What Our Clients Say: JLL's Tony P. Cartagine

JLL’s Tony P. Cartagine had this to say about RDM’s Property Plan Book services:

“Wow, you’re good!  I am feeling good about my decision to utilize RDM’s services.”

RDM created a Property Plan Book for JLL managed 85 Broad Street.  The building is also enrolled in our Support Program which includes access to our web based space management app – RealAccessTM Commercial, REBNY/BOMA measurement consultation, and annual building walk through.

JLL is an example of one of the many organizations utilizing RDM’s comprehensive Support Program for leasing, management, and fire safety. To see what our other clients are saying, click here.

About JLL:
JLL (Jones Lang LaSalle) is a financial and professional services firm that specializes in commercial real estate services and investment management. To find out more, visit www.us.jll.com

What We Heard: Boston's State of the Office

On their recent Boston trip, the RDM team attended Bisnow’s State of the Office; where experts discussed the leasing, capital markets, and development activity in the Boston region.

The panel included experts from Synergy Investments, ADD Inc., CV Properties, Tishman Speyer, Goulston & Storrs and McGladrey.

This is some of what we heard:

Sam Schaefer (Tishman) - has seen rent growth in low and mid-rise buildings, but not as much in high-rises.

Frank Litwin (Goulston) - says the cost of construction in Boston is limiting supply.

Schaefer - political constraints are hindering growth as well; however, tenant growth is good.

Fred Kramer (ADD Inc.) - tenants are looking for office space in areas favorable to their employees because this will help retain employees in the long run.

David Greaney (Synergy Investments) - businesses are moving from the suburbs to the downtown area because they’re able to attract better talent downtown.

Greaney - says urban areas are better for attracting startups or companies that require “younger talent”. 

Dick Galvin (CV Properties) - growth of startups in Boston is in large part due to the proximity to great schools like MIT. 

Greaney - startups have “organic growth” - they begin a lease wanting a small floor plate but three years into the lease they want to move to a 20,000 sf floor plate. 

Litwin - growth in Boston is also coming from expansion of education and medical industry in the region. 

Kramer - new development occurs when a tenant explicitly voices a need.

Schaefer - building amenities are key in the market. At 125 High Street, Tishman installed a gym and conference center for their tenants.

Galvin - says buildings need to foster a collaborative work environment, provide sustainability/green initiatives, and accommodate unusual work hours to attract tenants.

Kramer - amenities in the suburbs are also important, however, the types of amenities needed are different (i.e., bringing in retail and food options at a suburban office park). 

• People want to live in downtown Boston but more housing is needed for the middle class.

Galvin - the city needs to find a way to retain talent from area colleges. For example, Mark Zuckerberg left Boston for San Francisco.

Greaney - it’s tough to put leases together as companies increasingly want flexibility; for example, a five year lease might not fit into a startup’s business plan. 

Schaefer - finding well-leased assets with good cash flow is very challenging in today’s market.

Greaney - lending in Boston is very strong right now, this is good for both the landlord and the tenant. 

• The price per square foot of Boston office space is still relatively cheap compared to other global cities. 

Greaney - the general profile of a Boston landlord has changed from what it used to be; there are more large institutional players and foreign investors.

How will the CRE Industry Evolve?

RDM’s Joe Leach and Mike Solarsh were among the more than 300 attendees at this year’s Honest Buildings Real Estate Innovations Summit.

The conference profiled some of the most innovative players in New York real estate including SL Green, Kushner Companies, Hines, Tishman Speyer, Cushman & Wakefield, WeWork, RXR, and The Empire State Realty Trust.

The panelists discussed the intersection of real estate and technology, and recent innovations that they and their teams have recently put into action.

