Diverse Development with Meg Brod

Welcome.

This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avison Young's US Investment Sales Group and his co host Kim Troller from his investment sales team. In this program you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now here are your hosts.

Welcome to our new season of the Insider's Edge to Real Estate Investing. This is your host, James Nelson, head of US Investment Sales here with Kim Troller, our co host. And this is episode number 226. We're not going to start counting from number one, but we are on a roll again. And so wonderful to have Kim here as the co host. And today we are going to be with Meg Broad. She's the senior Managing director of Rockefeller Group. We're going to be talking about diverse development. You're going to learn all about how institutional developers navigate cycles, how they share insight into Rockefeller's dual structure of core assets and development and how the firm backed by Mitsubishi Estates, balances independence with long term strategy across different asset classes.

You'll also hear how Meg approaches capital raising, market selection and design strategy amid changing investor appetite and political uncertainty. She explains how to underwrite in volatile markets, manage risks during entitlement processes and maintain a long term focus, especially in complex regions.

And you know, Kim, what I really appreciate about Meg and having gotten a chance to meet her personally is how active she is within the real estate community. We sit on the Board of Governors at the Real Estate Board in New York. And you know, she really is engaged in the real estate ecosystem, which is really important, I think to be successful in this business.

Absolutely. And she just has so much passion and drive. It was very clear speaking with her. And I also think one of my biggest takeaways from that conversation was just how resilient real estate is as an asset class and how it endures real estate cycles. You know, asset types go in and out of favor but if you can be diversified, you can really withstand that.

Well, this is gonna, I know this is going to be a great interview. So as always you can go to james nelson.com we built this site for you, has a lot of helpful information. You'll get the show notes on there with Meg's background and Rockefeller Group and also a lot of other helpful resources. So we're gonna have a brief word from our sponsor and we'll get right into that interview with Meg Broad.

Avis and Young's United States Investment Sales Platform executes on multifamily office retail development and specialty asset transactions across top US Markets. As experienced leaders in the industry, our integrated national team is here to help you make informed investment decisions, whether advising on your current holdings or identifying new opportunities nationwide. Our one unified platform is built on unparalleled collaboration and connectivity across 120 full service offices around the world, giving clients direct access to the deepest pools of capital. We put our clients first, delivering tailor made strategies to achieve superior results.

Welcome everyone to a new season of the Insider's Edge to Real Estate Investing. I am now your co host, James Nelson, head of U.S. investment sales for Avis and Young. And joining us now is Kim Troller, who is also part of the U.S. investment Sales Group. Kim, welcome to the show and looking forward to partnering with you moving forward on these exciting interviews.

Thanks James. Happy to be here.

Great, Kim. Just for our audience so they can get a little sense of your background, maybe just give them a little bit of your bio and what you're doing now on behalf of Avis and Young.

Sure, yeah. So I did my undergrad at the University of Pennsylvania where I spent most of my time focused on urban studies and real estate. I then was at Time equities, mainly in a capital raising role. I was in the equity division, so raising capital for the deals that they were buying all throughout the country and for a series of equity and debt funds as well. And now I'm, I've joined James's team to help roll out the US Investment sales expansion. So very happy to be here.

A varsity rower as well. So I know you're tough because I rode one season in boarding school and that has got to be one of the toughest sports that I've seen out there. Swimmers, you've been much different. So you've been a tremendous addition to the team and really excited to now mix things up. And so with us, we're really excited today to have Meg Broad, who is senior Managing Director for the Rockefeller Group, who heads up development for the company in the northeast. So Meg, welcome. Thank you so much for joining.

Thank you. Glad to be here.

Wonderful. So for our audience and Rockefeller Group does a lot of different things, but maybe you could just give kind of an overview of the platform and then kind of specifically again your mandate.

Yeah, so happy to. So Rockefeller Group, we have basically two kind of business lines. One is our core assets group and that group, which is led by a different person, Marissa Gadlin is really managing our core portfolio two buildings in New York City, 1271 and 1221, Avenue of the Americas, and our ground lease under 745 7th Avenue. That is very different from our development line, which is where I sit on the development side. We have seven regions and I'm in charge of the northeast, which is headquartered out of our New York City office. So the development side of the business, we mostly do ground up development in both industrials, residential, and we would obviously also consider office when, you know, when the conditions are ripe for that. And we are organized sort of across the region. So there are counterparts of mine in six additional regions across the U.S. so we're very active, you know, on the east coast, west coast as well as in Rocky Mountain region, which is kind of Colorado area as well. Great.

So when you say you do office, when the conditions are right for that, can you expand on that? What conditions and what signals do you look for?

