In this episode of Concrete Credentials, Gregg Lewis, AIA, LEED AP and Executive Vice President, Strategy for the National Ready Mixed Concrete Association (NRMCA, sits down with Jerry Reimer, Founder and President of Urban Waters Development. They discuss his background in international consulting, and discuss how that has translated to a passion for equitable, sustainable, community, and affordable housing. They talk about the role of concrete and ICFs in developing accessible, dependable, affordable homes, and Jerry explains his reasoning behind using ICFs in his upcoming projects.
Gregg Lewis sits down with Jerry Reimer, Founder and President of Urban Waters Development. They discuss his background in international consulting, and discuss how that has translated to a passion for equitable, sustainable community housing. They talk about the role of concrete in developing accessible, dependable homes, and Jerry explains his reasoning behind using ICFs in his upcoming projects.
Gregg Lewis:
Hello, and welcome to today’s installment of Concrete Credentials. I’m Gregg Lewis, executive vice president with the National Ready Mix Concrete Association and our guest today is Jerry Reimer. Jerry is a graduate of Thunderbird at Arizona State University, where he earned his MBA. He has worked for companies in domestic and international assignments that had revenue ranging from $40 million dollars to $16 billion annually, including Honda R&D, EDS, Deloitte, Omnium Worldwide and NDS. For the past 15 years Jerry has built, renovated and managed apartments in Omaha and devotes 100% of his time to pursue his real estate development ambitions. He has a team who builds and manages apartments with 1200 units in his current portfolio.
Jerry, welcome to Concrete Credentials.
Jerry Reimer, Founder and President of Urban Water:
Thank you so much for having me. It’s my pleasure.
Gregg Lewis:
Really glad to have you here today. I’d like to start our conversation with what inspired you to shift from business focused roles to your current career in the world of real estate development?
Jerry Reimer,:
Yeah, it’s interesting. When I think about the word shift, from a young age I actually had an interest in apartments and my father was a drywaller, didn’t really have a retirement. They inherited $500 and they bought a four unit apartment building. Growing up, thought it was a good idea, why don’t we do more and they suggested that we didn’t have enough down payment money. Somewhere along the line, I concocted an idea that if I could get a “real job” and they would send me abroad and pay for my housing and perhaps give me a per diem or a stipend, then I could save more money than an average guy. I got a scholarship from the Japanese Ministry of Education when I was in college, I studied in Japan. I got a job with Honda Research and Development. My bosses were all Japanese, the computers were online to Japan, they didn’t speak English. Rice, miso soup in the cafeteria.
I bought a duplex and started remodeling it on nights and weekends while working at Honda. After that, I went to graduate school and was able when I graduated to get a job with Electronic Data Systems, which was Ross Perot’s old company and they wanted to send me to Tokyo. I like to say I was a migrant worker, but instead of chasing the dollar, I chased the end. I literally worked in Japan for nearly four years. The company paid for my housing, they gave me $100 dollars a day spending money. Roughly the first $70,000 of a person’s income was tax free at that time when you lived abroad and I sent money home and started buying fourplexes and eight-plexes and had a longer term goal that one day I would step out of corporate America and work in apartments specifically full time. That’s how I ended up in the apartment business.
Gregg Lewis:
Why apartments versus say commercial real estate development?
Jerry Reimer:
I ultimately got an MBA, had a lot of corporate training and especially at Deloitte Consulting and we were very much taught to be subject matter experts. I was not a subject matter expert in real estate. My mother might have thought she was a subject matter expert in fourplexes because we couldn’t hire anybody to do anything for us because nobody could do it better than we could. I guess I declared that I was a subject matter expert by default in apartments and just continued to focus on apartments. In many ways I have been doing it since I was eight years old, answering phone calls, shadowing my parents doing showings, maintenance calls. I just wanted to be a subject matter expert and focus on one thing and that was apartments.
Gregg Lewis:
Very cool. How’s your Japanese?
Jerry Reimer:
It’s not too bad. Well, it’s probably rusty today. On a one out of 10 I’d get myself about a six or a seven.
Gregg Lewis:
All right, that’s great. Not an easy language to pick up. You received several awards from the multifamily development community and the construction community for your work. We were together at the Multifamily Executive Conference in Vegas where you picked up an award in 2021. Can you talk about why you received those awards and how your work has evolved over the past 15 years or so to get you where you are today?
