61: Building Better Cities With David Kramer

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 61 of real estate Investing Live from New York. This is your host, James Nelson, principal and head of Tri State Investment Sales at Avison Young. And if you didn't catch last week's episode, had a great interview with Dr. Mark Zandi, who is the chief economist at Moody's. And before that, we had Avison Young's chief economist, Nick Axford talk about the top 10 trends for 2021. So if you did not get a chance to listen to those shows, please check them out. And while you're there, whether it's on itunes, Spotify, or wherever you get your podcast, please leave a rating, a message, any comments? It's great to hear from you and also appreciate your subscriptions and telling your friends while you're at it. Also link in with me at James NelsonMYC. You can find me on LinkedIn, Twitter or Instagram. Got a great show for you today. We have with us David Kramer, who is president of the Hudson Companies. And David has actually this might even be a record. He's been mentioned by at least two of our other speakers. So it's really cool how these stories are all weaving together. So I think you're going to get a lot out of this. David began his career on the West Coast. Although he is a native New Yorker, he has built, along with Hudson companies, an incredible portfolio of affordable housing and market rate. And he's a true pioneer. So I think you're going to really get a lot out of this. We're going to have a brief word from our sponsor and we'll be right back.

And now it's time for our Investor Spotlight. And today, thrilled to have with us David Kramer, who is president of Hudson. David is a native New Yorker who loves developing housing as part of his commitment to help build a better city. David joined Hudson back in the stone age of 1995, his words, not mine, and has played a role in many of Hudson's most exciting achievements of the past three decades, including the world's largest passive house building, the house at Cornell Tech, and the redevelopment of the Brooklyn Heights Library. One Clinton. David has a bachelor degree from Yale University and graduated from the Coro Foundation's Fellows Program, which he likes to mention, since he loved the program and doesn't have a graduate degree. He served on the boards of the Brooklyn Bridge Park Conservancy, the Brooklyn Navy Yard Development Corporation, and the Coro Foundation, New York City School Support Services, the Brooklyn Real Estate Roundtable, and the Collegiate School Alumni Council. David has seen most Broadway musical and plays a lot of. Ken. Ken. Wow, David. I gotta say, that's the most interesting bio I've ever heard. So I'm looking forward to this discussion we're gonna have. Welcome.

Thank you. I used to put in that bio that I got my master's from Trump University. I put it in there to see if anybody actually read the bio and commented on it. I took it out recently because, I don't know, I had to present the bio for something a little more serious. So I took it out. But literally, for two years, I had it in my bio that I had a master's from Trump University and nobody said anything. I never got one comment about it.

Okay, so native New Yorker, where did you grow up in New York?

I grew up on the Upper west side, West 86th street, between Riverside and West End, for my whole youth, and walked eight blocks down West End Avenue to go to Collegiate. And the Upper west side in the 70s was not the Upper west side we know today. That Upper west side was great until Broadway, and then it became lovely again in Central Park. But you had to watch yourself on Amsterdam and Columbus. It was really a dicey area, much as New York City was in the 60s and 70s. And I think just as I was leaving high school, a transformative bar restaurant on Columbus Avenue open, called Nanny Rose. And Nanny Rose was the beginning of what we say today is gentrification that began to transform Amsterdam and Columbus.

So before that, and maybe as an early teen, did your parents give you kind of freedom to still run around? I mean, were you taking the subway on your own? I mean, what was that like if the neighborhood wasn't so great?

Yeah, you'd get mugs. I mean, I probably got mugged five or six times. But, you know, parents were not helicopter parents. And we had a lot of freedom. We would take the subway, we took the bus. You know, we would walk. And, you know, to this day, when my wife and I were raising our kids and, you know, an issue came up about, like, letting our kids, you know, walk here or get on the subway. And I would say, you know, in my day, when I was their age, I did this, that, and the other thing, my wife would sort of Reflexively say, like, oh, it was different then. And I'd say, yeah, it was different then. It was much worse. It was much worse. But, you know, there were different standards and different thresholds of distress. And, you know, I think that if any of my kids were mugged today, like, you know, would. It would lead to, like, a family therapy session in a way that. That just wasn't the case 40 years ago.

Yeah, I mean, I gotta say, I mean, even if it happened once, but four or five times, I mean, by the third or fourth time, did you just know the drill? Here's my wallet. Or, I mean, did you grow a thicker skin, would you say, as a result of this?

