THE HIGHLINE LOWDOWN
Jonathan Arnold: On Legos, Frontiers and the Genus Loci of Kansas City.
Brett: It’s on there, but let’s start with this. You’ve been doing development in Kansas City for how long?
Jonathan: Twenty-one years.
Brett: Twenty-one years. Why did you decide to proselytize yourself on the altar of Kansas City Development?
Jonathan: In New York, I met an amazing girl. On our third date, just as I was entering grad school, she said, “This might be going somewhere, so I feel I should tell you I just took a job in my hometown of Kansas City.” So that started a long-distance relationship where I would come and visit on the weekends. Kansas City, at that time, was just starting its 2001/2002 urban renaissance. The city was like a blank canvas. Each weekend, I would come, and I would find an old building or a lot, and I would run some hypothetical project. I would bring it back to my professors. Then, after graduating, I moved out here, picked a couple of canvases, and started developing.
Brett: What did you study?
Jonathan: I was a Master’s in Real Estate Development at Columbia, which followed a Bachelor’s of Architecture at Cornell. I started in Architecture, worked a brief time as an architect, and then realized that to have the type of impact I wanted to have I probably needed to go to the other side of the check-writing table and make more decisions.
Kathryn: How did you get interested in architecture, to begin with?
Jonathan: I grew up in a suburb of New York City. Every day when I would walk home, I found myself gravitating to houses that were under construction, and I would befriend the contractor. They would say, “Just don’t get hurt, kid.” Then when I was 13, some friends asked me, “Do you think you could build a clubhouse for us?” So I did my first syndication. I raised $300, and we built a two-story house in his front yard that had electricity and cable TV. From then on, I was hooked. I was like, “I want to be building stuff. This is what I love to do.” We got a letter from the town saying, “You do not have authorization to build this structure.” We took the house down piece by piece, and rebuilt it in the backyard where no one could see it.
Kathryn: Since you’ve moved to Kansas City, it used to be a blank slate, what do you think now of how it has transformed and the state of downtown?
Jonathan: The thing that struck me about Kansas the most, when I first moved here and started to meet other developers, was contrary to what happens in New York where every developer just thinks it’s a zero-sum game: I win; you lose—dog eat dog. Here, developers help each other to get more projects done because I think there’s this understanding that if more good projects get done, Kansas City will be more successful and everyone wins. That was so refreshing.
There was a happy hour where before we all had kids, every Friday, a bunch of developers would get together and talk about our projects and help each other out. I think that is one reason why I think Kansas City has flourished. I think the leadership, in terms of knowing how to use incentives to get projects that should get done to get done, has been fantastic over the last 20 years. Not everything is perfect—I think the millions of dollars of investment, the public transportation, a lot of progressive thinking in Kansas City.
There’s a quality of life here with very little traffic and relatively affordable. Now that we, as a country, have rediscovered that we are social beings, we don’t want to spend all of our time just driving around isolated in boxes, which I refer to as rehearsing for death. We want to live in places that are socially connected. It’s been fascinating to see that happen in all sorts of different shapes and sizes around Kansas City.
Brett: I want to go back to what you said about Kansas City being progressive. Sometimes, we feel like it’s the opposite. Sometimes, we feel like it takes ten years for the cool stuff that’s happening in other cities to happen here. What is the evidence that Kansas City is progressive?
Jonathan: Let’s start off with—I don’t think Kansas City is uniquely progressive, but I think there is a strong community among developers, artists, culinary, and music that over the last 20 years have been working together to organically create. There are really amazing spaces. Let’s start with the Crossroads District. The artists moving in, the pioneer work that Stretch and Suzie Aron did with getting the art scene, First Fridays, which led to lofts, which then expanded to the work that Mel Malin and Dana Gibson did way ahead of their time in terms of seeing what urban loft housing could be and what the market was and what it would grow into for, especially, young people that were years away from having kids and wanted to live in places that were socially connected.