Jerry Reimer:
Yeah, I appreciate that. I actually think some of this does go back to my corporate training. I’ve worked for some Fortune 500 companies when I was a consultant for Deloitte, we would go in and consult for Fortune 500 companies. There was a lot of emphasis on setting benchmarks, setting new industry standards, being thought leaders, being innovative and so forth. I think in my corporate upbringing, if you will, that was instilled into me.
As I studied apartments, it occurred to me that in many ways, since the interstate system that was really built in the ’50s and ’60s and so I’d say the output is the ’70s, the apartment industry for the most part, in my opinion, has been building effectively the same apartment style, garden style apartment complex since the ’70s. We’re really 50 years later and we’re just in my opinion, copying and pasting the same product. So I set a goal for myself and my team, could we set a new standard for the next 50 years that the industry would take a look at and perhaps rip off and duplicate?
Gregg Lewis:
That’s great, so really innovation. I mean, it’s clear from MBA school, through spending some time in Japan, I’m sure you’ve found and been exposed to all kinds of innovative concepts. It seems to me that’s a logical or natural extension in terms of how you brought that to bear in the work that you’re doing. Obviously being recognized for that by industry, is I think a hat tip.
Jerry Reimer:
I appreciate that. A couple things occurred to me. One of the things is as a young person, I was in my 20s when I went to Japan. As an American, many Japanese just assumed that I was an expert on America. Was like, “Why do Americans do this? Why do Americans do that?” I’m like, “That’s a really good question. I have no idea.” I do think there was some conditioning there to be reflective. Then something again, that I learned in my Deloitte days was that we would go in and challenge what was called legacy assumptions. You might go in and ask someone in a department, “Why are you doing it this way?” In many ways the answer was, “Well, this is the way we’ve always done it.” What I started to learn was that the person who invented that process 20 years ago was solving to a set of criteria, problems, conditions, and came up with a solution. That very person may not come up with the same solution today with a new set of problems, but we’re still doing it the old way.
Again, we were trained to look for legacy assumptions. I think again, I applied that to the apartment industry and I’m like, “Where are the legacy assumptions in our industry that may not be serving us today?”
Gregg Lewis:
It opens the door or the proverbial Pandora’s Box. All of a sudden you’re saying, “Well, I’m interested in breaking the mold. I want to challenge these assumptions about why we do the things the way we do them in the apartment business.” A lot of that development obviously has not necessarily had a positive impact on the way our urban centers have developed. One of these garden style apartments that continue to spring up everywhere have pushed, at least from my perspective, pushed aside the so-called missing middle in real estate. I know that’s something that you’ve thought about and worked on yourself. Can you explain for our listeners, I guess first what that is, and then why it’s so important to community development from your perspective and how you’ve sought to address this need in your own work?
Jerry Reimer:
If you think about missing middle, a guy named Dan with Opticos coined that term. Back in the ’30s, ’40s, and ’50s and ’60s missing middle wasn’t missing, it was the norm. I generally define the missing middle as smaller buildings, rental properties, two units, three, four, five, six, seven and probably up to about eight units in a building. They tend to be designed more at a human scale; two stories, maybe two and a half stories. They historically would’ve been built on the grid system. If we think about how American land was originally laid out, it was in the grid system.
That speaks to me something else from a legacy assumption. What is interesting to me is unintended consequences. There’s a book that is titled The Color of Law, that takes a look at some of the historical court decisions around segregation and then some of the changes that came from zoning out of those court cases. What’s really quite interesting in the world today that aspires for affordable housing, I would propose that we give some consideration when those court cases said, “Our communities are not allowed to segregate,” there are communities that then passed zoning laws with the intentionality to then make the housing unaffordable for minorities. By designing the codes and the zoning to make it unaffordable for minorities, it occurs to me that we may be living with that legacy assumption that was a very intentional direction and multiplied over a number of years. Our system has a hard time developing and delivering affordable housing, but in fact, our system may be strategically aligned with that strategic initiative to not develop affordable housing.
The missing middle, I get some credit, wow, look at this new innovative product. I simply said, and again, this was my Deloitte days, “When did we have affordable housing? What was the housing like before we put those segregation laws, countermeasures in place?” Well, we had a grid system for development. I actually pulled this up with the city of Omaha Planning Department the other day for some civil engineers. I pulled up a grid system of Santa Monica. There’s lots of beautiful residential missing middle housing and I propose we’re not allowed to develop that today.
