41: Location, Location, Transportation with Chris Schlank

Foreign welcome.

This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program, you'll learn about the world of commercial real estate and find out why it is one of the largest investment opportunities in New York and around the world. Now here is your host, James Nelson.

Welcome to show number 41 of real estate Investing Live from New York. This is your host, James Nelson. And for those of you who missed last week's show where had my friend David Coelho on talking about opportunity zones, definitely something you should check out if you're interested in those opportunities, no pun intended. And also want to remind you to go go to iTunes, Spotify, iheartradio.com, wherever you get your podcast and take a look at some of the past interviews and shows that we've done. And these interviews are really meant to be timeless. These are skills that can help you succeed in any market. Some of my recent favorites with Scott Rechler from RXR talking about what it takes to come back from a crisis. Certainly Francis Greenberger spoke on that as well as in his book Risk Game and Rick Clark also talking about investing through cycles for the long term. So a lot of great information out there for you to listen to and just cannot thank you enough for continuing to share this show with your friends and your ratings and your comments. It really helps get the word out. So thank you so much for today's show. Really excited to have with us cool Chris Schlank, who was the co founder of Savannah and he has an incredible story of getting into the business actually through the affordable housing side where he was doing social work and then moving over to the for profit side where over the course of Savannah's various funds have amassed a portfolio at 20 million square feet. And what's really great is that Chris has invested in almost every asset class. So this is going to be really, really helpful for you all to get a sense of what you should be thinking about when you're looking to invest. And then after that, we've got a panel that I'm going to share with you a portion of an interview that I did with the Young Men's and Women's Real Estate Association. Our board of governors spoke to our mentees. We have a mentorship program and they were talking about skills to succeed in their early years in the business. So for those of you looking to start out, some really helpful advice and so you're in for a great show. So we're going to take a brief word from our sponsor and we'll be right back with that interview with Chris. Thank you again.

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And now it's time for our Investor Spotlight. And with us today is Chris Schlank who is founder and co managing partner at Savannah Savannah. Chris sits on the investment committee and is in charge of construction and redevelopment and shares responsibilities for asset management, sales and marketing acquisitions. Chris has overseen the acquisition redevelopment of more than 70 real estate assets comprising over 20 million square feet of space and nearly 3.8 billion of total capitalization, including raw land developments, apartments, office buildings, industrial to residential conversions, retail warehouse distributions. Prior to this, Chris was a project manager for the Westside Federation for Senior Housing. He also has an Ms. In Real Estate Development from Columbia and architecture and a BA in urban studies from UPenn. So Chris, thank you so much for joining us today.

Well, thanks James. Thanks for having me. It's a pleasure.

Awesome. So I've had the pleasure of hearing you speak many times over the years. So I know you have an interesting path of getting into real estate. I know you grew up in the city and your first foray was through affordable housing. So maybe help us connect the dots. How did you talk about your college years and how you ended up in school and then ultimately working in affordable housing?

Great. So, you know, I think it all goes back to, you know, the formative years. And I'll remember, I always remember, you know, in 10th grade in high school, I went to a high school on the Upper west side and I was taking an urban studies class with my professor, Bruce Breimer and he had us read the Power Broker about Robert Moses by Robert Caro. And you know, it was 10th grade, I was 15 and a half and read the book and absolutely fell in love. You know, I grew up in New York, Upper west side. My mother, who's still around, was a real estate broker her entire life. I grew up, you know, sitting in the kitchen eating dinner while my mom was doing deals with the phone and actually the cord that you had to unwind. So, you know, all my life I've kind of been around real estate. My dad was in advertising, but my mom was in real estate. So I always heard it. And taking that class for urban studies really, and reading the Power Broker kind of just set things in motion for me. It made me fall in love with cities. And so when I went to UPenn, I actually did my. Used to write a paper for school and I have to write seven papers and it was who would you want to meet, living or dead? And I picked Robert Moses. And it was all about, you know, do the means justify the ends? And if you know anything about Robert Moses, it was, he was, he was instrumental in building New York City highways, freeways, parks, lots of housing. But he, he did not spend any money on public transportation. So it was this sort of, you know, sort of do the. Does being a tough guy and ramming stuff through, does that sort of make things easier or better? Is it socially conscious or not? So anyway, that was a very interesting moment in my life. And then I went to UPenn and studied urban studies and obviously Philadelphia has an interesting sort of, you know, housing situation and was doing a lot about learning about low income housing. And when I came back to New York in 88, bought a. I loved real estate, so I bought my first building. It was in Fort Greene, Brooklyn on Adelphi Street. It was a vacant four story brownstone. And so I was renovating it. And at the same time I got a job. I got a job running an SRO in the Upper west side on 86th and Broadway called the Euclid Hotel. So I was working during the day and then driving my green Subaru out to Brooklyn. Sorry, drive my green car out to Brooklyn to renovate apartments. I was working for west side Federation for Senior Housing and they were, we were putting men and women for the city shelter system into permanent housing in this building. So I learned a lot about daily management and just sort of the struggles of people living on the street. And that sort of was very informative for my starting the company. I ended up leaving there and I went and I did my Master's in real estate at Columbia. And I always say it's not what you know, it's who you know. And while I was there, a couple great things happened is I reconnected with Nick Beanstalk, who I knew in high school, and Nick who ended up coming and joining me at Savannah. And now we run our business together. But also importantly, I met a name, guy named Jonathan Leitersdorf, who had just moved to the city from London, Israeli by birth, and wanted to do real estate. So he and I, while we were still at Columbia, started buying buildings in downtown Manhattan. And that was sort of what became Savannah. That was 1992, and we were buying buildings that were partially occupied, mostly vacant, you know, not working, for variety of different reasons. And so it was sort of a buy, fix and sell platform that we started in 1992, buying value add, fixing the problem and then selling. And, you know, Jonathan was a great partner. I didn't have any money, so he kind of ceded and I had some sweat equity and that's how I started. And so from 92 to 98, it was really all New York City. Smaller deals, friends and family funded, always low leverage, but always sort of a fix up ideas finding an asset that was broken and fixing it. And that's what we do now. You know, the business plan that I developed to Jonathan in 1992 is the same business plan that Nick and I run with now, a team of 55 people in New York City, which is a value add real estate investment platform. And it's the same, same philosophy. We just do it in a larger scale.

