58: Sustainable Development With Helena Durst

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 all to show number 58 of real estate Investing Live from New York. This is your host, James Nelson, principal and head of Tri State Investment Sales for Avis and Young. I hope you all had a wonderful Thanksgiving and are gearing up for the holiday season. I know this has been a challenging year for us all and if you were like me for Thanksgiving, it was probably just with the immediate family or maybe a much smaller group than usual. But I know we are all looking forward to next year when we can open things back up again and start seeing people. And so we're getting there. Some great news with the vaccine over the last month or so, so help is on the way, but I want to take this opportunity to thank you all and express my gratitude for listening this past year, for spreading the word, rating the show, giving your comments and subscribing on itunes, Spotify or wherever you get your podcast. That is what helps spread the word of this show and helps others become successful investors. And that is the point of this show, is we want you to teach you the key traits to succeed in this business, in this market or in any market. And today's show is no exception. With us, we have Helena Rose Durst, who is a principal at the Durst Organization. Helena is part of a multi generational business, some of the largest developers of office and residential in New York City, but doing it in the right way, in a sustainable way, making a difference. Helena is passionate about the environment and certainly growing up in a family that championed this and was very early on opened up organic farming, then really led the way with LEED certification development. Helena is also passionate about the way we recycle and deal with waste and lastly also the waterfront and making our city more efficient, the way we move around. So I think you're going to get a lot out of this conversation that I'm having with Helena. Before we do that, we're going to take a brief word from our sponsors and we'll be right back. Thank you.

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And now it's time for our investor spotlight and thrilled to have with us today Helena Rose Durst, who I've had the pleasure of knowing for quite some time and also serving on some boards along with her. Helena is a principal at the Durst Organization, overseeing all aspects of the company's residential portfolio and including leasing, management, operations and marketing. She is spearheading the lease up of thousands of market rate and affordable units at Halletts Point as well as the seven projects in Queens and throughout the residential portfolio. As principal of the company, she also oversees human resources collections and works across departments to implement innovation. Formerly, she was co president of the New York Water Taxi and Circle Line downtown. So we're going to get a chance to talk a little bit about that today as well as serving on several boards, including the New York Restoration Project, a member of the Lincoln Center Real Estate Advisory Board, and then we both sit on the Board of Governors for the Real Estate Board in New York. So Helena, welcome and thank you so much for joining us today.

Thank you. Thank you so much for having me. I'm very excited to do this. Thank you.

Wonderful, wonderful. So tell us, what was it like to grow up in a real estate family?

Growing up in a real estate family, especially my own, was very interesting. So I thought growing up, I thought everybody talked in numbers. I thought everybody said things around the dinner table like 1133 Avenue of Americas or 675 Third Avenue or 201 E 42nd street and I really assume that most people in the country would talk about that like they would be using addresses like they were talking about their children or their family pets. And so it was quite a culture shock when I came and I got to sit around the table with some of my other friends and they were using full sentences and words and to describe their situation and their day rather than very short sentences and discussing using addresses as nouns. So it was really, it was very interesting. I also with another culture shock was to learn that many families would read Full books. Unlike my father, who would be reading these large leases and talking about how important it is to make sure that the check is not just in the mail, but it's in the bank. And finally, what I think was really great to be able to grow up in my family was to learn the appreciation of not just the bricks and mortar, but also the appreciation of the people who keep the bricks and mortar running. My family has always been very focused, not just on the buildings, but how the buildings run. And we all acknowledge the importance of having people who are dedicated to the building as much as we are as owners, running and operating those buildings.

No doubt. And really looking forward to asking you about your family's commitment to the environment and certainly for the people as well in your business and for everyone, who certainly enjoys the benefit of what you all are doing. So I know your family is also passionate, like I said, about the environment. And you've had, I believe, farming as well. So growing up, were you in the city or did you already always have the access to the farmland as well?