The missing middle is a challenge in the sense that I would say it’s a relatively easy product to go and reconstruct in an urban setting where the missing middle and grid system and alley system was already in place. But from a land use perspective today, it’s very difficult for me to buy land from a developer who would already have the land put into a grid system that would allow for multifamily. Because even the garden style apartments, they’re gated off, they’re segregated off. Whether it’s a road, but it’s a complex. How many apartment people are allowed to live in a neighborhood? The missing middle allows for people to live in a neighborhood. But again, going back to this Color of Law, there was a conscious effort not to let those people in our neighborhood. So we have now created a zoning system where apartment people aren’t allowed in our neighborhood. That is not efficient and it’s not affordable.
Anyway, that deviates a little bit, but so this is why the missing middle, I think, offers a lot of opportunity in the future to address some of these issues. Because there was a model in our history that allowed for economically integrated communities. I think many of our communities are now segregated by household income. This neighborhood’s $300,000 to $400,000, this neighborhood’s $500,000 to $700,000. Hey, you shop at Walmart. Hey, I shop at super Target. Hey, they shop at Whole Foods. Hey, Whole Foods builds near these type of neighborhoods. While we don’t call it racial discrimination anymore, our zoning in fact segregates our community.
Gregg Lewis:
Maybe a tangent, but to me it’s not. It’s central if we talk about the way our cities should or could develop from an equity standpoint, it strikes me that what you’re talking about here is the history of how we evolved away from that. Bringing back the missing middle in a lot of ways is addressing the question of equity, I think. At least that’s how I hear you.
Jerry Reimer:
I can speak to that firsthand. We developed a project in a suburb of Omaha called Pavilion, the Bungalows on the Lake. It’s a missing middle project. We basically designed it as the grid system. I wasn’t able to buy land from a developer, I’m not a developer so I just had to go buy enough land to fake it and try to figure out how to be a land developer and put in the streets. We’ve done this and so we have apartments that range in rents from let’s say $900 to $3,500 now. That suggests that the household incomes are four times higher for the person with the $3,600 rent than the $900 rent and they live across the street or they live in the same building and you can’t tell which resident is which. But that’s a lot of economic diversity and a lot of economic integration.
Again, that would’ve been normal back in the day before we started segmenting our neighborhoods that, hey, the banker lives in the big house. He builds a duplex across the street for his mother-in-law and the bank teller that he hires lives in the little corner streetcar apartment on the corner of the streetcar and the maid lives in his carriage house out back. We had a community with a wide range of skills, then the social bridges, just the natural running into your neighbor and having empathy for that person that you see, it creates community. I studied apartment complexes and I’m guilty, I own a few. The rent ranges in them are pretty narrow. It’s a pretty homogeneous population from an economic perspective.
Again, I think we destroy some of the social bridges that the missing middle communities and the old grid system used to encourage. Again, whether they were encouraged or whether they were default, I don’t know. But we rebuilt one and by golly, it seems to be working the same way that it did. That’s what missing middle means to me. But again was with an effort to create a new model and to challenge our industry. I’m a big believer in voting with your checkbook. It’s easy to have an opinion. It’s easy to go put something out on Yelp, but I believed in this enough that I was like, “I’m going to write a check and test this.”
Gregg Lewis:
This is fantastic. Think about the future health of our cities and the way that we develop our land. To hear you talking about what really in some ways is a retro vision I guess you almost could say, but it’s clearly brought in with a modern mindset. There are all kinds of ways that I think your development work that you’re doing reconstructing the missing middle, to me it necessitates a whole series of additional questions that I’m not sure we’re going to have time for. But I’d love to have a conv-
Jerry Reimer:
I’ll throw something out related to that, I think even in the world of concrete. It’s an old story from little kids, but it’s what are the three pigs? Builds out a straw, builds out of wood, or builds out of brick. In many ways we’re building throw away suburban housing. Again, we’ve tested out with our missing middle product to use some insulated concrete foam in the concrete and the durability and the longevity of that product, it’s much more like the three pigs. Hey, it’s the brick. But when I’m building out of the sticks or the straw, am I really just building in the suburbs again to just throw it away in the future? In some ways it feels like that.