Fantastic. Well, I'm sure at an early age, I mean, again, if you could finish the power broker in 10th grade, I mean, what is it like 1300 pages? Also my favorites. I don't know why I never got that on Kindle, but I had the hard copy. I remember at one point I ripped the paper book in half so I could at least take it on the plane and go with me. But that is an incredible read and it seems like some really incredible experience that you got early on. So, you know, and I want to get to everything that you did at Savannah. But for that first deal in Brooklyn, I'm curious, was that just, you know, friends and family that you pulled the money together? Do you remember what you paid for it and how did that work out for you?

$360,000. My mom lent me $80,000 and I took a mortgage for $280,000. And it was pretty simple back then.

Did you give your mom a Good deal on that. Did you?

Did she? Yeah, I paid my mom back. That was the good deal. I don't think she ever expected. But the interesting thing was Fort Greene in 1998 was completely different. 1988, sorry, was completely different than it was when I sold the building in 2002, completely different than it is today. And that's sort of a microcosm of sort of the changes that New York goes through. When I bought it was kind of, you know, a little bit on the edge and now it's, you know, most gentrified, one of the most gentrified neighborhoods in New York. But it was a learning experience to work during the day, helping the homeless and then to get into my green suburban Subaru and drive to and work from, you know, 6 to 12 by myself with my hands on a shoestring budget, you know, renovating these apartments to rent them. Little did I know that having a four story brownstone with only four renters is probably not the first foray that you want to have. Because when you're not well capitalized, if one of your tenants decides not to pay your rent, which they did, you have trouble meeting your debt service. But it was a lesson in humility, a lesson in hard work, and a lesson in how neighborhoods change. I obviously I ended up selling it too early, but I did make my money back. But it was a great experience, something I will never, ever, ever forget. Listening to Tina Turner, her country version of a lot of different tracks driving to Brooklyn. So it was a moment in time that remains very dear to me.

No, that's fantastic. And a lot of our listeners are aspiring first time investors. So, you know, how do you break in and do that first deal? And there's no substitute for just, for just doing it. So that's fantastic. You know, talking about your work with the homeless because, and I don't know if I had this wrong, but were you doing any piece of the social work as well? I mean, did you actually have interaction and if so, you know, what was that experience like? And did you actually take any skills from that that, I mean, might be hard to kind of make that link of applying it to dealing with, you know, multimillion dollar companies. But what experience did you gain there?

