Casey Lynch (CEO) and Katie Vila (COO) manage Roundhouse, a fully integrated developer and operator of multifamily housing. Roundhouse focuses exclusively on providing high quality housing options, and core values include an appreciation of forward-thinking design, challenging the status quo, and a commitment to evergreen business principles. Founded in 2008, Roundhouse has since developed a portfolio of over 5,000 multi-family homes including Blackbirds in Echo Park, designed by Bestor Architecture.
Casey and Katie spoke with LA Forum Board Member El Larson about their mission of ‘putting humanity into housing,’ building sustainably, and the challenges to building in Los Angeles.
INTERVIEW WITH CASEY LYNCH AND KATIE VILA OF ROUNDHOUSE, A HOUSING AND MIXED-USE DEVELOPER IN BOISE, IDAHO.
El Larson: Hi Casey and Katie - thanks in advance for doing this, it will be the first interview L.A. Forum has done with a developer. We’re excited to share your perspective, especially now considering the current housing crisis and other challenges in Los Angeles. To start off, is there anything you’d like to share about development in general?
Casey Lynch: Development is so much more complex now than it's ever been. It wasn't that long ago, you could just hire an architect, a contractor, an engineer, and say, “Hey, here's what I'm trying to do. Design it for me, and then I'll show up when it's done (laughs) .” And now, you know, not just in cities like L.A., but even in Boise, Idaho, the development process is so complex with entitlements, changes to the building code, and sustainability requirements; changes to residents’ preferences in the case of housing. What are they looking for? What do they need, in terms of space and amenities, design and aesthetics? So it's essential that developers are extremely involved in the process and working very closely with their consultants. That's a big change from how development was done in the past.
McKinsey, the consulting firm, published a study looking at productivity gains by industry in the United States. And there's only one industry in the entire country that has not had any productivity gains since the 1970s. That's construction. It used to be you would just hire somebody, and they'd show up and start framing a building or plumbing a building, or whatever. Today, we have safety requirements, we have more complex building codes. Our contractors show up, they literally do calisthenics in the morning before they start working, to prevent injuries from happening. That's a good thing for the construction industry. It has negative implications on the cost of construction and production housing. That's just one tiny example of multitudes of why we are where we are today with real estate.
EL: And then adding sustainability and code changes on top of that.
CL: Yeah. Do you want fire sprinklers in the building? Yes. You do. Is it expensive to build fire sprinklers? Yes, it is. So there's all these tradeoffs and, again, it's not just one or two things -- it's hundreds of things that we say “yes, we do want that. That's good for health and safety, etc.” But it comes with costs. And I think we've gotten to the point where we've forgotten about some of the tradeoffs we're making.
EL: Your website mentions that you “put humanity into housing.” Can you go into more detail on that, including if there's any go-to processes or design strategies that you apply to that thinking?
CL: For us it's largely a mental shift, thinking about the people using our buildings first. In our case, we're housing developers, so it’s people that are living in our buildings – thinking about the experiences that those people are having. Secondly, thinking about the experiences that the people who are investing in the buildings are having. You can see this on full display, you can go onto 50 different real estate operator websites, and almost all of them will say something to the effect of, “we own $1 billion dollars worth of property,” or “we own 10,000 units,” or “we own x million square feet of real estate.” The audience they're speaking to is their capital partners. I get it, this is a capital intensive business. We rely on our capital partners to capitalize our projects. But it's just a mental shift – if we're actually delivering the product that people want, and it meets their needs, the rest will follow. So that's how we've organized our business.
With respect to putting humanity into housing, it's largely about respect and dignity for the people that live in our communities. Especially in multifamily, it's historically been a very commoditized product, right? “You can't afford to buy a house, here's a generic box for you to live in.” That's the type of product that developers have been putting out for a long time. For us, it's not necessarily about spending more money, it's about being much more thoughtful, especially upfront in the design process, to create quality housing options for people that actually meet and respect their needs.
EL: Do you carry that over into things like aesthetic material selection, material health selection and building standards like WELL and Fitwel?
