Data Driven Decisions Part 2 With Craig Lebowitz

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This is Real Estate Investing Live from New York with James Nelson, the principal and head of Avis & 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's one of the largest investment opportunities in New York and around the world. Now here is your host, James Nelson.

Welcome to episode number 108 of Real Estate Investing Live from New York. This is your host James Nelson. I am principal and head of Tri State Investment Sales for Avis and Young. Thank you always for joining. It means so much to me. Thank you for your comments. Thank you for your ratings which helps spread the word on your show. If you have not already, please make sure and connect with me at James Nelson NYC so you can follow what we are doing on LinkedIn, Twitter and Instagram. And finally, don't forget, forget to check out my new site, james nelson.com I built this as a investor tool for you so you can gain the insider's edge to real estate investing. This is what this show is all about, is giving you the tools to be the most successful investor possible. So if you listen to last week's episode, we had a state of the market where Craig Leibowitz, our executive director of innovation and insight for the US At Avis and Young, gave a macro presentation on the return to office, among other things across the country as well as different segments. And so if you didn't listen to that, it might be worth going back and hearing that to set the stage for this conversation that I'm having with him today which is taking this data and making data driven decisions for your investments. So we get into a really detailed conversation of how to leverage this data and we live in this golden age with access to so much information. But the question is how do you make it actionable? How do you parse through this data and look for what is most relevant? So I think you're going to get a lot out of this episode. We were very fortunate for Craig to join Avison Young. Before that he was at JLL where he was the manager team that provided Occupier Investor services for nine years. And before that he worked in asset management at Citigroup, JP Morgan and Nomura. So he has a ton of value and experience that he brings to the table and I think you're going to enjoy this episode very much. So we'll have a brief word from our sponsor and we'll get right into that conversation with Craig Leibowitz.

A different approach to putting our clients First Avis and Young's Tri State Investment Sales Group sells multifamily office retail development and specialty sales throughout the New York metro area. As experienced thought leaders in our industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and teamwork. We share core values of hard work, integrity and expertise. We put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter LinkedIn and Instagram amesnelsonnyc to learn more.

So Craig, thank you so much for joining us today. Really appreciate everything that you've been doing for us at Avis and Young and really excited to talk to you about your story and really advice that you would give to our investors under this theme of making data driven decisions. And when it comes to data, you know you're on top of the game and I know that we rely on your work heavily. So thank you for joining us today.

Pleasures don't mind. James, thanks for having me on.

So Craig, tell us a little bit about your story and you can go back as far as you like but. But you know, curious to hear your path. You know, growing up were you always good at math? Did you, you know, technology? Where did this all come from?

Sure, I'll start from the top. So I was born in West Nyack, New York. I'm just kidding. So I always had a passion for real estate, but I didn't know I always wanted to do it for a living. I grew up in a family where both of my parents were in the finance industry. I went to college at Lehigh University with the assumption I was going to go into finance. I had finance internships throughout my college career. But having taken a couple of real estate courses and given my parents interest in real estate more broadly, for example, like the real estate section of the Times and the Journal are sacred in my household. Getting access to them is like the Holy Grail. Effectually I started to it started to pique my interests which really hit a hit a fever pitch I would say during my senior year having more intense practicum level coursework in commercial real estate. The unfortunate part was I graduated in the midst of the global financial crisis so there was absolutely no way I was going to get my feet wet in that industry. So I went into an accounting role for a couple years and ultimately I Was lucky enough to start my career at jll, which is the second largest commercial real estate services firm globally. And I was not hired to do research. I was hired because I was passionate about real estate. And four months into my career, they said they being my managers, were like, hey, you're pretty good with words and numbers. You are our head of research for New Jersey Industrial. And I said, okay, great. What's research? So I got my feet wet. I learned from a lot of very talented people, whether they were brokers, clients ultimately, or my research peers across the United States, through which I was able to get an understanding of what actually drove markets. Getting an understanding of how demand driven occupier markets interact with really complicated investor markets, debt, equity, so forth. And ultimately parlayed that into a lateral transition to oversee just the downtown Manhattan office leasing market. But my eyes were always on the investor side of the equation because I always thought that was a more interesting element where you're actually putting your money where your mouth is, so to speak. And became the. A few years later, I became the head of New York research at Jolly and learned a lot from one of my mentors, who's John Cicaitis, who made the jump to. It was from JLL to Davis and Young about two years ago now a year and a half, about two and a half years ago, I should say. And he became the chief innovation officer. I was like, what does that mean? What, what is going on? Is there a world outside of historical charts and graphs? You tell me that that exists. And after having some discussions with them, we recognize a role that would make sense for me personally, which is really working hand in hand with clients to deliver the real estate services equivalent of the Holy Grail, which is real time, predictive and customizable analytics in service of a client's goals. And in my role, I'll work with them, I'll leverage the best data sources we have at our disposal. And. And not only that, we humanize the real estate process too, because no one really interprets markets through vacancy rates or asking rents or asset pricing. In reality, decision making should be a little bit more visual, should be a little bit more compelling as well. Because when investors make a decision, they're painting a picture. And that picture could be painted to their underlying investors, to their investment committee or whomever. And in my role, I help them to paint that picture, whatever it may be.