Yeah, you had to. I mean, you know, I think my most humiliating moment ever was I was at the 86th street and Broad one stop, and we were heading downtown to Penn Station to get on the bus to go to the Meadowlands to get the Giants game, to go to the Giants game. And beforehand we had gone to Blimpy's on 86 and Broadway to get blimpy sandwiches. And so we're all standing on the platform, two friends and I, and a tough kid comes up to me, and he doesn't mug me for money, and he doesn't mug me for my sandwich. He mugs me for a bite of my sandwich. He comes up to me and says that he wanted a bite of the sandwich. And so, you know, you. You knew the drill. And you give him the bite of the sandwich. You don't want, like, bad things to happen to you. And then, of course, so, you know, we just sort of sat there eating the blimpy sandwich, you know, in front of me as I became, you know, less and less, more and more pathetic. And so then, of course, the conversation that my two friends and I had afterwards was, well, do I have the rest of the blimpy sandwich? Because, you know, he only ate a few bites, then he gave it back to me and went on his way, having done his sort of spiritual mugging. And of course, you know, I was a kid without two pennies to rub together, so, of course, I had the blimpy sandwich. I just didn't eat from his end.

Wow. Well, you don't hear much about mugging for sandwiches these days. We've made some progress. So from there. So you were. And I see you're on the board for Collegiate. So you were there through high school or where did you go throughout your schooling? And Yale was next, I guess.

Yeah, I started at a small preschool on East 96 called the Emerson School. But in second grade, I went to Collegiate, and I was at Collegiate for 11 years before moving on to Yale. And Collegiate was a huge part of my childhood, my formative years. You have a intimate, small class of 45 boys who are together for basically their childhoods. Some of my best friends and groomsmen are all my friends from Collegiate. We're still best friends and even the ones I don't see on a monthly basis, when we do run into each other, there is a familiarity and intimacy of knowing each other's lives, knowing each other's parents. Growing up together in a way that was incredibly special, and it was a great place to go to school.

That's wonderful. You must have excelled academically, I would imagine, if you got into Yale. Were you the studious type doing sports? What else were you doing throughout school?

I dabbled. I guess I was a generalist, which is a good practice for being a real estate developer. I was a high school wrestler. I was on my school paper. I worked really hard. In fact, I think I like to say that I worked harder in 11th grade than any individual year at Yale. But also, it was a little counts, right? What's that?

I said, that's the year that counts.

Exactly.

I worked hard.

I timed it well. But it was also a different era. You know, more people got into schools. You weren't competing against the rest of the country, let alone international students. So the acceptance rates were higher at all of these schools. So, yes, I worked hard and, you know, proud to have gotten into good schools. But this is a weird statistic. So 45 kids in my graduating class, 20% of my graduating class went to Harvard. Felt like 20% went to the Ivy Leagues or 20% went to specialized schools. 20% of my grade went to Harvard. So were we a uniquely special group? No, I think that, you know, going to certain schools made a big difference. There was less focus on geographical, racial, socioeconomic diversity. I remember showing up at Yale and seeing the freshman book and. And the number of kids who were in our freshman class from Andover and Exeter. I mean, it just went on and on, pages and pages of kids from Andover and Exeter. So, you know, it was a different time. And, you know, people of my generation, you know, joke about, like, would we have got into these schools, you know, 30 or 40 years later?

Yeah, I think about the same thing. And my oldest son, he's a sophomore in high school, and I'm thinking, thank goodness, and it's still early for him, but thinking about, could he even have gotten into Colgate if I apply back then. I mean, you look at the, you know, the scores now and how competitive. But, yeah, it was certainly a different time. So if you were a generalist in Yale, were you. Did you gravitate towards a certain field or what? Did you end up studying there? No.

I mean, if you're asking if there was any, you know, green shoots of real estate in my life, the answer is, of course not. Like, I don't think I even knew what real estate was growing up. I don't think I knew anybody in real estate. I was into a college campus of adventure. I was. I wrote. I had columns for the. For the Yale Daily News. I was on the. I was in student government. I was the vice chair of the Yale College Council. I started a business that I guess if I knew what I was doing, I could be running Netflix now. But we started two of my best friends and I started a company at Yale called Teleflex. Just to show you how close I was. We started Teleflex. And the concept was that when you were home, you could pop a VHS cassette into your VHS player and watch a movie. And then you'd go to college and there were no TVs in dorm rooms. There was no way to watch a movie. If you wanted to see a movie in college, you would go to a movie theater or there were film festivals. So we said, let's bring the movie experience to the dorm room in case kids want to watch Animal House with their friends. And so Teleflix was. We bought some TVs and we would rent cassettes from video stores. And if somebody wanted to rent Animal House, we would literally schlep A what, 30 pound TV, you know, up three flights of stairs, their dorm room, deliver them the VHS cassette tape, come back the next day and pick it up, and I was there, too. Or how did that work?

