Bay Area Workforce Housing Insights, With Riaz Taplin

Workforce housing is a crucial property type in the world of multifamily real estate…. but what does it take to ‘get it right’?

Riaz Taplin, Founder and CEO of Riaz Capital joins the show to share his insights on workforce housing, particularly in the San Francisco Bay Area.

Click the play button above to listen to the conversation.

Episode Highlights

  • Why workforce housing is so important.
  • What forces caused the Bay Area housing crisis.
  • How the Bay Area’s housing crisis can be addressed.
  • The story behind Riaz Capital, and why they have focused on workforce housing projects.
  • How Riaz Capital develops properties to both offer quality living spaces, while keeping costs reasonable and maximizing investor returns.
  • Why multifamily investors should keep an eye on workforce housing, instead of focusing only on luxury housing.
  • What notable multifamily real estate trends Riaz has observed that may continue throughout 2022.
  • Riaz breaks down the changing needs of the urban workforce, and how they can be addressed through thoughtful property development.

Industry Spotlight: Riaz Capital

Riaz Capital is a workforce housing developer headquartered in Oakland, CA. Their development strategy positions them to potentially capitalize on delivering substantial and sustainable returns to long-term investors. With dozens of workforce housing projects in their pipeline across the San Francisco Bay Area’s Opportunity Zones, Riaz Capital later this summer is launching Fund III, which will be a California Workforce Housing Fund.

Learn More About Pinnacle Partners

About The Multifamily Investor Podcast

The Multifamily Investor Podcast covers trends and opportunities in the multifamily real estate universe. Host Scott Hawksworth discusses attractive offerings in the space, including direct investments, DSTs, opportunity zones, REITs, and more.

Show Transcript

Scott: Hey, everyone. Scott here with you and welcome to another episode of the Multifamily Investor Podcast. I’m excited about this show because we’re going to be diving into workforce housing and really exploring its importance and some of the exciting things happening specifically in the Bay Area. And joining me to offer his insights is Riaz Taplin, who’s the founder and CEO of Riaz Capital. And Riaz Capital is a development and asset management company focused on addressing the changing housing needs of the urban workforce in the San Francisco Bay Area.

A lot to dive into. Riaz, welcome to the show.

Riaz: Thanks so much, Scott. Happy to be here.

Scott: Well, thank you for being here. As I said, we’re talking about workforce housing. So my first question to sort of, I guess, set the stage, why is the development of quality workforce housing so crucial?

Riaz: Yeah. Great question, Scott. So I think that just to go back a second is like, how did the industry historically think about what we today call workforce housing, right?

Scott: Mm-hmm.

Riaz: You know, I think when I started out in multifamily, people called it class C apartments, then some really great marketing guy, you know, introduce workforce housing. And then, you know, you have capital A affordable housing, you have lower case affordable housing. And I don’t know about you Scott, but I didn’t grow up with the idea that, you know, living in, whether it’s workforce housing, affordable housing, or class C apartments was where I wanted to be in life, right?

Scott: Right.

Riaz: And so what it is at the end of the day is, you know, like if you think about an equitable society, right, and you think about food, water, shelter, right, as things that conceptually should be rights, right? And, you know, I was recently in Cuba, so I’m not a communist, but the basic idea that you live in a society where everyone has access to reasonable housing, you know, seems like a good goal, right?

And, you know, when I got into this, you know, I spent a big part of my career doing luxury housing and when I got into and, you know, because of my background, you know, my stepdad ran an organization called the Sierra Club, my mother was the PR director of planned parenthood, but I very much grew up in a do well, do good household. And so how do you, right, think about how to use the market and my background in order to, you know, create something different, right?

And so what I did was, right, is I wanted to create something where like, I’m cool if my sister lives here, but it’s affordable. I’m cool if my niece or my nephew lives here, but it’s affordable. So the idea was to think differently about design, number one. You know, create an appealing place to live, right, that was, you know, you would…

was maybe smaller, you know, a little more efficient, maybe a little less parking, but you wouldn’t be like, I shouldn’t be allowed to say that, but like, “Why do I live here?” It’s like, “Yeah, I live here. It’s cool. It’s awesome. There are other cool people living here, right?” And you know, how do you create a scalable platform to do that, to really address the changing demographics of this country, right?

And, you know, to give you a basic idea on that, you know, in 1955, 80% of American households were a multi-generational household. Fast forward to 2013, and that number has dropped to 20%. Within the 23 to 38-year-old age gap, the family household has fallen from 70% to below 30%, right?

