ImpactPHL Perspectives, Volume 12: Building Equitable Communities Through Patient Impact Capital and Thoughtful Real Estate Development
About ImpactPHL Perspectives:
If you are curious about pursuing financial returns while influencing the positive growth of Greater Philadelphia and the world at large, then welcome to the conversation. ImpactPHL Perspectives is a multi-part series which explores the many facets of the impact economy in Greater Philadelphia from the perspectives of its doers, movers, shakers, and agents of change. Each volume is written directly by a leader in this space, to discuss best practices and share lessons learned, while challenging our assumptions about the returns - financial and societal - on engagement in the impact economy. For more of ImpactPHL Perspectives, check out the ImpactPHL Blog.
By Brian Murray, CEO and Founder of Shift Capital
54.46% in poverty
209 deaths from overdoses in 2017
These are the sobering statistics of Harrowgate, a Kensington neighborhood north of Lehigh Avenue, that is only 15 minutes north of Center City on the Market-Frankford subway line, and three subway stops away from Fishtown – “the hottest neighborhood” in the United States according to Forbes magazine.
Today, this struggling (and unfairly maligned) neighborhood is at the center of the most critical challenges of our society - the opioid crisis, poverty, and gentrification. Despite these challenges, we believe this community represents our city’s future and a blueprint for the kind of society we want to create.
These challenges drive our mission at Shift Capital and why we call Harrowgate and Kensington home. By aligning impact capital with community development, we are seeking to be positive, private sector partners for our most underserved communities. As a long-term committed stakeholder, we are finding new ways to rethink how real estate development happens in communities – one that uses practical real estate tools to lay the groundwork for sustainable communities, stronger cities and a better, more equitable society.
These Kensington neighborhoods are a proving ground for solutions that will shape the community and set a national standard.
"BY ALIGNING IMPACT CAPITAL WITH COMMUNITY DEVELOPMENT, WE ARE SEEKING TO BE POSITIVE, PRIVATE SECTOR PARTNERS FOR OUR MOST UNDERSERVED COMMUNITIES."
The Neglected Community
Philadelphia is a tale of two cities.
We are the 6th largest city in the U.S. with a solid economic base anchored by the Education and Healthcare industries, yet we continue to witness the highest deep poverty rate of any large city in the nation. Cranes from new construction dot the skyline, underlining a booming real estate economy, benefiting many who have been best positioned to invest. On the other hand, wage stagnation, the opioid crisis, and housing challenges have left most of the city unable to participate in our growing economy.
Kensington represents this duality. Moreover, Lehigh Avenue has become a line of demarcation.
Throughout most of the 20th century, the neighborhood stood as the economic backbone of the city, once dubbed as the textile “Workshop of the World.“ The community has always and continues to pride itself on being an immigrant-led, workforce housing hub. However, in recent years, the neighborhood, especially north of Lehigh Avenue, has fallen prey to pockets of crime, neglect, and unhealthy living conditions. Every day, families and children walk around overdose victims, pass by dark, vacant storefronts on their way to school and their homes.
Today, south of Lehigh Ave, new construction, new restaurants, and an influx of new renters have been driving out blight and re-energizing old business corridors. Housing prices are creeping above $500k for newly constructed row homes, and the rental market has increased by more than 10% in the last 12 months.
North of Lehigh Ave, average home sales were as low as $22k as recently as 2015. An official account of the homeless population is more than 700 people along the Kensington Ave corridor (up from 300 just six months ago), where neglected city services, open drug sales, and storefront vacancies are the norm.
"PHILADELPHIA IS POSITIONED UNIQUELY FROM A REAL ESTATE PERSPECTIVE….PROVIDING INCREDIBLE OPPORTUNITIES FOR WALKABLE COMMUNITIES TO THRIVE."
Kensington’s Opportunity Is Philadelphia’s Opportunity
Over the last 20 years, we have seen neighborhood after neighborhood, city after city, deny the possibility that urbanization will benefit these communities only to look back after it has happened and wonder what could have been.
Could we have preserved affordability or increased opportunities for the current community?
Change often comes with safer and stronger neighborhoods. However, at what cost? How can we do better?
Can affordability and culture be preserved as our cities change?