I got the best of both worlds. So I was actually an equestrian when I was growing up. From the age of about 6 to 18, I was a very serious horseback rider. So a lot of my very early informative experiences was being able to commune with nature, being able to learn how to horseback ride, also being able to learn how to take care of the horses, more importantly. So as I was growing up, I really wanted to be a horse trainer. And that taught me a lot of value, actually going into what composting is. Composting is often the source or one of the main components of composting is manure, because you need what is part of the nitrogen cycle for soil remediation. And that's effectively what manure is. I'm getting a little bit ahead of myself, but it really taught me a lot about how important it is, the ecosystem, the ecosystem, and how there's so much that is dependent on other things that you need to be very aware of a lot of situations that you're coming into it, including a community or an environment. There's a lot of sensitivity around change. And so making sure that we understand the impacts that we have as builders was something that was taught to me through the experiences that I had as a child growing up. And then the family focus on nature also comes from my parents passion around farming. They had started a organic farm in the late 80s, early 90s, before certified organic was a word or a thing in popular culture. And then from there, my brother has Always been very active in the outdoors, and he was Outward Bound instructor. And so I followed in his footsteps and took some Outward Bound classes that were very informative as well, which is where Leave no Trace camping comes from, which, it had turned out, my great grandparents had been teaching their kids about Leave no Trace, which is where the Durst Organization gets our statement of leaving a place better than you found it. Because that's part of the ethos of camping, is you don't want to just go to a campsite and leave it a mess. You want to try to improve it, if any way possible, by taking trash out of. Out of nature, if at all possible.

That's amazing to hear that your family was so ahead of the times and doing good for our environment. So, I mean, with your passion for that as well, did you ever think about doing something outside of real estate, pursuing that elsewhere, or did you really think that joining the family business was where you could do the most good in that arena?

I studied environmental economics in a school called Whitman College out in Walla Walla, Washington. So great they named it twice, just like New York City. And I learned quite a bit about myself at that time, because I learned that while I was out there, I learned a lot about how political science actually has a lot of impact on the environment. And when I was out at Whitman College, I realized that if I wanted to have a greater platform, the best platform I had was my family's business in being able to make substantial changes that I thought were necessary or needed, especially in my early 20s, and wanted to see those changes happen. So that was at that point that I realized what a great foundation my family's business is. And recognizing that it is commercial real estate, I was able to join the organization at a great moment after we had opened Four Times Square in 1999. I joined the organization in 2001. And I learned from that experience the amount of impact that we could have. Because Four Times Square was the predecessor to LEED certification. It was the blueprint for LEED certification. And then about eight years later, in 2008, we had opened One Bryant park, which is a LEED certified platinum building. And understanding beyond what the family's investment is in environmental and sustainable and green building goes beyond LEED certification because we wanted to push that barrier or those boundaries even further to really understanding it. And then my education in economics and environmentalism gave me the benefit of understanding how important it is not only to be successful in the environmental arena, but to make sure that that environmental arena is engaging with capitalism. And making it attractive to industry is really the most important place that we could be going forward. Because when you marry the economics and you marry environmentalism and you're able to find a way to show that it's good for stockholders as well as people who are salaried and who, who are looking for that paycheck, you're really able to motivate and create a lot of change. Because then as in the lingo, it's a win win situation for everybody. And I came into it not understanding how it could be how we want to create a lose win situation for anybody within a community.

Whenever I've heard you or your father speak about the benefits not just for the environment, but also from a financial standpoint, to say that these savings over time will result in a more profitable building. So to your point, a real win win. So maybe just in general terms, in our audience we have a lot of aspiring investors, we have college students who tune in, maybe just tell a little bit about some of the things you do to qualify a building for Leeds. You know, I guess to the layperson they might say, isn't it more sustainable to take an existing building and convert it so you don't have to, you know, use all new, you know, materials to build a new building, but maybe talk about what makes a property lead and, you know, what are the, some of the design elements that go into that.