CL: It's a false narrative that it necessarily costs more money to build a beautiful building than it costs to build an ugly building. If there is an incremental cost, it's usually marginal. In our case, we found that to be somewhere between 5-7%. It's much more about spending the time up front to think through, how can we identify and engage the best architects and interior designers and engineers, and how can we put in the extra effort up front to design a building that is cost comparable to the other product that's being put out there, but it’s aesthetically better, it's more efficient, it has more sustainable design features in it. Katie can speak to Passivhaus or Fitwel, or some of the other sustainability designations we've worked with.
Katie Vila: On the Fowler building we did a LEED certification. Most of the LEED certification you're doing anyways, because it's pretty much part of standard building code – it's really just about pushing paper and paying extra money, so we've moved away from LEED certification a bit.
We did a Fitwel certification at the Hearth, another building in downtown Boise, which has proven to be successful and something that residents appreciate. Any sort of certification that residents can say, “hey, this developer is thoughtful about the environment and sustainability” seems to resonate. Then we've embarked on a new project in downtown Boise, which we’re trying to design to Passivhaus standards, which is honestly a really big feat. In the end, hopefully, it will pay off not only with a reduction in utility bills, but also from a sustainability standpoint. That one is still in progress, and we are finding with the Passivhaus that some of the design decisions we’ve made seem to be a little more costly than we were hoping for, so trying to navigate that is challenging, but we're working on it.
CL: A couple of things I would add in terms of putting humanity into housing, is the building itself is part of it: you want a place that's inspiring. You wake up there, you go home there, having it be beautiful is obviously a good thing. But it's also about the programming – how do you create meaningful opportunities for residents to interact with one another, through site planning and design?
It's about building systems – there's a big difference between living in a building that has a PTAC HVAC system and having a forced air system. Literally, your experience as a resident is going to be completely different. There's a big difference between living in a building with a centralized boiler system and having an individual water heater, both in terms of energy use, and up front costs, but also just in terms of the experience of turning on your shower, or your faucet, and what comes out of it and how quickly.
The other big piece that is often overlooked is on the operational side of the business. Where our business is today, we mostly own and operate larger scale apartment communities – these are 100 to 400 unit communities. We will typically have between five and eight of our employees working on site every day. There are community managers, leasing agents, maintenance techs – these are the people interacting with our residents every day. If our residents have a good experience interacting with these people, it's going to improve their lives. It's simple things: Do they know my name? Do they know I have a pet? Do they respond to a maintenance request quickly? Are they professional? Are they dressed well?
It can be very basic things that historically have not been paid much attention to, and for us that starts with our team. Hiring and attracting the best people, giving them appropriate training and development opportunities, and treating them with respect and dignity and paying them well. Not looking at them as just a service worker – these are people who are essential to the product and the service we're providing. That's another way that we've tried to reframe the business.
EL: In terms of sustainability, what are some of the most effective design and operational decisions?
CL: To answer this question, there needs to be a little context about the real estate industry, and the barriers to sustainability implementation. I think the biggest barrier is the financialization of real estate. Real estate is viewed as a financial asset by most of our industry, not as a place where people live. Again, it sounds trite, but it's actually a very meaningful distinction.
It comes into play in a variety of different ways, but the biggest one in multi-family housing, is that most of our competitors are what we refer to as merchant builders. They are developers whose business plan is to build a property and sell it when it is finished. Our model is different, we hold long term – 10 to 30 years. Think of the implications in building design, when you intend to own something for 30 years, versus owning it for three years. They’re massive.
Easy example that we always use: we just completed a project in an urban environment, it’s a high density project where we put a centralized boiler system into the building, as opposed to individual water heaters in the unit. Very uncommon decision, because it costs roughly half a million dollars more up front, to pay for the boiler system. However, it's way more energy efficient, and will pay for itself easily in under 10 years, which is less than our intended hold period for the asset. It also provides a higher quality experience for our residents.
In any given project there are hundreds of decisions like that. If your business plan is to sell immediately upon completion, you're going to think, “okay, dollar for dollar, how do I strip out costs? How do I just deliver the cheapest product possible?”