You could have had add ons.

This was. This was before there were apps, but we were onto something. We were onto something, but we let it slip away.

What an amazing idea. All right, so you had that entrepreneurial spirit.

I guess so. And then in terms of this journey, I would also add that I got into homelessness policy in New Haven, and I was also very political. I was the campaign manager for a local council race. And then after we won, I sort of got involved in some New Haven issues, including, this was 86, 87, which was sort of the beginning of the homeless epidemic that, you know, continues unabated to this day. And it was, to some extent, a Result of Reagan's policies to cut funding for mental health facilities led to the increase of street homeless that really began in the 80s. And I would notice that a lot of my classmates had passionate commitments to far off issues they were concerned with. And I don't want to downplay how important the issues of apartheid were or the gulags of. Of the Soviet Union, but I sensed in a lot of my classmates an interest in commitments that didn't actually impact them and that they were more concerns about, let's say, impoverished communities that they couldn't touch. And that it was sort of much more difficult and much less sexy to get involved in poverty you could touch, which in New Haven was a mile from the Yale campus. And so I didn't really get involved in the apartheid movement, but I did get involved in homeless issues of New Haven. And that was sort of the beginning of, I guess you could say, my dabbling in land use policy. But at the time, it was just, you know, a good urban New Haven issue. And, you know, being a good Upper West Sider, we loved our urban issues.

I mean, again, you're really ahead of your times in that. I feel like just now they talk about the homeless issue as not just being a policing issue, but a mental wellness and how to treat that. I want to get to that and all the incredible work that your company has done to provide housing in that regard. But I forgot to mention in the intro that you are the most referenced person on real estate investing live from New York, because I believe Chris Schlank referred to meeting you early on in the business. I believe Susan Hewitt also accredited her early days. So did you run into Chris back in those days? Were you in the same department? And if so, what were you both doing at the time?

Well, so Chris and I are childhood friends. So Chris is a child of the Upper west side. David Dishy is a child of the Upper west side. Jan Olibra is a child of the Upper west side. There are a lot of Collegiate kids who got into real estate who I grew up with. So I knew Chris. I was close friends with his family. His older sister Christine and my older brother Jonathan were best friends. So I knew Chris from Collegiate. Chris was, you know, Chris was a fun kid at Collegiate. And then, you know, interestingly, fast forward, he graduates Penn and starts working for the west side. Got the name of the group, but they ran Euclid hall, which was an SRO on 86th and Broadway above the aforementioned Blimpy Sandwich.

It all comes together.

It all comes together the same building. The same building that housed Blimpy Sandwiches was Euclid Hall. So after college, Chris and I met up and he had started working for the Westside Federation in Euclid hall, the same building that housed the aforementioned Blimpies. And I was developing SROs in skid row Los Angeles. And we met up and it was fascinating that these two collegiate kids were both working in the SRO homeless world in our early 20s and continue to sort of have parallel existences over the next 30 years.

Amazing. So how did you get out to LA then to start building SROs on skid row? There's got to be a story behind that.

So you mentioned in my opening coro. So the CORO foundation is a public affairs training program. One of their more successful programs is a one year fellowship for kids right out of college to sort of understand how the world works one assignment at a time. And I applied to be a choral fellow. And I went to the finalist selection day in New York and there were four centers. And I circled San Francisco and said, if I become a choral fellow, I'd like to go to San Francisco. And I'm sure what CORO interpreted from my form is like, oh, he's willing to go to the West Coast. So I was accepted into the CHORO program and sent to Los Angeles. And so I signed up for a one year program in LA to be a choral fellow. And I thought, well, I'm a lifelong New Yorker. I'll go out to LA for a year and then I'll come back and continue being a New Yorker after a year in la. And I ended up spending eight years in LA starting as a choral fellow. And when you're a CHORO fellow, you spend each month at a different assignment, basically trying to get experience in public affairs and learning how the world works and understanding the connective tissue between different industries. So you spend a month working for a labor union and you spend a month working for a nonprofit agency, and you spend a month on a political campaign, you spend a month with a business and you spend a month with a communications firm and you're trying to sort of make sense of how the world works. And one of my assignments was working for a real estate developer who was putting up homes in Riverside County. And that was my first introduction to the world of real estate through my different QUORO assignments. And so after my Courier ended, I was thinking about a bunch of different career paths. And one path that interested me was, was low income housing. And I think it's because it combined my prior interest in homelessness, my interest in urban development. And I think there was a part of me, as a choral fellow, seeing people going into nonprofit jobs and educational jobs where I think a part of me thought, you know, maybe if I get into this housing development issue that, you know, maybe one day if I ever wanted to make money or send my kids to Collegiate, I might have some other options that I wouldn't have if I went into government or the nonprofit sector. And so I pursued the low income housing industry. And by now we're at 1989, 1990, and it was really perfect timing because in the 1986 tax bill, when they got rid of all of the passive depreciation that the dentists counted on, what they did add was the low income housing tax credit, which became the funding for affordable housing for the last 30 years. And what it meant was that every neighborhood in the country could form a nonprofit development corporation, build affordable housing, layer on some subsidies from their city or county or state with the low income housing tax credit. And so by 1990, four years after the tax bill passed, you really began to saw in earnest this industry take off. And so I was sort of in the right place at the right time to get a job in affordable housing, just as the long housing tax credit was becoming a thing and becoming an industry.