And I think it's important to understand first or to think of how I think about a building is that, you know, the most successful building is a building that's fully occupied, fully tenanted, and is at its highest and best use. And so for a building to be regenerative in the environment, to actually produce fresh air, it would actually have to be a building that's probably underground, that is not good for people, would be good for mushrooms, but it would not be a good place for people to exist. Because green buildings are not only about providing or conserving resources for the environment, they're also about providing resources for the people in the building. And people in buildings require light and air, which is really, really critical. And of course, for businesses, as you know, we need power to be able to run our buildings, such as, and especially if you have something like a data center. And so when we think about green building, we think about it in four areas. There's material, water, energy, air. And air is, let's start with air because it's really important in this day and age, especially with the impacts of COVID fresh air is the air exchanges that come in and outside of a building, or is the actual fresh air coming into the building, then leaving the building, that actually requires more energy. The same thing for higher filtration and filtration. There is MERV filtration and then there's lower level levels of MERV filtration. And then when you get into higher filtration types, like using lighting as a potential dark, you can use HEPA filters. And all those additional filters require more energy. And so a green building, to make it healthy, actually can require more energy. Many of us, some of us recall the impacts of the 80s and the 70s and the sick building syndrome, which was effectively, building managers were turning the air off because they wanted to save on fuel. They didn't want to burn as much fuel, which is obviously good for the environment, but bad for the occupants. And so then there's also material waste, which, as you know, I'm very passionate about recycling and solid waste topics as a whole. Water consumption. How do you maintain and reuse as much water as possible? In New York City, we're very fortunate because we have high water tables, but we do need to be mindful about what happens to our water when we let it go out into the septic, go into the septic system, because we have a combined stormwater and septic system, which can overflood and put raw sewage into the harbors. And then finally, energy consumption. And energy consumption is one of the most difficult, complex topics that I think we have in the environmental movement because many of us want to use renewable energy. One of the issues with getting renewable energy or purchasing renewable energy in New York City is when you look around, there's very few solar installations, there's very few wind power installations. There's very few other innovative renewable resources, such as an anaerobic digester, which is something that takes food waste and turns it into methane, that then you can run a natural gas turbine to be able to create energy for New York City. My theory is we need to be thinking about how to generate as much energy on site as possible. Many buildings do this. Hospitals do this. One, Bryant park has a co generation plant. Other large buildings have this within the city. And the benefit also of generating energy on site is that you create steam. You're able to use steam to power large chiller plants. Also what it does is it reduces the loss of energy through transmission. We lose, we all lose energy through transmission from when it goes from a large power plant to where you're consuming that energy. And depending on the length of how far that electron gets Created and then transferring that energy over, you can lose up to 20% in energy transmission.

That was an incredible overview. I just learned a ton. So hopefully our audience is following as well. And, and I know to top it all off, I've heard that you also have green roofs where if I'm not mistaken, you also have bee colonies. Do you make your own honey off the top of the roofs of some of your buildings? Did I hear that right?

Yeah, no. You're hired as part of our marketing team. Yeah. So one of.

Where do they buy this honey? Yes, Tell our audience.

Yes, well, you can buy honey if you become a tenant. Actually, as part of some of our move in packages for our residents and our residential portfolio is we give honey away the same thing if we're able to do a deal together in any of our commercial spaces. Also on our financing deals, our honey is quite precious to us. We have well over 12 beehives. We're working with a priest who is the head of the New York City Beekeeper Society. And we, I think we're creating about, oh, we're, we're creating about 100 pounds of honey a year which we all give away, which is. Comes from, as you, as you mentioned, our green rooftops. The green rooftops are created actually using a soil amendment from our composting facility. So the food that you're eating in our buildings actually then goes up to the farm, gets composted. Composted. Brought back as green roof soil amendment. And so it's a full cycle. And whenever we can find a closed loop cycle, we like to look at, we like to try to strive for that, though. It's very difficult.

