He seeks to build community and turn a profit
By Jenifer B. McKim, Globe Staff | June 7, 2009
Kirk Sykes, president of the Boston-based Urban Strategy America Fund, strives to create affordable housing and economic development with a solid return to investors. His projects include Olmsted Green, the fund’s first investment and mixed-use development in Mattapan that was built from the ground up. The development started selling condominiums this fall. Sykes’s efforts are being tested during a recession that is pushing buyers and investors to the sidelines. He recently spoke with Globe reporter Jenifer B. McKim.
Considering the difficult economic times, do you wish you got into a different business?
No. For me this is the culmination of a life’s objective of transforming communities. I’m in my third career. I was an architect, I was a developer, and now I’m a fund manager. I have tried improving communities with a pencil, a brick, and a dollar. The dollar was working pretty well until we hit the current financial crisis. What it takes to be rewarding as a life’s vocation is to be able to make that difference. We are continuing to do that although it’s gotten more challenging.
When debt is less available and not available at all, it is hard to do a project or if you are doing a project, you have to put more equity into it to get a lesser return. You get to do less projects. The guidelines are much more stringent. Each project becomes a project to get it done.
What is the triple bottom line you talk about?
Make money, make a difference, and make it green, or the three “Ps” – people, planet, and profit.
Is that harder to do now?
This notion of responsible property investing, which is blending financial returns with sustainable and economic development is becoming mainstream. You have seen it with green building. Five years ago, green building was a notion that was somewhat esoteric. Now through legislation, greater social consciousness, and investment, sustainability has become more mainstream.
Do you have any new plans?
We are in the process of executing projects that are in process and awaiting opportunities that will come as the economy continues to recover.
To attract buyers to Olmsted Green, you have dropped prices twice, this time by 20 percent. How many units have you sold, and do you expect another price decrease?
This price decrease just happened, and we’ve seen a significant increase in interest over the last couple of weeks. I don’t anticipate another price drop. With the combination of the price reduction, the federal first-time home buyer tax credit, and substantially lower interest rates, we’ve started to see some yield. We have two units under agreement of 19.
What’s happening with Parcel 24, the mixed-used development slated for Chinatown?
Right now it’s on hold. Parcel 24 is permitted and entitled and waiting for the market and buyers to return.
When will the market return?
It goes up and down every few weeks. In general, I think we are starting to see the bottom. The question is how long is the flat part. I also think it’s regional. I think we are closer to recovery in our own market and in the mid-Atlantic.
What kind of fires do you put out on a day-to-day basis?
The world of real estate is challenged and requires new creativity. It’s about being smarter, learning new ways to finance projects, finding out how to stimulate these public-private partnerships.
Tighter lending regulations have added another challenge to condominium developments. How will this affect new developments in Boston?
The trend is toward urban living and conserving on energy. People are downsizing their footprints and minimizing. All those things support the idea of condominium living. Right now it’s a challenge, but I think it will come back because urban living in space-constrained markets needs this form of ownership.
What advice do you have for other developers?
As a city we have some very unique things going for us. They probably have most to do with our medical and educational environments. I’m an advocate of cities. Suburban development would be more challenging for some time to come. Developers: Be near the city. Be near transit lines. Be near our world-class institutions.