Yeah, absolutely. So in New York, we actually haven't done any office development recently, but my colleague in D.C. for example, is doing a large office development. So you know, when I say conditions. Right. Like right now, I think New York City is, is getting more interesting. Right. But large scale office does require a significant amount of capital. So the first question we ask ourselves when we're looking at sites is, you know, who's our anchor tenant and who and what conditions are needed in order to get development off the ground? When can we get financing? Right, so lenders typically want to have kind of an anchor tenant maybe sort of in the 50% range of the entire building. So they don't want to really do spec. Right. Whereas on residential side, obviously pretty much everything is spec.

Right.

We, we build, you know, large scale residential, both on rentals as well as on the condo side without having a tenant, you know, in mind yet. Right, but those are, those are different because you're really leasing or selling one unit at a time versus an office. We're talking about massive, you know, hundreds if not millions of square feet at a time. So it's, the risk profile is different also for us as well as for the lenders.

So when you look at the diversification of your portfolio right now, what does that whole portfolio look like, whether aum square footage, obviously very active on the multi side as well as industrial. But how does that all, what does that portfolio look like?

Yeah, so I think sort of the balance between industrials right now and multifamily, I would say it's probably leaning a little bit more towards industrial just because of the last several years. In the last cycle was, was heavy on industrial. I think that might be shifting a little bit more towards what we call kind of urban development, non industrial, you know, so that would include both office and residential. I can't give you the exact, I don't remember the exact sort of percentage, but the shift is sort of moving towards, towards resi. I think in New York it is, is significantly more on the urban side. So multifamily as well as condominiums make up, you know, pretty much, you know, 90% of our portfolio here.

Aside from New York, what are your other major markets of focus?

Yes, it depends on the market as well. Right. So our, our New Jersey region, for example, that really oversees New Jersey as well as, you know, all the way down to Pennsylvania. Their focus historically has been predominantly industrial. Large, you know, of like million square foot industrial type of projects are not an anomaly in that region. Whereas in my region that is an anomaly. So my region in the Northeast, we have done some industrials. Right after Covid. Coming out of COVID there was obviously a huge demand for industrials. So we did do two projects out in Long island and those are kind of give or take, 150 to 200,000 square feet. So they're definitely smaller. And then other regions, for example, our Southern California region, they are also focused mostly on industrial. So Inland Empire is an area that is heavy, heavy industrial. So it really kind of depends region to region. Some region has a bit more of a balance. So our Southeast region has a little bit more of a balance in terms of both resi and industrial. So it's case by case.

Wonderful. So just to take a little bit of a step back on the ownership of the company and how you approach investments. So Rockefeller, big name here in the US but, but, and over the years it's, it's evolved with, with, with, with ownership. So maybe talk about kind of how you all are structured on the ownership side.

So we, we are originally, you know, the, the Rockefeller genesis, I guess originally from the Rockefeller family who obviously everybody knows built Rock Center. But then after that, Mitsubishi Estate, which is a large Japanese company, real estate company, purchased Rockefeller Group. And then after, in like the 90s, there was a restructuring where we sold off basically the Rock center as you would know it. So basically the east side of 6th Avenue, the Rockefeller center that, that everybody thinks about is no longer part of our holdings. And the west side, so on the 6th Avenue side became part of our core core holdings. So 1221, 1271 are kind of still part of our co holdings but we are hold owned by Mitsubishi Estate. However, we do operate pretty independently. We have our own board, you know, we invest our own capital. So while, you know, obviously everything eventually rolls up to Mitsubishi Estate, you know, we very much have a lot of flexibility and freedom to do the business that we, you know, we wish to do. And that's, that's also by design, you know, Mitsubishi State, as in Japan, as you might know, growth is, is, is hard. Right. It's a, it's a, it's an aging population. And so it's really hard for a company like Mitsubishi State to find a ton of growth in Japan.

Right.

So they're looking overseas and Rockefeller Group is, is essentially an overseas investment that they've made. So they really want us to do well, which means they want us to have, you know, success independently.

Discretion.

Discretion, Right. Otherwise it really wouldn't be worth, worth it. Right. For them. So yeah, I mean, it's interesting for me because there are our kind of wonderful Mitsubishi State colleagues in the office that we do collaborate with. Sometimes they will invest in our deals as almost like an lp, a third party. But they do give us a lot of freedom, discretion and flexibility in terms of making our own investment decisions and where we would like to develop, what we would like to develop, develop and how we capitalize those.

Are there any examples of ways that Mitsubishi has influenced your US Investment decisions? Just coming from another perspective?