So there was, there was a very strong social service component of west side Federation for senior housing. So in the SRO was a 210 unit SRO, as I said, on the west side of 80s of Broadway between 85th and 86. So west side Federation had a social service component. I was Doing the real estate there. But it was. There was an interaction on a daily, moment by moment basis because I was renovating vacant rooms. And then we were through the social services department. They were interviewing and approving men and women coming from the streets, the city shelter system, or living on the streets, who were now going to be applying and approved to live in this SRO called the Euclid Hotel that I ran in permanent housing. So they would approve it, and then I would basically move them into these rooms. And remember, an SRO has, you know, no kitchens and communal bathrooms. There's usually a sink in the room, but these are 10 by 12 rooms. And so. And these are men and women that have been living on the street for six months. I never really understood or agreed with the business plan and thesis of the. This funding from HPD for West side Federation for Senior Housing. Because anybody that's been living, if anybody knows anything about mental health or drug addiction, living on the street for six months or living in a. The prerequisite for having to have lived for six months on the street or in a shelter in itself means that whoever that person is is extremely messed up on drugs, social issues, mental issues. And so having that as the prerequisite made all my life much more difficult in. In terms of bringing them in and actually managing this new building where they lived. It taught me how to deal with different types of people. It taught me how to be humble. It taught me about the struggles that men and women have, and it taught me about the great things of social service and about the pitfalls of social service. So it showed me a little bit of the city that I had lived in my whole life. You know, I was about 24 when I did this. It showed me the microcosm of this city that I lived in that hadn't really. I hadn't touched it or tasted it. So it was. It was very interesting. And I think, you know, going forward, I think what that's given me is an understanding of how people, you know, I'm a Virgo, so I always think about what other people think. So I think one of my, you know, positive traits in life is that I can usually see and understand and be empathetic towards what other people are going through. Whether that ends up serving me well or not in the end, I don't know, but it's been. It's been instructive.

No, it's amazing that you did that. What. Incredible.

And to finish your point, you know, how is that. So what that did was it taught me construction it taught me management, you know, to the 10th. But why I went to Columbia was because I was missing the numbers. I didn't know the numbers, I didn't have that financial background. And so going to Columbia gave me that additional layer of knowledge that I would need to go forward. But if you think about what I Learned at the SRO and buying my first building on 223 E 10th St from buying the debt from Amalgamated bank for $225,000 in May of 1992, what did I learn? I learned it was a 50% vacant building, but the other 50% was occupied by drug dealers. Right. And people on the edge and sort of on the periphery of society. I had just come from dealing with that. So that allowed me to understand how to negotiate buyouts, how not to negotiate buyouts, how not to be a hothead. I used to be a hothead. And if you mouth off to the wrong people, you're going to end up in the wrong place. So I had learned modification of, you know, how, what you expect from people and what they expect from you, very importantly, which allowed me and Jonathan to navigate this kind of a tricky, you know, you know, east village in 1992, everybody said it was going to be this great panacea, but it was still very edgy. And so really trying to figure out how to renovate and gentrify this building on this block without pissing a lot of people off and ending up getting beaten up on. You know, when you're leaving work and you know, to think Fast forward almost 30 years, it helps the same way it helps when dealing with stuff. Listen, in 2007 and 8, we were buying a lot of distressed debt. So we were buying, we called it buying performing debt from non performing banks from the Wachovias and the Lehmans, on buying pieces, B notes or mez pieces from the banks before they were, you know, trying to stay out of bankruptcy in 2007 and 8. And you're buying debt on a building on someone you know in New York City, it's a small world. You're buying debt on buildings that friends of yours own and ultimately foreclosing on them. And so the trick was how to do that nicely, how to do that elegantly, how to, how to figure out how to get one of your friends and peers in the business to give you the deed to the building without a, without a fight in court and make them feel good about it, which I think we successfully did in many instances. So again, it's the empathy, it's the understanding that sort of, I think, is a binding force for what I do. And it's the same way that I approach looking at buildings. When we buy buildings, you know, I want to understand who the building is, you know, what's the personality of the building. Because when we buy a building, you know, it's usually got issues, unloved, under managed, certainly underperforming as an asset in its subclass, you know, in its sub market. And so looking at the building and trying to be empathetic to the building, you know, who are the tenants, why is it vacant, why is it underperforming? And then trying to see who it wants to be. And then with the team, implement a transformation with design and all that, that kind of understands who this building is. And it sounds savvy, but it's really how I look at life.

No, it's really helpful. And, you know, real estate is a small world and thinking about, you know, how do you have those discussions, especially when someone, you know is on the other side of the table. So that. That's really helpful and can see why that experience served you well. So I guess going back to 92 and launching Savannah. So was this originally deal specific, where you guys just bought a building, did a couple buildings? I mean, when did the fund start?

So the fund. Did you say the fund or the fund?

Yeah, the fun, I'm sure, started back in that green Subaru listening to Tina Turner, the fund with a D. So.

