Sustainable real estate in urban regeneration with Jonny Friedman
urban regeneration / south africa / city opportunity fund / jonny friedman / healthy buildings / esg / sustainable real estate / social equity / green & healthy places podcast
Sustainable real estate south africa
A conversation with Jonny Friedman, Executive Chairman of the newly launched City Opportunity Fund.
In the 1980s and ‘90s Jonny invested in over 100 buildings in the Brighton area in the UK and another 20 buildings in Hoxton and Shoreditch in London, playing an instrumental role in the urban regeneration of both places.
Today he leads a team of over 120 people under the Urban Lime developments name focused primarily on Cape Town and Durban in South Africa. He has over R2 billion invested in real estate in Cape Town and Durban so far.
We discuss topics such as activations in the public realm, tactical urbanism, apartheid’s influence on urban geography in downtown areas in South Africa, what he calls ‘catalytic developments’ and the incremental gains from creating momentum in placemaking strategies, public-private partnerships in changing the identity of entire urban districts, as well as ESG and sustainability in the South African context.
conversation highlights:
Where I've seen successful urban regeneration projects work extremely well is when you take a deep understanding of that original space and the people within it and use that as your starting point to build upon. That is going to be completely unique in every single situation - no two separate buildings, areas, districts or neighborhoods are the same.
So you can in fact be catalysts for change by making small changes - tactical urbanism is a lot about that type of strategy where you make a series of minor changes here and there. These quickly add up to a lot more than the sum of their parts and make districts quite exciting.
Apartheid was all about creating safe spaces by massive walls, dividing up areas physically in terms of distance, but also in terms of the way in which they were built.
Matt Morley: Johnny, one of the concepts that really leaps out from the work you've done in the past has been around this idea of creating democratic spaces that have been re-energized and given new relevance within a city context, how do you see the key drivers of success for you?
Jonny Friedman
Hi, Matt. Look, I think the first thing to say is that a very important part of this is thinking deeply and widely about who's already there, what's there already, in terms of community, neighborhood, and the various parties living / working there, and also what the history is, what the culture is, and how to really take what is there and build upon that. How to make that relevant and better and repurposed in such a way that it works for the people that are there ready, so that it starts to develop interest and excitement for others to come and join in.
Creating momentum in real estate placemaking strategies
This then creates a sort of momentum around itself. But it's not a sense of gentrification or total change, where you from top down impose change upon a particular area or district or city. It's really about working with what's unique and special about that already. How to work with that as your starting point. And I think in a way, that's a sort of bottom up approach, as opposed to a top down approach.
Where I've seen successful urban regeneration projects work extremely well is when you take a deep understanding of that original space and the people within it and use that as your starting point to build upon. That is going to be completely unique in every single situation - no two separate buildings, areas, districts or neighborhoods are the same.
There's not a cut and paste approach that works, what you do in one city won't work in another city, what you do in one area where work in another area, you have to understand the uniqueness of it in, in every sense culturally, historically, and really get underneath it. And when one's able to do that, then it is organic.
It's not something again, which is imposed, I'm not really into master planning, in the sense of really planning out every single building every single aspect of a particular area, what I like to do is set frameworks and have a direction of travel, that allow it to happen organically.
Matt Morley
In the past, you've done both buying up smaller units, for example, at the top end of Bree Street in Cape Town, but you've also done far larger buildings, in terms of how what you've just described relates to piecing individual elements together versus going in with with one large building that can almost be an individual catalyst. How do you see the opportunities and challenges there in terms of scale? Like how does that connect with that concept of democratizing spaces within the city?
The role of scale in district-level placemaking
Jonny Friedman
Scale is important. But it's not the only thing that counts. Look, where it gets very exciting is when you can work at scale, when you can see whole areas, and you're buying buildings, you're looking very carefully at the relationship between the buildings, both private space and public space, and you start integrating that together.
The ‘democratization’ that you're talking about in terms of what I bought, is the opening up of the space so that it's usable and available and doesn't have barriers to entry and people can appreciate and use it at different levels. I think the best spaces are like that, where they they can be appreciated in multiple different ways and barriers to entry are cut down. There's an opening up for us between the private and the public.
Where you're using individual buildings as a catalyst for change for whole areas. I think that can happen. And we've had successful examples of that happening. But I think it needs to be in the context of thinking about spaces more generally, and how the public spaces again interact with that building. And again, making it appropriate.