Amazing. That's so cool. So talk a little bit about the design of your buildings because if some are thinking, well, if I've got to make this LEED certified, maybe you have to compromise design. I mean, some of the buildings that you all have developed, they're so striking. I'm thinking of the via 57 on the west side Highway. That was big architecture, right? Who designed that? But maybe talk about how you think about design.

We think a lot about design and we think a lot about the impact of design on the built environment as well as the occupants. So both one Bryant park, via 57. We will be having, we have a new building in Long Island City that's named Sven which will all have, all have striking designs to them. And you don't need to compromise striking design for LEED certification. It's really. And what was really amazing about via West 57th street which is the pyramid, like building along 12th Avenue was that its design incorporated this idea of what a green building is and the occupants that are living in the building. It has a courtyard in the center. And Bjarke Ingalls, he likes to call it a court scraper instead of a skyscraper. And thinking about creating that green space for the residents in the building so they had someplace to go. Because no matter how great we build our built environment, our indoor spaces, it's really critical that we have outdoor spaces to get to. And there's been a lot of studies that have shown the benefits of forest bathing and making sure that we get out in nature as much as possible.

Amazing. Yeah. No, that's what you've been able to accomplish, like you said, not just on the exterior, but on the interior. And the outdoor space is really phenomenal. Maybe talk a little bit about another one of your passions, which is the New York Waterway. So I've been doing this in the city for a little over 20 years. And just to see the activity now on the rivers and with the ferries has been amazing to see. So maybe talk about your work before as co president with the waterways and tell us a little bit about what you were looking to accomplish and where you left off.

My work in the ferry industry in New York City was. I picked something up from Douglas that he had set forward after September 11th. September 11th was the largest marine lift, modern marine lift that had happened. Over 500,000 people had evacuated off of our harbors and shores. And there just wasn't enough ferry dock landing. People were actually going to the bulkhead and jumping off of Manhattan island to get onto tugs as well as other ferry operations. And any boats that were possible came out into the marina and were saving people off of the tip of Manhattan Island. And that was the catalyst for our investment in the ferry industry because we not only saw it as an important transportation, we also saw it as an opportunity for recreational use because the waterways are so amazing. But most importantly, we saw it as a necessary component to New York City's safety in the event of another large event that could happen so that people could evacuate. And after that, now we see a lot more ferry docks which would make a lift like what had happened in 9 11, much easier for those ferry operators. And then also, my father has always been very passionate about open space. And so his father actually was a part of the Westway lawsuit, which was the catalyst for the Hudson River Park. My father had picked up working in the Hudson river park and re engineering and redesigning those Piers into parkland, because we understand how wonderful resource open water is as outdoor amenity. As you know, everybody in real estate says location, location, location, which means how long does it take for me to get to my job and or my kids? Can I go shopping someplace and get food and do I have access to the outdoors? Can I get out and recreate in some way? And so Douglas saw this as an opportunity for creating more recreational space and more land value, especially along what we saw in western Queens and western Brooklyn. We also saw that developing shortly after his investment in the ferries.

It's been so amazing to see all the development that's taken place along the waterfront in response and then really in conjunction with the improvements there. And thinking back to. And I read Robert Mose's power broker and the highways, I mean, he'd done something that had never been done in New York. I guess, from a transportation standpoint, getting people in and out. At the time, I guess it was effective, But I know it also, in many cases, could cut off access to the waterfront. So it's amazing to see that restored now. And if I'm not mistaken, you can now take a city ferry for the same price as a subway ride, and it can take you from downtown Manhattan out to up and down the east river and Hudson river and even out to the beach. So it seems like we've accomplished a lot, but is there still a lot of room for more improvement there?

