Brett Kaufman, founder and CEO of Kaufman Development is based in Columbus, Ohio, and has a great take on the market in the area. Brett has been working in real estate development through the investment, banking and development lens for 20 years and he has developed, leased and/or sold over 10,000 homes and developed a variety of commercial, retail, land and office projects.
00:38 Columbus growth
01:03 Rising home prices
02:19 Housing inventory
02:52 Student housing
04:44 What’s drawing people to Columbus?
06:50 How did Columbus come together during the pandemic?
07:47 What are you seeing happening in the business district?
09:18 Which neighborhoods should investors be looking into?
10:45 Is there an opportunity downtown for multi-family?
11:35 What are the biggest challenges that the city faces?
13:18 What projects you are working on and most excited about in Columbus?
16:52 Why should someone come check out Columbus?
Deidre Woollard: Hello, real estate-investing Fools. Today, I'm bringing you a spotlight on the Columbus, Ohio market. My guest is Brett Kaufman. He's the Founder and CEO of Kaufman Development based in Columbus. He's been working in real estate development through the investment banking and development lands for 20 years. He's developed, leased, and/or sold over 10,000 homes and developed a variety of commercial, retail, land, and office projects, so he's the perfect person to have this conversation with. Well, welcome.
Brett Kaufman: Thank you. Thanks for having me.
Deidre Woollard: I'm excited to talk with you because on millionacres.com, we just published our hub on the Columbus market. Seems like it's going through a growth phase right now.
Brett Kaufman: Yeah. Columbus is really growing quite well. It's been fun to watch. It's actually, I think, been going on for probably the last decade, but really, in the last 5-7 years, we've seen tremendous growth.
Deidre Woollard: Well, let's talk a little bit about the residential market, because I took a look at that, it's been on my radar for a little while. I noticed that median home price according to Redfin is around 232,000. That's below the national median, which is around 330,000, but I think one of the things that is interesting about Columbus is that the median price has been rising by double-digits for the last few years. Is this the end of the window of affordability in Columbus?
Brett Kaufman: I hope not. I think that there is an issue regarding density and approvals that have made it harder to bring inventory to the market, both on the multi-family and the single-family side. I am involved with a number of efforts to really try to tackle affordability, so I think our leadership here at the city does understand that this is an issue. It's an issue that's a lot worse than cities that are a little further along than Columbus, and so there's a lot of discussion on how to make sure that we don't end affordability. But there's a supply and demand aspect to this. If inventory continues to be limited, it is going to drive pricing up.
Deidre Woollard: What is the housing inventory right now? Is it pretty low as it is in the rest of the country?
Brett Kaufman: It is, both, again, on the single and multi-family side of things, and we don't build single-family, but just knowing enough about the market generally here. Stuff is being bought as fast as it's built or being leased pretty much as fast as it can be built. There really isn't enough inventory in the marketplace and there's a little bit of a catch-up that's happening right now.
Deidre Woollard: Makes sense. I know Columbus has an interesting mix of factors. It's got universities and colleges nearby. What are you thinking about with student housing right now? Will students be back in the fall, and is that an area that's growing in Columbus?
Brett Kaufman: Absolutely, and yes, it's been growing like it has on a lot of college campuses. We're fortunate to not just have Ohio state, which is one of, if not the largest public university in the country, but we have Columbus College of Art and Design, we've got a number of other schools in and around the area. Kids are ready to come back on campus, and I've believe that that come fall, it will be pretty much back to college as we knew it. Student housing component is something that's really been a game changer for how kids live and experience college. There's a whole new world to it that's pretty exciting. It's a lot nicer than it was when I was in college. [laughs]
Deidre Woollard: I think that's really true. One of the REITs we follow is American Campus Communities, and I've noticed that the way student live now is very different than when I was in college.
Brett Kaufman: Yeah. My son actually lives in one of their properties in Austin, Texas and I've gotten a chance to see what the offering's like. As a consumer, it's really impressive how they handle every aspect of student life, including the move in, the move out, the management, the food service, you name it. They've really brought a lot of it under one roof, and it's a pretty impressive and great experience for the students.
Deidre Woollard: Absolutely. Let's talk a little bit about Columbus' growth because I know there's this narrative that I've seen in the media about the Midwest losing population. But I was looking at the census data, Columbus actually has been gaining pretty steadily. I believe it was 22nd in major metros with increasing population. What is drawing people to the area?
