Podcast - Repositioning Downtown Washington, D.C., for Housing, Growth and Investment

Kyrus Freeman: Thank you for joining us for another episode of Holland & Knight's Real Estate Law Unlocked podcast. This is Kyrus Freeman. I'm a partner in our D.C. office. I'm joined by the D.C. Deputy Mayor for Planning and Economic Development, Nina Albert, and today we're going to talk about what makes a city worth choosing right now and what has to change for cities to thrive in the next decade.

Nina Albert is the deputy mayor for planning and economic development for the District of Columbia under Mayor Muriel Bowser. In this role, she is responsible for seven district agencies and coordinates with seven independent agencies to grow D.C.'s tax base, increase economic opportunity and mobility for D.C. residents, ensure an affordable quality of life for D.C. residents and strengthen Washington, D.C.'s, vibrancy and role as the nation's capital. Deputy Mayor Albert has more than 20 years of experience in public real estate, economic revitalization and sustainable urban development. A leader with a proven track record, she prioritizes collaboration, fosters a diverse culture of high performers and encourages a growth mindset. Deputy Mayor Albert served as the commissioner of the Public Buildings Services at the General Services Administration (GSA) in the Biden Administration, was the vice president of real estate at Washington Metropolitan Area Transit Authority (WMATA), was responsible for Walmart store openings in the Greater Washington region and has worked as a real estate adviser and consultant. Deputy Mayor Albert is also a U.S. Army veteran, and we look forward to an exciting conversation. I am looking forward to today's conversation where we will unpack how D.C. is trying to build a more 24/7 downtown and efforts to convert the downtown into a more vibrant, active place. So thank you, Nina. I'll dive in. What's the modern value proposition for living in cities, right? People can choose to live anywhere, any place. Post-COVID, folks are remote. But why should people live in cities? And how is that changing?

Nina Albert: First of all, thank you, Kyrus. I'm excited to be on this show. I love having conversations with thought leaders, with people who are dealing with implementation, day-to-day projects, trying to do something innovative while still working within the framework of our societal policy priorities and context. So thank you for inviting me. I'm really excited to be here, and I'm particularly passionate about thinking about the future of cities because, as you said, right now I think we are in a moment of unique transformation, not just for the District of Columbia, not for just cities in the United States, but cities globally. And that was primarily informed and is being adjusted as a result of telework. And so, just like similarly to the industrial revolution and what that did for people having great demand and migration into cities in pursuit of jobs that had cities in the United States grow to their maximum, which was approximately in the 1950s. Then, with the advent of suburbs growing and the auto-centered you know economy, you saw cities being vacated and people had a choice between the suburbs or the cities. And so cities have been taking, I would say, depends on the city, but 20 to 30 years to recover from that and establish cities as knowledge centers, as places for the creative economy, and that's broadly defined, and as places of entertainment and culture, and then, last but not least, as places of diverse opportunity. I mean, diverse opportunity in terms of job opportunity, that there's a diversity of jobs, that there is a diversity of housing options, of transportation options and, certainly since the 1960s, as places that embrace diversity of population. And so I think that all of those value propositions continue to be what cities have to offer.

And when I think of what cities constantly compete against, which is cost, as well as commuting and the pain of commuting, that's really what we have to overcome when people can work from anywhere and live anywhere and still access a job. But I think that the inherent value proposition of a city is always that we are a place that offers diversity of opportunity, according to everything that I just said, as well as places that continue to be where the knowledge economy convenes, where if you are innovating – and we'll hopefully get to talk about economic development in the course of our conversation – but the future of the United States economically will require us to innovate, to integrate technology across all industry sectors. And we are in a moment where those innovators want to come together and learn from each other as quickly as possible. And that physical proximity that a city offers cannot be duplicated via Zoom calls. And then the last is, and we'll see this more and more, that entertainment and the quality of experience is something that people will pay for, travel for, so that they can get something unique. And again, I think that cities have always been the cultural, artistic and creative centers of our states and of our society. And so that will not be lost. That will continue to be enhanced and doubled down on by most cities, which is the investment in an extraordinary shopping experience, entertainment experience, sports experience that you can only experience in person.