Thank you. I appreciate the plug, because now I can go into my ferry economics. So New York City actually has some of the highest ferry ridership in the world, even before the citywide ferry was started. And that's because of the Statue of Liberty. And so I'd really like to find a way to continue working with the city, as well as the federal government, to being able to monetize, better monetize the Statue of Liberty ferry riders, because oftentimes those ferry riders will Pay up to 20, $25 a ticket to go out to the Staten island ferry. But when we were operating our ferry company, we found a very effective way to be able to sell to tourists the ride around the Statue of Liberty. Our greatest competitor, though, and it still bothers me to this day, was the free Staten island ferry. There is no competing with free. So hopefully the city, I know the city will continue to evolve into thinking more about the different economics and commutations there need to be around ferry ridership and how to make sure that we can be using one of our greatest assets, tourism and the Statue of Liberty, to continue to Fund the other very necessary ferry ridership that the citywide ferry provides.

Absolutely, yeah. No, that makes a ton of sense. So we definitely appreciate your thoughts on that. And it's a huge opportunity and I'm.

Okay with people getting on the Staten island ferry for free. I think it's great. I understand all the politics. Like I said when I was in college, I better understood the importance of political science. So I try to see all sides of it. But I think that there is a great opportunity. Wonderful.

So some of the large scale developments that you all have done, I guess really part of it was creating that accessibility through the waterways. I'm thinking about Hallett's Point. So maybe tell the audience a little bit about what that project entails. Because if I'm not mistaken, it is a little far from the subway, but you do have a ferry station there now, so maybe. I mean, that was a pretty big leap of faith, right? I mean, this area, safe to say, was pretty undeveloped. I believe there was a rezoning to get it to residential, but maybe talk a little bit about that project and the execution there.

So we're very excited about how it's point and it's a wonderful project. It has a lot of those natural resources and the parts of that we were talking about location, it has a supermarket, it has a lot of open air and access. The neighborhood is actually I really enjoy the neighborhood. Astoria houses and Astoria as a whole has been someplace that I've been going for the past at least 10 years. And it has such a great neighborhood vibe to it. The building has done very well because it has high end amenities which is not seen in the Astoria market. So we've been able to attract quite a few residents to the location and we're just very excited to be able to be working with the city to be rebuilding or building an esplanade along the waterfront. So creating a park, which is something my family is extremely motivated and passionate about, which is parks in New York City.

Wonderful. It's been very exciting to see the progress there. What about office? I mean, your company controls millions of square feet of office. Certainly in a post Covid world. A lot of questions about the return to the office. Will people be working remote? How are you all thinking about the office for the future? Are you all still thinking about developing new office? And if so, what would that look like?

That's a really good question. I've been mostly focused on the residential market. I can tell you though, we have launched some new products around something called so recognizing the changing Office dynamic, I think is that businesses want more flexibility in what they're doing and making sure that they have that flexibility in being able to grow or change as needed. So we have shorter term leases. We've been able to cut our lease lengths, I think down from 30 pages to 10 pages or longer. And I know, you know, quite a feat that is, we are also very focused, we've always been very focused on air in our building. So we talked, I talked quite a bit about MERV ratings and all of our MERV ratings are very high. And finally, what I think our opinion around productivity is people are most productive when they talk to each other. I think what we've been seeing from the millennial generation is that this has been a harder work environment for them because they like to have that interaction with individuals as well as interaction with leadership and coaching. Because there is definitely something lost in a zoom call and there's something lost in the management style that you can't translate across an email, a phone call or a zoom call that's best translated on a one to one person dynamic. So I think we're expecting to see this. Also, the open office environment will most anticipating it will diminish due to the impact of COVID and that people will need more space and want more confidence that they are not putting themselves in an environment that may not be healthy for them in that. So we're expecting that there'll be greater distance between people. The open office environment will most likely be diminishing, but that the office as a whole is something that's very important for work.