Cities like Washington D.C., Boston, San Francisco, and Seattle have missed opportunities to think long-term about equitable communities. Today, these cities are struggling with greatly diminished affordability options, after failing to realize many of their neighborhoods were at risk until it was too late.
We believe this is the time for Philadelphia to shine.
Philadelphia is positioned uniquely from a real estate perspective. It is one of the last Northeastern cities to find its urban legs. As a result, it has an existing transit infrastructure in place (dated but functional) providing incredible opportunities for walkable communities to thrive. Up and down its two major subway lines, highly dense, walkable neighborhoods already exist that cater to the working class and new urban dwellers.
Also, impact real estate innovators are leading the way in sustainable solutions for our neighborhoods serving as models for other cities. From nationally recognized Community Development Finance Institutions (CDFIs) – like Reinvestment Fund and Philadelphia Industrial Development Corporation (PIDC) – to visionary developers tackling complex projects in areas of need – like Mosaic Development Partners, an African-American owned real estate firm in North Philadelphia, or Philly Office Retail, who is rethinking how to empower others to capture opportunity through their Jumpstart Germantown program.
"WE BELIEVE IN AN INCLUSIVE APPROACH TO CHANGE. WE FIND AN ACTIVE SOCIAL AND ECONOMIC INTERVENTION WITH INTENTIONAL URBAN PLANNING WILL BRING THE CHANGE WE SEEK TO MAKE AND CREATE THE OPPORTUNITIES OUR COMMUNITIES DESERVE."
Our Thinking and Approach: Patient Capital
We recognize that traditional RE/community development tools – like Low Income Housing Tax Credits and New Market Tax Credits (and soon the newly designated Opportunity Zones) – might be successful programs from a distance. However, these programs often fail to ensure the long-term, committed support underserved communities require.
Our approach is different.
For the work in our neighborhoods, we believe in an inclusive approach to change. We find an active social and economic intervention with intentional urban planning will bring the change we seek to make and create the opportunities our communities deserve. A collective impact model centered around an underserved zip code or census tract, working closely with government, the arts community and the nonprofit sectors to attract like-minded partners, operators, and tenants.
To date, we have invested over $60mm into the communities above Lehigh Avenue along Kensington Avenue (Harrowgate/Juniata) and at the intersection of Broad Street & Erie Avenue (Hunting Park) with plans to invest an additional $70mm over the next several years. We have created 500+ temporary and full-time jobs focusing on hiring and supporting local, minority and women-led businesses. Also, the small businesses that now occupy our properties have added around 350 employment opportunities into a neighborhood with a jobless rate of over 27.56%. On the residential side, our commitment to quality housing is unmatched in the community. With 100% of our rents at 70% of Area Median Income, we are delivering high-quality housing as we seek to be a stabilizing force in the local rental market.
Over time we plan to be the steward of the impact we create by moving our assets into a mission-oriented real estate investment trust that will work to:
"TOGETHER WITH OUR COMMUNITY AND PARTNERS, WE ARE ON A PATH TO CHANGE LIVES, CREATE LONG-TERM HEALTHY COMMUNITIES, AND HELP CATALYZE SHARED PROSPERITY."
Preserve the affordability of residential properties,
Maintain workforce opportunities in the neighborhood
Continue to support economic development inclusively
At Shift Capital, the status quo is unacceptable. If the choices of our society remain:
1) Sit back and allow poverty to exist and worsen or
2) Enable gentrification to steamroll communities and create a less economically diverse city.
3) Help Philadelphia become the leader in a new path forward for development, one that seeks to minimize displacement, increase opportunity for the community, and develop tools to create mixed-income communities that remain affordable in the long-term.
Then we choose option 3.
We have a long road ahead. Together with our community and partners, we are on a path to change lives, create long-term healthy communities, and help catalyze shared prosperity.
Brian Murray is the CEO and Founder of Shift Capital, a Certified B-Corp impact real estate group headquartered in the Kensington neighborhood and focused on aligning capital and philanthropy with underserved communities. Prior to Shift Capital, Brian was an entrepreneur and an MBA graduate of Yale School of Management interested in the intersection of the public, private and nonprofit sectors.