Kyrus Freeman: Thank you, Nina. As you were talking, I thought about D.C. and the transformation that D.C.'s experienced in the time I've been here, I'm sure, in the time you've been there. Tell me a little bit about how the government helps to catalyze those changes and transformations. I think that's the first part of the question. And then the second part of the question is, you often don't know unless you're here. So how do cities kind of get the story out about how great it is to be in a city, as compared to other places that are also kind of out there trying to attract the knowledge and the culture and folks that are looking for places to go?

Nina Albert: Well, to your first question, which was really about how do cities promote change within the city or promote change in how people perceive the city, those are slightly different questions. I mean, the first one really about promoting change, I mean a city that is really working together within the city to make sure that the changes that they're trying to make not only are communicated, are understood by the population and by the decision-makers and by business community. There should be adequate communication, number one. That goes, I think, without saying, but there should be well-laid plans. Where are we going over the next 20 years? Why are we there over the 20 years? And like all cities, you have to introduce, particularly if it's significant change, the combination of the carrot so that you incentivize and get a buy-in both from your residents as well as from your businesses, as well as newcomers into that future so that there's kind of voluntary and you're mitigating risk for those people who are buying into that future that you're aspiring to. And then you also need to include, I'll not use the word stick, because it's not always punitive, it is in the form of regulation, making sure that your regulatory environment aligns with that future vision.

I'll give you a very simple example, which often impacts the real estate community, which is net zero or more high-energy-efficiency buildings. The way that a city should be working 360 to align its residents, its businesses and its policies toward the same end goal  – let's say net zero – by a date, you have to agree on that date. You have to, in a plan or in a policy document, outline what the transformation is or how you get to that endgame. What's the toolkit? What's the path that gets you there? What are the interim milestones to get you to net zero? And then in terms of the toolkit, what are the tools? What are the carrots and what are the mandates? And those things have to work together. I think when you're making big change, it requires deliberation and consensus. And that's where I think it's getting harder and harder to do because the community of stakeholders is so broad now that that early investment in a major policy change should be discussed and vetted. And so today, I think that environmental goals is certainly one area of change that I think is really at the forefront of a lot of the development community's minds.

I think there's another area, which is how do we convert and respond to where demand might be for real estate. Is it office? Is it residential? Is it entertainment? Entertainment has a totally different type of space requirement. And so, what is that path? And so right now we're looking at and evaluating for different pockets of downtown, what is the mix of uses? How much residential versus how much office versus how retail versus how much entertainment, and what is the toolkit of incentives and regulatory framework that will allow us to get to that new mix of uses faster.

And then the third area I think that is on everybody's mind, particularly in cities, where a job really can be anywhere or also you have just such a heterogeneous population, from the poorest to the richest, very often, what is going to be the impact to the job market as a result of AI, as a result of technology, and how are we going to adjust as quickly as possible to remain competitive? And that would be sort of the third area, I would say, of priority for a lot of cities. Housing is in there in that mix. But I would say existentially for us as a society, we're talking about the environment, how are we going to deal with it? Are we going to ignore it? Are we going to tackle it? Are we going to be aggressive and try and innovate around that? Secondly is the future of the economy and the workforce. Because at the end of the day, somebody doesn't have a job. Somebody has to accommodate that and figure that out and figure out what the safety net's going to look like. And then third is how do we deal with the infrastructure of cities, and I mean infrastructure both below-grade transit, but now I'm including in that infrastructure conversation because there's so much capital that's invested, which is the buildings. And I think those are kind of the three major areas of transformation that require what I said before, that plan, that toolkit of investments, and that adjustment and alignment of our regulatory environment to make any of those three things happen.