So you say that basically life stages and the demographics of the society should be very accurately reflected in the housing inventory. That has not played true for this demographic, right? And so what I’ve dedicated what is now, you know, over a decade being very focused on it but majority of my career too, is how do we create a scalable platform to kind of plug the gap between student housing and traditional multifamily, where by and large people are more likely to be single and more likely to be urban.

Scott: Right. Right. And Riaz Capital specifically is something that is focusing on this workforce housing in the Bay Area. Can you share a bit more of the story behind the things that you guys are doing and how you’re, I guess, putting all of this into action?

Riaz: So do you want me to talk about kind of what we’re doing now or how we got to where we got?

Scott: Kind of both and yeah.

Riaz: So why don’t we start with how we got to where we got, right? And so, you know, the Riaz Capital is a descendant entity of a company my dad started in 1977 called Pasco. And so it’s, you know, if you take the full set, we’re almost a 50-year-old business. And, you know, my dad was very much focused on doing condo conversion work. So he was one of a group of guys who converted a large number of buildings to condos from just traditional apartments where every unit has its own deed back in the late 1970s and early 1980s, right?

And, you know, then, you know, we got hit with the earthquake in 1989 and, you know, that created a kind of a life quake, right, as my mother used to put it. But I grew up in a family where nichey real estate was kind of what we did, right? You know, when I graduated from college, I went to London School of Economics. I’m like, well, I don’t want to go and run around Oakland, dealing with kind of entry-level apartment.

It doesn’t seem like very much fun. So I basically started a business where I did very high-end houses and thanks to whoever did my office, which I just moved into today, there are all these pictures of what I used to do, where I designed these really kind of plug-and-play houses. I either sold them or did them as a service for people. And we grew that business to about $25 million in revenue over a few years.

And then, at some point, you just get bored of listening to people tell you about their storage needs. Like, “You know, Riaz, I need storage.” It’s like, you don’t really need more storage. Or like, “Riaz, I need a functional kitchen.” Darling, I’ll just want to point out the facts of life if the fridge is keeping the food cold and the stove turns on it’s a functional kitchen.

And please, no one tell me about the kitchen triangle ever again. And real estate agent saying, “Oh, it needs to be warmer.” Like, okay, I know what word you’re about to say because it’s the only word you have, right? But anyways, so at some point I was like, I want to do something different. I wanted something more impactful, etc. So we kind of pivoted our business to kind of being, I would say reactive on the multifamily side and very focused on a luxury product on the for sale side and say, okay, let’s just focus what we do into one product, one capital structure, one implementation model.

So what we do today is, you know, we raise funds in grouped development funds. We build smaller projects relative to the industry as a whole in order to have a faster deployment. We entitle these projects, what’s called the California State Density Bonus. So we have kind of an automated, not automated, but administrative entitlement process.

And then, you know, thanks to my dad, you know, I’ve spent almost 25 years now doing some form of construction management, right? And so at the end of the day, there are two ways to keep things kind of more affordable to build. One is just not having certain line items in your project.

And the second one, you know, is keeping what you are assembling relatively simple, right, and standardizing things. So basically, on the construction side, we’re very focused on standardization or componentization, you know, limiting the kind of expensive parts of a building. And number three, you know, making sure that what we’re doing, we’re kind of doing over and over again, right?

And so what that does in the place like the Bay Area, where it typically takes 72 months to do a project, we can get started to finish in 30 months, right? So if you think about, you know, when you do business, it’s about what are your gross margins, right? When you’re in a capital business, it’s what are your gross margins divided by time and that’s how you get return on capital, right?

So what I was very focused on, right, being an okay finance guy, right, was like, okay, how do we get our margins up and how do we get our timeline shorter to produce a better return on capital, right?

Scott: Mm-hmm.

Riaz: So that’s kind of what we do now. And we’ve built… You know, I’ve been really… It’s kind of the gift of a lifetime. I kind of like pinch myself once a week I think. You know, I have, you know, four people that have been with the firm now for almost a decade. You know, I think we were all kids when we started together and, you know, each one of them kind of runs a section of the business and then we have a, you know, reliable uncle Joe running accounting, who’s like, you know, the guy’s been looking out for my back my whole life and I don’t appreciate him enough, but he is just the most wonderful person.