Yeah, I think they're silo. Yeah, I think they're great about sort of giving us sort of targets and mandates in terms of what they would like to see. But again, these are sort of targets and, and you know, kind of like. Oh, we see that like for example, in the last cycle, like industrial's doing great. So could we find more of these types of deals or you know, as far as expansion is concerned, even within New York region? Right. There are, you know, perhaps boroughs that we're not invested in yet, or perhaps there are areas within our region a little bit north of New York City, like perhaps areas of Connecticut or even, you know, up to Boston. Right. Like that's still part of Northeast. So just sort of encouraging us to look outside as well as our five borough borrows things like that, but not, not really significantly. You know, obviously we were tasked to find great investments and as long as we're, we're doing that great, I think they're happy.

So how do you approach these investments? Are these all direct investments where you're the gp? Are you making these investments off the balance sheet? I don't, I don't think you operate out of a fund structure, but maybe just how you approach these investments.

Great question. So we do invest primarily. We do take the GP role. Sometimes we are the sole GP, sometimes we have, we bring in CO GPs to work with us and we do capitalize, deal by deal with lp. So occasionally in, especially in other regions where the project itself is not large. Right. And by large I mean maybe sort of south of 100ish million dollars or so, we may make the strategic decision for both control reasons, you know, because obviously having a GV partner, you share control, we may just sort of do it without a partner and just capitalize on our balance sheet direct. But in my region in Northeast, all of our projects are so large that that really has never happened for me. So we usually take the GP position. We find LPs to, to co invest with us. We also bring in obviously lenders to provide the construction loan. And then case by case, if the, the takedown of the land is large, we will also bring in before the construction loan, acquisition loan at the sort of the, the time of land purchased at land takedown and then find, you know, construction and LP lenders. Oh sorry, LP equity afterwards when we're fully sort of designed and you know, we have GMP ready to go. So it is, you know, the capitalization is done on a kind of, you know, bespoke, like one by one basis depending on the project and, and just a lot of concerns like considerations that go into it. Right. So it depends on again the size of the deal. It might depend on the type of partner that we find is the partner. A partner that may have had the land and they want to contribute the land. Right. And we do the execution and they, you know, keep a stake in the deal. Or is it another partner that is also really institutional capable of executing and it's really more of a, not just a co gp but like a co development partner. We've done that as well. So it really kind of depends on the deal and who we're working with as to. So it's not like really, you know, prescriptive per se in terms of exactly what type of partnership we will do. So we have that flexibility.

Yeah, I, so coming from a capital raising background, I was going to ask how do you source your equity? Who are your investors? How do you go about finding them and how do their, their wants and needs kind of dictate your investment decisions? Because obviously you have to take that into account. Do any examples kind of come to mind for that kind of question?

Yeah, absolutely. So, you know, I just, I hate sort of answering with it depends, but I mean, it kind of is like it depends on the situation. We have done, you know, kind of a traditional kind of capital raise, right, where we would hire a brokerage firm to help us with the equity search. We have also done, you know, our own capital raising kind of internally based on relationships that we have had in the past. And so I guess it kind of also depends on how the deal came in as well, right? There are deals where it was a site that we were chasing and somebody else was chasing at the same time. It was kind of a little too big of a deal, a little too complicated for either one of us. And we were each hoping and wishing that we had kind of a co development, co GP type of partner. So in that instance, we worked together and took the land down together. So it was sort of more of an organic situation as opposed to kind of taking the land, you know, negotiating exclusivity or perhaps putting down a deposit and getting a hold of the land and then finding a partner, which we've done as well.

So how much are you thinking about what the equity is looking for and trying to solve for that as opposed to having conviction in a business plan? You know, because one of the big challenges developing today is, you know, a lot of the equity has been risk off. And so how do you, you know, how do you balance that?

Yeah, that is like such a great question. I think about that all the time, honestly, because, you know, as a real estate developer, right, we, we have conviction, we have sort of vision in terms of what we want to do with the site, what we think is maximum value, that particular site, what will be successful, you know, down to sort of the design of it, right? What, what would fit in this neighborhood and what type of units do we want to deliver into this neighborhood and all that kind of stuff. Having said that, practically speaking, you can't really launch a development project unless you're fully capitalized, right? So as much as I don't want the capital to dictate, it does. It is, you know, it does to an extent, in terms of at least pricing, right. So the, the capital side or the partner prospect may not alter our decision and our vision in terms of what we think is maximum value for the site and what we want to do with the site and what we want to build and develop and design, et cetera. But in terms of thinking about and negotiating with potential, you know, land sellers about what conditions, what pricing, what timing of closing, you know, all of that is heavily influenced by what we believe the LP market will demand because ultimately we don't really, you know, we are also IR driven. Time matters. And so the last thing we want to do is frankly overpay for a land that can't get capitalized later. And from the get go, from day one when we're capitalizing, we were already having to take, you know, perhaps forget about landmark up. You know, we're having to come in almost like behind, you know, Prof. Equity or behind nlp, who would only, you know, value the land at, you know, whatever we with a 10%, you know, discount or 20% discount or whatever. So then we're like already playing catch up and that's like not where we want to be. Right. Especially coming in early, tying up the land, taking on this development risk and then to, you know, capitalize with someone who is like, well, your land isn't worth what you paid is kind of our worst nightmare. So we try to avoid that at all costs.