Could not agree with you more about the benefits of working in the office and the collaboration that just doesn't happen virtually. But I think that's so smart of you all to have more flexible options to have an easier lease to negotiate. I think this is a big reason why coworking has surged because a lot of tenants, especially if they're in a rapidly growing business, they don't want to make a long term commitment and to make it as easy as possible. So it sounds like you all are really ahead of the curve on that one. So I'd love to get your advice to the aspiring investors, those who are looking to get into the business, and maybe they're even thinking of starting small. And maybe the question would be, you all have been able to accomplish amazing things in large formats, right? Lead certification. These are laborious process approvals. I doubt you'd tell us that someone would go and get LEED certification if it was a four or five STORY mixed use building but what are the kind of things that our listeners can do to make their buildings more environmentally friendly and how would they start off doing that?

So green roofs actually can be much they can be very simple. Green roofs can be a good way to start. Oftentimes depending on which green roof product you're using, they may give you an estimate that's overly complicated. But we use something called green roof soil blocks, which is bags of material that come up through the building and for the most part you have to take material off of off of your roof. And so that weight load should be somewhat similar. I'm a big trash. So recycling a building owner can save money by increasing your diversion rates, your diversion from landfill because that makes the hauler is able to sell the recyclable commodity product. And for a lot of business, for a lot of commercial offices, the material that's coming out of our buildings, which is white paper, is the paper that's desired the most. And then there's a lot of other there's also LED light bulbs, which is a somewhat simple, more simple fixture swap out. It's also cost effective. And NYSERDA has a lot of great other great ways to be doing this and engaging in understanding what an organization like NYSERDA is doing, which has a lot of funding for different types of innovation I think is the places to start. And then maintenance is always an important key component because the better you maintain the building, the better the building runs, the more energy water you'll be able to save because as the example, if you have a leak and you don't know it, you're wasting water.

That's really helpful. Thank you for sharing that and some great advice for our listeners to consider for their investments. I want to talk also about for those of our listeners, maybe their families in the business, maybe they're in the same position, whether it's their father or grandparents who started the business. The decision again to stay with the family business as opposed to go off on your own, do something, I mean was that ever a thought process for that for you or what would you say to our listeners who are currently in real estate families? What are kind of the pros and cons, I guess of staying with the family or venturing off on your own?

What I really enjoy about working with the family or my family and I work with my brother. And you know, my brother and I, we were I really love my brother. He's fantastic. I've always looked up to him as my bigger brother. But that also means you Kind of we know each other's weak points or we know how to press each other's buttons. So it's really important to understand, you know, when you're crossing a line and creating those lines in the sand and having those conversations, when you feel like it's getting too touchy, for lack of a better word, to have those open conversations as early as possible. And the really great thing about working with family is you know that you have each other's back and you know that you have the same values. You don't have to question, well, is that person playing office politics with me? They're not. And if you do feel like that is happening, I think it's really critical to have that conversation early with your family, including in working with my brother, Alexander Durst. I also work with David Neal, who is my cousin, who is the other co president at New York Water Taxi, Circle Line Downtown, who helped me sell the company. We were very, though it was hard to sell the company, we were proud that we were able to give all of our, the majority, the profits of the last year, probably about $3 million, as a transition gift to everybody who stayed with us through the end. So that was probably, that was one of my prouder moments, was being able to work with my cousin, being able to do that sale and being able to give a profit share to all of the people who work so hard with us.

That's great, great insight and I love what you had to say about values and the importance of that. So this has been just fantastic. Helena, really appreciate you joining us. I don't know if you have any parting words or advice for our listeners out there about how some are maybe thinking about making their first investment. I mean, these are very uncertain times. You know, what would you say to someone thinking about jumping into the real estate business now?

It's a great time to jump in because, you know, real estate's extremely cyclical. So whatever, whatever impact we're feeling right now will in the future eventually go away. And don't fall in love with bricks and mortar. That was something Joseph Durst, my great grandfather, had passed down through the generations. And my grandfather's advice is the most beautiful building is a fully occupied building with paying rent.

Well said. Well said. Well, Helena, thank you again for joining us today. This has been a lot of fun. Thank you for joining us.

Great. Thank you so much.

This is your host, James Nelson of Real Estate Investing live from New York. We'll have a brief word from our sponsor and we'll be right back.

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