This is some of what we heard:

Innovations in Leasing & Marketing
• Augustus Field (Cushman & Wakefield) – believes we are in the most competitive real estate market he’s ever seen.  Tenants are looking for space everywhere.  If Midtown South doesn’t work, they’ll look in Brooklyn or Financial District, etc.
• Tomas Durels (Empire State Realty) – a tenant’s biggest concern is keeping their employees productive.  It’s his job to make sure his buildings are equipped with amenities to make this possible.  As an example, the Empire State Building was able to attract LinkedIn and Shutterstock because they have a tenant only private gym and will soon offer a tenant only restaurant and conference center.  They also have intelligent lighting systems, which saves tenants money on energy costs.
• Daniel Bodner (Kushner) – Amenities are a must, but you need a differentiator as well.  For Kushner’s Dumbo spaces, telecom and connectivity are a differentiator, as Kushner’s Dumbo properties are a tech campus.  In order to attract tech tenants, he’s worked with Wired NYC to acquire Wired Platinum status.

How will the CRE industry evolve?
• Nick Romito (View the Space) – says there’s so much institutional money being invested in real estate right now, that it can only increase.  He predicts changes in how we market spaces; less paper fliers and more digital.
• Brandon Weber (Hightower) – Has seen leasing teams abandon excel and increase smartphone usage. He stresses how quickly new companies will be able to implement new software to manage their spaces.
• Bodner – Has seen dramatic changes in the last 2 years, both in the types of tenants leasing space, and the technologies being used.  Kushner was an early adopter of Hightower and he could never see his leasing team going back to the old way.
• Durels – His company will continue to focus on repurposing older properties for modern use.  He also predicts workplace environments becoming more collaborative.
• Field – stresses that while technology is great, it’s important that we do not lose the “human touch.”  Used the example of the greeters at the Empire State Building who warmly say hello and smile at you when you walk in.

How will technology be implemented?
• Weber – “good tech just melts away” as in it’s seamless.  You don’t even notice it once you’ve started using it. Said his clients have an “aha” moment when they open up their iPhone and see reporting and analytics for their portfolios.
• Durels – It’s the owner’s job to make the broker’s job easier.  His company takes great efforts to create a nice website that includes videos and information on each available space.
• Nick – Tells clients that brokers need to embrace technology because it will make them more efficient and save them time.
• Weber – Added that people are often skeptical about software, especially in the Real Estate industry, because of bad experiences they’ve had in the past.  To this he stresses the ease of implementation and the training.

Adam Neuman, Founder of WeWork
• It’s an amazing time we live in that some of the biggest startups like Uber and AirBNB are also questionably legal.
• Believes in disruption, as in taking a concept and making it better.
• The main idea behind WeWork is creating a community that brings entrepreneurs together.  They call it the “We Generation.”
• WeWork started in Soho with two founders, one employee and 3,000sf of space.  Today they have 1.5M sf of space.
• In the beginning their challenge was to convince landlords to lease space to them, an unproven company.  That one employee in 2010 has turned into 200 employees in 2014.

Jessica Goldman, CEO of Goldman Properties
• Goldman Properties is about neighborhood revitalization.
• They find neglected boring neighborhoods and turn them into something trendy and popular.
• Goldman likes to infuse art and creativity into their buildings and neighborhoods.  They don’t just change the building, they change the whole neighborhood.  Investing in making neighborhoods more interesting and beautiful eventually pays off on the back end with higher rents.
• She believes that the way neighborhoods progress is first people want to play there, then they want to work there, and then lastly they want to live there.

Jared Kushner, CEO of Kushner Companies
• Every company today is in some way a tech company.
• Over the last few years Kushner and his brother have invested in many tech companies - often finds himself as an informal advisor.
• These companies cannot live without the absolute best internet connectivity.  They could go without having power, but not having internet is unthinkable.
• Bike access is a must as well.
• Sees a lot of these tech companies gravitating towards Brooklyn. As a result, Kushner has been buying properties in Brooklyn, Soho, Downtown, and his next area of focus is Jersey City.
• He believes that not embracing tech can hold a landlord back.
• He’s also high on Hightower and Wired NYC.
• At Kushner he tells his employees that they’re in the customer service business and that listening to their tenants is vital.


What We Heard at the NYC Tech Forum

The RDM team was in attendance at the 2014 NYC Tech Forum, which brought together leaders in the tech sector and the real estate, design and building industries to discuss the technological innovations impacting New York City real estate.