You know, I'm so glad we're having this conversation because, you know, I'm sure a lot of the listeners to this show, especially the aspiring investors, they're thinking about, you know, how can I get into this business to make tons of money and do, you know, luxury condo development and, you know, whatever is glitzy, but there's also clearly a huge need for the affordable side. And it's a way to get into the business and also do social good. And now there's a lot of talk about this esg, investing, investing for good. And I don't really feel like that was a big thing a couple years ago or certainly when I got into the business. And now, thankfully, I think there's a lot more attention. I guess early on, was it always kind of a public private partnership, or was the public trying to create affordable housing, but it wasn't doing a good enough job, so there was a need for the, you know, the private sector to step in. Were you kind of getting into this at the advent of this?

Yeah, I mean, I would say that. I don't know if you've read Malcolm Gladwell's book Outliers, but it sort of explains people's, their career successes in terms of much larger waves of historical consequence. So, for example, he describes how hockey players who are born in January in Canada have more success than hockey players born in October because of how kids develop. And in the same way, if you are in your early 20s in 1990, as the Affordable housing industry is taking off, what happened after the initial advent of public housing and examples in New York city would be NYCHA. In the 70s and 80s, government agencies came to the conclusion that the best role for public dollars was to fund and regulate affordable housing, but to let private nonprofit or private for profit companies actually do the work, and they would be more responsive and use money more efficiently and could still be held accountable through public regulations. And so I sort of joined that industry at a time when the tax credit was taking off. And the other part of it that was incredibly helpful is that I sort of talked my way into a project manager job as my first job because it was a new industry. And today, if you're trying to get into real estate development, housing development, affordable housing, your first job is not as a project manager. Your first job is as an assistant to the assistant project manager. And the project manager that I was for Skid Row housing trust in 1990 is not dissimilar from a project manager today. You're overseeing the architect and the design and the entitlements and the financing and overseeing the acquisition closing and the construction loan closing and dealing with asbestos and lead and surveys and utilities and the building department and monthly requisitions. All of that work, all of that experience takes time. And the fact that I was sort of handed the file to be the project manager for SRO renovations was, what can I say? It was a great opportunity. It was a great learning opportunity. And, you know, that's all you could ask for when you're starting your career is to have responsibility to jump in and have to figure things out. And I didn't really know a beam from a post when I started. They asked me in my first interview if I knew how to use an HP12C. You know, which is. Which was the real estate calculator. I still actually use it to this day. And I said, lying, of course I know how to use an HP12C. And right after I left the interview, I went out and I bought, I went to Radio Shack and I bought HP12C. And it wasn't that hard to figure it out. But, you know, having a lot of responsibility at an early age really helped because whether you're developing affordable housing or developing condos or hotels or Anything, you know, the more responsibility you can have at a young age. It's a great way to, to learn and grow and develop. And so at a young age, I was at Skid Row housing trust renovating SROs for the homeless in downtown LA. And it was also at a moment in time where the Los Angeles Community Redevelopment Agency had decided they made a major commitment to fix up Skid Row and to buy all of these former flop houses and turn them into affordable housing. And so just in 1990, the tax credit is becoming a real thing. The redevelopment agency wants to spend a lot of money fixing up SROs. And it's a new industry. And it's not as if there are a lot of people who are going to school to go work in low income housing. And so I was able to work on a lot of projects in a very short period of time. And what I did, renovating SROs on Skid Row in 1990 is not that different than what I do today. You are acquiring, you are designing, you're bidding, you're trying to make the numbers work. And at the end of the day, you have a exciting project and you hand the keys to the property management company and keep moving.

