What is Impact investment; why is it important for your portfolio

[Michael McLean]

Let’s discuss Impact investment and why it’s an important consider for all real estate investors.

Impact investment takes into account the effect of a real estate project on the immediate and greater community. The basis of the investment is in the alignment of the project with the existing dynamics of the local community and how it coexists and elevates what is happening around it. When considering a typical investment, 99% of our attention tends to revolve around the asset itself with little regard for the surrounding community. However, when local Impact is included in our evaluation we enter a completely different dynamic of wealth building. When an apartment building or office project is built in the typical location, you get typical results. In fact we would argue you get less then typical results. This is because you have invested in a commodity. Four corners, four glass and steel buildings, four amenity floors and nothing special. What we have found is that when you go off the beaten path, developing neighborhoods with authentic culture and community and meet that authenticity with your product and design that you not only get a better product but better returns. Investments made in alignment with high quality communities tend to be more stable, more resilient and lease up faster then the status quo. The tried and tired is a safe bet until there is an economic shift, but the authentic and impactful rises above the rest in any stage of a cycle.