Gregg Lewis:
The disposability of our mid-rise apartment buildings, that’s an idea that certainly has occurred to me and I think many others, at least in the concrete industry and people who come in from overseas. I think most of the world builds out of a more robust construction methodologies. And here in America, we build a lot of stuff that, I mean, your word temporary. It certainly seems to resonate with me. When you took this on with the current project and you’ve got this project where you’re, if I understand it and feel free to correct me, but a portion of the project is built traditional stick frame, and a portion of the project is being built with concrete and ICFs. What led you to that, I guess is my first question.
Jerry Reimer:
At a high level, I am always interested in challenging the norm and being innovative. I had had my eye on the insulated concrete foam. I was unclear whether the first in cost would be more, equal to wood, or something along those lines. In fairness, I probably wasn’t quite ready to pull the trigger. I was still more in the investigation stage. But then when the wood prices shot up as much as they did, it became very concerning to me that if wood prices were to settle back down, that it’s conceivable that I would build an apartment unit and my wood cost would be $15,000 a unit more than the building I just built. But more importantly, what if in six or 12 months, my future competition built another wood building and the prices had settled back down? Now they had same product as me, except they had a $15,000 per unit cost advantage.
At that moment in time, I wasn’t sure where the insulated concrete foam would come in, but it wasn’t coming in more expensive than the inflated wood. So I thought, “Well, my downside is minimal and if I end up with a product that is superior, which I am convinced it’s a superior product and the wood prices went down, then my competitor would have the cost advantage, but I would have a superior product.” One of my questions was would my resident pay for that because the energy efficiency is much higher, the sound ratings are much higher. Perhaps my longterm maintenance would be better. But regardless, it would give me an opportunity to see if my customer would pay for the differentiated product. Because in the future, if, for example, I see it were to be more expensive, but my customer can distinguish the quality difference and is willing to pay for it, then I could conceivably get the same rate of return, whether I was building out of wood or insulated concrete foam.
Due to the pandemic and the spike in the wood, it just seemed like a fairly opportune time to test this hypothesis without additional risk, if you will and frankly, it may prove to mitigate some of my risk. That’s the process I’m in right now.
Gregg Lewis:
Let’s talk about that in terms of mitigating the risk. Can you explain a little bit about what you mean by that?
Jerry Reimer:
Well, I mean, the number one risk that I wanted to mitigate was that I didn’t have a wood product and you build it six months later and have a wood product and yours is $15,000 cheaper than mine. If I was going to be $15,000 per unit more expensive than you because I decided to keep on building, then I at least wanted to have something else to sell or to promote to my future residents. That was the number one downside that I was trying to mitigate.
Gregg Lewis:
Have you started leasing?
Jerry Reimer:
Unfortunately, we have not started leasing the insulated concrete foam buildings yet. The construction is
Gregg sits down with Jerry Reimer, Founder and President of Urban Waters Development. They discuss his background in international consulting, and discuss how that has translated to a passion for equitable, sustainable community housing. They talk about the role of concrete in developing accessible, dependable homes, and Jerry explains his reasoning behind using ICFs in his upcoming projects.
I don’t know, I might be shooting myself in the foot there and then advertising that, hey, my wood product’s noisy, but it is noisy compared to the concrete buildings.
Gregg Lewis:
Yeah, the noise issue is a big one. The other thing is speed of construction and it struck me, I was reading where I don’t know if you had encouraged it or if the natural competition led to them wanting to see who could do it faster.
Jerry Reimer:
Yeah, that was the theory. I will say the current supply chain is cramping my style a little bit. We have ICF buildings that are waiting for their wood roofs. I have framers building the same buildings out of wood and so they’re neck and neck. But at the same time, because of supply chain constraints, we’re not running normal, so then it’s hard to determine whether it’s the supply chain. Anyway, we just haven’t gotten a good cadence and at this point neither product has a good cadence.
Gregg Lewis:
All right, fair enough. The competition, your competition, such as it is, and builders and other developers who are out there, who are stuck on the idea of that stick frame is the only way to build affordably, how would you answer that? Or how would you address that question?