Kyrus Freeman: Lets go back to the planning part for just a second, because within that planning context, you have a lot of different interests, right? You'll have the development community interest. You may have kind of neighborhood civic association interests. How do you approach balancing all of those interests in order to actually come up with the plan and develop a toolkit in order to move the city forward?

Nina Albert: And I think it's upon every city and, frankly, I'd even just say any community, to figure out what the best way of debating, educating and adopting policies, what does that require in your community? I think in a city, I mean, D.C. is kind of a medium-sized city, actually, we're 700,000 people within the boundaries of the District of Columbia. The MSA, the Metropolitan Statistical Area, is much larger, 6.5 million people. So the D.C. region is the fifth-largest economy in the United States. But the conversation about policy really is had among those 700,000 people, right, for the District of Columbia. And we coordinate and share information with our surrounding jurisdictions, but we really focus on kind of our own jurisdiction. Because we're a small jurisdiction, we can have a conversation. It's often quite polarized, but I would say there's great alignment of values. If you take a look, and there have been several polls about what residents want, top of the list, regardless of who you are, affordable housing. Number two – or actually it's a kind of a tie right now – between safety. Not only just day-to-day safety of everyday people, but also now protecting home rule for the District of Columbia. And then secondly I would say is housing. But those two things pop to the top of the list for a majority of Washingtonians. But in terms of the quality of dialogue, I don't think it should be done on the dais. I think that there should be a number of different ways to outreach. We need to diversify how we receive input from the in-person public meeting, that should continue and remain, but also how do we take input electronically? How do we make sure that the working family that doesn't have time to take three hours out of their day to listen to all the debates in an in-person meeting also has input? And so I think that most cities need to diversify the forms of input. We learned something during COVID, but, you know, I don't know that most cities have continued to use all the tools available in their toolkit. And I think that local media becomes incredibly important and making sure that there are platforms, many forms of platforms, where people can be having these conversations and that there is a professional class of journalists and media representatives who are covering these fairly complex topics fairly. And I think that coverage of media of local issues is kind of all over the place. I would continue to advocate for that because that's a really important form of where the public policy conversation takes place. And then I would say that between the legislators and the business stakeholders, that open dialogue is really important, that back and forth, the role of hearings, and the access to decision-makers is really important. So those are the tools that any city has available to them. The District of Columbia, I would say, does fairly well across all of those, but I think for big policy changes, we need to be more intentional about making sure that we're hearing from everybody at the onset. And I'm not sure that that always happens.

Kyrus Freeman: How do we measure success as it relates to these big policy changes? Is it input-driven? Is it outcome-driven? How do we measure success? How do know we will be successful or have been successful in any of those topics, for example, affordable housing? What does success look like on any of these topics?

Nina Albert: I mean, this is a question that the business community deals with all the time, which is, how do you measure success? It's not only revenue-driven or profit-driven, it's also perception-driven. And so, the business community identifies a whole variety of metrics that they measure themselves against. And the public sector does and can do better to make sure that those metrics are appropriate, are the right ones that really measure if you're making those changes. But I'll give an example – very concrete – about transformation in downtown. Mayor Bowser set a goal back in 2023 to have 15,000 new residents in downtown. Well, that's a big deal, you know. And we are measuring that. And 15,000 residents by 2028. So we're able to measure that in our pipeline today. We are on track to hit 15,000 residents by 2028 in the District of Columbia downtown. And so that's one metric. We also measure ourselves on business attraction because one of the primary tasks that we have ahead of us is to diversify our economy. And so we are diversifying our economy, we're seeing private business growth in the District of Columbia, but we're also seeing a shrinking office footprint. So you've got to hold yourself accountable. You have to make transparent what metrics you're gearing toward so that you can have an honest dialogue with the policymakers. And that's what they're asking for. Give me the data that is saying that the investments that we're making as a city are rendering the results. And by the way, if we don't believe that one of the metrics that you're proposing is the most important, then at least we can have that conversation. We're back to a policy conversation. So in the District of Columbia, we're measuring jobs in what we call high-growth industries, because high-growth industries is how we see our ability to diversify. We're measuring households in downtown. We're measuring diversity of our business community and affordability of housing, availability of housing and affordability of housing. So we're measuring those kinds of things as a top line.