The fund started in 2006. So really the sort of. The three eras of Savannah were 1992 to 1998, all New York City, as I said, smaller deals, a lot of residential, buying vacant warehouses in West Chelsea and NoHo in Tribeca, converting them to condos. Broke in multifamily, like 223 East 10th street or building. That crunch was in on 13th Street, 54 East 13th street so that kind of, you know, messed up real estate. Then in 98, when my partner, Nick Beanstalk joined, we started doing the same deals, but doing sort of up and down the northeast quarter. So we stopped doing just deals in New York City. We started doing deals as operating partners with allocator funds. So no longer just friends and family, but larger deals with the Paradiums and the Lubert Adlers of the world. We were the operator. We'd put 10% of the equity up, they put up the balance. We'd run the deal. We'd get a promoter of a hurdle. And that was sort of. So that was from 1998 until 2006. Specific deals, right? So from the beginning until today, we are not buying pools of deals. We are not buying multiple assets any one time. We we're buying deal by deal assets. We're buying deals that are specific deals that we underwrite that we understand. We understand why it's not working, how to make it work. So that's our. You know, we're doing, you know, three or four deals a year now. So we did. So we did this deal by deal thing up until 2006. Then in 2006, Nick and I realized that we were spending a lot of time raising money for each deal and that the delta, because we were not well off, it was very hard for us to find a deal and to hold the dog, as they say, to go hard so we could hold it and then raise equity. So we realized we were losing deals because we couldn't hold it, and we couldn't put it under contract because we didn't have the money. And we had 50 deals by this time with great partners, and we had a really good track record. So we said, you know what, let's try to raise a discretionary fund. So we raised Savannah Fund 1 end of 2006 with a great roster of pension funds and insurance companies. And that was really. When we raised Savannah Fund 1 the end of 2006. We were the first operators in New York City, the first operating platform to go out and raise a discretionary fund, Basically cutting out the allocator, right? So there were a lot of allocator funds that would invest with guys like us, as I said, we were doing until 2006. But we said, you know what? Forget the double promote, forget double fees. We are the operating platform. We are vertically integrated. Let's raise the money and have the investors only have one level of promote. And a lot of the people that we went to and started raising money from in 2006 were people that we were making money for already who are invested in the allocators are investing in us. So it turned out to be good timing. So we raised fund one, and now we're raising fund five. But we're raising fund five. So I really shouldn't talk about funds, but it's a different, you know, it's a different beast, raising, you know, working out of a fund structure. Again, we're doing deal by deal. We're underwriting deal by deal. We're doing about 10 to 12 deals per fund. But it's just a little bit different. It's allowed us to keep a great team together. We have 55 people and, you know, we are New York City focused. I mentioned earlier, you know, from sort of 98 to 2003 or four or five, we were doing deals up and down, you know, two hours up, two hours down, two hours out, you know, because we were value add. We were buying deals that we could be on, you know, be at any day and every day. But, you know, since we were starting families, we didn't want to be on planes. That has kind of morphed into. And so that was great. We did well. But over the past, about 14 years ago, we realized we have to pick our pond, right? We know one thing that we were developing a great platform in New York City with a team of individuals, of professionals who, you know, grew up in New York, who had been working in New York for a long time and really understood New York. And so as we started seeing, we realized that we were getting the first calls on broken deals in New York City. We were becoming one of the companies that were reliable counterparties who did what they said they would do, who in 2006 now had a discretionary fund. So we didn't have to run around looking for equity. We had the equity, right? We raised the equity. And then within the box, we could. Nick and I were the investment committee. We could call money and invest immediately. And that just morphed into us just being sort of rising to a level where we were guys that were one of the first four or five calls. And we couldn't say that in D.C. we couldn't say that in Boston. We couldn't say that anywhere else. And then as we grew the team and our expertise, I think, is being honed. You know, we know a lot of people, we know every block. And so what we do is very, you know, block by block specific. So we just realized that, you know, pick where you want to fish. You know, we lose some investors because we're very, very geographically focused. But New York city is a 450 million square foot office market. And we focus mostly on office, 450 million square foot office, which is greater than the other 4 markets combined. So within the geographic focus, it's a relatively large and diverse market.

Makes a ton of sense. And I remember, because I got into the business in the late 90s, and I remember hearing you all speak about this portfolio that you had amassed of office product. And I can't remember how many million square feet it was, but the number that sticks in my head was I think your whole portfolio you had bought in at under maybe $300 a foot. So you were really value buyers where you were looking for cheap bricks. Maybe talk about how that's evolved. I mean, what do you look for in an office building? Because now it's really expanded. You're investing in the boroughs, now you're building office. Maybe talk about kind of the history of your office investing.

Listen, we're always looking for a story. We're always looking for something that we understand that kind of grabs us and you know, so, you know, typically it's, you know, an office building that's, you know, got vacancy and unloved or where there's some sort of ownership distress or ownership just fatigue. And that's what we've done. You know, fund two, we bought about 3 million square feet, probably around the same. About that per square foot basis that you mentioned, there's about 12 assets all in New York City. And we bought it at a great time. All of the buildings had the same sort of, you know, we're not buying 2 million square foot glass and steel buildings. You know, we're buying sort of, you know, half million square foot office buildings. Some were glass and steel, some were corner, some were mid block. But everything, you know, every building had a special thing that we thought we could lease it up even in the tough market.