Tactical urbanism in real estate development
So you can in fact be catalysts for change by making small changes - tactical urbanism is a lot about that type of strategy where you make a series of minor changes here and there. These quickly add up to a lot more than the sum of their parts and make districts quite exciting.
A lot of mistakes are in town planning space and made by the idea that activations and development needs to be very substantial to make change but a lot of substantial and meaningful changes can be made in small ways, clever ways, ways that don't involve huge budgets.
Individual buildings, as long as there is a sense of where the area is, where it's come from, who's there, who are the stakeholders, and it's done in an appropriate way, I think it can make a big impact, it's like you’re putting a huge dollop of confidence when area, you're putting something that really sparks up an area, it can become a catalyst, to attract other, different and interesting things.
Activation of the public realm
Matt Morley
I think perhaps the term that we've been skirting around is activation of the public realm, isn't it about creating valuable, useful, accessible public spaces that everyone can use. You did that in the UK, then at some point, you really doubled down on developing in South Africa, particularly in Cape Town and Durban. So you have two perspectives, in a way the UK and later in your career, with SA in terms of public realm, and also more generally, in terms of where the priorities lie locally. What are the particularities of SA when you're looking at urban regeneration projects?
Urban regeneration in the UK vs South Africa
Jonny Friedman
Well, I think they are, of course, because they're, you know, the histories of the of the two countries are so, so very different. And the architecture and the geo geographical layout of South Africa, has been so influenced by its unique history.
Going back a couple of 100 years, but, you know, in particular, of course, the the history around apartheid and separation of areas by you know, identifying records and the, the geographical implications of apartheid were huge. And, of course, also the fear that was surrounding apartheid, both during it and after it. And the way in which that influenced architecture and and town planning and urban design was massive.
Apartheid was all about creating safe spaces by massive walls, dividing up areas physically in terms of distance, but also in terms of the way in which they were built.
Creating office parks, which you had massive security around and residential, gated communities in suburban areas, again, where the walls were the key issue.
So it was a tremendous amount about, about keeping people out and not using public spaces. So a lot about what we've done it at urban life and our philosophies about breaking those walls down about opening up private spaces with public spaces, about inviting people in and creating spaces which which are saved by the fact they're used, that they're, they're vibrant, they're exciting and, and breaking down those perceptions around security around cities being fearful space with the street as a fearful space, and breaking those types of perceptions down and opening up the city as an exciting vibrant and, and, as you say, democratic space.
So huge differences between between two were of course, you know living in London and growing up in London and walking the streets and being part of that city and the excitement of being able to enjoy public spaces. Then in South Africa, it's very much you know, you get in your car, you go from point A to point B you know exactly where you're heading and you you park your car at point B, you do whatever you're doing at point B and then you go back to back in your car and back to point A and very often that those points are home and shopping center or home and office.
Developing destinations in real estate development
Where we found we can really make a huge difference in this country is about turning that around and turning areas into destinations in themselves. So we're not just going to this restaurant or this office and parking, we're actually saying we're going to this area and we're going to walk I mean these things for obviously for Londoners you know that's it's almost obvious but here in South Africa there are so few high streets where there's so few public urban spaces to enjoy and walk and see and be, you know, and have the surprise of what's around the corner and have multiple things to, to look at and interact with and do all in sort of one area, something which has not really happened outside of very controlled areas, like shopping center environments.
So that's where we try to make a difference and try to introduce South Africans. So the excitement about what's you know, urban centers can feel like what what the street feels like, how does the coffee shop and enjoy the hustle bustle of city life, which has been so missing, both during the apartheid era and and posted around the particular history of South Africa.
So I think there's a lot of opportunity here, just kind of letting people experience what we're so used to in Europe, we take it for granted that you can walk around the city and enjoy the streets and enjoy street life and be constantly surprised by what might be available or what the only shops opened up or coffee shops available.
What are all of those types of things, which we sort of take almost for granted, is not available here, or was it was only just becoming available in multiple different ways or so even where they've done good sort of urban regeneration projects, what South African developers at a lockdown usually done is they've created sort of like a little oasis, and they put a wall around it.
That what they've called urban regeneration, because that mindset, the mentality is all about safety, security, and keeping restricting people coming into spaces. In fact, the opposite of what you're talking about in terms of democratization of spaces, it's almost even though the urban regeneration ideas and spaces, they don't get quite get this concept of opening them up and making them exciting and, and spaces in their own right, where people can move freely between public and private spaces and between different private spaces. So it's actually very exciting developing here, because a you can do it at scale. And scale is important as previously discussed. But I think it's almost like introducing a new way of living, and excitement around what the city equals and what it can be.