Jerry Reimer:
I hear a little bit of all or nothing in that type of mentality. As a side passion, I study neurobiology and one of the 14 human thinking errors is all or nothing thinking. I can see a day when I have enough distinctions in my product and building types that hey, for this segment of the market, I may choose to build a wood building because they’re more price sensitive than they are noise sensitive. I may have another clientele who’s more noise sensitive and less price sensitive and are willing for me to [inaudible 00:23:13] if in fact it’s more capital to do the ICF building, which is not necessarily proving to be the case. But I’m just saying, I don’t want to fall into this all or nothing mindset.
I think a lot of our industry, we’ve been doing it this way for the last 50 years. It’s working, why change it? Is it because it’s superior or is it because change is risky? I think it’s more psychology than it is facts.
Gregg Lewis:
I would totally agree with that and I’m glad to hear you say that. We’ve covered a fair amount of territory here, and I’m delighted to hear your perspective on how this development effort that you’ve been involved with really is leading the way in changing things, breaking that mold. I’m very encouraged by that. I guess what I’d like to close with for our conversation, is if you had a chance to leave our Concrete Credentials audience with just one takeaway from this conversation, what would that be?
Jerry Reimer:
One of the things that occurs to me related to building affordable housing for example. When I say affordable, I’m talking about market rate housing that hardworking people can afford to rent without a subsidy from the government or something. The building codes, there’s a lot of stakeholders when I go build a building and a lot of people have a say and a lot of it’s around public safety, for example. The building code itself is made up of 6,000 volunteers that all put in what they say. Then the city’s write ordinance and call it law. I think there’s a lot of selfish interests that are built into our building codes that have not necessarily thought of the whole picture, but have made products called out specifically or the code requires you.
So participating in the building code process and hey, calling up public safety or energy efficient and some of those things, I think the competitors do. Now, that’s a selfish way to go at it, but it works because then the code says I have to use this, or I have to use that. If you could just go codify your product well now then developers, I don’t have a choice and we just continue to build with what we have. Again, you may want to retake on that one.
Gregg Lewis:
No, to the contrary, that’s a government affairs line of thinking and it’s certainly, I know for our concrete producer members, we’ve had conversations about getting them involved in the code development process, having a seat at that table and the value of having a seat at that table so that their interests are represented. Ultimately, I think the concrete industry’s interests align with people who want safer, more resilient structures.
Jerry Reimer:
They do, and they’ll also align with the energy code. For example, right now if I were to build a duplex under the IRC code, I would need a two hour firewall in between the two units. Well, if I go build a Fox Blocks wall with insulated concrete foam and pour the concrete in, I’ve probably got a three hour separation. So I’ve easily hit or exceeded the building code and I’ll beat the energy code for sure. Again, I think there’s ways through the codes that your product may or may not get credit for what it’s already delivering.
Again, that’s one of the things that I can see using the product. I am building a superior building for hopefully equal cost. If it ends up being a touch more, I won’t know if it was this product or with all this inflation, I mean, there’s so many moving variables right now. But what I will be able to tell is that I have a finished product in wood that’s just like my finished product in concrete and we will be able to go in with sound instruments and measure the difference and the tenants will be able to see it. I’ve already got some early indications from some of my existing tenants that they are going to choose to rent the insulated concrete foam buildings because they want quieter and they’re not worried about a hundred dollars here or a hundred dollars there.
There’s a little bit of stay tuned here, because I did this so that I was no longer hypothesizing. I’m going to go get the data and put it side by side. We’re going to have the electric bills from the air conditioners, the gas bills from the furnaces and we’re going to have the same square footage of units, the same unit types. We’re going to be able to measure those utility bills side by side and we’ll take the guesswork out of this. I just haven’t finished construction yet.
Gregg Lewis:
We obviously then owe it to ourselves to have you come back when you’ve furthered your data development and have those buildings leased up. I hope we’ll be able to come back and talk about the after lease up questions. This has been fantastic. Jerry, thank you very much for taking time out from your projects to speak with us. We look forward to coming out to Omaha to tour the project, we hope.
Jerry Reimer:
I look forward to having you guys and I will share that data with the industry so people can make sound financial decisions based on fact versus projection.
Gregg Lewis:
Thank you, Jerry. We’d also like to thank you, our Concrete Credentials podcast listeners. Please remember to subscribe to Concrete Credentials, which is available wherever you get your podcasts. We also strongly encourage your participation in this important conversation. Please reach out to us with your thoughts and feedback, as well as your suggestions for future content by emailing [email protected].
. Thank you.