So that makes a lot of sense.

That reminds me, so yesterday I was at the Biznow Finance conference and one of the major takeaways from the panels was that a lot of, a lot of specifically LPs but a lot of investors have developed sort of asset type allergies for obvious reasons. You know, for office, even with multifamily, there's oversupply and they were kind of stressing the importance of the GPS having conviction over their, their, their vision and their, their business plan and how it's been very difficult in recent years to, to kind of get LPs on board with that. But like at the end of the deal, at the end of the day, a good deal is a good deal if, if the numbers pencil, despite, you know, what headlines you read in the news, right. Is this something that you've experienced with your investors where there's been sort of a misalignment?

Yeah, I mean I think that with, again, in, you know, specifically for the Northeast, right. I kind of know going in that we're going to have to capitalize. Right. Like a lot of my deals are well north of 100 million, right. There are 4 or 500 million dollars kind of on average. And so I kind of know going in, you know, if you get, let's say in a very simplistic case, if you have a $500 million total development cost and you get, let's say maybe 60% financing, you're like, okay, so I'm going to have to find a lender that's going to be willing to give me $300 million of equity, plus someone is going to underwrite $200, sorry, $200 million of equity. And so, you know, take away maybe the piece that we would put in, it's still a significant. Right. Hundreds, 150, like $180 million of equity is what we're going to have to raise. So that is something we think about. The thing that I also worry about is kind of the time between securing the land and then securing the lp. And given the world that we're living in, where we are surprised by headlines on a daily basis, we realize how volatile that is. And while perhaps the time between land takedown and LP closing may, quote, only be a year, that's a very long time. Right. And a lot can happen. A lot can happen in terms of capital markets. A lot can happen with rates, how the Fed moves, how employment or unemployment numbers move, how even local politics might come into play. So there's so many things that can happen in a year. So that's kind of, you know, it's, it's a risky period for us. And so we are sort of trying to get ahead of that and figure out how we could, we could reduce risk. And, and there are obviously various strategies to try to reduce that risk. Right. But nothing is perfect. Right. That's why we're in development. Risky business.

Has your underwriting strategy shifted at all in recent years just given all of the volatility, especially when it comes to contingencies?

Yeah, you know, I think that, you know, with recent concerns about tariffs, for example.

Right.

We do probably really go out of our way and spend a lot more time diligencing kind of what alternatives, alternative materials or, you know, places where we could source things. We have way more conversations with, you know, contractors, subcontractors, in terms of their view. I mean, real time. And this is, you know, conversations that our development construction team is having on a daily, weekly basis, just monitoring. But to your point about contingency. Yeah, absolutely. We do, you know, I think we have probably, you know, increased our contingency a little bit there. And then depending on where we are in the lifecycle of the, the design, we will put in what we call kind of a design contingency. So there are a lot of unknowns. And so, you know, instead of just regular contingency, we put in like a design contingency to give us a little bit of wiggle room and flexibility in making some decisions that may not yet be made today. But we would like to have the flexibility to be able to make, whether it's the type of, you know, you know, curtain wall or window wall system that we use or you know, perhaps just being able to increase the level of finishes. Especially if we're doing something like a project that we're working on on the Upper west side where we intend to do more like family style units, perhaps being able to use some of that design contingency and up the, you know, kind of the appliance package, for example, to cater to families. Like those are types of things that we may not know exactly, but we know it's going to happen. We just don't know what is going to come down the pike and we, we would like to be able to make those choices. So.

Yeah, so talking a little bit about your geographic focus and how you get conviction in certain markets. So so obviously you've been incredibly active here in New York City on the residential development site, you know, certainly New Jersey on the industrial front. You talked about maybe Connecticut. I mean, how important is, are you looking at demographics? Are you looking at the data? What you know, that gives you confidence in a specific market. And then I, that'll be kind of the first part of the question. I know before this we were also talking about the political landscape which I think is maybe, I mean, yes, certainly related and a whole other discussion. But just like let's first by talking about, you know, the data and how you're looking at, you know, these markets and, and how you're building your, your thesis.

Yeah.

Around that.