Well below replacement cost, I would say.

Yeah, well, replacement cost. And even today it's still well below replacement costs. You know, in fund, you know, we started, then invested, we bought the City Court Building. As you know, in 2014 out in Long Island City, we bought the Fauci building in Long Island City. So we, in sort of 2015, 16, started buying in the boroughs. That's been pretty good. I think one thing that we've learned as a lesson, and I'll tell you one thing you always have to do, take lessons and you always have to learn. The minute that you stop learning and listening and seeing where you veered and where you maybe made a mistake, that's the minute you stop living and that's the minute you stop growing. And I think one thing in hindsight that we've saw that, you know, even though the buildings along Island City are great, you know, Citicorp is a little bit different because it's on four subway lines. But you know, the building, the other building in Long Island City, we bought a building in the Bronx. We were surprised by the slowness of lease up. And I think that it was really attributed to even though both buildings were five to seven minute walks from subway lines, it was still five, seven minute walk. And I think that really the slogan location, location, location, which rings true still, it's morphed into more location, location, transportation. And I think that if you're going to be in the boroughs, you got to be really next to major transportation lines. And I think that's one of the mistakes we made. And to the extent that you're not, your lease up is lower, you know, And I, and so one, so when we started investing fund four, which was, you know, we bought 2.2 million square feet, we just recently finished investing that seven assets, Nomad and Bryant Park, Grand Central area, all very well transported, I mean like really, really very close to the transportation lines. You know, good buildings, the same stories, but great buildings in transportation. Very close to transportation hubs. And now when you look at it with COVID and our most recent purchase, 1375 Broadway, which was a repurchase, we owned it in 2010, sold in 2015 and just bought it back, you know, that's this five minute walk from the three main transportation hubs, Penn Station, Grand Central and Port Authority. And now with the COVID with the virus, to the extent that you own real estate, that is a walk from the transportation hubs. I think it's another advantage in leasing and retaining tenants because to the extent that tenants can shave off another mode of transportation, another subway experience, the better off you are. And so we're, so we're, you know, we're, that's what we're focusing on really well transportation, really well transported buildings. I think for what we're doing now, for the foreseeable future, we're going to try to focus on, you know, New York City, on Manhattan.

I mean, on that note, because especially now in this post Covid world and there's discussion, you know, do companies now have contingency space? Is this going to bring the suburbs back to life? I mean, what would you say to that?

You know, we talk about it a lot just because, you know, that's what we do. You know, we're in the, we are in the enviable position of investing in office in New York City. I love office. I love New York City. I think New York City's here forever and I think office is here forever. We love New York because the density, we love New York because of the, you know, the socialization, the, you know, the interactions. So that's what we love and that's why all the tech companies loves it. Tech companies have loved it and still love it. However, that beauty, the beauty of that is going to be, is what's going to make the Recovery for New York City take that much longer, right, because of that. So I think we're going to recover slower than other cities in New York. I fully think that we're going to fully recover. And I think if you think about the two different headwinds, you've got, you know, remote working and you've got de densification you know, we're early on, we're in the first inning, second inning. But everything that we hear, you know, the genzers of the world, The Cushman's, the CB's, all the studies that they're, they're doing, you know, people want to come back to work, right? So I think come back to work is going to be are there therapeutics or is there a, or is there a vaccine? Hopefully that will happen soon. But people need socialization. People, young people want to work, but in the short term and short term used to be six months. Short term in my mind is now, you know, 18 to 24 months. So short morphing into midterm, medium term, there's going to be 50% occupancy in office. You know, you're going to have to maintain instead of 150 square feet per person, you're going to be at 200 square feet per person or 250 square feet per person. So does that mean that tenants are going to need a lot more space? No, tenants are going to make up for that by doing teams, you know, an A and a B or B a blue and a red or by encouraging more remote working. So I think in the end of the day those two trends are going to nullify themselves. And I don't see a big dump of space. I mean you don't. I hate to hear Google saying they're not going to come back to work in the offices until 2021 in July. But I don't even believe that. I think that that is just a headline. I think we know a lot of people work Google and they're working. So there's a lot of headlines that we have to fight against. I would also say a lot of people out there that are speaking about the demise of the office market in New York City, these are guys that are also short selling the remarket public reit. So I mean there's a lot of different stuff going on there that's not necessarily above board, but I believe in it, I love it and I breathe it every day. And it's just gonna be a struggle and it's not easy. You know, we're collecting rent, we're trying to do. I think it's everybody's obligation to try to do what's best for everybody. So our tenants, especially retail tenants, restaurants or tenants that rely on foot traffic, you know, we have to try to help them. I don't want them to go out of business and they shouldn't go out of business. So we're converting some deals from true rent to percentage rent. We're doing whatever we can that's okay for us to be good to people that are, you know, have been with us during the good and the bad.