Wow, that was great. Very helpful to hear your story, your experience, your journey. And so I want to just kind of take it back a little bit and Kind of go through each step here, so. And great to hear you were at Lehigh, part of the Patriot League. You know, I'm a Colgate alum. I've spent some time down there in the Lehigh Valley. Were you guys Boilermakers? Was that what you're trying to know? Maybe. I'm thinking I forget what your mascot was. Maybe an Eagle or something. I can't remember.

It's funny. My sister went to Colgate, so it was a deep Patriot League rivalry in my family. So we used to be the Engineers, and we became the Mountain Hawks.

The Mountain Lions.

The Mountain Hawks.

Oh, the Mountain Hawks. Okay, so they're a little tougher than Engineers. Okay. A little more daunting. Okay. So, you know, and a lot of our listeners are college students, and many of them might be in liberal arts schools, and maybe there isn't a real estate specialty. So did you have internships along the way or. I guess there were specific real estate courses there that you could take advantage of.

There were specific real estate courses. But having hired so many people over my career, to me, what was always most impactful was a demonstrated interest in real estate. Because the one thing you really cannot teach is. Is passion. Either you're passionate about something or you're not. And you could have a liberal arts degree. You could have a degree in basically anything. And to some extent, doesn't matter where you really go to school. It's not just about Ivy Leaguers. I'm certainly not an Ivy Leaguer myself, and I certainly didn't score 1600 of my SATs either. But what I did have and what's taken me pretty far is just an unequal passion for what I do. And I'm a perfectionist. I'm proud of the work I do, and I really enjoy working with people. I enjoy working with my colleagues, whether they're research or innovation at this company. Client work motivates me as well. I just love hearing stories and, of course, stakeholders across different walks of life, whether it's you, James, or leasing brokers or whomever. And what I do is I kind of internalize all those different storylines, marry them with data through which I could ultimately derive my own opinions. And those are the opinions that could help to inform the decision making of our clients.

That's great. And could not agree with you more on the passion piece to it. And that's because a lot of the hard skills can be taught. But if you don't have that drive, it's very difficult for someone to have success in a specific type role. So I want to talk about research, but I want to talk about a little more in context of your journey, trying to learn real estate. So a lot of our listeners might be looking to make their first investment. They might be looking, trying to understand a neighborhood. They might even be thinking about, you know, should I be buying multifamily, should I be buying retail? So, you know, maybe this is while you, you were an accountant and you were accounting firm and you were trying to, you know, stay plugged in and follow real estate and understand so you could make that jump. What were some of the publications or things that you were doing to help increase your real estate iq?

That's a great question. There are a few things I did. One was actually went to NYU's real estate program. So I have a master's degree in real estate with a concentration of finance and investment. So that helped me to shore up a lot of blind spots as it relates to some of the more advanced topics in commercial real estate. I did that while I was working full time at jll. And there's certainly some flexibility with that program, the Columbia program and others around the United States, which are all very prestigious and high quality. I would say the thing I did in anticipation of that was I simply read. I read a lot. I read, for example, the Wall Street Journal and the New York Times have some of the best, I would say, in most detailed commercial real estate reports, and they are very topical. And in those reports there are multiple sources of truth. So it's not just, for example, Evison Young and Craig Leibowitz giving their opinion. The reporters will do their due diligence and shore up the topic and the theme with other shops, whether they're investors, real estate services firms, or other real estate adjacent firms through which they could ultimately derive what's salient. And reading those reports on a weekly basis at a minimum, is how I kept abreast of what's happening, at least on the ground. The other thing I would note too is just to keep, just to be mindful of what's happening in the economy. What happens economically has really deep implications for real estate fundamentals. It is literally the backbone of investments and occupier decisions that inform those investments. So just simply keeping the best of what's happening there is really helpful as well.

