Black Developers Network’s Kirk Goodrich Talks Leveling the Development Playing Field
Even though he grew up in East Flatbush, a predominately Caribbean neighborhood in Brooklyn, Kirk Goodrich said people still raise their eyebrows when he speaks at community meetings there as a developer of Caribbean descent. “It’s not what they’re used to,” he said.
Goodrich has been active in the affordable housing industry for over three decades. He got his start as an intern at the New York City Housing Authority in the late 1980s and is now a president and partner at affordable and market-rate housing developer Monadnock Development. Over the years, he has observed and personally experienced the challenges and inequity of racial homogeneity in the commercial real estate industry — and now he’s facilitating change.
In 2021, Goodrich and partner Richard Roberts, from real estate investment firm Red Stone Equity Partners, launched Black Developers Network Triboro (BDN Triboro), a 100-percent Black-owned entity, and their mission is clear: to help Black developers enter and succeed in the commercial real estate industry and increase their representation in a historically white male-dominated field.
Together with the nonprofit Community Preservation Corporation (CPC); The Community Development Trust, a national investor in affordable housing and charter school facilities; Roberts’ Red Stone Equity Partners; and Goodrich’s Monadnock Development, BDN Triboro recently closed a $36.5 million deal to purchase and preserve a 13-building affordable housing portfolio with 1,036 units in Manhattan, Brooklyn and the Bronx.
This transaction is Goodrich and Roberts’ first venture outside their executive roles at their firms. But, it won’t be their last. The two intend to pursue additional affordable housing and community development opportunities and make the playing field more equitable for Black developers.
Commercial Observer: How did you first know you wanted to get into real estate?
Kirk Goodrich: I was born and raised in East Flatbush, here in New York City. My exposure [to real estate] came through my work in affordable housing. By working on financing projects, I got exposed to developers who are entrepreneurs, who are building and owning buildings, and I was doing financing for them on their projects. It occurred to me that it was something I could do. So that was the exposure. I didn’t have any family members in the real estate industry. I had to find my path to real estate ownership and development.
What’s the biggest challenge faced by entrepreneurs that are people of color?
Richard and I have both been around the affordable housing industry for decades. My first job in affordable housing was in 1989. I worked as an intern for the New York City Housing Authority. And Richard was commissioner of housing for the New York City Department of Housing Preservation and Development in the late ‘90s through the early 2000s. Our observation is that in the area of real estate ownership and development, people of color and women are underrepresented. It was always something that we took note of, separate and apart from our current positions. Both Richard and I spend a lot of time mentoring people of color and women who have an interest in real estate. We’ve advised folks in a variety of ways, and I think the biggest thing from our perspective is that real estate is an industry that is dominated by families, which means, “my parents or grandparents were in real estate and they were able to get me in the business, connect me to bankers, plug me into a network of architects, engineers and contractors.” That’s the normal course of things.
For people of color and women, the family relationships that are so important in getting you into the business just don’t exist. So, how do we recreate that? The idea behind the Black Developers Network was really Richard and I trying to be helpful. It’s a combination of mentorship, strategic advice, partnership and financial investments. In a nutshell, we are trying to recreate an environment that allows people to own and develop real estate when they don’t have family in the business who can pull strings for them.
What’s the story behind BDN Triboro’s launch?
In 2008, after a decade of doing low-in-come housing finance [at nonprofit Enterprise Community Partners], I went out on my own, but my business failed after a couple of years. Part of it was the timing [durnig the Great Recession of 2008], but a large part of it is I didn’t have someone like me to partner with; I didn’t have someone like me to go to for strategic advice; someone like me that could be a mentor. So it’s a personal thing for me. I want to be “me” for other folks. When I got into the business, my parents and grandparents weren’t in a position to be any sort of resource to me in the world of real estate ownership and development. I want to make sure that going forward, people of color and women who want to be in this real estate ownership development space don’t have to go into it alone.
What happened after your business failed in 2008?
Back in June of 2010, Nick Lembo, the founder of Monadnock, invited me to join his company. The first transaction I worked on was a 66-unit affordable senior housing project in Astoria, Queens. It was on a site that was home to the First Presbyterian Church of Astoria. We created a partnership where we purchased the property and built 66 units of affordable senior housing. Now as the president of Monadnock Development, I spend most of my time working with our staff and partners to move our projects forward, also helping people who might be new to business meet other folks in the industry.
Can you tell me a little more about the work you do at BDN?
The Black Developers Network is a formalization of the work Richard and I do every day with professionals who want to be in our business. A lot of people send me financial performance [data] and I give them advice on it. Financial performance is like the currency of our business. If you can’t properly underwrite a project, you can’t be a real estate business. Seventy-five percent of my time is spent looking at performance for our business. If somebody sends me a pro forma, I review it, give them comments, fix it sometimes and send it back to them. It seems like a small thing, but real estate is so competitive no one is going to do that for you unless it’s their deal. We also connect banks and equity investors to them. So it’s a full slate of things that we’ve been doing, and we felt like we should put a name on it and formalize it so the people who don’t know us personally can reach out to us. It’s less about us building an empire for ourselves outside of our regular jobs and more about people understanding that Richard and I are available to them as a resource, so they won’t fail in business as I did.