That all makes a ton of sense. So in light of that, I also want to talk because it's rare that an investor does pretty much do every asset class. In fact, I think the only thing I didn't see was maybe medical. But I know you've done retail, you've done resi, including that ground up 32 story condo up in Heights. You've even done some industrial, although that's been pretty far back. So tell us a little bit about the other asset classes and where you think the opportunities might be.

So I'll say one thing. We don't do hotel. Hotel is a business unto its own. It, you know, it transcends brick and mortar. And we're like brick and mortar. So we've done industrial. We did industrial when we were investing, you know, from 1998 when Nick joined till 2006, we were doing some industrial, some secondary office, tertiary office, which is maybe, you know, you asked earlier, maybe the suburban office market is going to get better now as companies look for satellite offices in the burbs. Not for me, not for me. We haven't had a good experience. Luckily, stuff that we bought, we bought a long time ago at a very low basis. But I'm not a suburban secondary office buyer or believer. We've done a ton of condos. Not ton, but a bunch of condos. And as you referenced, we're building a beautiful building called Van De water up on 122nd street between Broadway and Amsterdam. It's a 32 story, ground up, 183 units. And it's absolutely gorgeous. And we're selling right now, albeit a little slower than we had anticipated. But it's a beautiful project and I can tell you that, you know, it's a very tall building. It stands out up in Morningside Heights. And we spent a lot of time on the design process trying to make sure that we were contextual, that we weren't going to build a glass box that would have stuck out like A sore thumb. When we design and when we build, we want to be very contextual. So you look for stuff, you look for areas, you look for real, you know, icons in the area that give you reference and give you inspiration. So, you know, you have the Riverside Cathedral Church, which is a limestone, you know, tower. So we kind of, we cut. Our design was took off of that. You know, I always say you don't want to mess with God. So it's, I would never say this is nice, but it's sort of that reference. It's, you know, it's a stone building and it's, and it's gorgeous and you know, something like that, you, you design forever, right? It's gonna be there forever, hopefully. But yeah, condos are an interesting market. You know, we do them very sporadically these days. You know, it's more, you know, if it's a great deal. It's all about timing. And timing, you know, sometimes is good, sometimes it's bad. But office, we've done some retail mostly, you know, a lot of retail. A lot of retail that we've done over the years has always been sort of ancillary in the multi tenanted office buildings. We did buy a couple retail pieces. One is in the meatpacking on 10th Avenue between 14th and 15th. It's a beautiful glass box under the High Line right next to, you know, Google's headquarters. It's been a little slower than we anticipated. Obviously we should have, I don't know if we should have. We didn't see the Amazon tsunami that swept through the retail world and hit us as well as all of our, you know, a lot of our peers and across the country, across the world. So we still have that and that'll be, you know, we were working through that, but it's a great, you know, even if it's not doing well, it's still a beautiful project. And you know, we're, I think going forward we're going to be very sort of very careful if we do retail, you know, standalone retail or retail that's got any large exposure to any one tenant. Because obviously in this market with COVID and with the Internet, retail is very challenged. We don't, you know, one thing we don't do, we don't do multifamily. I think multifamily you have to have an in house management and we've never built that. We leave that for the other smarter, more ambitious people than we got it.

And then development, you've got a couple boutique office developments. I mean, is it Climate, is it challenging to get those capitalized and built?

Well, so we're finishing a building called the Six at 106 W. 56th St. Just west of 6th Avenue. And that's 100,000 square foot boutique office building which will tco in probably end of September. We were delayed by the shutdown, but that's going to be a great building. Small footprints, small floor plates, good for sort of family offices, small hedge funds. And we think that'll be good. We're signing leases. We just signed a lease at $150 a foot. So you know, I think that's going to be good. Especially now, people wanting smaller buildings, bespoke entrances, not a lot of interaction with a lot of tenants. So that's what we're gonna have. We're about to break ground on a large project out in downtown Brooklyn, which I love. That's gonna be a 400,000 square foot ground up spec office building. And so that's gonna be breaking ground next month. So we're excited about that. We think the design is terrific. We've made a bunch. It was probably 80% design when Covid hit. We've made some designs to the mechanical systems to the entrances, making sure there's a lot of green terraces. And so that will probably be one of the first ground up office buildings to break ground post Covid. And I think, you know, Fogarty Finger is our architect and I think that we've addressed the concerns and you know, one thing that's very important and one thing that's very apparent is that health and wellness is of super importance. It's always been important, but on the secondary importance. And I think one thing that the recent events have shown is that health and wellness of tenants, of people is of utmost importance. And landlords need to understand that and do everything they can to make their buildings sustainable and to make their buildings with as much fresh air as possible. And you know, all of the new sort of things that you can do to make the air fresh and make interactions with the elevators and with doormen to a minimum. And I think with 141 Willoughby, which is the address, I think we've done that and we're excited and we're doing that across the portfolio. We're trying to make our buildings best in class by addressing the health component of all the buildings.