Then, let’s look at the leadership of Kansas City and what they did when we brought a very progressive green building project to them, which was one of the first of its kind in the country of this size. They recognized the importance of being leaders in sustainability and resilient design, and they said, “We want this in our city,” and they stepped up to the plate with incentives to help make it happen. That alone is a very progressive leadership stance.
Brett: I think that’s compelling evidence. What’s interesting, too, is the word you used, organic, that grew organically from a group and collectively was supportive versus maybe those other cities you mentioned where developers are not acting in a collective manner. If you could look back—you mentioned a bunch of others. Are there any Seminal projects besides Second and Delaware that you think got us to the next level?
Jonathan: The wonderful thing about our growth is that it has been incremental. It’s like when you build a Lego ship with your son, or if you’re doing it on your own, each individual piece might not look like that much, but you step back and add them all up. It’s a huge impact. I wouldn’t point to any one as the biggest. If you want to look at things that maybe changed the perception from outsiders, I do think that the entertainment district, the Sprint Center, and then removing all that blight.
Some of those big projects were also very catalytic, but I would give equal credit to the individual early loft, condo, rental, warehouse adaptive reuse, galleries, and restaurateurs that moved in as building that place. When people come and visit from outside of Kansas City, they are absolutely blown away by the eclectic wide range of really fun and interesting places to go to.
What also blows them away is how you run into people on the street that you know. That’s so often. They’re like, “How do you know all of these people?” I don’t know. We’re all working together. I would bring capital advisors through. I would be giving them a tour. We would literally walk from the River Market to the Crossroads, and I would run into three, four, or five people that I knew and had worked with them in some fashion. They were shocked at that because that doesn’t happen in a city of seven million people. So I think we value relationships very highly here.
I have a theory about this. There’s a book that a professor tipped me off to what’s called Genus Loci. It’s called Mind of the Place. The theory is that in every city when it gets first established, there’s an ethos that gets set. Technology might change, transportation might change, and buildings might get taller, but that ethos stays with the place. There are examples like California, which settled during the Gold Rush. It is a place to go, go, go. Land speculation happened after the Gold Rush, selling all the land, and the tech companies.
I think what Kansas City has in its “mind of the place,” is that it is one of the first frontier towns. St. Louis is still an East Coast town. When people moved to Kansas City, they were leaving their support networks. They were leaving all of what they knew. They knew that “I might need help from you or you over the winter.” I don’t know all of this stuff. So there’s this spirit of let’s work together. We’ll go farther. I think that’s been Kansas City’s secret weapon since its founder.
Brett: Yeah. Where do you think the next crossroads is?
Jonathan: I think it’s in the Northeast.
Jonathan: Well, Kansas City’s geography has a lot of elevation changes, natural barriers and highways that prevent development from going west. In the Historic Northeast, you can’t go much further west before you fall off a cliff. I think that getting back to that blank canvas where transformation and artists who are the urban pioneers go in and are the first group to come in and make a fantastic change, the opportunities for them are largely going to be toward the east. I think the building stock in the historic Northeast, the historic buildings that are able to be renovated from single-family homes, the small ones to mansions, and then there are some large warehouse opportunities that I’d liken to Brooklyn. People are leaving Manhattan for Brooklyn, not just because it’s cheaper but because they have a better quality of life. It’s not so congested. They have trees. They have more nature. They can breathe, and yet, they are still close to downtown.
Brett: That’s interesting. It made me think of two things. In general, artists don’t have a lot of money, and they are aesthetically oriented – does this essentially mean they can see “possibility” in a place and have the talent to make it cool? I don’t know if I’ve ever heard real estate developers ask “Where were the pioneering accountants?”
Jonathan: I think artists are driven by principle, purpose, and the desire and need to create. For that, they need space. They have no idea whether it’s going to make any money. Quite honestly, for most of them, that’s not the driving force of why they’re doing it.
Kathryn: Yeah, motivation.