So whenever we look at a market, especially a new market, but even markets that we, we know. Right. Like little submarkets, like for example, the Upper west side within Manhattan type of thing or perhaps something like a Providence, Rhode island, where we are looking at, we haven't done any investments but like that could be a potential new market. Or Syracuse, New York is another potential market that we're looking at. So whenever we look at a new market or even an existing or sub segment of an existing market, we do look at demographics. We also study comps, we study pipeline, we study sort of. I also like to look at overall vacancy. And so there are parts of Westchester, for example, that has seen a lot of growth and are known to be very friendly towards developers. So these are towns that might be easier to get something approved. Having said that, you know, we think about, well, where is this? You know, if we supply, you know, it's like we don't want to necessarily think, oh, we shall, you know, we build something and people will just Come, Right. We want to make sure that they will come. So I think even looking at not just like vacancy rates stabilized, vacancy rates of comps, but how quickly absorption took place within like a new building that got delivered into a market and let's say it was a 500 unit rental, how quickly are those being absorbed and how did it impact the other existing, you know, buildings? Are those, you know, seeing a drop in occupancy or how are concessions? Right. Like we like to say, you know, see concessions burned down. But we also look at, if it is a building that is, let's say, a year and a half or two years old that has stabilized, are they continuing to give concessions?

Huh?

If they are, why are they doing that? Right? Why is it not burning off? So those are kind of like, you know, not that one, you know, data point is end all, be all. But it does paint an overall picture.

Just, just talking about the supply demand dynamics and you're developing in. Is it a Jersey City where you're doing.

We're looking at something in Jersey City. We also have land that we've owned, the company has owned for a long time in Hoboken, so we're looking at that as well.

So I mean, here in New York, there's no doubt that, I mean, with the lowest vacancy rate for residential in the country, you know, 2%, we know that, you know, we're probably short a half a million housing units. Right. So no surprise that New Jersey, we're seeing a tremendous amount of development. So I might have this statistic slightly off, but I believe in Jersey City right now they're delivering somewhere between 15 to 20,000 units right now. It might take probably a year or two to absorb that. But net, net, I mean, again, still trying to offset that supply constraint in New York. I mean, long term, I would think that Jersey City, for example, or Hoboken for certain, can absorb a lot more units sometimes. Is it just kind of looking at the current pipeline and saying, okay, a lot of stuff is hitting the market at the same time, so there's going to be a concession war to try to get everybody parked. But once everybody's there, you know, you're going to have that long term demand. So do you. How do you kind of balance that kind of short term pipeline as opposed to looking at the long term picture, if that makes sense.

Yeah, you know, it does make sense and obviously there's no like perfect math, but I do, I do look at sort of net absorption per year and what's, you know, what's Feasible. Right. So if you look at all of the, all of the stock of Jersey City or wherever your shell. Anywhere, right. Of the housing stock and how much new kind of like net absorption, not stealing or cannibalizing from each other, but like how many newcomers and new households are able to come in and how are they sticking? And so that's something on a year to year basis we look at. And then we also look at how long can it continue. Right. So you know, can, you know, I don't, again, I don't have the answers necessarily, but can Jersey City absorb all, let's say 15 or 20,000 new units to come online and how long will that take? I don't, I don't know. But that is something that I look at sort of historically what they have absorbed, where are they coming from? What, you know, what kind of like, like what, what it would take for that to continue. I also, you know, think a lot about like let's say downtown Manhattan. Right. There are a lot of new supply that came on to downtown Manhattan conversions. Exactly. Conversions are happening. And so which is great, right? Like you said, you know, we're like sub 2%, you know, in Manhattan in terms of vacancy. So you would think, oh well these are definitely going to fill up. That's, that's, that's certainly a very reasonable thesis and conclusion. Having said that, in a market where you're constantly delivering or someone is constantly delivering new, right. New supply and a new shiny new building comes up for people that are price sensitive. And so you have to also think about who are the renters. If these are literally 22 year old newly minted graduates from undergrads and they're getting two month free because it's a, it's, it's during lease up next year when that person's leases up and across the street is another new shiny building. They're all now, they're now offering two month free and your building is not, if you're a price sensitive person and this isn't like your home that you're buying easily, that person is going to, is going to go to the new building, right. And so it becomes like sort of a, it's like it's like you're hopping around for a while. And so for me personally, I have looked at a lot of stuff in downtown New York and sort of downtown Manhattan, but I haven't personally gotten comfortable just because I feel like, you know, when you look at the kind of, the second or third generation of kind of second or third generation, like lease up. Right. Like 3, 4, 5 ish years out from initial lease up. That's really the telltale sign. How are they doing and what is their sort of occupancy? And if you see something that is like 97 fantastic. But if you're seeing something like, well, those are 80% because there are like three other buildings over here that got delivered and they're stealing people from you and it's not sticking. That is a concern.