I mean, it sounds like that was unbelievable frontline experience where you got a chance to make mistakes and learn by doing. Usually I would ask this question at the end of the interview, but just since you brought it up for our listeners who want to get into affordable housing, you said today you'd be the assistant of the assistant. And is it just. Would that be the only way to break into affordable housing today is just kind of try to get a basic level entry position and it would probably just take longer to find your way in and get that valuable frontline experience you talked about. You know, how would you recommend someone who's interested into getting into affordable housing in affordable housing?

Well, the good thing about affordable housing is there are a lot of different ways in. It doesn't have to be as the developer. You can work for HPD and HDC or HFA and be on the public side. You can work for a tax credit syndication company which is buying the tax credits. Groups like Richmond or Wells Fargo or Citi or Chase or Redstone equities are all very active groups that buy the tax credits. You could be on the lending side and work for a Wells Fargo or a Citi or a Chase being the lender of affordable housing. You could be on the consulting side working for groups like HRA and Forsyth, being development consultants. So there are a lot of different hats that are worn in affordable housing. And from there you can then pivot and do something else. So basically everybody at Hudson is some version of that route. And literally everything I mentioned is an example of what's happened at Hudson. I have people at Hudson who started hdc, which is the city housing agency, or at hra, which is a consultant, or at Richmond and Santander, which is the tax credit or lender. So, you know, a lot of those individuals, they started in affordable housing. And this is market housing as well. You can start out at market housing and wearing different hats and eventually end up working as the developer. But, you know, you just want to get your toe in the door and have a job where you're seeing the action, where you have responsibility, and then from there you can always pivot into what your role is. When I hire project managers at Hudson, and, you know, there are different legs of the stool that they need to be expert in. There's the construction leg of the stool. There's the financing leg of the stool. There's the design leg of the stool. There's the marketing leg of the stool. There's a lot of legs. Nobody comes to the job knowing all of those industries. On day one, maybe they were strong in finance and they've got to get to know construction, or maybe they're really good at marketing design, but they really need to bone up on their spreadsheets. So, you know, it's always a mix. And to be a developer is really to be a generalist. And if you are joining a developer from another field, typically you haven't seen, you know, the full pie, but you've seen, you know, parts of the pie and, you know, that's what you want as a young person is to sort of get in, you know, begin to learn it, and then, you know, then figure out from there what is what interests you.

So you came back to New York and so. And eventually started at Hudson in 1995. So I don't know if there was anything between Skid Row and Hudson Companies, but if so, let us know. And then I'd be curious with that experience, where did you start out At Hudson Companies. What did they have you do off the bat?

Yeah. So after Skid Row, I went to a group called the Venice Community Housing Corporation. I was the housing director there. And by now I'm about to turn 30. I'm in LA. I want to move back to New York. I'm married. My wife is okay with the idea of moving back to New York, but it's A big move. We had planted seeds in la. We had a lot of friends there. And then what really helped was the Northridge earthquake of 1994, which happened on MLK Day, scared the bejesus out of everybody. It happened at three in the morning. Then that became the catalyst for like, okay, let's get out of here, let's move back to New York. So when I moved back to New York, I had just turned 30. I was basically homeless and unemployed and basically penniless. And my experience had been working in affordable housing for nonprofits. And I had promised my wife that like when we moved back to New York, no more of this nonprofit salary thing. New York was much more expensive than la. I was going to make money and justify why we were moving back to New York. So I had a lot of sort of self imposed pressure to figure out how to make money and use my experience in affordable housing. And I really was concerned that I was going to move back to New York and I was going to be pigeonholed as a nonprofit do Gooder. And I, you know, was hoping to pivot and I was a little concerned that I was going to panic and just take the first job that came my way. And sure enough, I got a gig through David Dishy working for HR Hamilton, Rabinowitz and Altschelor, which is the development consulting firm I've already mentioned that's a good feeder to firms. And I was working there, but they knew I was there short term. They knew I wanted to be a developer. And I was going around interviewing and hoping that people would appreciate my experience as a low income housing developer. And when I met with the principals of Hudson and described to them what I had done, they didn't dismiss my resume and, you know, realize that what I did had value because Hudson at that time in 1995 was primarily affordable housing development, but also was just beginning to do market rate housing. And they were looking to hire somebody to be a project manager for an 8020 in the East Village that became the Hudson east at 225 East 6th Street. And two of the people they interviewed were me and a young fellow I knew growing up named Shaun Donovan, who went on to become HPD Commissioner, HUD Secretary, Director of the Federal Budget for Obama, eight years in the Obama cabinet and now was running for Mayor of New York City. So I like to say I beat Sean after the job, but I think Sean wasn't interested in pursuing the job because he really wanted to focus on affordable housing. And this was working on an 8020 primarily Margaret job. So I was hired by Hudson in 1995 to be a project manager to work on the Hudson East. And again, I sort of go back to Malcolm Gladwell's concept of sort of the waves of history that I was in the right place at the right time. Again, just as 1990 was a good time to get into affordable housing, 1995 was a good time to return to New York City. 1995 was the beginning of the New York City economy coming back, new construction occurring. Remember when Clinton ran in 92, it was, it's the economy, stupid. And so by 95, groups like the Hudson companies are looking at buying sites and building market rate housing. And really it's been 25, you know, more or less incredible years for New York City since 1995 that you can't say was paralleled in 1970-1995. It was, you know, it's been an incredible run. And I sort of arrived at, you know, at the moment that New York City was becoming a stronger city, a growing city. Now, remember, like Giuliani became mayor, 93, Bratton was commissioner. New York City was finally coming back from a rough 30 years and 95 was a good a year as any to jump in. And so I joined Hudson in 1995 as a project manager. Really haven't looked back.