So, and now the company’s about 32, 33 people just very focused on designing, building and operating kind of what we now call micro-living, right? I’m not sure micro-living is so much better than workforce housing, but the idea is that it’s a high-quality solution, right, at an affordable price, right?

Scott: Yeah. Can you actually expand a bit on the multifamily properties that you guys are developing? You know, when you’re talking about the size, what’s the size, the unit mix of these types of buildings?

Riaz: Great question. Right, so in the course of the history of the firm, you know, we’ve converted churches into apartments, we’ve converted, you know, buildings into co-living facilities, we’ve done student housing, so we’ve done kind of the gamut, right? We’ve done kind of what I’d call mass luxury, you know, that $2,500 price point for the Bay Area, which, you know, for the rest of the country might seem quite expensive, right?

And so we fundamentally have two building designs. So one of them is what we call our townhouse model, Scott. Three-story building, very simple to build. And it’s fundamentally a five-bedroom townhouse where each bedroom is kind of used as its independent residence, right?

But it doesn’t have full kitchen functionality and all that stuff, but it’s an ideal design for kind of low-density neighborhoods where fundamentally people already live like this. If you had the house next door, I guarantee you it has five roommates in it. So how do you create a new construction version of what’s already happening in the existing inventory, right?

The problem is it’s not a very… You know, my partner, Seth was like, “Riaz, you know, this is great and all, you know, kudos to creativity, but there’s no way we’re going to build thousands of these, right, you know?” And so, you know, what was cool about this is, you know, we got it permitted in 10 months. We built it in 12 months. Fantastic.

And, you know, we have 500 of them in our own production, right? And it’s really a testament to my partner, Seth, and, you know, Ari, our construction manager and Lisa, where they’ve really got this into kind of an assembly line approach, right? We’re just moving it down. You know, you’re not reinventing too much stuff, you’re tweaking things. The second thing is what we call our mid-rise design, which fundamentally would look like any kind of five, six-story building that you’d see anywhere in the country.

The key difference between these buildings and I would say your traditional multifamily is number one, we’re trying to eliminate the concrete layer at the ground floor of the building, number one. Number two, we’re trying to eliminate the retail as much of the retail and parking elements at the ground floor of the building because you can either think about them as a lost leader, but they’re a big loser or their attacks on the housing, right?

You never make enough money from your retailer or your parking to pay for it. That’s number two. Number three is there are certain amenities, which are creative to value in the customer experience and certain amenities, which nobody ever uses, which are not. Like, you know, you have these big lounge areas in the building, you ever see anybody in them?

Scott: No. I’ve lived a number of buildings with those and I’ve never used them.

Riaz: Yeah. And you have a dog washing station and things like that. I mean, some of these are nice to have, but, like, when you’re really focused on how do we make this as affordable as possible, these spaces kind of have to be… you’d be very careful about how you’re using space because it all affects rent, right? So that’s number three. Number four is that the units are probably on average about 20% to 30% smaller than the industry standard for that unit type, right?

And so how do we manage that and create a livable experience? So one of the things that, you know, Lisa Vilhauer, she’s got a very powerful last name, and Seth on my team have done is they’ve done a beautiful job, right, kind of like what cabinets do we build in?

What furniture do we build in? What furniture do we allow the tenant to…? Allow is the wrong word. What items can the tenant bring to customize the unit for themselves? Because basically a lot of times, you know, a lot of space gets wasted simply by not thinking about the furniture, right? So we were very intentional about, like, okay, this is how all these units will work. This is how you install the bed.

And then you maintain what I call your six-zone functionality, right? And so a lot of times units and houses and buildings get bigger because you add all these nice to haves. And I don’t know if you’re married or not Scott, but, you know, when I was doing houses, you’d watch these couples walk around and the guy would be like, “I must have this. I must have that. I must have this. I must have a gym. I must have my man cave.”

And, you know, the woman would have her list of things. And by the time you were done, you’d show them a budget and they’re like, “How did that happen?” I was like, “Did you not listen to yourselves for the last two hours?”

Scott: How many rooms did you need?

Riaz: Yeah. So when it comes over to this, you know, that same idea affects cost, right?

Scott: Mm-hmm.

Riaz: So what we thought about is like, okay, let’s think about it like you think about a software product, what is your minimum viable product, right? And then we can always add from there, but always go back to the MVP, right? And when I was building houses for actually relatively affluent people, I would set up the thinking the exact same way, which is, you know, you’re going to need to do these things no matter what, right?