To your point about competition and newer, shinier buildings. I do think that sometimes there are subjective factors that can add to an asset's value. Like if the older asset is historic and has a really beautiful finish, especially for multifamily, because that's where people are living. We recently underwrote a converted mill deal down in the South. It was converted to a luxury loft apartment complex. Was beautiful. And what we found in that market is that the converted mill properties that were converted to multifamily were actually charging a rent premium over the traditional multifamily, like new multifamily assets. Because I imagine, because people like the bigger windows, the natural light, the, the historic charm of the asset. Is this something that you've experienced at all? Because it's so interesting because those, that's something that you can't really quantify other than charging rent, a rent premium for it. But it's, it's a subjective factor that we're human beings, you know, we're visual, we're experiencing the building in that way.

Yeah.

So that is something to take into account 100%.

I do agree that like, I mean, that's definitely, I think, a factor that people that are converting buildings will look towards.

Right.

I mean, I think that, you know, that type of unique asset where people would gravitate because of the history or because of this design of a building that is never going to be built as a new building. Right. Those are kind of like very like one off. Unique things are definitely something that people will gravitate towards. And so, you know, I think that when people are building new buildings or converting like a large office building. Right. Becomes harder because when you're building a new building and you're competing against other people for the land and you're trying to be competitive and trying to figure out a way to increase your, your offer on the land, you know, naturally we would think about increasing efficiency and making a building that can eke out as many sort of net sellable, net rentable square feet as possible, again in order to become competitive and to get that winning bid. Right. So a lot of these charm and you know, all of that stuff sort of in a competitive environment is kind of sadly like first to go because we're trying to make the numbers work. Right. And so. Or on the other, on the flip side, with conversions, if you have like a boxy kind of office building that you're converting, it is hard to bring in some of that charm. And it does become more of a price, you know, price per pound kind of calculation. And there's nothing wrong with that. Right. Like there's nothing wrong with saying, well, New York City, the, the rental prices are getting so expensive. So if there's a way for me to convert a building and offer it for a more reasonable price, like that would be welcome for some people. Right. So I think that you're, you're right. Like there are renters who care about that and there will always be enough renters in a market that care about that kind of beautiful architecture, historic, you know, meaning, and, and, and then there are renters who are a little bit more transactional because they just can't afford not to be transactional. And, and they just have to go with kind of the best deal and what, what, you know, the best thing they can afford. So I think there are multiple types of renters in any market, really.

Right, no doubt. So going back to conviction on the market EAS the political landscape and interestingly, I think we probably met, I don't know if it was 10, 15, maybe 20 years ago, I don't know. But through the real estate board in New York and we're both on the board of governors, and I know you've done a tremendous work to help create great policy. Right. So not to kind of talk about maybe the current political landscape in New York and what may or may not happen with the mayoral election and by the time someone listens to this, maybe that's already been decided, but, but I think more of the decision making process. So understanding, you know, how could a change in leadership impact how approvals are made, you know, rezonings, I mean, so how do you factor that in, especially when there's, let's say, an upcoming election. Right. So how are you kind of trying to predict what is it going to be like in the future? You might not know who's going to be the current leadership and understanding how do you get these projects approved? Or do you just say, hey, we're going to sit on the sidelines here until we have more, more clarity?

I think it is a little bit of both. I mean, there are Projects that we are choosing to move forward with. As I mentioned, on the Upper west side, it is a, you know, relatively large scale rental building. And there we have conviction just because the location, it's, it's transit oriented. It's, you know, it's, it's not anything that we're relying upon a rezoning where you look for, right? So there are things like that that we feel comfortable enough, regardless of what happens in the mayoral election, that we feel we, we can move forward with to the extent that there are more risks involved where you are relying on something that, you know, whether, whether it's a ULURP application or, or frankly, you know, like a landmark air rights transfer or something like that, the more kind of, you know, the more it gets away from kind of as a right, the more, you know, risky it becomes, right? So I do think that going back to your earlier question about how much do I think about capital, the capital side is currently a little bit spooked, right? They're, they're unsure and they are sitting on the sideline for the most part. So with that comes kind of our inability to move forward too far ahead of where we believe capital is. And so, you know, I think the, the more complex and the more risky, the more likely it will sort of, sort of stay put for a little while until people feel more comfortable with where things are going. You know, this isn't just about kind of underwriting, right? It's, it's one thing to say, well, if the rental growth, you know, were to, to stay at 0 or 1% or you know, something less than what we typically underwrite, that's something that is like a very simple analysis that one can do and sensitize our return and say, okay, in the worst case scenario, let's say if it was like a zero percent growth, can we still stomach that? And what are the likelihood of that in the worst case scenario? Okay, well, this isn't terrible, right? That's something that we could all do the math and, and decide whether we're comfortable with that kind of like downside scenario or not. I think that if it becomes more of a discretionary approval, that becomes obviously a little bit more politically charged. And it's what we usually say is we don't really like taking binary risk that we can't control, right? So if it is something, a risk that we can control, we feel better about it. But when it's like a political issue or something like that, it's not really something that we can really control. So that's something that makes us a little bit uncomfortable and especially if things fall in the not as desirable outcome. And it's very binary. That's when we say, oh, maybe we, maybe we wanna, you know, hang tight for a little while.