You answered what I was going to make my second part of the question about when you're doing research, are you concerned about are you looking at the macro and the micro? Because one thing I've been told, and I'd be curious if you agree with this or not, but the number one driver to real estate values, real estate consumption, is job growth, right? And maybe that's changed now that we're in a virtual or hybrid type role. But clearly if you're just studying real estate transactions in a very specific neighborhood and you don't know what's going on with kind of broader trends, whether companies are moving here or there, clearly it's essential that you're also staying up to date on more macro type trends. So first of all, is that job growth indicator, is that a pretty good barometer? And what are some of the other macro type considerations that our listeners, our investors, should be thinking about as they are making buying decisions?

Job growth is a great one. It's at or near the top of the list. And it's also the dissection of employment. And the more you dissect it, the more interesting that narrative becomes, whether it's a macro or a micro level. But I would also note too is demographic trends, especially in the post Covid environment where we had this extraordinary period of migration out of cities and to some extent, and James and I and a handful of others were just discussing this yesterday and inward migration back to cities. So people are mobile at the end of the day and jobs are also to some extent mobile, especially in the current environment where myself, where I'm working remotely today and a lot of my peers, whether they're in real estate or any other more technical industry, can work remotely. So I would also say like where are the pockets of population growth and what's the dissection of the job and educational attainment of those segments of the population. So for example, if you're an industrial investor, you're really going to want to know access to talent, that is blue collar workforce in a hyper tightened labor market environment right now. But you're also going to want to know where the pockets of population and population growth more broadly. So when the product enters the warehouse and then leaves that warehouse, where's it going to go and what's the proximity to either to the end source, whether it's a brick and mortar location or direct to consumers. Another trend I know that's becoming a little bit more salient these days in some of the more alternative property sectors is actually even more macro than that. It's actually age. So what is the age of potential consumers? Think about, for example, medical office buildings, which is presently an alternative asset type but is becoming more mainstream. I would say if you look at the perspective demographic composition of the United States and a lot of markets like Florida and Southern California being a couple of the hallmark examples of that. People are going to age and the composition of individuals aged 65 or older is going to rise, which provides some tailwinds for that segment of the market as well.

I like how age is now really factored into your analysis of the markets as well. I also like what you had to say about jobs being portable because this just recently happened. Facebook, I guess now they're calling themselves Meta. They just make an announcement that they're going to move to Austin, Texas and they're taking all this space. But it used to be okay, well, we know we're going to hire 1,000 people, right? And that might be their intention. But then the question is, are those thousand people even going to live in Austin, Texas? It becomes a lot more challenging to try to understand how to go about finding where are people really moving to. And so I would love if you could share with our audience what you've done with the Vitality Index, because this just has so much implications. I think it'd be very helpful for our listeners. So I'd like for you to explain first of all what it is, how you source the data, and then how you can apply it. Sure.

So I had probably, without exaggerating, about 200 different client discussions, largely with office investors or office occupiers over the course of the pandemic. And I must have heard 200 different answers about return to work from we're going to be fully remote indefinitely to we're going to be fully back in the office. We don't care what's happening as it relates to the pandemic more or less, and everything in between. And so we have a really tremendous data partner in Orbital Insight that provides Avis and Young with extrapolated and anonymized cell phone data. And what the Avant Team or Innovation Team, the branding of our Innovation Team does is we'll isolate or geofence specific locations, share those locations with Orbital on site, and they'll share historical foot traffic or visitor volume levels at that location through which we could draw some really meaningful analyses around, for example, return to office efforts. And what we did after a Labor Day 2021, we released the first version of the Vitality Index that measured return to office efforts across 23 gateway cities in North America, using single tenant occupied or single occupied office properties in each of those cities through which we could measure return to office efforts across cities and across industries which, as we started to dig into that data, we got a more firm understanding of just how prolonged those return to office efforts have become. And until tenants are better able to navigate those return to office needs, it's very, very difficult for most companies to effectuate a long term real estate decision. Especially in markets like New York or San Francisco or Silicon Valley or what have you, where the capital costs associated with signing a lease are generally pretty extreme. Especially for emerging companies that really don't know what their, their employees, the scale of their employees will be in the future, who's going to be working on site or remote and how frequent that will be, and ultimately what the future of work holds. So what we did was we ultimately quantified that data so it removes a lot of the guesswork from the equation and it's updated every single day. It's literally my gospel. So when people ask me, hey, who's returning to the work, I to work and what does that look like? I don't even guess, I just say, I just open up the Vitality index.