Brett Kaufman: Well, it's an interesting thing. Columbus doesn't have, maybe oceans, and mountains, and weather, and some of the other attractions that you find in other markets. But what we do have, which I think people really appreciate now more than ever, is we have a community that's very open, it's easily accessible, it's easy to navigate. Literally, in traffic, you can get anywhere in Columbus in pretty much 20 minutes. There is affordability, relatively speaking, but I think it's a Midwestern mindset. It's very open, it's very welcoming, it's very inclusive, it's very focused on making a difference and being a place where you can do that, and I think people see that. We've seen a tremendous venture capital boom here in Columbus because people get that there is intelligence coming out of the university, coming out of state capital, coming out of the Fortune 100 companies that we have here, and there is an opportunity to step right in and tap into that intelligence, tap into all the other resources that allow people to come in and do big things. I will say, organizationally speaking, I think the leadership in this city is really focused on doing all the right things. It's very collaborative. There are groups that I'm a part of, where you have CEOs that otherwise, in most cities, would be very competitive, that are collaborating to solve the city's biggest issues, and I think we're seeing the results of that.
Deidre Woollard: How did the city come together during the pandemic?
Brett Kaufman: Phenomenally. I have to tell you that it was one of the silver linings to a very difficult time. We are seeing how people came together. Certainly, after the George Floyd murders, there was a tremendous movement for leadership in this city, for CEOs, for people in the community coming together to be together at a difficult time. Same is true for, whether it'd be the restaurant industry, or the housing industry, or any number of people that had challenges throughout this last year, there has been a tremendous effort to come together, to collaborate, to support each other, to invest in each other, to do what it takes, to come through and be better off at the end. I think Columbus is a city that really does that very well.
Deidre Woollard: Wanted to ask you what's happening with Columbus's central business district. One of the things that we're tracking is with people being out of the offices, if central business districts are having a little bit of a trouble. What are you seeing?
Brett Kaufman: I think Columbus is a central business district. In our case, that can spread. Our downtown is large when you consider all the surrounding areas. It's quite a big area, but that's where the energy is in this city. These venture-backed companies, the start-up ecosystem, even the more traditional companies, they want a presence downtown. That's where the energy is and that's where you've got to recruit and retain talent, is to bring people into a high energy environment. That's what we've been creating here over the last decade, and that's where people want to be and that's where people are returning. I'm very much a believer that people want to be together, that work isn't just a thing that you do to get stuff done. It's a social experience, and there's a lot of collaboration and a lot of efficiencies of being together. We're seeing people return to their offices. We're returning to our office, most of my colleagues are doing the same thing, and that's really fueling that return of that vibrancy to the central business district.
Deidre Woollard: Excellent. From a rental property investor's standpoint, what neighborhoods in Columbus are growing, and which ones offer the best opportunities for people that are looking to do some research?
Brett Kaufman: Well, I'm really big on Franklinton, which is just on the west side of our downtown. There's a lot of creative energy in that part of Columbus, which to me is always the sign of where the growth is about to happen. I follow the creatives, I always have. Maybe that's personally because that's what I'm attracted to, that's what gets me excited. But I also think just fundamentally, that's generally a good indicator of where development is about to happen. Franklinton is my first choice in Columbus. Our Short North neighborhood, which is our former creative arts district, it's a little bit more of a entertainment district today, is probably the hottest real estate in the city. There are some opportunities still there, so that's a great bet as well. The central business district is really continuing to be developed. We've done a number of projects there. The city has been heavily invested in creating public space, redoing our riverfront, and all of that's really paid off to make the core of downtown a very attractive investment opportunity as well.
Deidre Woollard: Is there opportunity downtown as far as multi-family, or is it mostly an area with office buildings?
Brett Kaufman: Mostly, the opportunity, I would say is on the multi-family side. That's where we've seen most of the development. There have been some new office buildings. We've built a couple of them, we're building one now, so there is office development that's happening successfully. But you're seeing a lot of hotels, you're seeing a lot of apartments, you're seeing some condominiums. The residential side of things, it has grown tremendously. We've probably built well over 10,000 units over the last seven years, and that continues to be a big part of what the activity is downtown.
Deidre Woollard: What do you think the biggest challenges are, that the city faces?