And these are all electives. So, but anyways, just to simplify it, just to bring it back again, what we’re trying to do is make, start with the MVP for your studio, one-bedroom, two-bedroom, three-bedroom, then, you know, how do you think very intentionally about the interior? So design the building where we make the units like our little Lego block. So they’re very predictable.

So this is where the couch will go, so we can get that efficiency without really affecting lifestyle. And then how do we, you know, put a number of those into the building and then the common areas of the building, it’s not like we have no gym, no this, no that just based on what’s in the neighborhood because we want… right, we’ll adjust the amenity mix in terms of parking this and the other. But the biggest cost savings is how do we mitigate the amount of parking we have to provide on-site?

It’s the most important item. And you know, here in California, you know, we really prioritized housing cars over housing people for a very long time up until very recently where the parking requirements really got in the way of adding a significant cost to housing where they wouldn’t let you build the housing unless you built the parking, right?

Scott: Right.

Riaz: And so, you know, here in California, and we owe a great debt of gratitude to governor Scott Wiener and Nancy Skinner, we’ve really got in a way of the coupling of these two items, right, and so we’re really leveraging that change.

Scott: Right. And I think you’ve brought up a great point and it’s something I wanted to get your perspective on because the Bay Area’s housing crisis has had such a profound impact. It’s well documented. What really did cause it and how can it be remedied particularly maybe with the things that you guys at Riaz Capital are doing?

Riaz: Yes. I think the thing to remember is when a system stops working, it’s typically not one mistake, right? And the analogy I usually like to draw is with what took down Detroit. You know, in the 1950s, you have these three just incredibly powerful companies that dominate the world of auto manufacturing.

Ford, you know, “What’s good for GM is good for Uncle Sam,” right, Chrysler. You know, I’m not that old, so I didn’t grow up with that slogan. But, you know, we’re all aware of that as an idea, right?

Scott: Mm-hmm.

Riaz: And fundamentally it was what I call a ratcheting effect, which basically eroded the competitiveness of the auto manufacturers. And so it was a lack of long-term thinking, right, which is like not on, right? So, you know, and the management, you know, probably has a little bit to blame, but the unions and the management are both complicit in basically allowing the cost structure of the auto manufacturers to just explode, right?

So that they weren’t investing enough back in, you know, research and development. And as a result, the Japanese just cleaned their clocks at the end of the 1970s at the beginning of the 1980s in really an aftermath of the second oil crisis, right? And so, like, okay, so you take the same analogy here in the Bay Area. Was it one mistake that created this disaster?

Not really, right? So number one is we have 101 municipalities in the Bay Area in the same geographical area roughly where LA has LA, right? So it is very difficult when you have a town of like 12 people, right, 6 of them are the city council to be objective about anything because it’s their neighbor, it’s their mother.

I mean, literally, right?

Scott: Right.

Riaz: And then, so I would say the balkanization of the administrative management of the Bay Area is definitely a contributing factor, number one. I think number two, which was a national phenomenon, right, not unique to the Bay Area, was this idea in the 1950s when many of our planning codes came together of how do you make cities like suburbs?

Well, hello, Cato, they’re not, so you cannot do that, right?

Scott: Right.

Riaz: It’s like saying like, right, and so, you know, oh, we must have so much open space. We must have so much parking. We must have so much gardens in front. It’s a city, right? That’s not how cities look. And so I think this fundamental mistake of, you know, this kind of pleasant bill ideal of the 1950s and the cities being seen as not that and how do you make them more like pleasant bill, I think was a real, a contributing factor, right?

Number three is these, you know, I would say parking requirements, I mean, all kind of can fit into that. The next chapter is really the downzoning of California and the downzoning of the Bay Area as a whole, right? And so, you know, if you look at, you know, for example, you know, I built a 90 unit building, you know, not too long ago, you know, and we were able to work some special stuff out because of some density transfers, but on that same piece of land where we have 92 units, we only could have built 26 units, right?

And so when you prescribe the density so low, you basically only allow for the creation of large expensive units by definition, right? So basically with the intent of creating a more pleasant, urban environment, we basically made it so you could only really produce housing for the wealthy.

I mean, it’s built into the zoning code, right? So I would say that’s the next chapter. The chapter after that is like, oh my God, how many administrative processes can you add to tying your shoes in the morning, right?