Democratized urban spaces for social equity
And that's what I found very, very fulfilling. And when people find it, they love it. And in fact, particularly young people, I think, you know, creating great urban democratized type of spaces, is extremely, it's something that young people almost kind of need. And if you don't provide it within a city, they'll go elsewhere. And they'll go to cities, which do provide it.
So it's been very exciting working here, because we've been able to do it at scale. And we've also been able to sort of bring a different mindset to it, and started to introduce people to what in Europe, we sort of take almost for granted that what what has been very much prohibited here, either, you know, actually, or in terms of perception being people can see the CD spaces too, as too dangerous somehow.
And I feel like over the last 20 years, I've been working here, we've moved the mindset on that in a lot of areas. You mentioned a few, but we've worked in probably 25 Different areas across the country. And all of the areas One of the things that they have in common is that they're about opening up, they're about connecting public private spaces, they're about the feeling of being able to be in a space and be able to engage with excitement of what city life, let's say like at its best can be.
Matt Morley
And to achieve that, are you finding free consider say that, say a district level or a cluster based strategy where in a sense, you start to spread out and create, as you mentioned, sort of a street level neighborhood. That's really something quite innovative for sa but perhaps something we might take almost for granted in in Europe, does that require greater public private collaboration? Or is it something that a private developers such as urban lime can pretty much roll out themselves how much how much partnership is involved in that with the city planning?
Public - private partnerships in real estate development
Jonny Friedman
The more partnership there is, the better. Where the schemes work best is where the public and private work hand in hand together. And almost by their nature, they have to have a good symbiotic relationship with the with the cities and with the owners of the public spaces.
So what can also happen is that as a private developer, you can sort of be the catalyst for that as well. So even if you haven't got a willing pond to start with, you can start showing them how the public and private realm can start interact.
And what's interesting is that we've had such you know, public of engagements, where, when the cities and when neighborhoods and when you know, the the stakeholders start to see change, we found that they got more and more engaged, and that it goes beyond talking actually into reality. And when they start to see it, there's a momentum builds.
In fact, momentum in what we do is extremely important, getting things done, and doing stuff, we were talking earlier about small interventions. Small interventions are hugely important because they develop confidence, they develop confidence, and then people see are starting to see change, it's time to feel change.
So actually just making smaller small interventions, where people are starting to experience the sort of things that we were talking about earlier, the excitement of city life, the interact with other people, the best of what cities and districts neighborhoods can be, once they start to feel that, then it has it starts to grow momentum itself.
And then of course, others start coming in as well. It's not just due to i, we never look to be the the only private. In fact, if we were the only people developing privately, we've kind of not hit, we've missed the target in a way.
Becoming a catalyst for change via real estate
But we want to be as a catalyst for change, once people start seeing it happening, it gets to a sort of a tipping point, where you know, we could actually do nothing more and come back in five years time, and the area would be very substantially better than it is now. Because it's come to a sort of a tipping point where all the owners of the buildings start seeing potential, they want to spend money on maintenance, they want to think about the right 10s Instead of just, you know, any tenant, and it becomes a positive becomes a positive catalytic spiral.
And very much the municipalities and the local councils and other stakeholders get on board that enthusiasm, if you create it, once I see one of our roles is as kind of momentum builders. So it's a it's yes, you can do catalytic developments. But also, you can do a lot of small interventions here and there. And out of that comes a momentum, and it starts developing a life of itself. And then all stakeholders very much obviously key stakeholders are the municipalities, but other stakeholders as well get involved and projects take on a life of their own.
City Opportunity Fund - ESG real estate
Matt Morley
Fascinating and in a way that leads into then, where you look to be changing gear, in a sense with the launch of the city Opportunity Fund, upcoming in June of this year, clearly different scale, but still, in a way, tapping into that same level of detailed insight and the knowledge that you have that have particularly in a city, Cape Town and Durban. So what is your what's the aim there? What's the big goal with that new fund that looks to be? Yeah, in a sense, taking urban regeneration to another level in SA right.
Jonny Friedman
The City Opportunity Fund is actually taking the skill sets and our experience that we've developed, you know, in the three cities that we've worked in on on two continents. And really distilling that and I would say one does still that one comes down to the real skills that we have is how do we take areas or buildings that have become inappropriate in terms of us have gone out of fashion that no longer had relevance in some way. And we've adapted them in an organic way which is, which doesn't feel like it's a top down approach, which is a bottom up approach, which we talked about which is organic, which is incremental, but at the same time radically transforms areas and buildings and at the moment, those that skill set couldn't be more relevant because in the postcode environment, you know, through changes in technology, but which have now been enhanced heavily by the experience we've all been through over the last couple of years.