That's fantastic. Very excited. So we only have a couple more minutes left, but you also have a great history of buying distress and I want to kind of combine this with one of the last questions, which I typically ask, which is, you know, what advice would you give to an aspiring investor? So, you know, a lot of people would think that there is going to be, you know, correction in the market. You know, where are the opportunities? Where are they going to be? What advice would you give to someone who's looking to jump in and get in the game?

I think the most important advice you can give to anybody that's jumping, you know, trying to jump. First of all, you need to have some experience because it's, it sounds like it's easy to do, but it's really not that easy. The most important thing is stick to your knitting. Stick to know what you. Stick to what you know. And don't try to do too many things at one time. You know, we made that decision 14 years ago to stick to New York City, to focus on office, and I think it's bode. Well, we still make mistakes, but it's, it's, it's, it's, it's bode. You know, it's been good for us getting into this now. You've got to stick to your knitting, stick to your underwriting. Let deals go. Let deals go. Don't jump on the first one. We're early in this, as I said, and we don't know how deep the distress is going to go on this. And always pick something that feels right. If you're going to buy an office building, buy an office building that you like, right? I mean, don't fall in love with it. You know, you never want to fall in love with anything. You want to love everything you own. You don't want to fall in love, but you've got to there always. And I've always felt this. There's always got to be something that attracts you to a deal you're going to do. You're going to spend a lot of time on that deal. You're going to spend a lot of sweat, a lot of tears, a lot of money. And unless you like it, you lose the fun. You know, you're going to love it once some days. You're going to hate it some days because it's not behaving nicely and things don't go well. But there has to be something in each building and each deal that you do, even if it's a distressed debt buy, right? If you're buying distressed debt, you might own the real estate, understand the real estate, and just, I always just think you have to have a connection with everything you're buying.

That's fantastic advice. Well, Chris, thank you so much for joining us today. Really appreciate your taking the time.

My pleasure. It was a true pleasure and nice seeing you over zoom.

But yes, hopefully we'll be back in person soon. So thank you again. This is James Nelson, your host of Real Estate Investing live from New York. We're going to have a quick break from our sponsors and we'll be right back.

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Lauren, how did you get into the business and maybe talk a little bit about brokerage specifically? Did you think about ever going to the ownership side or was brokerage just something you gravitated towards?

So I actually got into real estate very randomly. I went to school at Rutgers University that at the time they did not even have a real estate program. So I didn't know commercial real estate was really an option for me. I ended up getting working at JRT because I met a friend while studying abroad and his mother owns the company I work at. As I mentioned, JRT is a women owned company. They like to hire young women since this is a very male dominated business. And that's kind of how I found my path into real estate. So one of my big advice that I tell everyone that's graduating is use your network. Like ask your friends, parents, people you know, just people you go out and network and meet because you never know who you're going to meet. Like I mentioned, I never could have imagined after I graduated college that I would end up in commercial real estate. And it's something that I love and have a passion for. So definitely network and talk to people and let people know that you're in the job market looking for a job and what your expertise is and what you would hope to do. Because you never know, you may plan to do one thing and completely end up doing something else within real estate that you didn't even really know was an option for you. Kind of like me. And so brokerage, again, I kind of fell into it. And now that I'm here, I really do love it. It gives, there's a lot of, it's hard work. Part of the job is to you have to find business so you have to do cold call and network and meet people, which can be difficult. But it's also, as I mentioned, a flexible job where you can be at a meeting at 9 o' clock and then have a lunch at 12 and then still be able to do something else at 3 o' clock where you're not chained to your desk, as I mentioned before. So it is Definitely a tough job. It's very, very competitive, especially New York City, especially, especially the Manhattan market. Everyone's competing. So it's not for the faint of heart, but if you work hard and put in effort and learn the business, I'm sure that you could be successful.

Great advice. Alan, you mentioned you were at Apollo before, so you've been on the institutional side of things. Talk a little bit about what it took to break into that world. Did you have to go get your master's degree first? What type of skills did you have to have to land a job at Apollo?