And I'll tell them, amazing. So for companies this makes perfect sense as they're thinking about, you know, what does our future office space need look like and what are our peers doing right, if they want to understand what does the return to office look like? I mean, the fact that you can get very specific on an industry by saying, okay, what's the return been like for finance, how about for technology, for law? Now you get a sense of what your peers are doing and maybe that can help inform how you want to plan for space in the future. And that's certainly interesting to our listeners who are owners of companies and trying to figure out what their space needs are going to be. Talk about it from the investors lens. So if I'm sitting here and I'm looking to buy office buildings, how should I be extrapolating this data? What are the things that I should be looking for to decide where I should be buying? Maybe what type of buildings industry? How could I get the competitive advantage by leveraging this data?

That's a great question. So when you're making an office investment, it's underpinned by office leasing demand through which we have direct line of sight into who's returning to the office more quickly geographically in one lens and what we're also doing in the next version of the Vitality Index, just to kind of plug that for a moment, we're going to do a deeper dive across submarkets and building classifications as well as inclusive of multi tenant buildings. So investors will be able to say, well, class A buildings in midtown Manhattan or Experiencing greater visitor volumes based on how those prospective tenants work compared with class B buildings in downtown Manhattan, just to name a hypothetical example. Because creative companies have adopted remote work, and by virtue of those circumstances, there may not be as much leasing traction in the future state. So the greater those return to office rates, the quicker or the higher the likelihood there will be leasing activity or demand for that building or similar product in the market through which you could start to adjust your underwriting assumptions as appropriate. And when you're underwriting a building, and James, you know this building as well as are better than I do, the number one inhibitor for value is vacancy. So the longer the lease up time or the higher the vacancy risk, the lower the value of the building is likely to be. And if you're writing a discounted cash flow model for 10 years and you're really branching out there and you have your market leasing assumptions in hand, it's helpful to have that mobility data in mind when you're tweaking what the vacancy risk could look like either for prospective investments or for a handful of investments, whatever it may be. Because at the end of the day, it's all about vacancy. And then of course, the rents and concessions and capital expenditures associated with making an investment.

That's great. Thank you. So, Craig, I don't know if it's just me, but the last couple of years, the amount of data sources out there, and we were both at the Cretech conference and it seemed like every other booth had the latest and greatest set of data. And I know that, you know, this isn't new. I mean, five, ten years back, you know, the credit card companies were selling their data saying, hey, if you want to open a retail store, we can tell you on these retail corridors, what are the customers spending? What's the average charge on the credit card? When do they shop? Which is very helpful. I mean, again, if you're a retailer and you're looking for that, right? And then some of the security companies say, hey, and this is typically what you see in the Wall Street Journal is they'll refer to how many times someone's swiping and the turnstile and how does that work? So I guess more of a general question, but there's so many data sources out there, it's almost like overload. How do you know what to use, what's credible? I'm sure it also probably depends on what you're trying to accomplish. Like a retailer looking to open a store might be different than an office user trying to figure out how much space they're going to need in the future.

It's so true. It seems like there's a new source of truth popping up every day, every hour of every day. And it is a bit of an arms race right now, whether it's especially in the CRE tech environment where to your point, James is seemingly everywhere. And it kind of came out of the blue, more or less. I think it's ruminations of this started maybe 10 years ago, but it really started to come to fruition in a really meaningful way probably in the last five years. So what I would say is that what we're trying to do selfishly at Avis and Young, we're trying to be that source of truth because we have dozens and dozens of data partners that we personally vet through which we'll culminate that data, interpret it, visualize it, whether it's in a chart, a graph, a model that's predictive or map or map type visualization, or some culmination of all those things, depending on what the requirement is. And I think that mindset would work for a lot of listeners. It's kind of doing your due diligence, taking a step back and saying, well, what are the key drivers here? What are the sources of truth of those push and pull factors that influence investment fundamentals at the end of the day? Because to your point, how one would underwrite a retail investment could be very different from how one would underwrite a medical office building. There are almost entirely, completely different in a lot of respects. So you'd prioritize. For example, visitor volumes would be a great one to use foot traffic levels around that retail location as well as some other demographic variables that might be a little bit more important compared with how you'd underwrite perhaps a medical office building where those demographic variables could look very, very different, to name one example.