Jonathan: So access to large, affordable space that is also close to other artists and not isolated is what, I think, they’re looking for. I think you can say that not just for artists, but anyone who is just starting out. A lot of people are moving to places that are affordable and they can get into. But then there are other people that don’t want to be the pioneers. They want to move into a place where all of the restaurants are there, the markets are there, the transportation is there, and the streetcars are there. Fortunately, Kansas City has a lot of great neighborhoods that have all of those things, and there are more that are developing at the same time.
Brett: A term or concept that we use is that there is a difference between a thermostat and a thermometer. The thermometer adjusts to the temperature, whereas a thermostat sets the temperature. What are the things that you feel have set the temperature versus just measuring the temperature?
Jonathan: I’m going to say that in different neighborhoods, it’s different things. We talked about the Crossroads. I think the art scenes, galleries, and the Crossroads Association set the temperature. There’s an active group that took initiative and through blood, sweat, and tears and working together created something that thousands of people want to come to on every First Friday of the month. It’s become a staple in people’s social calendars to go out and experience art.
I would say if you take the River Market, the setting of the temperature was the collection of small businesses that represent dozens of ethnic food choices in the City Market and all of the farmers that are there. So you have their passion, their art, and their blood, sweat, and tears to create something that has amazing food choices. Food brings people together. Then when there is something that people want to go to, people, naturally, want to live near it. I think that resulted in a lot of apartments being built around it.
Kathryn: It’s like culture driving development versus development driving culture.
Brett: You can spot development trying to drive culture, and the notable failures are legion. Right? No offense to Park Place and South Johnson County.
Jonathan: It’s a great point. I think the social science behind this reorganization of the country is that at its very basic roots, we are social beings. Some of us are introverts and extroverts, and that comes out in different ways, but we all still need social connectivity. There are studies done around the country showing how people value living in a walkable neighborhood. There’s a premium that people will pay to have that. Part of it is that their transportation costs are lower. You have to remember that in order for something to be walkable, there have to be things that people want to walk to. The best things that people want to walk to are of the place, local, authentic, eclectic, and interesting.
Kathryn: I wanted to touch on sustainability. It seems like your ethos around development has been focused around doing what’s right for the environment. Can you speak about where that comes from, how to do it well, and how to do it right?
Jonathan: Sure. I’d like to frame sustainability in a wider context because I think to understand why I do what I do, we need to step back one step. I grew up as a son of an epidemiologist who spent his life focused on educating people about the ill effects of cancer, largely created by smoking and heart disease. For most of my life, I felt like he was getting nowhere. People keep smoking; they’re not stopping. He worked for the American Health Foundation. They were relentless in going after either legislation for the labels or no ads so that ads don’t get put in front of school kids—all of that stuff.
Then when I got to college, they passed laws that you couldn’t smoke in bars and restaurants, and clothes didn’t smell that bad. I was like, “Wow.” It took a while, but what a huge impact it had. Now, I had no desire to go into medicine or epidemiology at all, but to have that impact, to let your life and your interests intersect where the world is going, and to be part of that movement was really inspiring to me. So I stepped back and I said, “Where did we come from? Where are we going? Where do my interests lie, and where is that intersection?”
Sustainability is part of that, but I think it’s three things. The first thing that got me interested in community building was looking at the loneliness epidemic that we have. We have a lot of people, whether they are seniors or latch-key kids, who are isolated as a result of how we’ve built our environment. So addressing our social health and mental health is something that I saw that architecture and development could be impacting. Second, climate change: buildings and transportation are the majority of our carbon emissions. We know how we can cost-effectively reduce that by 70-80%, which we’re working towards in our projects. Then, the last area is about resiliency and affordability or attainability. There’s another issue that we have where we have to create buildings that last, that have a wide range of affordability levels so that those people that are serving you coffee or are working in the art gallery, restaurant, or market are not having to drive an hour in. Looking at all of that, that’s my view of sustainability in a broader context, not just environmental.