And so it’s like, you know, like the average project is San Francisco takes seven years start to finish. I mean, like, that’s a cartoon. I mean, I’ll be dead by the time I finish the next one, right? I mean, so this idea… And so just, you know, oh, we need to review this. We need to review that. And we need to go send it over to that desk over there.

And we need to do a public hearing. I mean, for God’s sake, decide what you want to do on each slot and that’s the rule. And if you’re trying to do more, you have a public process, but if not, you don’t, right? And so this sum of stuff is not one thing, it’s just the whole thing together, right? I think the last thing, right, is it’s a little bit of a chicken in the egg problem, which is that this is a very expensive place to live because of a very bad policy, right, over a very long period of time, which has made it very expensive.

So if you’re, to quote a Obama era reference, Joe the plumber, I mean, do you want to raise your family in a place like the Bay Area, which is expensive, or do you want to have your family in a place like Sacramento to maintain the California context a little bit less expensive or a place like Modesto, which is affordable, or do you want to go to a more affordable part of the country, right, which is a big debate, right, is, you know, to what degree is California failing Californians, which is labor availability, right?

And then you can add supply chain problems, which we’ve all heard about ad nauseam, right?

Scott: Right.

Riaz: And so, which is that basically, the fact that it’s not affordable to live here makes it very hard to recruit, you know, skilled and unskilled labor to work on our projects, right? And so you add all that up, but it’s like, how do you fix this mess? And you really have to go step by step. And so what I really have tried to do over the decade, right, is unpeel the onion and not think about it like a dart or a panacea or panacea, I think is the way you pronounce that word, panacea, panacea.

There’s not going to be a cure role for this, right?

Scott: Right, right. There’s no silver bullet here.

Riaz: There’s no silver bullet. You got to go piece by piece and address each part of it. And I think what we’ve done as a team over the decade is everything hasn’t worked perfectly, but by and large, we’ve had a very good track record from a return standpoint and we’ve done 10 case studies and we have another 15 case studies in production, right? And so we’ve done all of this with private capital, which means we could move more nimbly and we have a great debt of gratitude to the investor base that has supported this effort in an effort both to produce returns and to crack the nut, right?

Scott: Sure. No, and I like that you’re bringing that up because that leads into my next question. Because I think that sometimes much of the attention of multifamily real estate can focus on luxury properties and other types of housing. So why is workforce housing specifically a really compelling property type for investors to consider and investors that you’ve been successful at attracting to your projects?

Riaz: Yeah. I mean, you know, I had a couple of mentors in life and it’s like, you know, if everybody’s doing this, go do something else, right?

Scott: Right.

Riaz: And so, you know, if you think about this from just the… You know, because of what’s happened to interest rates over the course of your and my life, Scott, you know, where, you know, the year I was born, the prime rate went to 22%. Today everybody’s crying, right, because the 10 year has gone to 180, right? You know, 22%, okay.

So we’ve been in this world of ever-decreasing, oh, God interest rates are going to go to 3%, what we’re going to do, right? So we’ve been in this world of ever-declining yields for 40 years, right? And so what has that done? So for these big allocators of capital, they basically turned to the multifamily segment as a relatively reasonable risk-adjusted yield to produce, you know, historically, you know, 250 over the risk-free rate, okay, you know, 4%, 5% yields, right?

And so what that’s done is, you know, core properties and core markets were really the pinnacle of the investible real estate ecosystem, right? And so the problem is, is, you know, it was really the only thing you could build, right, in a place like the Bay Area, right?

And so a lot of capital flowed into it, right? And so what that was ignoring is the fact that in the work, in the, you know, and this is true in places like New York, Los Angeles, Miami as well, right, is there was not enough capital flowing into entry-level housing. And so I was like, okay, well, if people aren’t…

And, you know, my godfather who, you know, I always looked up to, in addition to my dad, right, I saw him go through the cycles of real estate over the 40 years, right? You know, the guy built, you know, more condos in San Francisco than anybody else in history. And, you know, poor guy had a car that wouldn’t go in reverse for 18 months, right? I was like, I don’t want that for my life.

You know, no one’s going to listen to me, right, if I go broke, right? So what do I do? And so what I figured out, right, was, you know, I did this building and kind of on accident, right? You know, I rented an apartment in an area that’s by no means Beverly Hills, right, for six bucks a square foot.