Kyrus Freeman: Thank you for that. You mentioned a second ago and earlier affordable housing, the availability of housing as huge needs. How do you maintain affordability and equity while still encouraging investment and development in the downtown and other parts of the city?

Nina Albert: Well, I do believe that you can do both. So the notion that you can't have both, I don't agree with. I think that in fact, you will produce more housing. You will have more private investment in affordable housing, in low-income housing, when you have an environment that is predictable, and I mean a regulatory environment and an investment environment that is predictable. That's what I've kind of learned more than anything else. When Mayor Bowser committed $1.5 billion for affordable housing, that commitment in and of itself created predictability. Now the type of predictability that we are focusing on is a couple-fold, because we have very strong tenant protections in the District of Columbia. We also need to make sure that the landlord has predictability if a tenant is not holding up their end of the social contract, which is paying rent on time. If they don't, that there are measures which the landlord can take. So we're making those moves so that you both protect the tenant and have really strong tenants' rights, but at the same time, provide the landlord with predictability. 

In terms of making sure that we have a variety of different kinds of housing, we want to make sure that we are continuing to promote production, as well as preservation. So new production of housing, we have found that when the mayor said a 36,000 new housing unit goal, that was not all affordable housing. That included market-rate housing. We delivered, in less than five years, 42,000 units. So far exceeded our goal of 36,000 new units. And as a result of housing production overall, we've seen that our appreciation of rental housing costs has stabilized. The District of Columbia only had rent rates increased by 1.6 percent compared to the national average of I think more than 6 percent. So housing production does equal rent stabilization.

The District of Columbia currently has a mismatch in terms of housing that's available at all levels of the income spectrum. So we have the greatest need for the lowest income levels below 30 percent of area median income. And so we now need to concentrate on producing housing that's affordable to that level of income. What are our primary tools for doing that? The Housing Authority. The Housing Authority in the District of Columbia still has capacity to deliver 6,000 units of new housing. And to your point, how do we encourage investment at that level of income? Well, there's a process for that. There's a set of tools that are both federal and local to deliver that housing at that level. So I don't think that there's a conflict between delivering affordable housing at different levels of income, provided that there are the tools to do so and the government's co-investment, if you will, as well as being supportive of private investment. [We] just need to make sure that we have a comprehensive housing policy where you are addressing all levels of the income spectrum and making sure that you are creating both a predictable investment toolkit as well as regulatory toolkit.

Kyrus Freeman: I'm working on two projects, Parkmore and Berry Farm, and the government has been a key partner in getting both of those projects developed and moved forward in a predictable way that's achieving the goals consistent with plans that were created many, many years ago and working towards the delivery of housing, retail and other needs that folks have identified many, years ago.

Nina Albert: I would say that predictability in the housing market in most cities is reliant on simplification or coordination across the multitude of housing authorities. So in the District of Columbia, we have the D.C. Housing Finance Agency. We have the District Department of Housing and Community Development. You have the D.C. Housing Authority. You also have the Department of Human Services, which deals with homeless housing. So you already right out of the gates have four or five different agencies that need to be coordinated. And I think that the District has a significant number of tools available, but right now, especially in a big city, I think a majority of the task is yes, providing money subsidy, especially if you're trying to produce more affordable housing at the lowest levels of the income spectrum. So yes, that's an important component. But another really important component to predictability is streamlining and making sure that the private sector doesn't have to go and hit all five of those agencies, not only they have to pull together their capital stack, but now they've also got to go through a regulatory process, and how do we streamline that? And I would say that that is the opportunity that continues ahead of us and that I hope that AI and technology become a toolkit for us as a government to reform and further streamline.