Was Hudson ramping up at the time as well? If you think you joined in 95, how many projects had they built up until then? And just to give our audience a sense of how many thousands of units you all have delivered today, tell us about Hudson before 95 and since then, what the track record looks like.

So Hudson was founded in 86 by three friends who knew each other, who had worked a little bit together, Allen Bell, Bill Fowler and Nick Lembo. And they considered themselves real estate entrepreneurs. And they got involved in different types of projects, from industrial condominiums to retail to housing. And Hudson at the time was sort of a junior affiliate to monadnock Construction, which had been around for much longer than Hudson and was a mature contractor in its own right. And so the special sauce of Hudson was having Monadnock to build and bring projects in on time, on budget. And so they became very well suited for the New York City Housing Partnership Program, which was a huge part of New York City's comeback in the 80s and 90s. They don't really have property today, but back then all of this in REM land was handed over to the New York City Housing Partnership, run by Kathy Wild, who now runs the New York City Partnership. And they delegated to mostly for profit developers, but mostly developers that also had a construction arm to build for sale affordable housing. And this was in neighborhoods that needed stakeholders. And you would build two and three family homes that would be sold to, say, civil servants who would not only become homeowners, but also become landlords because it was a two or three family home. So they would own a unit and rent out one or two units. And this helped stabilize many a neighborhood in Brooklyn, Bronx and Queens. And Hudson was one of the most active developers in the New York City Housing partnership. So by 1995, they've already enjoyed a lot of success building affordable for sale housing. A lot of two and three story homes built by monadanok. And they were ready for the next best thing, which is to build mid rise rental, construction block and plank, just when they felt the neighborhoods were becoming safer, more marketable. You know, in the east village in 1995, that was sort of the basis for the musical Rent, whose theme is that people didn't pay rent. And there was a huge AIDS crisis and there was crime. And of course, who's the bad guy in Rent? The developer, Benny the Bulldog in Rent is trying to gentrify a lot on the in the East Village in Alphabet City. And so by 1995 was probably time that a project like the Hudson east could happen. And from 1995, Hudson then broadened its mission to do market rate rentals, 8020s condos, co ops, in addition to continuing to be an active affordable housing developer, decade in, decade out. And so from the Hudson East, I went on to work on Marc Ray Reynolds in the Lower east side. In the West 40s, we did a condo conversion at 345 W. 13th St. Which was at the time the meatpacking district. And there were still these live sort of salt brine tubes that connected buildings underground. And West 13th street was known as where the trans prostitutes would hang out. So, you know, it was not the meatpacking district that we know today. In fact, our building looked out at a parking lot on the southwest corner of 13th and Hudson. And when prospective buyers asked like, what could go there, you know, we sort of pooh poohed it. Said like, oh, it's M Zone and it's the Meatpacking district. Nothing's gonna happen here. And of course, 10, 15 years later, the Gansevoord Hotel pops up there. So, you know, so we were fortunate to sort of be a part of the, the New York City wave that started in the mid-90s. And Hudson's DNA sort of sprouted from Monadnock's building affordable housing, which is that we weren't into luxury. Fancy, high risk reward. And so New York City land prices eventually drove us from Manhattan. And after doing my first few projects in Manhattan, we migrated to Brooklyn. And, you know, little did we know, you know, sort of the Brooklyn renaissance was on its way. We sort of migrated to Brooklyn because we felt uncomfortable with Manhattan prices. And so Hudson's DNA, I would say, is that we ended up sort of being the first in a lot of neighborhoods, just as we were the first new building in the East Village, and we were the first ones in west Chelsea, and we were the first ones in the meatpacking district. We sort of continued that in Brooklyn when we had the first grounds up in Dumbo, and we were the first in the Gowanus, and we were the first to return to Prospect Leffords Gardens, you know, on and on and on over the last 25 years.