Thanks, James. No, it's a really great question. And I actually went to a liberal arts school called Tufts University right outside Boston. I had a degree in political science and economics. So really sort of getting into the real estate industry. I didn't really have any formal training going into it. So, you know, Apollo is one of the biggest private equity firms in the world. And it was always something I had my eye on to get into that echelon at a school if I could. But it's always something that's challenging. So I actually applied to their summer analyst program and I was fortunate enough to be accepted. I was able to network with some of their senior principals prior to applying, which put me in a position to get that, to get that job. And, you know, just generally speaking, that culture, they really teach you how to work in a high octane environment and kind of instill in all their employees they need to really, really work hard, learn everything you can about whatever it is that you're working on. And you know, what I found is over time, you put these skills together and you look back at yourself and if you put in that effort and time, you become really a holistic professional if you spend the time to do that. So I think it's very well worth it. And having that initial job at Apollo put me in a position to move over to the kind of operator side. I heard that Todd Waterman, who's our principal at Waterman Interest, was looking for someone to join him and kind of handle a lot of different things. So I actually applied that eight years ago to join Todd. And just in general, I think it's important to be an absolute sponge when you're in kind of early starting out, be the person that gets in earliest, leaves latest. And I think that's not always so easy to come by nowadays to find people that have that attitude. So I think, especially senior people, if you make it a priority to make your boss's life easier and thinking in that way, how can I make my boss's life easier? You will be rewarded for it.

Great point. Yeah, definitely no substitute for hard work. And I started my career at a firm called Massey Nackel. And Bob and Paul used to say, good news, guys, you only have to work half the day, so just pick what, 12 hours of the day you want to work to be successful. So thanks for reminding us there. And, Lauren, just to go back to what you said earlier, I really liked about leveraging your network, because I think a lot of us, when we think about networking, it's okay, who do I know in the real estate business? But sometimes it's asking your inner circle, who else do you know? Asking friends and family is a great way. I know that through my university. And I went to Colgate undergraduate, we didn't have a real estate program. But the only reason why I'm in the real estate business is because Paul Massey, our founder, was a graduate there and he gave me a shot. So, you know, you all are, you know, our mentees are part of great universities here. You're all based here. Use that alumni network. Reach out to them. You know, ask them for advice, ask them about their experience, do some research on them before you do it, and then ask them for introductions. There's a real sense with schools to pay it forward, because I know all of us used that network when we were getting out there. And then I'm going to ask some of our other mentors on the line also after we hear about what some of our other board members would give for advice. But, Laura, what would you say to the mentee who's out there right now, who's in a master's program, thinking about where do they want to end up, what do they want to do career wise? What would be your advice to them?

I think you touched on some of it already in terms of using the network and trying to reach out. Especially now, everyone's a little virtual setting up. If you were to reach out, make a phone call and say, can I have 15 minutes of your time? I just have some questions about what your day is like. And, you know, I think now is a good time to really start relationships and see who you can meet, who you can get to know. I also, I was thinking as you, as you were talking, and Lauren and Alan brought up some great points, and Ryan, like, I run our intern program, and last year we had this great group of interns, but there's one particular intern who would come in my office every Friday, just say, like, hey, can we just talk for 15 minutes, and she would just sit down. We would talk about what she's doing for the weekend, what I'm doing for the weekend. And then eventually, like, after a couple weeks, I was like, oh, can you help me on this project? And she ended up getting a lot more out of, I think, the internship than some of the other ones, because she really put the time in to get to know me and build a relationship. And eventually, if you just, you know, sort of show up enough, there's going to be projects that come. And so since none of my interns are on the call, she's definitely my favorite intern and got an offer. And, you know, I do think that it's. It's important to take the time to get to know people, because the people that are higher up, you know, they. They want. They want to build a relationship, too, and they want to make sure that you succeed. So take the time out and get to know them and really just work on building relationships and asking questions. And I think people, when I make decisions about who I'm hiring, I look for an energy and a quest for knowledge and being able to communicate. Those are the three main things that I need in somebody. If you want to learn, you can learn. You're going to figure it out, right? You hire smart people that want to learn. They come with an energy, and those people are going to be successful. So just make sure that your drive and what you want to do is transmitted in the interviews and the conversations that you're having.

Yeah, I really like what you brought up about that intern who was in your office asking for guidance and then getting involved. And our sales team has over 30 people in the group, so we have a lot of associates associate directors. And if time was no object, I'd love to spend equal time with everyone. But the reality is, you know, your manager is busy. You know, they're out there that, you know, they've got their own workload. So I found, you know, the associates associate directors who reach out with smart questions or offer to help. Hey, I heard you're working on this. Can I help, you know, run some numbers for you on it? And just kind of staying front and center, you know, you're going to build that relationship, and your manager is going to be able to open a lot of doors for you in the future. So that was a great example. Laura.

Thank you for tuning in this week to Real Estate Investing live from New York. Please join your host, James Nelson for another program next Tuesday at 7pm in New York, 4pm Pacific Time on the Voice America Business Channel. All shows are rebroadcast Wednesday mornings at 7:00am Eastern Time, 4:00pm Pacific Time, as well as always on Demand. We'll talk again next week.