That's great. And yeah, I love what you said about finding the right sources of truth. So Craig, for our listeners who are maybe newer in the business and they're saying, wow, this is really fascinating and if I was part of a Fortune 500 company and we had 50 offices across the country, maybe this is, you know, would be more actionable. But, but let me just give you an example. Let's say, you know, someone's looking to invest 2, $3 million in New York City and you know, they like the idea of mixed use, that, you know, the feeling is their gut hunch is that retail has been really punished over, you know, first E Commerce, then Covid. But they kind of see the city coming back to life. They see residential coming back. So they're, their thesis is, you know, they want to buy a mixed use building with a store and four apartments above, and they want to invest in the area, the neighborhood in New York City where they think they're going to get the biggest pop, in other words, where the rent's going to surge. They want to be in the path of new development of activity. So what would you tell that investor? Where, where would you tell them to start their search, to start analyzing the data to find, figure out what is that neighborhood that's going to have the biggest rent growth and in the process the biggest gain in value?

I think there are a few different sources there. I think one of them is you just want to assess what the inventory could look like. Was there supply risk, for example, in your neighborhood? So using New York City as a reference point, you could use a number of different third party providers that could tell you what the vacancy rate is and the supply as well as the supply pipeline in a specific neighborhood. We could also do is do a little bit of a deeper dive into the demographic profile of that neighborhood. So has the population been expanding over the last 10 years or contracting? Then there might be a reasoning for that. So it might warn a little bit more due diligence there. And in some cities like New York, where there's literally a resource called New York City open data, you could dive a little bit deeper into some other salient real estate adjacency type data. So for example, crime and crime rates. So you may or may not want to invest in a neighborhood where there's the prospects of elevated crime because it affects the quality of life, especially if you're looking at a mixed use investment, just to name one hypothetical example. So there are a couple of different push and pull factors there as well as of course there are different sources of truth for occupier fundamentals. So a great one in New York City in the multifamily space is StreetEasy. StreetEasy is a great one. It's easy whether you're pulling together market data around a specific neighborhood or more broadly, it's easy enough to analyze that type of data through which you can make a real strong determination around the longevity of that two to $3 million mixed use investment in that neighborhood, because at the end of the day you're going to want to push rents to some extent and what have you. And the other thing to note too is just doing a little bit more due diligence into some of the regulations as it relates to a prospective investment. So for example, if there's the existence of low income housing, there could be some pretty strict restriction or governmental restrictions against meaningfully changing the rent profile or the reinvestment in those types of properties. So it's doing your homework on some of those kind of overarching factors at the municipality level as well.

Okay, that's great. And that certainly helps paint the picture and kind of understand the areas where you want to be. Although I'm sure how you interpret this data and where, and I'll give you an example because it sounded like originally what you were saying is you might want to be cautious if you're going in and buying product where there's going to be a lot of new development and competition. So, you know, I've always said in my practice is New York based and people say, oh, you know, that's great, but I'm going down and investing in Texas because they're getting, you know, big increases in rents. It's a lot to make a generalization. It's a lot easier to build in Texas than it is in New York. Right. They have a lot more land as well. And so, you know, the fear is, okay, I've bought this multifamily, but then, you know, someone builds a better product across the street and you know, my tenants, you know, leave. And so in a strange way, the fact that New York, it's very difficult to build there, it makes the existing product, you know, more difficult. But I'm not sure if the development of new product is always in competition with maybe older products. So let's get specific. Let's talk about Greenpoint, Brooklyn. So, you know, in Greenpoint, this is an area where for the most part low rise, you know, three, four story brownstones, a lot of this mixed use product, kind of this cool hipster type location. And they're building probably 5,000 units on the waterfront. So if you are looking at one of those smaller four to six families, how do you find out the fact that there's going to be 5,000 new units on the waterfront? If you own a retail store, I would think that would be a good thing because now you have people walking by your store on the way to the subway or as they're out and shopping around. And couldn't that elevate the quality of the neighborhood? So, you know, a rising tide lifts all ships. So it's just I would imagine that sometimes the data, if we're talking about, you know, new construction supply dynamics, could mean different things in other neighborhood and different types of cities. Would that make sense to you?