The impact of COVID on mixed-use real estate development
It's left a huge amount of real estate, not only in the in the city centres, but throughout the whole of South Africa. And in fact, globally. It's made its left a huge amount of commercial real estate, in some ways irrelevant under purpose or needs to be repurposed reinvented resort through for this post COVID modern world, people essentially are not working from offices in the way that they that they used to.
And people are essentially not buying from shops in the way that they used to. And whilst this this trend has been in place for quite a while in terms of flexible working, and in terms of online retail, these are trends which are already well established before COVID. They've been hugely accelerated by COVID. And you know the way in which we work and the way in which we which we shop and the way in which we live and the way in which we socialize and the way in which we think about our homes.
And the way we we think of ourselves and each other has radically transformed. And what it's done is it's had a tremendous impact on the way in which we use buildings, the way which we think about buildings. The how we're going to be using buildings going forward, there's a massive shift, which needs to be taken to account from there, because there's a huge blend up between the virtual world and the real world. And how does one integrate the virtual experience with the bricks and mortar experience?
So it's in that slot in the slot in this lot of how does one repurpose rethink reinvent real estate, given these massive social technology, massive changes that are that have been happening and are happening and are accelerating at a tremendous pace? And how it's impacting really every aspect of our lives?
And where does real estate fit into that? And what is and how does one adapt these types of buildings, headquarters, office buildings, for instance, shopping centers, high streets, business, travel has totally changed.
Almost every aspect of the commercial, real estate and leisure businesses have changed very fundamentally. And it's the reinvention and the rethinking of how does one adapt those two buildings which are, which are relevant, and that's what the city Opportunity Fund has at the very heart of it.
And the proposition is, is that we come up with a set of sort of broad solutions in multiple different categories, as to how we can in, in general terms deal with some of these fundamental issues that have that have changed, and a lot of real estate will never be the same again, because things are fundamentally changed.
So the city Opportunity Fund is a fund where we're injecting close to 2 billion rands of our own assets into the fund. But we're also working with major partners who are going to be injecting real estate, which fits into that category, which are buildings which, or groups of buildings, which need rethinking, repurposing, reinventing which which are no longer relevant they currently are. And, of course, the solutions. To what to that problem? How does one deal with real estate in the postcode environment, it's not cookie cutter,
there's not a cut and paste solution to it. And again, the solutions will have to be crafted on a bespoke basis. And and that is where that is where our sweet spot is. And that that is what the city Opportunity Fund is about is it comes out of a team that's got 30 years experience in, in looking at areas that have gone out of fashion that at buildings, which no longer fit for purpose, and being able to adapt them and change them and get underneath the pot with underneath the issue, finding the most relevant and most appropriate solution for a particular area building district or city. And it's that which will be encapsulated within the city Opportunity Fund.
Student housing and affordable housing
Matt Morley
Within that context, then the student housing and affordable housing sector, so what is the opportunity there? So if you've got a 1960s building that's really sort of past its its sell by date, but yet has potential? How can a student housing concept or how would you adapt the student housing concept to fit into that space? Because there's there's surely opportunities there and that sector, right?
Jonny Friedman
Well, there are a lot of buildings that fit into that category in the industry. Some of them are more appropriate for retrofit into student social housing and others. And of course, it depends upon exactly where the demand is. But in both the sectors that you that you brought up there they they are, you know that one of the solutions, in effect, or student housing and social housing are two of the solutions that we are looking very carefully at in terms of a much wider and much wider issue.
But they certainly in South Africa are areas where there's a large amount of demand, there's government backing for him. And there's a real opportunity in retrofitting old office buildings, certain old office buildings into spaces of that nature. And again, we would look at a project like that, like we look at any and we think, Well, what is the very best, the very, very best in asset class here?
How can we do this in the very best way? And we would work off a wish list and look and think well, what is it what does the ultimate student student housing look like? And we would literally run through and think about that. And the same with social housing and create best in best in class types of buildings and areas.
Again, I like in that space linking buildings, I like thinking about the public spaces. I like thinking about how it feels to be not only in public space, but how it feels to be within the building. I think a lot of the issues around the way in which buildings are used healthy spaces, creating green spaces, spaces, which are, which are feel good to be and we almost was everything we we do we look at we take a sort of a living room approach.