Kyrus Freeman: I have a prompt here. It's an article. It is entitled, "How Zoning and Faster Approvals Are Expanding Housing Supply in Nashville." It's in the ULI. My question is for you, what's the District doing? Do you have any thoughts, any recommendations on how to improve timelines, rules, outcomes, zoning, anything that the District or other cities should look to do to kind of help deliver this product faster, more efficiently?

Nina Albert: Well, honestly, I'm a big fan of what I call sprints, or a tiger team. And so I'll give a real-life example of something that we've recently done, which is that the mayor called together a task force. And we called it the Gallery Place Chinatown Task Force. And it was focused on a specific issue, which is what happens if our basketball and hockey teams left downtown. What do we do with this huge property that we have there and arena? What ended up morphing from that project – first of all, I just want to put out there, we did retain our basketball and hockey team in downtown D.C., and we are building a strategy around that anchor user and our sports teams. But that aside, what evolved out of that task force was a small sprint team, or tiger team, that included the private sector and a cross-section of private sector partners, as well as a cross-section of D.C. government partners. I would say there was a working group of about 10. I mean, it was small. And we brought in the best of the best experts and brainstormed, because we were really fixated on how do we introduce more housing. We now have secured this anchor of a sports arena, we know that this is going to be the entertainment epicenter of Washington, D.C. It's right next to 18 different theaters, museums and other arts institutions. So how do we make this an arts and culture district. We know that people are going to want to live here, and so what are the zoning and other regulatory impediments to producing more housing around here. And so we developed and brainstormed, like blue-skied it, a hundred different things that could be improved. Many of them were really small. Like, hey, how do we deal with setbacks, you know, or just some of them were like, oh, well we're going to need to introduce more driveways for parking. You know, how do we do that? So we really blue-skied it, and out of that 100, we are advancing 25 of those zoning regulation reforms through the Zoning Commission.

But very often, highly technical issues need the experts around the table who see different parts of the process coming together, working together, and in a two-month period producing solutions so that then the policymakers and the regulatory body can say, which of these can we do now? Which are on our work plan for that rest of 75 that didn't get tackled? When is the right time to tackle those? Are those a priority for us to tackle? But now you've got an actual solution set that you can start executing against. And that's what's difficult for government, is to have their expert partners come, to have a focused time to work on it and to have a project manager who is keeping the timeline going so that you have a solution set to execute against. How do you make it time-efficient? How do make it valuable because you have like experts across the table from you so that you can come up with viable solutions?

Kyrus Freeman: Well, thank you, Nina. This has been a great discussion. What's next for the city? What's next for you, what's the future look like? To the extent you can predict it.

Nina Albert: Well, I can't predict anything. We definitely in Washington, D.C., have a couple big milestones coming up this year. Like across the country, you know, there are midterms. We don't have midterms in the city. What we have is different cycles for political seats to be voted on. So this year, half of our council seats are up for election or reelection as the case may be. So that's six out of 13 seats on the council or on the legislative side. But the big one is really the mayor. Mayor Bowser has served three terms as mayor of Washington, D.C., and that's 12 years total. And she announced back in November that she's not going to run again. And so that is what everybody's looking at right now. Twelve years in terms of predictability that we've been talking about, that's been a very consistent leadership pattern. And we have tackled under Mayor Bowser just a tremendous amount of complexity, from COVID and how do you do the COVID response and get kids back to school and get downtown running again. And then post-COVID, obviously, just how to revitalize downtown and make sure that it continues to be the vibrant place that it's been. A shrinking federal government now with job loss, with potential significant federal real estate coming onto the market and how to absorb all of that. I mean, we just got a lot going on. So it's a time of change, and so in June there'll be a democratic nominee for mayor, in November will be an election for mayor, and in June, there'll be the primary process. The other change, by the way, politically – I can't believe I didn't mention this out of the gates – is that Representative Eleanor Holmes-Norton is no longer running for the District's congressional seat. It is a non-voting seat in Congress, which is why the District of Columbia is fighting so hard to be the 51st state so that we can have representation in Congress for the 700,000 people that live in Washington, D.C. But that role is in a very important role. And so, that's also up for grabs. So just a lot of political change that's in the near future.