Featured speakers included professionals from Jamestown Properties, Himmel+Meringoff Properties, RFR Holding LLC, Related Companies and L&L Holding Company, with a keynote from William C. Rudin, CEO & Vice Chairman of Rudin Management Company, Inc.

In his keynote, William Rudin addressed making buildings more attractive to tenants:

• In order to attract top companies, owners need to have their game at the “best level” possible.
• Rudin partnered with the Downtown Alliance over 20 years ago to reposition 55 Broad Street for tech companies.
• They created a high speed network which gave tenants a “choice” – something no one else was doing.
• This is why it only took 18 months to reach 100% occupancy at 55 Broad after the reposition.
• When competing on a global level, you have to think of ways to make your building better.

This is some of what we heard during the panel discussions:

First panel
• Ashkan Zandleh (RE:Tech) - Tech companies are coming to NYC to expand. Tech companies seized the moment during the recession and took advantage of the supply of space in midtown south.
• Steven Rosenbaum (Magnify.net) sees LA creeping up on NYC by becoming a “real digital competitor and content creator”.
• Molly Zinzi (Google) – says Google is constantly challenging engineers to make new products and move quickly. All this plays into real estate decisions.
• She runs a 5 star hotel and encourages employees to use resources in the community.
• The environment in Google’s NYC office is different than in Mountain View - every “Googler” has a desk.
• Google is here because their employees want to be in NYC and they’re close to the ad revenue.

Second Panel
• Steven Meringoff (Himmel+Meringoff) says when leasing space, they’re concerned with the growth of a company. Tech companies change quickly and owners need to keep up with space requirements.
• Owners need to proactively seek opportunities to retrofit buildings with new technology such as fiber optic networks.
• Tech companies in growth mode should build space that is generic so they can easily sub-lease.
• It’s important to have communal spaces.
• Meringoff says NYC is a “tale of many cities” – there are companies that want to be close to transport centers and others that are attracted to cool regardless of transportation.
• Gregg Popkin (RFR) says areas that are most popular are incredibly supply-constrained.
• Popkin believes the boroughs are finally participating in the growth of NYC. It’s now hard to find areas where you don't want to be.


What We Heard at the 5th Annual D.C. Real Estate Summit

RDM’s Blake Grosch and Joe Leach were among the 650 attendees at this year’s 5th Annual D.C. Real Estate Summit, presented by Bisnow.

The multi-panel event brought together some of the biggest names in D.C. real estate to discuss the current state of the market, key industry trends and predictions for the near future.

Among the all-star speakers were professionals from Arent Fox, Brookfiled Office Properties, Jamestown Properties, Cassidy Turley, Vornado, Genlser, Rappaport Companies, Penzance, JLL and CohenReznick.

The event kicked off with a conversation about entrepreneurship between former US Senator (and current Arent Fox advisor) Bob Bennett and billionaire BET founder Bob Johnson. Johnson noted:
• You need to be a risk taker in order to be an entrepreneur; being too cautious or too aggressive can lead to failure.
• When starting out your ideas may be rejected -you need to believe in yourself and your ideas.
• Entrepreneurs need to consider what hasn't been done before.
• Johnson doesn't see risk, rather opportunity. Notes that if he doesn't do it somebody else may.
• It was a long uphill battle to start BET as the majority of black households at the time didn’t have cable television. Getting the product to the target audience was a real challenge.
• If you find passion lagging, that's when you may not succeed. This is why he decided to sell the Charlotte Bobcats to Michael Jordan.

