture and stuff because sometimes, if you point about zoning, sometimes this isn't so much the case where I am, but I understand it, especially the case in California, if it's zoned for up to 8 units an acre or whatever, then you're not going to get that change. And so, you can quit right there basically. So, that part really depends on the jurisdiction, and in that case, you'd have to talk to a land use attorney. In California, I think it's just hard to do anything about that or it’s a long process, but yeah, you'd want to get definitely advice there.
[00:37:37] Basically being a good developer is just about how the quality of the people you work with. That's really all. And it's like how good they are, how much you enjoy working with them, if you want to enjoy your work, I find that pretty important, and how much you trust them.
[00:37:50] Jackson Steger: Yeah. I would say that you're probably right in that working with people that you like is a good idea. I certainly feel that way at Cabin.
[00:37:57] Joel Anderson: Yeah, that was something my dad always said, is if you're not having fun, then what are you doing? Why are you spending your time on it? I very strongly agree with that.
[00:38:04] Jackson Steger: Yeah. Amen. What is the entity funding at The West Village and does that entity or collection of entities, whatever it is, intend to see a profit? Or is there this other intention to give ownership to residents eventually? How do you think about that?
[00:38:19] Joel Anderson: I’m glad you brought that up because I believe one really important part of a healthy neighborhood that I forgot to mention earlier is you not only want a diversity of housing types. If they don't need a lot of floor space, then give them a studio apartment option. They cost like basically very little in rent, all the way up to two-bedroom apartments. But then a healthy neighborhood also has other housing types of different sizes for people in different phases of life. And I'll infer that by saying the worst type of neighborhood is, or I guess maybe the least healthy, in my opinion, is the one that is like all exactly the same type of home. It's exactly, it's the massive suburban field with they're all three bedrooms, two baths, 1,700 square feet or somewhere thereabout. So, there's builders who will use three floor plans, and they'll rotate them and try to make it feel diverse or whatever, but that really just ends up creating like, almost like it could be better just actually stamping them out because then you're at least being honest. When you try to do the diversity with three floor plans, then you end up with an uncanny valley thing, where you can tell it's not right, but you maybe can't put your finger on it, and it just makes you feel really uncomfortable just being there. Anyway, off that soapbox.
[00:39:25] But about the ownership, that's one thing I see a lot, is a lot of developers don't have the flexibility to offer different house, either offer different housing types or offer different types of housing, and by that, I mean like for sale versus for rent, whereas that is typically you find a really important part of a healthy neighborhood. Typically, it's not good to be all rental or all sold, and a lot of developers like to do that because it's just easy. Again, they have a template and they’re working with an institutional investor and it's, hey, we're on a timeline, we're on a schedule, we’ve got to earn this 8% unlevered return, or whatever it is, so we can make our LPs happy.
[00:39:59] Their goals are different is the point. So, they do a very different style of development. But we were very intentional, and we'll have I think about 60 units that will be sold. And those are all a blend of, we have some very small footprint, like single family that will start their homes essentially, which are very uncommonly built. And we have some duplexes which are really popular with a lot of situations, if you have an aging parent or if you want to live next to a friend, or if you just want to rent it out as a short-term rental or a monthly rental and be a small-time property owner. And then we have some more like traditional single family that kind of help tie the new neighborhood into the old because we are building on an infill site. So, there's some context that we're mindful of as well.
[00:40:39] Jackson Steger: Gotcha. And then just to be clear, the entity doing the developing, is this an organization that is coalition built or is this your personal company? Just help me understand that piece.
[00:40:50] Joel Anderson: Oh yeah, it's just me.
[00:40:52] Jackson Steger: Cool. Gotcha. Awesome. Yeah. I guess one last fun comment only because you've brought up biking and I'm a big biker. You wrote how electric cars are a painkiller, not a treatment, and I just, I think that's a really astute observation that you have. You say the U.S. doesn't have a gas car problem, it has a car problem, that every car on the road today became electric, it might improve one type of emissions, I bet they would, but it will not fix the fundamental issue with way most cities in our countries are laid out. So, we need new ways of thinking about building and development. I think that's a great framing for this whole conversation that we've just had. And so, you've traded your electric car for an e-bike. Just thoughts on how that experience has been. And then also what is the doorman's fallacy and how does that relate?
[00:41:35] Joel Anderson: Yeah. Yeah, that post was inspired for a while. I've commuted by bike to the office every day because we live a mile, maybe a mile and a half away. But it's really pleasant here. There's not a lot of traffic. It's really nice to ride your bike every day. And my wife is Dutch, by the way. So, that's how I got into the whole bike riding thing, I visited the Netherlands, and I was like, wow, everybody rides their bike here all the time, and I was like, how do they do this? And then going down that rabbit hole and you find, hey, it's very intentional choices they made, it's not just an accident. That kind of got me thinking about how do you bring more of that here, how do you make those choices here.