How does it How does it feel to be in the space? We think about you know, if we're actually in that space? How does it feel to be in there feel like, like a vibrant, healthy democratic space, something's inviting, we would look at student housing exactly that way as, as in a in our class. So best in class is critical.
Defining a concept for mixed-use real estate development
How does it feel how to build it interact? How to public speak, how does the public space work? What we don't like is huge concourses whose huge concrete concourse is, which are kind of almost made for architects rather than for people, you know, they kind of make the building look good, and make the building look grand or whatever. But we're interested in is how does it feel? How does it feel to be in the space?
How do we get a best best in class feeling? What's most appropriate? What's there? How do we think about modern technology? And how do we integrate that? How do we use the changes in the way in which we're living so radically?
And how do we integrate those into these buildings to make them make not only relevant now, but also relevant in 10 years time? So we thinking very hard about that the interaction between technology and real estate, the interaction between the virtual world and real world? And, and going back to basic principles? How does it feel? How does it feel to be in a space? What do you need?
So what are the needs of the people who inhabit that spaces? It's this type of thinking, we that I think sort of sets us apart. And within the city Opportunity Fund, it's we're going to be saved, we're going to be having those types of conversations and those that type of thinking, going through everything we do.
So whether it's a high street, or whether it's a social housing project, or whether it's a student city we're looking at, or whether we're looking at a neighborhood scheme, or whether we're looking at how does one reinvent the office space, the modern world what's required? Now? The thinking is starts there, who's there to start with?
How do we build on that? What's the most efficient, most exciting way to use the building? How does it feel to be in it? How do we interact with the technologies that are available? How do we blend the experience between the version the real, it's, it's this is the approach we're sort of taking, it's not a traditional development. And you can give you probably, I think, throughout the chat we've had we've not actually used the word developer, we don't really consider ourselves developers sort of a more around placemaking, more around reinvention, almost inventors or re inventors of space, not developers of space.
So it's a different it's a different approach. It's a different way of thinking. And it's very people centered used word democratization, so very people centered, how does it feel? Very critical. How does it feel? What's the use? How does it interact with, with the with everything else we do? How does it fit in?
Real estate ESG - Environmental, Social, Governance
Matt Morley
You touched on a couple of things there the idea of there being a component of health and well being and also to some extent, considering green themes and sustainability. We've spoken a lot about the social side. So the big hot topic at the moment clearly is ESG real estate.
So environmental, social, and governance within the sort of the macro perspective that you have from your position today. Do you see sa as being perhaps ahead or behind in any of those three is ESG real estate having that kind of impact on the real estate development market? In sa that it is having in the US and in Europe? Or do you think there's a little lag between the two in that sense, and therefore perhaps an opportunity for the fund to do something different?
Jonny Friedman
Definitely, definitely an opportunity. Look in IT environment where there's a tremendous amount of poverty in South Africa, there's a huge unemployment rate, especially in youth unemployment rate is at epidemic proportions. There's so in that environment in that context, yes, in various different areas that you're talking about has been somewhat left behind. And, and it mustn't be and we're where we look at buildings.
Health and wellness in real estate
We would take the best in class we would be looking at following best standards and looking at the way they're doing it abroad trying wherever possible to emulate it. And integrating wellness and healthy building type strategies, both in terms of the internal inside the buildings, but also externally and how to bring the two together, set right up at our, you know, high up on our list of priorities. And I think wellness generally, is a key growth area.
Wellness, in terms of the way in which we use buildings to wellness is kind of wellness as a sort of general concept is integrated into almost all of our projects in one form or another. Obviously, it's come out of COVID COVID has given us all a time of reflection around these issues, what's important to us wellness in the in the more general form as has been right up there with the conversation of the last couple of years.
How and the importance of taking care of oneself living in health environments, and so on and so forth is is critical for for South Africa as it is for for all other countries. Where it's not left behind is obviously around in terms of poverty and social needs, which are which really different level to many first world countries.
Matt Morley
It's incredibly valuable insight that you share with us today. Thank you for your time. I really appreciate it. If people want to learn more about urban life and about the new fund that you're launching this summer how can they connect and follow along?
Jonny Friedman
Well, they can go onto our website, the urban lime, urban lime.co dot set A or on to the city Opportunity Fund website, which is also up so contact us or or get in touch. Anyway, it's been a pleasure to talk to you about.
https://www.cityopportunity.co.za/