In their interview, Jamestown CEO Matt Bronfman and Brookfield Office US CEO Mitch Rudin discussed the urbanization of America's cities.
• Mitch -Brookfield owns 3x more buildings in DC than other markets.
• Matt -is most optimistic about NYC, sees upside in supply & demand constraints, zoning issues, etc.  DC is 2nd.
• Mitch -sees downtown Manhattan turning into an extraordinary mixed use neighborhood.
• Matt -believes in urbanization trend and that folks don't want to be in their father's building. Mentions Industry City in Brooklyn and Sear's conversion building in Atlanta. Aside from trophy assets, Matt also likes to chase assets that are in some way unique.
• Mitch -says the trend is evident in that new driver's licenses among 18- to 25-year-olds have gone down 30% over the past 30 years, indicating a flight to cities -young people want to live-work-play all in one convenient location.
• Also notes that Houston has been the hottest market over the past couple of months for Brookfield.  Points to dearth of zoning regulations in the market and the presence of many fortune 500 companies.
• Matt -worries about job growth, still slow.
• Mitch -regrets not getting into San Francisco sooner, worries about markets that aren't diversified with industries.
• Matt -raises a lot of capital from Germany. Worries about US and German relations. Obama has been positive for European investors.
• Matt –Jamestown has a lot of capital they’re sitting on and wants to pull the trigger on another iconic asset in DC.

Steve Fuller, Director of the Center for Regional Analysis at George Mason University, notes:
• DC is under performing the national economy.
• Looking at the top 15 national real estate markets, DC has consistently had some of the lowest, if not the lowest, growth levels over the past 5 years. 
• Growth will come but will not be as large as hoped in the short term.
• Sequestration and decreased federal spending has slowed growth.
• The federal work force is also decreasing.
• DC lost 12,000 office workers, vacancy is 14.5%, two points higher than the rest of the country.
• Need to replace dependence on government in order to fill the void.
• Suggests for DC to become a global business center.  Uses London as an example of a diverse global capital city that does a good job of balancing the public and private sectors.
• Doesn't believe tech is the only answer; the focus can also be on healthcare, education, and other sectors.

Here is what we heard from the Panel Discussions:

First Panel
•  First Potomac Realty Trust Chairman & CEO Doug Donatelli -amount of equity out there chasing deals is more than ever, except fundamentals aren’t great in DC.
•  MetLife Director of Equity & Investments Anthony Balestrieri -sees deal volumes down in DC.  Isn't sure current investors are expecting to make money downtown but rather looking for a safe place to park their money.
•  Rappaport Companies CEO and former ICSC Chairman Gary Rappaport -they just focus on NOI growth, this is what they can control.
•  Bank of Georgetown President Chairman & CEO Mike Fitzgerald -expects interest rates to rise the first half of 2015 -- his sweet spot for loans is metro DC -- likes to see projects that can be built / sold in 18 months.
• Balestrieri -needs to find assets that will mature over 30 years.
• Donatelli -sees it tough to get younger generation to abandon public transport. Sees future in urbanization. Will be difficult for owners of office parks.
• Fundrise Co-founder Ben Miller -sees gap in cap stack where institutional players aren't playing.

Second Panel
• Easterly Partners principal and former US Buildings Commissioner Joe Moravec -the government is in a period of confusion. At least now there's a budget.
• Gensler Principal and Former US Building Commissioner Bob Peck -government has roughly 50m SF under management.
• Easterly Partners principal and former US Buildings Commissioner Joe Moravec -sees lack of resources on government side to get leases done. Plus there is no lobby group to make the GSA more efficient.
• Cassidy Turley Vice Chairman, Principal Darian LeBlanc -there will be losers with government downsizing.                                                                                                                      
• Bob-need to take a look to see how your building will meet new government requirements.

Third Panel
• Toby Bozzuto of Bozzuto Group -views the Monroe Street Market as a multi-faceted environment that creates an experience.
• Johnny Moseley of Moseley Construction Group -sees a lot of owners spending money on amenities. This is being done to keep up with the new developments coming online.
• Norman Jemal of Douglas Development -likes to build to the top of the market, can move down but not up.
• Joe Margolis of Penzance views his project's location in Clarendon (near transit) key to success.


RDM Maximizes RSF for 7 of 10 Largest NYC Building Sales

The Real Deal recently published their list of NYC’s Biggest Building Buys of 2013 and we are proud to announce that RDM advised on 7 out of the top 10 office property transactions on the list; valuing over five billion dollars.

See Also: RDM Supported 19 of Top 25 CRE Managers in NYC in '13

Over the years Real Data Management has helped discover inconsistencies in RSF numbers presented to the potential buyer, added credibility to existing calculations, and uncovered additional value in under-measured buildings.