[00:42:10] Yeah. So, first of all, I started commuting with my bike, and then we had two cars, like most American households with two people, two or more people. And then one day we were talking. We were like, hey, the car has, my car had, like I hadn't driven it, I think, in two months or something. And I was kind of like, this is just ridiculous. Why do I have this thing here? We should just sell it. And then I'm also like investing. So, I was like, what if we sell it and invest all the money, and then what will that mean for us at retirement, because you're buying a thousand dollars electric bike to replace it. So, obviously it's a net win on that front, but what does it mean like for you long term?
[00:42:46] But yeah, anyway, I finally, I guess, yeah, convinced her. We agreed we'd try it out, and it's been amazing because we were like, oh, we’re trying to think of what all could go wrong, and we're like, what if you have a meeting at this end of town and I have a meeting at that end of town. And I was like, okay, one of us takes an Uber, that's super easy to do, and it costs like 10 bucks. Or like, what if it's raining really hard and we both have meetings because that's also uncommon that we both have meetings out of the house at the exact same time, what if it happened. And that one I was like I'll just take one for the team. I'll get a rain jacket and I'll make sure I'll be the one biking in the rain. Don't worry about it.
[00:43:18] So, that was how that played out. And it's been six months now or so since we actually sold the car, but I've been commuting with my bike for a year and I love, it’s such an easy part of my daily routine. I heard someone made this comment the other day, but you connect to the world really differently when you're on a bike or on foot versus when you're on a car. And I know more people in my neighborhood now. I see all kinds of people downtown when I ride my bike. And it's just, overall, it is just 10 out of 10 experience, I would do again if given the chance.
[00:43:46] So, I have to give credit. I just read about this in Rory Sutherland's book, Alchemy, which is a really fantastic book. I listened to an audiobook because he narrates it himself, and I find it super entertaining to listen to. But anyway, he talks about this idea how if he replaced the nice residential building, like in New York, a lot of them have doormen. And over the years, a lot of clever landlords had said, hey, we're going to fire the doorman who we have to pay $40,000 a year in salary and we're going to spend $20,000 on an automatic door opener, then we save that money every year as long as we don't have the doorman. And Rory's point is that it maybe not a mistake to make that decision, but it's not as simple as it first appears, which is, on the surface, the role of the doorman is to open the door. But that's not the only thing he's doing. That's not the only function he performs. It's the only one he performs if you’re only reasoning through an economic lens that you can identify any value, because you can take that one specific function and automate it and you've solved your problem, you saved the money, and that kind of thing. But his point is like, that's not all the doorman is there for. He's there to greet people in the building, to know them on a first name basis, to receive packages, keep the people in the building feel safe. And he was like, it wouldn't surprise me if the value he adds to the building overall is higher than the money you would save if you put an automatic door opener in, but that's not at all obvious on the surface.
[00:45:06] So, I think it's just, it's a good warning about being overly rational in economic calculation, and that to me is a lot of what it feels like what the United States did during the 20th century with automotive infrastructure, is, hey, we're going to create much faster roads. Oh, in theory, you know, in a car you can travel an average of 45 miles an hour. That's, like you said, an order of magnitude better than traveling at three or four miles an hour on foot. But that's not the only thing you're changing.
[00:45:34] Transportation speed is not the one true thing that matters in the world. And there's a great line from Jeff Speck’s book, Walkable City, where he says, basically over the 20th century, we made places that are very easy to get to and from, but not worth ever arriving at. There's no there when you get there. You drive through the suburbs and there's just, there's nothing there. And there's a lot of entire cities like this, especially in the Southwest and parts of Florida and stuff where there was no development before the car. It's just, you go there, but where is it? Where is the center? Where is that…so anyway.
[00:46:06] Although it might be more efficient along one dimension, that's not the only consideration that should be made. And obviously that's an oversimplification. There were a lot of reasons that the United States did the things it did. So, I'm not trying to say that's some guy was, let's just make the nice pretty straight roads everywhere. Obviously, it was more complicated than that. But it's a good lesson just to think about when making those kinds of decision.
[00:46:26] Jackson Steger: Here's to building more places worth arriving at. Joel Anderson, thank you so much for coming on the show. Where can people follow you? We'll plug the Jambalaya Substack in the opening, but any call to action, place you want to send listeners?
[00:46:40] Joel Anderson: Oh yeah, thanks. So, I'm on Twitter and I try to be somewhat active on there, and it’s just @Joel___Anderson (with three underscores) because I got tired of having the numbers after my name. So, it looks a little weird, but that's it. But there's no call to action right now. We're probably about a month away from having a real public announcement and having a website live and that kind of thing for West Village. We're finally at the point in the process we're ready to do that. And honestly, I would love just to, even if folks, obviously if anyone wants to move there, I would love to talk to them. But even if they're not, I would just love to get thoughts and feedback and ideas on the concept and on the neighborhood because this is the first kind of big project of this kind for us, but it certainly will not be the last. I'm hell bent on building more places that people actually want to live in rather than feel stuck living in.
[00:47:27] Jackson Steger: All right, Joel, thanks so much for coming on the show. Can't wait to chat again soon.