Yeah, James, that's a great point. And I think one of the hallmark examples of this, at least in New York City, was the meatpacking district. Everyone wanted that next meatpacking district type investment, which wasn't just retail, which was kind of a leading indicator. Actually. The turning point in a lot of respects was Google acquiring 111 8th Avenue as its new York City headquarters, which raised some eyebrows back in 2010. Then all of a sudden you had public park right at your doorstep at the High Line. And then it became like this cool trendy neighborhood, one that isn't all that accessible, but that was part of its charm too, at cobblestone streets. And it was like generally like a really interesting way to spend a night out. We had great restaurants and nightlife, some of the best you'll find in New York City. And I think you can make some of those types of parallels to other rapidly emerging neighborhoods. Greenpoint is another hallmark example of that, where if you were to look at Greenpoint five years ago compared with today, and you see all the cranes and these extraordinary amount of new construction, you won't even be able to recognize it. And I think to that point, you have to put your occupier hat on for a moment. So if you're like, for example, if you're renting, if you're a rent, if you are renting space and you're saying, you know what, I can't afford to be in the, in the waterfront, so to speak, and one of those new construction towers, where am I going to look? Alternatively, you're probably going to look elsewhere within Greenpoint. You'd be looking in Bushwick. You could look in Williamsburg, whether it's west or East Williamsburg. So putting that kind of hat on, so to speak, and put yourself through that type of due diligence will give you an understanding of whether that investment could have some legs, so to speak, in terms of returns on the risk return spectrum.

Perfect. So let me bounce another idea or business strategy off you. So I interviewed Philip Michael, who's a really interesting real estate investor personality. I mean, he's definitely out there and he's got an interesting investment strategy, which is he looks to invest where Starbucks opens up. You know, when he's looking for pioneering neighborhoods, he looks as soon as a Starbucks opens, because he says, look, I'm one guy who's out there trying to find opportunities. I don't have a whole team to do demographics and figure out what's going On Starbucks knows at what point an area can support one of their coffee shops and that would signal a certain level of tenants. So a, what do you think about that strategy? And B, what do you think the kind of things that Starbucks is looking at when they're deciding where to open up?

I love that and sorry that the listeners can't see I'm smiling because I love the kind of mindset too. There are a handful of Starbucks like examples where Starbucks is a company that's perceived to do its due diligence, whether it leads to demographics and demographic like trends, population and so forth. So it makes sense to invest around those Starbucks locations more so than you would maybe another type of retailer. I think that intuitively makes sense to me. It's almost like what a lot of investors have done over time is they'll look to some of their peers in a group think like environment, say like, well, if they're investing, maybe I should too. Whether it's domestic or foreign capital sources, there tend to be kind of a few hallmark examples of them. Not to name any names, but think of who they may be and if they're investing or they're raising funds for industrial, for example, some of their counterparts could say maybe we should do the same. The same could be said as it relates to return to office efforts coincidentally. Like if Meta decides they're going to work remotely for a couple months, guess what? Other tech companies are likely to follow suit. Same exact type of circumstances playing out and has played out for some time in the investor space as well.

That's fantastic. Good. So Philip's got the right idea. Okay, so now I want to talk more about on the ownership side and how to look at your current portfolio and how to optimize it. And that's a lot about the Avant system. And maybe you could talk about Avant, which is our proprietary platform to help owners make these types of decisions on their portfolio. Maybe talk about what goes into that and how it can help inform owners on how to optimize their real estate holdings. Sure.