Then, I was able to—I don’t know if you’ve heard this story. After working in the development space and working on these things for about ten years, I was contacted by a guy by the name of Bill Becker who was Obama’s climate advisor. I was asked if I would join a team of leading sustainability thinkers looking at how do we create a more just world that addresses all of these things? That led to a partnership with the United Nations. This group was tasked to go around the world and identify the best practices that are ready to scale. All of that learning lead to Second and Delaware.
Kathryn: Where did you discover Passive House?
Jonathan: After going around the world, talking to so many experts, and evaluating the different green building certification standards, our opinion was they didn’t have high enough aspirations quickly enough. It was too easy to get a certification, but that wouldn’t really affect carbon emissions and climate change. Other certifications were so stringent that you could only get them if you had an unlimited checkbook. You might be able to do one project, but it’s not something that’s replicable. So Passive House just makes sense. It’s like putting a sweater around the building. Insulation doesn’t cost that much. You save on your mechanical equipment, and it is something that can scale and become the new normal.
Brett: Let’s talk about your next big thing, Hardesty Renaissance.
Jonathan: Yes. Our next project, which is the historic Northeast Loft project, is at the intersection of Hardesty and Independence Avenue. It’s 1.2 million square feet of different types of historic structures. They’re all built to last hundreds of years. Originally, the building was used to house 2,000 seamstresses that sewed custom-made-to-order clothes that could be shipped out to the high-end fashions at the time in the 1920s to people in Oklahoma, Missouri, and Kansas.
It was then used during the war effort to ship out helmets and gear and it was a Quartermaster Depot. Then after the war, it was a place where they brought back fallen soldiers. Then for the last 50-60 years, it was used for record storage and self-storage. It’s right at the intersection of three neighborhoods that are predominantly single-family homes, with essentially, no high-quality multi-family. So for anyone who says “I want to stay in the neighborhood, but I don’t want to maintain a house,” this is like the perfect place.
A lot of service jobs, like manufacturing jobs, have a need for workforce housing that is immense. A lot of companies in the East Bottoms can’t recruit new employees because there’s no housing. Groups like Custom Truck are going gangbusters, being able to create housing that will allow them to attract and retain employees. The second floor up is all residential.
The ground floor is where we want to have that social connectivity service bringing people together not just those living on the campus but in the surrounding neighborhoods because we believe that the neighborhoods need a central walkable hub that you can go to and eat. There’s also a need for daycare. There’s a need for fitness, and there’s a need for a health clinic.
Following on the successes of the River Market, food will be a central ingredient to that placemaking effort, so we are in discussions with local operators of a wide range of ethnic food options who are super excited to be part of something that is organic and of the place and for the place. So that’s the historic Northeast.
Kathryn: This is a really exciting project. Is there anything else you want to talk about?
Jonathan: There’s another pillar. We are focused on the Transit Oriented Development that we talk about a lot. The other aspect of sustainability and addressing climate change is on the greening of the grid. With the IRA Act, there are wonderful incentives that make solar and wind even more financially viable. But what we need to do is think bigger and faster. The Inflation Reduction Act has specific bonuses for if you are developing, for example, on brownfield sites. If you put solar on a brownfield, you get a bonus that makes it even more affordable.
There are a number of brownfield sites around the Metro Area that are sizable and could make a real dent in getting us to the next level, so we’re looking at those opportunities because if we build Passive House and all the new buildings that are developed and are energy efficient, but the vast majority of the buildings are still not, going upstream is one of the ways. Energy efficiency and changing air to heat pumps and electrify everything is super important, but where that electricity comes from is equally important. So we’re looking at a couple of large-scale PV plants that will allow our project to go completely net zero and also green around us.
We’re also looking at ways to use energy storage effectively, as well. That’s another whole segment of conversation. It’s probably too much for today, but if you build all of this renewable, but you have no place to put it, there are hours of the day when we don’t need all of that electricity, so you need a place to store it. That’s another segment that we’re working on.
Brett: Yeah. Really exciting. We’ve covered way too much.
Kathryn: That’s a lot over just one cup of coffee. Thanks so much chatting with us.