Brett Kaufman: Well, it changes from time to time. Right now, construction costs are really high, so that's making projects difficult. I think that the retail environment is one that is very much in question right now. It's critical for us to have the entertainment, the restaurants, the shopping, the things that people want to do. Having that downtown, I think, is really important to create that sense of place and that full experience that people are longing for. I think those things are challenges but I think all of them can be overcome. They have been and we continue to see progress. I think the affordability issue is one that is top of the list, has to stay there. We have to have a community that is holistically thinking about everybody, it cannot just be a gentrified area that is only for people who can afford it. That does not make for a good community. That will create unintended consequences, real problems. I've seen that. I've seen it in Austin with the homeless situation. I've seen it in other markets. We've got to really keep affordability probably at the top of the list and making sure that, one, we're providing enough inventory because that by itself makes a difference, but two, that we really have strong affordable solutions to tackle affordability?
Deidre Woollard: Yeah, I think that's very true. As we wrap up, I want to know a little bit about what projects you're working on in the area and which ones you're most excited about?
Brett Kaufman: Yeah, sure. Thanks for asking. We've got a couple of projects that we're really excited about. Gravity is our largest focus right now, a community that we've developed one phase already called Gravity, and the second phase is under construction right now. In total, it will be probably about 15 acres of urban infill development. It's probably close to 1,000 apartment units, several 100,000 square feet of office. First floor retail, there's co-living, there is affordable housing, and a lot of placemaking around the yards. We are focused on what we are calling, and others are calling, conscious communities. Our communities are really focused on an experience, an experience that's elevating, that's transformative, that allows people to connect to the things they are passionate about. That allows them to collaborate with other people that they have shared interest in and really hoping that we can do more than just build spaces for people to live and work but we can build communities where people can thrive and transform and be better off and that hopefully, that will be our way of making a difference in the neighborhood, in the broader community, the city, and the world. That's our focus, Gravity. I think it's the largest conscious community in the country. We're really excited that it's here in Columbus, and we're leaning into some other concepts. We have another project in the Short North called The Greenhouse, which is solely focused on wellness, nature, and transformation. It's really a heavy focus on biohacking and simple habits to live a healthier, better life, a nature aspect that really allows for people to connect to nature in an urban environment. Those are two signature projects and brands that we're really excited about and looking to see those come to life this year.
Deidre Woollard: Well, that's really fascinating to me because you've mentioned two trends that I think we tend to think of as being big city trends. Co-living and also wellness as an amenity. For New York City, wellness as an amenity started to be baked five years ago. It's great to see that this is something that is really coming to smaller cities as well.
Brett Kaufman: Yeah, I think that wellness as an amenity is something that has been around in a variety of ways for many years, and to your point, and usually, the bigger cities, what we're finding is that people in the Midwest want the same things, the people on the coast want. Many of them don't want to go to the coast, and they can't afford to, take the time to, so we're bringing it here. I think it's more than an amenity. I think this is a necessity. I think this is what we need as human beings to live healthier, happier lives. We have got to take the time to work on our mental health as much as our physical health and those are the facilities, those are the experiences that we're trying to facilitate. We're trying to really bring people a truly holistic experience so that they can live a happier, healthier life.
Deidre Woollard: I just love that. Last question, why should someone come to check out Columbus whether they're real estate investor or not?
Brett Kaufman: There's a lot happening here, there's a tremendous amount of opportunity. Certainly, from a real estate standpoint, when I look at cap rates and I look at returns, I don't think you can get the returns, and so I think it's a great place to be investing. I think the next decade here in Columbus is going to be transformative. I think you're going to see what has been laid a tremendous foundation to really have us on scale, we've got a number of venture back companies now that have created billion-dollar exits and generating thousands of jobs, and it's the right kind of jobs. Again, universities, state capital, there's just a lot going on here, so we're extremely bullish on Columbus from an investment standpoint. Then just personally from, why would I want to live, work, visit, there is a lot going on. We have a great amount of culture, arts, again, affordability, accessibility, access. You can access your state government, you can access local government, you can access leadership very easily. People are very open, they're very welcoming, they're very collaborative and it's just a great place to live, work, raise a family, great schools. I really felt blessed to be here and had an opportunity to start a business, grow a business, raise a family. I wouldn't really want to do it anywhere else.
Deidre Woollard: Perfect. Thank you so much for your time today.
Brett Kaufman: Thank you. I appreciate the opportunity.