So Avant is Avis and Young's proprietary data enterprise, data warehouse and data analytics platform. The idea here is to centralize data and whether it's the real estate itself or the real estate adjacencies like demographics, economics and so forth into a single place to become that source of truth. So when we're working with clients to assess their, for example, office portfolios performance in the context of the market, we could do so quickly and seamlessly. What used to take my team of analysts hours, if not Days of work, we've largely automated whether it relates to the ingestion of data or just as important as the interpretation of that data. And our mindset here is that we want to make the market more transparent so our clients can become more productive. And, and I've become more productive too, coincidentally. So. When, for example, a great example of that is the Vitality Index itself. And if you Google Evison Young Vitality Index, it's. It's right on the website, it'll pop up immediately, you'll see. We, we blend together, we quantify data, and the degree to which that data is real time and predictive is to our benefit here. So when we look at, for example, demographic trends, whether it's a heat map or quantifying the demographic composition of a market or a census block and everything in between, we want to make sure that we're doing so in a way that's constructive and humanized, as I mentioned earlier. So the more visual it becomes, the easier it is to interpret in a lot of ways. So we're not like, for example, shoveling data and shoveling charts and graphs at people, although we do plenty of that. I'm sure there's no getting away from some of those charts and graphs that are especially meaningful. It's the interpretation of them and the culmination and centralization of different, what we'd call real estate and real estate adjacencies, with the latter being some of the demographics, economics and other market drivers into that single source of truth is what distinguishes us from perhaps other platforms that could be out there on the market.

You know, when you first told us that the vision of Avant, and, you know, its purpose, I mean, to really be able to customize this data, to make it specific and actionable. And you said, you know, the success of this, it'll be the death of, of the quarterly PDF report. Right. So, you know, instead of, you know, looking at more generic information, let's take rents, for example. So, and look, I'm sure, you know, over the years you could get the, what, what is the average rent for a class A, B, C building by neighborhood? Different firms track it. You know, obviously some of the biggest data providers out there do that as well. But really getting specific on market terms, that can change within a matter of months. And I'm talking about TI tenant improvements that landlords are offering free rent, being able to meet with an owner and say, okay, this is what your current rent roll looks like. These are the concessions that you gave to get there. These are your net effective Rents, how do you compare to your peers in this quality building? And how can we tweak the performance of your building? And it might not be the same answer for everyone. I mean, some especially long term owners, they say, hey, I'm not buying up the rent, I'm not giving these huge TI figures and a year or two of free rent, they're doing as is deals. But it really seems to me that once you understand kind of who the client is and what their goal is, that you can really give them real time data so they can understand what is achievable in the marketplace. Do you agree with that?

Yeah, it's funny, we reached a bit of an inflection point a few months ago and we were deciding as a team whether to either provide a different product for occupiers and investors or make it one product. And then having spoken to a number of investors, they said, you know what, we want to know what the occupiers are doing. We want to know how they're thinking. So that helped inform our strategy and it continues to inform our strategy to this day. I'll name one example. We met with a large, global, largely creative office company or investor, I should say, a few months ago. And their interpretation of the market is very unique compared with any other major investor of this kind. And what we did was we actually isolated the real competitive set so we were a tenant. That tenant will look at those specific creative properties and options in those specific markets where this company has exposure through which we were able to deliver a more constructive analysis around what demand looks like and how that demand influences pricing, whether it's base rents or concessions, ultimately net effective rents, and then ultimately what does it mean for the value of their portfolio? And our thesis was quite a bit different from their investors. And they're a publicly traded firm which distinguished us in a lot of ways and it enables them to drive a more positive market or, sorry, more positive thesis to the market, the broader equity markets.

Fantastic. Well, Craig, this has been super interesting and I'm sure our listeners here can get an understanding of, you know, whatever level you're playing at if you're looking to make your first investment, if you're working for, for at a large company and helping your company make real estate decisions. As long as you can find the right data, the truth, as you put it, there's really incredible information that we have available today to leverage and make the best data informed discussion. So with just a couple minutes left here, Craig, I would just ask it. And again, this is probably for Those looking to maybe get into the business, and there's a couple of different tracks that you can go and your NYU Masters, that was a great way to kind of really increase your real estate iq. But as far as your own personal choice, whether to go onto the ownership side and be an investor, be a real estate broker, or to go into, to research what, what informed your decision. Because again, most of the people I interview are typically investors, developers, and maybe they started as brokers and they went out to do their own deals. But you know what, what attracted you to this space and what advice would you give to others who might have interest in following your footsteps?