EL: Yeah, and that happens across the board from flooring to – everything.
CL: Yes – facade materials, plumbing fixtures, windows, roofing types, HVAC systems, all of it. There are always trade-offs, it's not just about spending more money, it's “is this something that is going to improve the experience of the people that live in the building and pay for itself over time?” That's how we're thinking.
EL: Regarding the Blackbirds development in Los Angeles with Barbara Bestor, what were some of the things that you learned with the project?
CL: (Laughs) I got a very rapid education on how the real world works.
EL: How long had you been working in development before you started that project?
CL: We started the company in 2008, and I think we started that project in 2011.
The sad reality is that any obstacle to housing production you can possibly think of exists in Los Angeles. We have one project remaining, which is in the city of Pasadena; we've been working on it for over five years. It has a 20% inclusionary zoning requirement, so 20% of the units would be deed restricted for very low income families. This thing could have been built four years ago. Instead, we're still working on an entitlement process. You could have had 20 units available for very low income households that remain unbuilt.
Blackbirds is honestly one of the key reasons why we moved away from development in California. It was the lightbulb moment for us: it's intentional that housing production is difficult. As a result, our hypothesis was that people our age - at the time in our 30s - were going to start leaving for more affordable cities. That is around the same time that we actually started investing in Boise and Colorado, and obviously it turned out to be a true hypothesis.
You can peg developers as just capitalist, commerce-oriented people. But I think you can look at a project like Blackbirds and identify that we were trying to do the right thing. And we're not alone. Yes, there are lots of developers who don't try to do the right thing. But many of the ones that we interact with generally want to do the right thing. They want to do something positive and uplifting for the community. They want to do quality design and quality product. But in an ecosystem like L.A. that has so many obstacles, there's a reason why you end up with so much bad design (laughs).
What we learned at Blackbirds is if you try and step outside of the prescription in any small way, it just makes it 10 times more challenging. Whereas if you just follow – here's the form, here's the massing, here's the parking, here's the unit types, etc, – we know that is the easiest thing to get through the planning and building department. That's what you're going to do every time and that's why you end up with this homogeneity of building types in a city like L.A. Which is ironic, because you have some of the best design talent in the world living there. They just don't have the canvas to work with.
EL: In addition to entitlements and codes, are they putting any aesthetic constructs around you? Preconceived notions of what should and what shouldn’t be built?
CL: When you're taking design risks, you're adding one more obstacle for yourself. In places like L.A. you have so many obstacles to begin with, it's usually not worth it. It's code compliance, it’s entitlement processes, it's rampant NIMBYism.
Garcetti was a city councilmember at the time when we were working on that project. And he said, “I think I'll support this. I think what you should do is host a voluntary neighborhood meeting to share your project.” We hired Barbara [Bestor] because she lived in the neighborhood. She knows and understands the context of the neighborhood.
We invited the 20 closest neighbors to the project, and someone made their own flier and distributed it to thousands of people in Echo Park. We show up with Barbara and we have a beautiful model and renderings, and we're talking about how intentional we are about the project, and there are like 100 people with pitchforks, thinking we were coming in to ruin their neighborhood. That was something I'd never encountered or experienced before. I know we have good intentions, I know we're trying to do the right thing. It's very hard to convey or communicate that to that type of audience.
EL: In an interview you mentioned Los Angeles ‘grew the wrong way,’ specifically in the context of people having to commute far distances to work, sometimes up to an hour or two. Were there other aspects to the idea of L.A. growing in not the most ideal way compared to some other cities?
CL: To me, it starts and ends with public infrastructure. What is the role of government? Well, one of the roles of government is to provide public infrastructure that the private sector is not going to implement. The private sector is not going to typically build parks, sidewalks, sewer lines, water lines, fire stations, police stations, schools, etc. What you have in L.A. is a city that obviously grew in a low density way, starting a long time ago. So you have this really old, decaying infrastructure that's spread out over this huge geographic area. That is very expensive to maintain.