Not surprised. Well, as we start to wind things down, maybe talking a little bit about your background and how you found your way to Rockefeller. So if I'm not mistaken, I know you went to Harvard. I don't know if that was business school or undergrad. And then you. I don't know if Tishman was one of your first real estate jobs. We should actually look at how many of our guests have been at Tishman. I mean, they are responsible for a lot of talent across the spectrum. And I know you spent some time at Equity Residential, but just, you know, one of the things we were also discussing before is we get a lot of students who listen to the show, many who are getting their master's degrees. So, you know, your path and, you know, starting off at Tishman and your decisions to, you know, to find new opportunities, to continue to grow, kind of what does that career path look like and what would you say to that, that master's student out there about, you know, how to think about to get to a position like you are today?

Yeah, so my quick sort of background is I graduated from, from Duke University undergrad and then took a job in finance for a few years. Then really felt that I've always been very fascinated and interested in real estate and knew that maybe finance was not where my forever job was. So that is when I made the decision to go to Harvard Business School to specifically to pivot into real estate and transition into real estate, which is what that was, you know, the path that I took, but certainly not the only path. There's so many ways to get into real estate or real estate development specifically. So then from, from, from business school, you know, I try to learn a little bit more about the real estate industry and the, the vast, you know, sort of landscape in terms of what one could do within real estate. Right. It could be acquisitions, it could be the capital side, you know, debt side, equity side. It could be real estate, private equity, it could be asset management, it could be a whole host of things. And I really felt like I wanted to be closer to the asset. And that for me, development felt like an area that I was really, really fascinated and interested in. So, yes, my first job out of business school was Tishman Speyer. It was a great experience for me. I got to do a lot of things at the time, they had kind of what they called like an MBA rotational group or like, which later became leadership development group. And I was able to sort of spend a little bit of time in different parts of Tishman, and given my finance background, it was a little bit of a leap to go straight into development. So I actually started off in their portfolio management group and then work my way into development, you know, sort of eventually. And then after that I had the opportunity to sort of start and head up their equity residentials development group based on an experience that I had as a summer intern actually at hbs. And my manager there, you know, was expanding the east coast presence for equity and invited me to lead that, that group. So I went to equity and then, which was an amazing experience as well, took a little hiatus for personal reasons, lived in London and then came back and then, you know, made my way back into real estate development as well, you know, back after I got back. So it's been like sort of, for me, I think it's. It's been a story of kind of follow your passion. And, you know, I really didn't, you know, think too much about sort of like, you know, you go, you know, I think when you're younger, you think, okay, I'm going to graduate from high school, then I'm going to go to college and I need to major in this and then I need to do, you know, maybe a master's in real estate. And I think that people think of it as very kind of like linear or they want almost like a path that, you know, they can follow. But I think the good news is with real estate, you can really approach real estate from so many different angles. Right. So I happened to come through like a little with a detour into finance and then made my way into real estate. But so many people come from, you know, urban planning or architecture side or, you know, just like they have a family business in real estate or, you know, there's just many, many avenues that lead to real estate or real estate development. So I, you know, when I am speaking to students, I just, you know, I really do emphasize there's no one size fits all. Like, it's, it's anything, any experience that leads you to growth and leads you one step closer to what your ultimate goal is. It's all great, it's all wonderful, it's all learning experience. Like, grab that, work with people that you love working with, work with, you know, you know, in a company that is going to challenge you and grow you work for people and managers who have your back and is invested in your growth and just sort of be a little bit more flexible about, you know, your approach and, and just, just keep, keep, keep after it, you know, keep following your dreams and, and you'll get there.

That's, that's one of my favorite things about real estate. Not only is it a very creative space, but it attracts people from so many different backgrounds. Yeah, but I'm a firm believer in if you, if you really are passionate about something, you're going to work hard because you care and then you're going to do well. So I've seen that a lot from my mentors just throughout real estate. So that being said, given your experience throughout so many different asset types as you know, asset types go in and out of favor over the course of time through different real estate cycles. How has that shaped your perspective on real estate cycles and resilience in your kind of day to day and how you're looking at your next project?