I'll say in the long future, the issues that the District of Columbia needs to deal with are going to be the same for any mayor. How do we continue to work with and cooperate and find the win-wins between this current presidential administration and the District of Columbia? We are home to the federal government, and the mayor of the District of Columbia always has to work with our federal leadership that's here, because of that relationship that is so special and unique. We are going to have to continue to deal with economic diversification and deal with what is now a higher-than-usual unemployment rate as a result of the federal government shrinking. So that will continue to be a priority. The leading mayors on the ticket have all talked about affordable housing as being a major priority, and like I said earlier, affordable housing is a priority of most D.C. residents. And so I think that will be in our future.

And then I think what we talk about less, but what the real estate community is really focused on, is how do we help preserve the investments that have been made in our office market and in our downtown and, frankly, even in our residential market. How do we poise ourselves to pull the trigger the minute that the capital markets loosen back up so that we get investment flowing back into this city just like everywhere else? And how do we remain as competitive as possible? Because investors are going to have a choice as to where to invest. We think that the District of Columbia over the long run will always come out ahead. We are a dynamic city. We have sports and entertainment. We're one of a handful of cities that have all of its major sports teams in D.C. We're poised to be a major entertainment and culture capital of the United States. So all of those things are ahead of us. We think that D.C. is a place that if somebody can invest with a long-term view, that you will want to invest in D.C. I believe that the future is bright.

As for my own future, I don't know. Some of the issues that I've historically been involved in have been at the intersection of real estate development as well as economic development. I have worked for the transit authority. I've worked for a communications utility company. So I understand big infrastructure. I think that the future of the United States includes reforming and adapting our energy infrastructure and making sure that we continue to be able to provide power for the industrial uses that are coming and that demand more power, as well as for our residents. It needs to remain affordable. And so I think that's [an] area of particular interest that I have. I mean, these are very diverse interests. I'm particularly interested in how to make sure that cities harness the workforce advantage that they have, and as quickly as possible learn how to integrate AI into our education systems, as well as our workforce preparedness programs. Because we want to be competitors. We don't want to be lagging behind, and we have the ability to move faster. And so that's an area of interest. And then last but not least, I continue to be really bullish on cities and downtowns. Sixty percent of people, when they first come to a city that they don't know, go downtown. Downtown has to be vibrant, has to offer you something. And so I'm really interested in helping cities, whether it's my own city here in Washington or elsewhere, really figure out how to transform their downtown as quickly as possible, and what that recipe of success looks like for them. So Kyrus, couple different topics and I'm having a hard time figuring out which one is the one that's going to land. But those are the three areas that I'm particularly excited about for myself in the future.

Kyrus Freeman: Well, I can't predict the future, but I can predict that whatever the future holds for you, I know you will be successful in it and that you will help advance cities and people thrive in whatever endeavor you undertake. So thank you so much for your time today, Deputy Mayor Albert. This has been a pleasure. You have been so generous with your time. We definitely appreciate it, and we look forward to watching you continue to help the District move forward.

Nina Albert: Kyrus, it's been a pleasure, too, and thank you for everything that you do for our city. We didn't get to really talk too much about that, but both Holland & Knight and then you personally, your role in working with the city, coming up with win-win solutions, representing your clients in a way that allows them to be as innovative as possible. That's really what you bring to the table. And it's been a pleasure not just to be on this podcast, but to work with you generally. Thank you.