I'll give you one small example: the first project we did in Boise was a 160 unit mid-rise building. It was the first mid-rise residential building ever built in Boise. Prior to us starting it, the city had decided they were going to invest a relatively small amount of money in streetscape for this one little neighborhood it’s in. They put in beautiful sidewalks and tree planters and benches, and public art, and it transformed from just a generic, urban block into this really cool, walkable, pedestrian oriented place where all of a sudden, we build a building there and our residents can walk outside and there's restaurants and benches. That’s a very small example of something that is very helpful for sustainable long term development.
Transportation is obviously a huge one, which is a big problem in L.A. Let's say they eliminate all the parking requirements in L.A., which would be great in theory, because it's going to reduce the cost of housing production, and it's going to reduce reliance on vehicular traffic. But if you're living in one of these buildings, think of all the streets in L.A. and think about your experience when you just walk outside. It's not just about public transportation. That's a big piece, obviously you need to be able to get around. But when you walk outside, what is your experience? Are you on this really busy street where cars and buses are whizzing by you? How far away is a coffee shop or a restaurant or a park? Can you walk your kids to school? Those types of things are very hard to retrofit. That can happen in small areas, which you've seen in Highland Park, for example – some of that has happened, but it's very hard to broadly implement.
EL: The housing crisis in L.A. is also complex, and one of the biggest challenges right now is supporting the unhoused. In addition to density bonuses that the city gives developers, what else do you think could encourage more affordable housing in Los Angeles?
CL: Very tough question. Fundamentally, you have to start with promoting more housing production, and finding ways to lower the cost of housing production. The reality is in urban environments, it's always going to be more expensive to produce housing. Even if you get rid of zoning and you make it the easiest, cleanest process for developers to come in and build housing, you're still talking about more expensive land, and more expensive building typologies – that's always going to be the case, versus going out into some greenfield in Colorado and building a three-story, low-density project.
So again, to me, public infrastructure is a piece of this. It is much easier for government to come in and say, “we're going to build a bunch of brand new beautiful streetscapes” or “we're going to invest more heavily in the public transit network,” or “we're going to build a beautiful new park,” than it is for government to come in and say, “we're going to build housing.” Or in the case of California, we're going to layer on more regulatory restrictions with respect to housing production, not fewer.
I'm sure you followed the “mansion tax,” which was a total canard. I understand the rationale for wanting to address housing affordability and homelessness, but the net result of that is going to be less housing production. You're basically putting a huge tax on building new housing, which is the opposite of what you want to be doing. I'm not seeing even remotely any of the right public policy coming out of California to address the problem. So I hesitate to even know where to start with solutions.
KV: To Casey’s first point, it's about supply and increasing supply. Even if you were to build more market rate housing that's not “affordable,” it's going to help the problem. But in the example of Pasadena, it's been five years and there are zero units where there could be 125.
CL: The other component that people rarely talk about, and I understand why, is there's another variable in the equation, which is people's incomes. We've been building housing for 15 years, we've built housing in five different states, we've built high density, medium density, low density, we've done all kinds of different stuff. And every single project we've ever built has cost more than the last one. We have no reason to believe that dynamic is ever going to change. There are so many structural impediments to lowering housing production costs nationally; it's not just a California problem. It's labor issues and the trades, it's lack of available land in the environments where people want to live, it's all kinds of stuff.
We never talk about focusing on the other variable, which is how much people are earning and finding ways to increase household incomes so that they can have better access to quality housing options. I don't remember the exact statistics, but in our portfolio of 6000 units, our average household resident has a 21% rent-to-income ratio, meaning they're spending 21% of their income on rent. In LA, I think on average it's somewhere around 40%. That is a huge, huge difference.
EL: I know in Boise there's been a lot of development lately, and also in Bozeman. Are you noticing that happening in those cities that started out more on the affordable side?
CL: Yes and no. Bozeman is a very unique market. It’s almost like a resort-oriented place where people have very high incomes. It's very small, like 50,000 people in the city of Bozeman. Boise is an interesting case, because it's a midsize city, roughly 900,000 people in the metro area currently, and it's at this inflection point – which direction are we going to go? Are we going to build dense urban housing? Are we going to build public infrastructure, transit, all that stuff? Or are we going to go the way of Phoenix, and Dallas, and just build to the edges of the prairie? And again, building out in the prairie is cheaper in the short term, and more expensive in the long term.