And what did those neighborhoods have in common at the time? And clearly, you all were pioneering. You're finding value. But how did you decide these were the neighborhoods that you wanted to focus on next?

You know, I think you just. You kiss a lot of frogs in this business. So I happen to live in Dumbo. I was like. I like to say I'm the third yuppie to move into Dumbo. In 1998. The first project in Dumbo was Two Trees clock tower building in one main, and we were the third family to move in. So I was familiar with Dumbo, and we ended up bidding on what became J condo. And I was very comfortable with understanding the neighborhood where there was some opportunity to build new and to distinguish our product from the loft conversions that Two Trees was doing. A lot of Hudson ers today, for example, are urbanists. They come out of planning schools. And so we think a lot about how neighborhoods evolved and where there is value and where there's opportunity. So, for example, Prospect Lefferts Gardens was a neighborhood that, you know, a lot of Manhattan people didn't pay any attention to. Like, up until recently, if you were a New York City developer and you were interested in Brooklyn, you would go to Dumbo or Williamsburg or brownstone Brooklyn, maybe Fort Greene, but you wouldn't really go beyond that. And the private equity groups weren't going beyond that. And it wasn't viewed in the same mainstream way that other neighborhoods were. And so we had less competition. And so a neighborhood like Prospect Lefferts Gardens, it's on the B and the Q, it Accesses Prospect Park. There's retail. It's not great retail, but we saw sort of green shoots. The retail was going to get better. And when you're looking in transitional neighborhoods, it's not all perfect. And usually the way it's not all perfect is that the retail is a little rougher. So you ask yourself, can I make the sale here three years from now? If there's a prospective tenant walking into our rental office, can we say here's where you can get your coffee and here's where you can get your sushi and here's where the subway is and here's where the park is. And you know, if we feel comfortable that it can check those boxes and we can get the land for 50 bucks a foot, then it makes sense. Prospect efforts Gardens was a no brainer because my college roommate bought a home in the historic landmark district of Prospect Lefferts Gardens for a million bucks. And he pointed out to me, why is it that there's million dollar homes available here but there's no decent rental stock available? And so we've made, you know, we have made that analysis, you know, part of how Hudson, you know, picks projects. And in making that determination on Prospect Leifers gardens, you know, three projects later, we've probably done 750 units between the park line, the Clark and the Lois, and the lowest just got its TCO on Friday, by the way. So we're about to lease up the lowest.

So at what point so you elevate through the ranks and you're appointed president. I know you've also had some incredible institutional partners. I know you had that post Sandy recovery fund you've built on Roosevelt island with related. So clearly at some point there was an acknowledgement this is no longer a private enterprise. This is, it seemed to scale to a much larger degree.

Yeah, you know, we've had a lot of fun over the years. Roosevelt island has been a 24 year journey. We've done with related. It started off being designated to build this neighborhood. Nobody was particularly interested in that. We renamed Riverwalk and that turned into nine buildings of which we've built eight. And that led to our relationships building housing for Sloan Kettering and Weill, Cornell nyu. And that led to our partnering with Cornell Tech to build their residential tower on the campus. And it led to our deciding that tower, which they wanted to be innovative, they wanted to be special. It ended up being the largest building in the world, built to the environmental standard of passive house. And then it ended up, we operate about 90% of the retail stores on the island. We won an RFP from the, from the Roosevelt Island Agency to operate the retail for them. And so I think we operate more than 40 stores on the island as well. So that's been a, that's been a fun long term project for us. And then we got involved in the pension fund with the New York City pension system and working now in our second funds with them. The first was called the Sandy Funds, focusing on neighborhoods impacted by Hurricane Sandy, and the second is called the Green Fund and we're working on doing our sustainable developments for workforce housing for the pension fund.

What would you say your key to success is? And the companies.