What worked for me is I wanted to get exposure to different clients and different lines of thinking. So I didn't want, in other words, I didn't want to be pigeonholed anymore to a specific geography and or property type. So in my role, I get to work with global clients that have very different mandates, whether they're occupiers, investors, or both in some respects, across all property types, which is a tremendous learning experience. Sometimes it feels as though I'm jumping headfirst into the deep end of the pool, but if you're not learning on the job, it simply isn't all that fulfilling anymore. And the beauty about commercial real estate too is that there are so many opportunities afforded to you. So if you're, for example, if you go into brokerage and you say, you know what, maybe I want to be a little bit more data analytics focused. You could go into research or join the innovation team at Avis and Young or what have you. And having worked with so many people over the years across now a few different firms, I've seen people make all sorts of really interesting career choices that was best in service of where they saw themselves long term. I've had people go from research to brokerage research to consulting consulting to research consulting to the principal side of the equation, which is really interesting too. So I would encourage listeners, hey, continue to learn. And if you're not learning, find an opportunity that enables you to do so and keep all your options open. I mean, life is so unpredictable. Although I did predict the pandemic a couple of years ago, I'm not one. And I also forecasted I was going to contract Covid a couple of weeks ago for New Year's. But those predictions notwithstanding, of course I say the half jokingly. This is such a fascinating industry. There's some segments of the industry that are really still emerging. Mine happens to be one of those. So happy to have A discussion with anyone who's listening about what opportunities could be afforded to them in this kind of line of work. Whether it's research, whether it's innovation, or joining the principal side and becoming an analyst at one of those shops. I'm happy to, to provide some guidance.

That's awesome, Craig, thank you so much. And I've got one final question that applies your skill set to the investor space. And I've got a bunch of friends who have hedge funds and they have all types of algorithms and rules based trading. And I don't want to say that the norm, but you know, it's almost, you know, the idea of kind of having, you know, gut feeling and you know, falling in love with the bricks and all that. I mean, that's probably more the norm for real estate investing is, you know, just go with your gut feel on what the opportunity is. Whereas, you know, the financial markets are very sophisticated. So, you know, why do you think that there have not been, you know, with all this new data that's out there, you don't hear a lot of, about a lot of real estate firms who have made this proclamation. And maybe it's an opportunity for someone listening to say, you know, we are the data driven investors and we have an algorithm and this is what we buy and how we make decisions. Is there a reason why that really hasn't happened yet? Or maybe it has and it's just not as pronounced.

It's funny, I just got off a call with an investor that now has a mandate to deliver data driven perspectives to their clients. Now there's an increasing mandate, given all those unique sources of truth, whether it's mobility data or vacancy rates or what have you, to help to take some of the mystery or gut check assumptions around. Assumptions around investing in the current environment. And having spoken with so many principals in the past couple years, they simply can't get their arms around everything. Where there's an opportunity for, for example, real estate services firms to step in to serve as their single source of truth or part of that source of truth. They're all kind of getting their arms around especially I'm talking about institutional investors for a moment, what data driven decision making actually means. And because it's still pretty new, the definition of that could change company to company. And the one thing I would note there is it's not just data for data sake, it's also having a thesis and humanizing that thesis in a lot of ways. Data is only going to tell you so much. For example, I could show you a chart of Rents Going up. And I could change the title from Unabated Rent Growth to the Market Is Overpriced. And it takes some level of intuition and due diligence to make that informed assumption. Even though the data is telling you one thing, you could completely flip it on its head without that kind of informed assumption around a market or around a specific investment or even the performance of a portfolio.

Craig I love that answer and that is a great way to end and give our audience something really to think about. And really the convergence and it's both, it's being able to analyze the data but also, you know, still, still have that, that gut feeling and being able to create that thesis based on. So, Craig, this has been really, really interesting, intellectually stimulating. You know, we really raised the, you know, the bar here. So just really appreciate your taking the time and everything you're doing for us at Avis and Young.

Thank you for having me. James.

Wonderful. And thank you all as always for joining the show. This is your host, James Nelson, Real Estate Investing Live from New York. If you liked what you heard today, please add your comments, rate the show. That's how we spread the word and have others follow and hear about how to gain the insider's edge to real estate investing. If you have not already, please go to my new website, james nelson.com I built this site for you. This is an investor hub where you can not only find all the podcasts and show notes, but you can find the exclusive video series as well as key terms, other podcasts, books that I recommend. And while you're at it, why not connect with me on Instagram, Twitter and LinkedIn amesnelson NYC until next week. Thank you again.

Thank you for tuning in this week to Real Estate 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 on Wednesday mornings at 7:00am Eastern Time and 4:00am Pacific Time, as well as always on Demand. We'll talk again next week.

Sam.