You talked a lot about family connections. Now that you have the connections, would you want your kids to get into real estate?
I think if you’re a person of color and you have family or friends [in the real estate world], it gives you the exposure. The problem we have is there are not enough people of color owning and developing real estate. And so the fact that if I have kids, family or friends who might want to be in the real estate world, that’s because I’ve exposed them to it. More people of color getting into real estate means that they can expose their family and friends to it and pique their interests. That’s what we hope for.
What’s the significance of having diversity in the affordable housing world?
I think it’s especially important to have diversity in the affordable housing world because in cities like New York, much of the affordable housing is being built in communities that are predominantly Black and brown communities. For many of us, we’re doing work in the neighborhoods we either grew up in or have some connection to. We are in the midst of doing two projects in East Flatbush, which is a predominately Caribbean neighborhood in Brooklyn where I grew up and lived. In the affordable housing world and the communities of color that we work in, we should be training not only developers but also contractors, architects and other folks of color, to be active parts of these deals. In a lot of these professions, young people aren’t exposed to professionals who are in these positions who look like themselves.
The profit margins on affordable housing are limited. Does that make it difficult for developers who work in that arena to grow?
Affordable housing is a convenient entry point for Black developers because the equity you need to do affordable housing is more modest than you would need for market-rate housing. A lot of the decision-makers in the affordable housing world — in terms of government officials, elected officials and housing agencies — are people of color and women. When you talk about doing large-scale, market-rate housing like a skyscraper in Manhattan, you need a substantial balance sheet to begin with, because you have to sign financial guarantees. And even if you can raise equity, you still need a share of equity on your end. And so the barriers [to market-rate projects] are higher than affordable houses.
I keep on saying people of color and women because even in families where there’s wealth and a history of real estate development, often women aren’t leading the firms. So we need to not only bang the drum for diversity in terms of Black and brown people being involved in development but also need to make sure that women, regardless of race, are at the table. I always do a test, I say to folks, “Name five women in our business.” It takes a while, and that tells you that women, regardless of race, have been left behind and left out.
What do you think of the various initiatives developed by banks and organizations that are dedicated to supporting minority developers?
Some of the banks have had good success in getting money out to underrepresented developers. CPC certainly has done a good job, Goldman Sachs has done some good things and JP Morgan Chase has made probably the biggest commitment.
What is interesting to me, and I said this before sitting on a few boards, is if you commit a large amount of money, but you don’t modify the guidelines that people have to adhere to get the money, then the people who’ve been getting in are the people going to keep getting in. For example, typically, you need to sign a guarantee on an affordable housing deal unless your net worth is minimally $3 [mil- lion] to $5 million. It’s hard for you to act as a guarantor and to get a loan or equity investment. Should there be an on-ramp where you allow a lower-net-worth standard to a group of developers in order to introduce them into the business? And no one is really talking about that. The question for the banks is, if your underwriting guidelines are exactly the same as they were three years ago, then you’re not going to be delivering money to anyone different than you have been. It’s going to be the same group of customers. So I think it’s really important that lenders and investors who say they’re committed to BIPOC [Black, Indigenous and people of color] developers develop a modified set of underwriting guidelines that are more achievable. Organizations should be asking how many new customers they’ve introduced to the real estate world as a result of their initiative.
Why appealed to you about the affordable housing portfolio you recently closed with CPC, The Community Development Trust, Monadnock Development and Red Stone Equity Partners? What are you planning on doing with it?
What piqued our interest was that it was an affordable housing portfolio. Richard and I both have done work in the neighborhoods before, and it was a high-quality portfolio of properties. We felt it would be a very compelling- ling opportunity for us to collaborate. We now have to make sure that we continue to maintain the quality of the buildings.
When you obtain a portfolio, you need to evaluate any improvement needs in the building. You need to interview staff and get to know tenants. It’s a process to absorb a property and manage it properly. In the future, the most important thing for Richard and me is to collaborate with other developers of color and to be a resource to them. That could mean pro-viding strategic advice to them or introducing them to a banker or an investor. It’s not simply about the economic partnership. It could be a variety of things that are needed because everybody is at a different level and everybody has a different need.
What’s the long-term plan for BDN Triboro?
We want to create a formal network of folks who can partner with each other and be a resource to each other. So, the reason we selected the name Black Developers Network is that it wasn’t just about Richard and me dispensing information and being helpful. It was about creating a network where people could communicate with one another, partner with one another, and be a resource for one another. We’re both incubating talent and creating an ecosystem that people can tap into. For almost two years prior to COVID, we convened quarterly lunches at CPC. We would invite eight to 10 developers of color and women developers who were fledgling developers. We ran around the table and people would talk about their background and what projects they were working on. We would give them feedback on it and look for opportunities to work with them. That’s an example of creating a network of folks who have the ability to connect with each other and be a resource.