Boise is about to enact a major overhaul of the zoning code. They hired the head of City Planning from Atlanta who has come up with an extremely thoughtful, well intentioned zoning reform that prioritizes dense housing in the urban core, mixed use environments, pedestrian-oriented experiences, etc. It has a lot of potential to make a huge impact on the urban environment in Boise going forward. But you need leadership from elected officials and decision makers to get these things going in the right direction.
It's much easier to say, “yeah, just go build some cheap houses out in the farmland.” And people will move here from California, because they can buy a brand new house for $400,000 or $500,000. It's much harder to step up and be a leader and say, “look we're going to do the right thing, we're going to grow the right way over the long term.”
EL: The New York Times wrote in March 2023 that out of around 112,000 real estate development companies in the US, about 111,000 of them are white-owned. Out of 383 top tier developers that generate more than $50 million in revenue, one is Latino, none are Black. Regarding lack of diversity amongst developers, do you know of any initiatives that can help people of diverse backgrounds get a solid start in this field?
KV: My advice and take on that is there's been a big shift, and it's happened in the last five years, where appreciating a diverse talent base has become more and more important when companies are considering hiring. Diverse candidates can really use that to their advantage. All things being equal, at least here at Roundhouse and I suspect in many other real estate development companies, if we have two candidates who are truly identical from a skill set level, but one's going to bring some diversity to our team and just different perspectives, we're going to hire that person. That's a huge advantage that people need to take advantage of, for lack of a better word.
There are two other things. One, a lot of diverse candidates have apprehension about reaching out to people within the real estate field for a coffee chat, or just to learn more. And truly most real estate professionals are willing to donate their time to help create these connections and to foster the growth of these people's professional development. Use those resources, is what I would say to most of the young professionals. For the most part, many people might find a diverse candidate worth spending even more time with to foster that relationship. That's how you get jobs, right? The best way to get a job is through that personal connection, and something that you maintain and foster over time.
The last thing that has been really helpful for many of my peers, for people looking to do some sort of higher education, whether it's a Master's in real estate or through an MBA program, there's a program called TOIGO which offers scholarships for advanced education degrees, as well as a system and support network to help you get through and successfully get a job afterwards. So there's more and more resources out there than there were in the past. People just need to work their way in and get their foot in the door.
CL: Real estate development in particular is one of the most opaque industries out there. It's not an industry where there's a common career path. Katie was an engineer, I worked on Wall Street, my former partner came from the construction industry. There's no one clear, evident path that is set out for you, which is one of the reasons it's more difficult for people with different backgrounds to break into the industry. It's actually a smallish industry too, in terms of headcount. So, I appreciate the obstacles that people face.
But as Katie said, it's really about being a self-starter. If you have the desire to get into the industry, whether you come from a diverse background, or you're a white person, it's very opaque. Even our company, very few people have heard of us. We hire one person every six months, it's not like we're recruiting a big pipeline of people all the time. So I very much appreciate how difficult it is.
KV: One of the things I always found interesting was that both being a woman and having a diverse background is incredibly advantageous in the realm of public hearings and community meetings. Specifically in Pasadena, probably a little bit less so here in Boise. I think that people are a little bit easier on women when it comes to the pitchfork mentality that sometimes happens at these community meetings, and also being able to relate to some of the Latino community members. Whether it's speaking Spanish to them, or just showing that you have some similar background to them, is such a big advantage. Younger people that have that background can really utilize and emphasize it in an interview.
CL: It's not our job to come into any community and tell that community what they need and want. It's our job to understand the needs of a community by being active participants in the community, and then endeavor to produce housing that meets the needs and wants of that community. And they're all different – there is no one size fits all solution.
Blackbirds. Echo Park, Los Angeles, CA. Bestor Architecture.
The Clara. Eagle, ID. Holst Architecture.
Hearth. Boise, ID. Holst Architecture.