Re-purposing Half Empty Buildings: Adaptive Leadership Case Study

Daniel Berkowitz
Original Article Here

The American Jewish community is in a real estate crisis.

We are a wandering people.  Rarely by choice and more often by circumstance or force, Jews moved from one place to another; sometimes across seas and other times across town, but we were always in perpetual motion.  My undergraduate thesis followed the Jewish community of Detroit during the unrest of the '60s, from mile road to mile road, as it moved into the suburbs.  Across the cities of America, you will find Hebrew on the lintels of libraries, urban leagues, banks and other buildings that have been re-purposed over the years, but still dot the urban core: shadows from the past.

Yet for the last 30 years, the American Jewish community has enjoyed an unprecedented run of stability.  No Cossacks, no changing borders and no crime wave or civil unrest dislodged us.  So, we settled in and began to build. The one room shtiebels of the early 20th century became the expansive shuls of the suburbs. The Jewish aid societies and landsmanschaften that operated out of store fronts evolved into JCCs, Federations and campuses - often with the scale of a small college or university.  And, for a time, it worked -- until three successive trends assaulted the status quo:

1. As our communities assimilated and shrunk, we were not able to reduce the scale of our infrastructure accordingly.  Buildings are not liquid or easy to change. 

2. The internet and social media changed the entire notion of “space and place."  Who needs to drive to a large building when we can Skype or collaborate over Google Docs?  Buildings are becoming less relevant.

3. In general, the neighborhoods central to Jewish life are often the more expensive areas of our cities.  Millennials who are eager to settle down likely can’t afford to do so in close proximity to the established Jewish community.  Buildings can be expensive.

The easy solution to the problem is simply to sell community assets, merge institutions and downsize.  As a real estate developer revitalizing the Rust Belt neighborhoods of Pittsburgh, I would suggest a different approach.  Innovative ideas changing the face of the private-sector real estate market are applicable to the Jewish community real estate dilemma, too:

Equity Ownership

Recent changes in federal regulations make it easy for communities to pool resources and invest in local real estate.  Federations and communal institutions should consider these investments for their endowments and funds.  Selling vacant or under-utilized communal properties to developers, in return for equity in future developments, can create long-term cash flow.  These transactions can contain covenants stipulating that the developer include affordable housing in the mix, solving two problems at once.

Flex Space

Neighborhoods were once dominated by longtime establishments in static locations.  Now, neighborhoods are incorporating flexible “third spaces.”  For example, a section of a main commercial street might be used for food truck parking at lunch time, overflow vehicle parking in the evenings and event and market space at various times in the spring and summer.  Jewish communal buildings should be viewed in a similar way.  Over-sized sanctuaries, unused classrooms and offices could easily serve as work space during the week and convert to holy spaces for Shabbat and chagim when needed.  Tiny house and shared office space environments offer a wealth of technologies to make this easy and affordable.  Zoning laws and building codes would typically not interfere with dual uses like this either.

Creative Financing

Recent upgrades to SEC regulations allow for crowdfunded real estate deals.  It’s just like Kickstarter, but for real estate instead of startups.  Institutions with mortgages could raise philanthropic communal funds with little to no return to finance real estate.  Federations and other institutions could even float bonds to finance resizing and development projects.

Disposing of and right-sizing real estate is a long-term process.  Now is the time to get ahead of the situation, before we face the ugly reality of fire sales.  Smart decisions now can keep us from wandering for at least another 30 years.

Daniel is interested in continuing this conversation.  Feel free to comment below or contact him at Daniel@AtlasDevelopment.com

Daniel Berkowitz, a Wexner Heritage alum (Pittsburgh 07), is a serial entrepreneur with over 15 years’ experience bringing ideas to life and motivating teams to success. Currently, as Principal of Atlas Development Co., Daniel is working to change the brick and mortar face of Pittsburgh, transforming sad and aging Rust Belt properties into happy, modern and relevant spaces for the young, vibrant and entrepreneurial Pittsburgh of today.  When he’s not working or spending time with his wife Tammy or daughter Stella, Daniel is an active member of a number of schuls in Squirrel Hill, and  most recently served on the board of the Pittsburgh Jewish Chronicle.  Daniel is currently an advisor to the Tzohar Seminary for Chassidus and the Arts here in Pittsburgh. He can be reached at daniel@atlasdevelopment.co.

Michael Sorg