Mm, yeah, they do go. I mean we've been through all sorts of cycles, right. I think for us and for me personally too, you know, the good news with at least real estate development is it's a fairly long life cycle from acquisition. That's sort of just the start, right? But acquisition through pre development work and the design and the construction and the eventual sort of lease up or sell out of an asset is a fairly long time. Right. Every asset or many of the assets that I've worked on is minimum five years. And that's, that's fast to be in and out in five years. It's more probably like seven years or so between literally start of sort of acquisition of land until you're out of a deal and you've exited a deal. So I think for us what has been helpful and successful is having multiple projects at different sort of parts of that life cycle. Some of the projects may be in the beginning, sort of the first innings, some may be in the fourth innings, some may be, you know, in the ninth inning and some may be in overtime. But I think having, you know, different projects at different sort of lifestyle stage has helped, you know, navigate some of the ups and downs, you know, and then, and then really like conviction Like I've been working in New York for, in New York real estate for over 20 years since I graduated from business school. And we have had cycles. But ultimately I am a huge, you know, fan and believer in New York and cycles. You know, yes, we have had cycles, but it always comes back. And so when we look at long Term. And we have conviction in our market, which I personally do in this particular market. You know, that really helps because I know that even in the middle of COVID we did a project literally in the middle of COVID Why? Because we believed in New York and we knew that it was going to come back. So we were, you know, we were very fortunate. And now it's doing great. It's the, it's our project called the dupont in Greenpoint Landing. And I think that that asset is going to do great because we weren't scared by what was a scary world in New York City, but we knew that that was temporary. So I think having conviction on a market that you know well will sort of lead to confidence, which will lead you to be able to pull the trigger even in hard times.

Amazing. Well, Meg, I guess maybe I can't help but ask one last question before, before we wrap because at the beginning of my, my book, I talk about the different ways to invest in real estate. And I say for most investors, you know, multifamily is a great way to get into it. Existing, you know, maybe mixed use, maybe some retail, office, definitely capital intensive, but development, you know, be careful. So, so hopefully, you know, for a private investor who's looking to get into the game, you know, do you think that's the right advice where, you know, look, if you're going to pursue development, this is really the most complex type of investment. Much better if you want to try to do that maybe to join a larger shop or partner, because it is so all encompassing, is that hopefully gave the right advice and as far as how to start off or if you want to get into development.

Yeah, no, 100%. I think that, you know, the, the best thing you can do, really. Right. Is to kind of be honest with yourself in terms of what you bring to the table and what you know and what you don't know. Right. So depending on sort of the type of asset, if it's a asset that you haven't been involved in in the past, I think it's an excellent, you know, idea and an opportunity to be able to bring in a partner and learn and, and contribute what you can. And a lot of times when people grow too fast or they become a little bit overconfident based on perhaps the success of a prior one, is when mistakes happen. And I think that a lot of times it's very hard to figure out if it's the market overall that, you know, sort of forgave your sins, you know, covered up a lot and all tides were rising or was it something that you specifically, specifically did on your project that led to success and to really figure out where the success came from? Because a lot of times in a great market, you know, it's, it's, it's really hard. It's, it's, it's hard to differentiate that, right? And so a lot of people are like, oh, I did so, you know, I did so well, look at me, I'm ready for, you know, the next big thing. And I think that's when, you know, a lot of times people just, just, they do unfortunately make, you know, errors. And so just being really, really humble with what you do and you don't know and being able to surround yourself with good partners that you know who can bring in what you don't bring. And as a team, you know, I think I, I really do believe that, you know, you know, more people, more opinions, more feedback does generate better outcomes in general. So, you know, I, I very much agree with what you said about maybe teaming up and you know, and maybe, maybe you bring valuable land or maybe you bring, you know, valuable relationships with, you know, the, the elected or the, the local neighbors or the community board and that might be your value add, right? But if you aren't experienced yet on sort of high rise construction, you've been doing more smaller scale, like it makes perfect sense, right, to, to bring in experts to help. And there are a lot of great, great groups out there.

Well, great advice and Rockefeller Group is no doubt one of them. So Meg, we're just. Thank you so much for joining us and sharing. This has really been incredible.

Thank you so much, Matt.

Thanks for having me and thank you all as always for joining again. I really think the best thing you can do and I don't know how you couldn't get great benefit out of this is share this episode with a friend that you think this would be helpful too. As always, you can go to jamesnelson.com the site is not about me. Built the site for you and that's where not only you can find this podcast in the show notes as well as a lot of helpful articles. We've got a course that's coming out in the future that will be exciting. So a lot of great stuff happening until next week. Thank you again for joining.

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