It’s probably the highest price per square foot of any multifamily building anywhere in the country, right? So it was like, okay, if we could make these bite-size things affordable, the price per square foot’s higher, which means that we could afford rents to fall and not have a problem, right? And the key to real estate is when you end up in a down cycle or with some headwinds that you don’t lose your assets because they’ll eventually recover, right?

And so the reason why I got into this was, a, to be able to do something positive for the community in which I live, number one, number two, because of the fact that a lot of capital wasn’t flowing into it, it wasn’t oversupplied, we could build supply into it for a very long period of time, number two. And number three, the margin, in other words, the ratio of cost per square foot to rent script, what was so much better than the luxury segment that we could build through a down cycle, right?

And so, as a developer, right, you know, you take a lot of risk when you build a project, you don’t really know what environment you’re going to deliver into. You can sit here and contemplate it and oh, the officers are going to reopen in January or they’re going to reopen in March, or students are going to come back in June.

I mean, we can sit here and contemplate it all we want, but who the hell knows, right? And the one thing I learned from my life is you get black swan moments, right? You know, when I was a kid, we had an earthquake, and it kind of totally destabilized my family financially. Then you have the .com bust in 2001. Then you have the financial crisis in 2008. And then we have COVID, right? You know, so all of these things, you have to both be thinking about like, okay, how do you consistently add units so that your business isn’t doing this, right?

And how do you survive down cycles, right? And at the end of the day, it was like, okay, is our performance as good as I’d like it to be? No, it was great but relative to the benchmark, you know, luxury multifamily fell 40% peak to trough while as a portfolio-wide, we missed revenue budgets by 7%, right?

So it’s not as good as I’d like, but it’s not as bad as those guys, right?

Scott: Mm-hmm.

Riaz: And so the thesis has really proven out in this cycle the same way it did in ’01. Entry-level rents do not fall as much as the market as a whole. It was true in 2001, it was true in 2008 and it was true in 2020, right? And so I really pivoted my business to have more of my capital, and my friends’ capital in that segment.

Scott: Yeah. And kind of focusing in more about how, you know, you have your vision and your focus with Riaz Capital, you guys also aim at meeting the changing needs of the urban workforce, which as we know, it continues to evolve.

So I’m just curious when you consider urban workforces, what are some of the trends and current needs and how do you see those continuing to evolve?

Riaz: Yeah. Great question. So look, I think that the, and I kind of touched on this a little earlier is these zones of functionality. And are you married, Scott?

Scott: I am married.

Riaz: So, you know, like, so I spent a lot of my life in residential and usually the dude walks in is like, ” This is great.” And then you see the woman going around much more slowly and methodically and looking at everything carefully and what she’s doing, she’s typically is running through a mental checklist, you know, can we put everything away here? Well, you know, can I get away from my husband? I mean, whatever, right?

And, you know, having watched that process so many times from having designed kind of like 100 homes for people, right, you know, it was like, okay, we need to be methodical about this checklist. The key addition over the last two months is the idea that work from home in some part is not going away, right?

Scott: Mm-hmm.

Riaz: And you have to make it easy for someone to be able to work from home without their home being an office, right? And many people in this price category typically would share an apartment with two or three other friends or buddies or whatever, but if your only exclusive use space is your bedroom, which is 120 square feet, it’s a little hard to have, you know, your bed, some private space, a place to work, etc., in all those areas.

So what we’ve been focused on is how do we create a space where it’s comfortable to sleep, put your stuff away, prepare food, use the facility, and have a place to work. So I think that’s been the biggest evolution of the pandemic. I think the second one is if we believe, you know, and I wrote an article about this called the three and two, are you going to go to the office three days a week or two days a week or one day a week, God knows.

But any way you look at it, you’re going to be spending more of your time, most likely centered around the building or the home in which you live, right? And I remember, you know, at the beginning of the pandemic, one of my clients was like, “Riaz, you know, I don’t know I was going to be renting our small apartments, right. Because everybody’s going to be living in their home in the Hamptons, their home in Hawaii, using their home offices.”

I’m like, what clueless planet do you live on? Do u think that everybody has a home in the Hamptons and a home in Hawaii and a home in Carmel and a home here and a home there and private offices? This is not the way the world works. This is your life, right. But the other piece is like, okay, in the building, how do we augment what’s in the unit, right? So what we’ve designed in are things like work pods.

So it’s like, let’s say you live with your girlfriend or your boyfriend, right, and you need to do a call, but she or he is also on a call that there’s a space that you can reserve in the building to go make a call. You know, that there’s a, you know, gym. I don’t know if you’ve heard, but there’s this guy in Seattle who keeps sending all my tenants packages, and somehow it’s my fault when they lose them.