You know, it helps to just be there. It helps to be a company that exists, that focuses on these areas that has a certain vision. You know, we hire a lot of A students, and I don't mean a students that like, I care about their gpa, but we hire people who are very diligent, detail oriented, hold themselves accountable. There are a million gotchas in real estate development. You can get screwed up by the building department, you can get screwed up by taxes, you can get screwed up by construction. And so we tend to be very methodical. We try not to be cowboys. And I think that's helped sustain us over many years because as we've seen in good times, it's easy to be fat and stupid and to have good success. And certainly we missed out on lots of big successful projects because we weren't cowboys. And so I think maybe having being a little more on guard for too much optimistic exuberance has probably helped us out. I remember early on in the 90s, sitting, having lunch with Alan Bell and, you know, we used to like, have our turkey sandwiches and eating in the conference room while we read Crane's Business weekly. In the 90s, we had very modest office space in the Gowanus Canal. So we'd have to like go out, pick up our lunch and come back and eat in the conference room. Alan's looking through Crane's Weekly and he says out loud to no one in particular, I can't handle the prosperity. And what he meant by that is that when you read the real estate periodicals about, like, how well people are doing and how much stuff is selling for and how fabulous it all is, it puts a lot of pressure on you as a real estate developer. It means that, like, land prices are that much higher, which means you have to assume much higher rents or condos to make the project make sense. And then everybody wants to get in on it. And so prosperity makes real estate hard. On the flip side, times like now make real estate hard as well. Like the opposite of prosperity, when everybody is gloom and doom. And so I think that as long as you don't get too caught up in either gloom and doom or too much exuberance, you can succeed. And certainly it's helped to be in New York City. Like, you know, basically we've been long on New York city multifamily for 25 years. So, you know, that's a pretty good, that's a pretty good way to go about starting a business. And as long as you're not too reckless with your assumptions, you know, that's a pretty good way to get by. I guess that's my answer. I think that makes sense.

That's a great answer, especially for whatnot. Not scripted. Those are the best ones. David, this has been awesome. We only have a couple more minutes left, but I've got to ask you because looking at your site and I really love how you put this front and center, but at your company, 42% of the executives are women, 41% of your staff are minority and 100% urbanist. So diversity and inclusion essential, so important to put that front and center. I had a really great conversation with Don Peebles on one of our friends former podcast. But for other companies who are looking to become more diverse, more inclusive, how did you all accomplish that and why is it important?

I mean, it's pretty logical, I think I read or heard like 20 years ago that when you have a meeting that has gender balance, that the meetings are more productive. And so, you know, I always thought that was interesting. And we have a lot of strong women, not only at Hudson, but, you know, we're three companies. Hudson, Lisa Management's our property management company and Broadway Builders is our construction company. And if you look at Broadway Builders, for example, we have strong women throughout the organization, which is atypical for a construction company. But you know, if the, if the personnel are awesome and gets it done, you know, that's the most important thing. So we want to be a strong, diverse company. And I think because Hudson, we're not just sort of mean potato real estate folks, you know, I think when you think about like, you know, the bigger brokerage companies like James, your former employers, you know, I think they're much less diverse in that. I think that if you're into affordable housing and you're into sustainable developments and you work with the city a lot, I think you end up attracting a more diverse group of candidates. And so, you know, that's always been important to us. And I should say we have an incredibly rigorous hiring process. We put people through the wringer. I have quizzes. I ask them multiplication questions. I ask them political questions. We, you know, there are multiple rounds of interviews. And so I think we're doing something right because we have an extraordinarily deep bench of talent in all of our companies. And I think it starts with how we. How we pick people.

Well, wow, what a wonderful story. And you all are such a powerful example. And so, David, we really appreciate your joining us on the show today.

Today. James, thanks for having me. Like, we did get into it earlier, but I should say that I started listening to your podcast because you and I were emailing about something, and I saw your podcast in your. In your email signature, and I had just finished a podcast series. So I was, like, looking around for the next great podcast. I was like, oh, let me listen to James's interviews. And two or three times I'm walking with Goby, my dog, on the streets of Brooklyn Heights, and all of a sudden I stopped in my tracks and turned to Gobi and I said, did you hear what I just heard? Like, somebody just quoted me. And it was a pretty hilarious meta moment. Walking down the street with Gobi, listening to a podcast, hearing somebody mention David Kramer. So it is an honor to be on your podcast. And now, of course, I blew it. I should have mentioned, like, 17 different people myself in my interview with you so they could walk down the street with their dogs and say, like, oh, that was nice that David Kramer mentioned Hal Fetner's name.

Well, we definitely go. I'm taking Hal's name down.

David Pickett's name. Exactly.

All my friends, it's wonderful to hear how these stories have all come together and how much good that you've done for not only the industry, but for New York and certainly to provide much needed housing. So, David, thank you again for joining us. This is your host, James Nelson of Real Estate Investing Live from New York. We'll close it out with a word from our sponsor. Thank you again, everyone.

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.