So, you know, having package rooms. I think bikes in places like Oakland and Los Angeles, I think we’re going to move from transit-oriented to bike-first and micro-mobility type of solutions, which are really booming before the pandemic. So, you know, the bike room, you know, these bikes are very expensive, right?

I’m lucky I’m a big fat guy, right, otherwise, I’d really be in trouble, right, because they’re very, very expensive. But so basically making sure there’s a very secure bike room, the bike room typically would be at the back of the garage somewhere. Now it’s kind of, like, a central feature. And so we’ve designed these six areas into the building to make it so that the utilization of the space is pretty good and there’s flexibility when you need it, right?

So like, okay, let’s say, Scott, you know, we wanted to have people over to play video games because that’s really cool, right?

Scott: Oh, obviously.

Riaz: Yeah, really cool, right. That’s what all the cool kids are doing, right? So basically, you know, we have, you know, rooms that you can reserve either watch a movie or play video games, you know, but it’s like all the spaces are intentional. They’re not that large. And by and large, we’re using spaces within the building, which is redundant. In other words, you couldn’t actually fit another unit, you couldn’t fit another this, right? And then depending on how big the building is, there’s a linear ratio of the amenity space and the number of units.

So in our building that has like 30 residences, we probably don’t have almost any additional amenity stuff outside of packages because God forbid, right?

Scott: Right.

Riaz: Right. But as they get bigger, we actually have about six additional amenity areas. And I think the thoughtfulness, you know, thanks to, you know, Lisa and Seth on our team, right, around this due to COVID has been much more evolved, right, because the reality and the tangibility of, oh my God, I’m at home with my husband Scott and the guy is doing a podcast and I cannot listen to this for five more seconds, we need work pods, right?

Scott: Right.

Riaz: You know, I need to go and read the paper away from this four-wall space I’ve been in for 16 hours, right? You know, we need a lounge, right? So I think that’s been, you know, some degree of forcing function of one of these other spaces need to look like and really crystallizing it.

Scott: I love it. I love it. And I love the thoughtfulness that goes into all of that. And, you know, from what I’ve seen when you talk about urban workforces, these exactly are the types of things that folks are looking for when it comes to housing. As we kind of wind down our discussion here, I always like to look to the future. So are there any exciting developments or projects coming down the pipeline with Riaz Capital that you can share, of course, that our listeners might find to be interesting?

Riaz: Look, I think that’s very… You know, one thing that we’ve done as a company is not really done these like mega large project. So every one of our projects is let’s say between 70 units and about 200, right? And so it’s like, I don’t really have the favorite child metaphorically. You know, all of them are my favorite.

I think one thing that I think, and let me see how many times I can say I think in one sentence to buy myself time, but anyways, you know, there’s a group of projects we have coming out the door now. One is a conversion of a hotel, which we’d never done before, which I think is going to be a really exciting project. And, you know, this was kind of like in the multifamily state, it was very thematic for a few months.

At the beginning of last year, we were like, all the hotels are disappearing and they’re all going to become multifamily. So we were able to do one deal, which I think is going to be great. In addition to that, you know, since I spent so much of my career kind of in secondary neighborhoods and making older buildings kind of more appealing, you know, one of the things that the pandemic brought, which is I think going to be very good for performance, right, is we really moved to core locations, right?

So instead of being, so there’s smaller projects and core locations. So, we’re designing another project in Jack London Square in Oakland, we’re designing another project in Downtown Oakland. We have a couple of projects going in Berkeley and you know, the… And so taking this affordability model and adapting it to better locations, I would say is the most exciting theme that I’m excited about over the next 18 months.

Scott: It’s going to be really wonderful to see what you all are able to accomplish. Riaz, I want to thank you so much for joining me on the show today. Really offering some fantastic insights when we’re talking about workforce housing. And if folks want to find out more about what you guys are doing, where can they do that? How can they learn more about you and Riaz Capital?

Riaz: Yeah, just go to our website at And I always say the www, because I like to date myself, right?

Scott: Right. Love it. Well, thanks again so much.

Riaz: I think on the interweb, Google Riaz Capital.

Scott: There you go. Google Riaz Capital.

Riaz: Cool.

Scott: Awesome.

Riaz: All the best, Scott.

Scott: Thanks.