Latest / Icons of DC Area Real Estate / Jeff Zell- Advisor Extraordinaire (#128)

Transcript

Jeff Zell- Advisor Extraordinaire (#128) · Icons of DC Area Real Estate

• 0:09
  Speaker A: Hi, I'm John Ko and welcome to.
• 0:11
  Speaker B: Icons of D.C. area real estate, a one on one interview show featuring the backgrounds, career trajectories and insights of the top luminaries in the Washington D.C. area Real estate market. The purpose of the show was to explore their journeys, how they got started, the pivotal moments that shaped their careers, and the lessons they've learned along the way. We also dive into their current work, industry trends, and some fascinating behind the scenes stories that bring unique perspective to our industry. Commercial Real Estate before we dive into today's conversation, I'd like to share some exciting news. The icons of D.C. area Real estate Podcast is now part of the Iconic Journey in cre, a nonprofit dedicated to supporting professionals at every stage of their real estate careers.
• 1:07
  Speaker A: With our new website www.ijcre.org, we're expanding.
• 1:16
  Speaker B: Opportunities for everyone in the industry. If you're a student or new to the industry, I encourage you to join the Iconic Journey and CRE community, an exclusive space for learning, mentorship and networking. If you're an early to mid career professional navigating career transitions, our career coaching curriculum provides structured guidance to help you move forward with confidence. If you're an experienced professional looking to give back to the industry, I invite you to consider sponsoring or donating to the Iconic Journey and CRE nonprofit to help foster the next generation of commercial real estate leaders. And for everyone, the best way to stay connected is to subscribe to this podcast, whether directly or on Apple or Spotify so you don't miss an episode. The podcast has been delivering twice monthly episodes since August 2019 and I'm thrilled to continue these conversations under the nonprofit umbrella. Expanding our Reach and Impact. To learn more about our community, career coaching or sponsorship opportunities, please visit our new website, www.ijcre.org. thank you for being part of this journey. And now let's get started with today's guest.
• 2:47
  Speaker A: Hi, welcome to another episode of icons of D.C. area real estate. So today we will dive deep into the world of real estate consulting with Jeff Zell, the president and CEO of J.M. zell Partners. In this conversation, Jeff shares his remarkable journey from a first generation American to one of the leading intermediaries in the D.C. area. He begins discussing how his upbringing as a child of a Holocaust survivors shaped his work ethic and entrepreneurial spirit. He elaborates on his current role where he dedicates 80% of his time to transactional business and consulting while also giving back to the community through nonprofit work. He reflects on the challenges he faced in the early days of his career, particularly during the economic downturns of the early 90s, and how those experiences informed his innovative approach to the real estate consulting business. Throughout the episode, Jeff emphasizes the importance of flexibility in real estate transactions, especially in today's hybrid work environment environment. He discusses how Jmzell Partners prioritizes client needs over traditional brokerage models, focusing on long term relationships and tailored solutions. Jeff also shares insights into the evolving landscape of the D.C. market, including the impact of remote work on office space utilization and the potential for adaptive reuse of existing properties. As we explore the future of real estate in Washington, D.C. jeff offers valuable advice for aspiring entrepreneurs and highlights the significance of understanding the complexities of the industry. His passion for the city and commitment to the community service shines through. So sit back, relax and join us as we uncover the wisdom and experiences of Jeff Zell, a true leader in.
• 4:49
  Speaker B: The real estate consulting field.
• 4:52
  Speaker A: So welcome Jeff. I've overviewed your background in the introduction at a high level. Please share your current role and how you devote your time currently.
• 5:02
  Speaker C: Currently, I'm the president, Chief Executive Officer, and Chairman of the board of Jmzell Partners. I probably spend about 80% of my time here working, still working transactional business, still looking at development, still doing construction consulting. And the other 20% I give to working on not for profits throughout the region to make sure we're giving back some of our knowledge and energy to help those that need help.
• 5:27
  Speaker A: Well, that's great to hear. Before we get into your company and its origins, please share some details about your upbringing and early life experiences that influenced your eventual path into real estate.
• 5:39
  Speaker C: Okay, now you've really opened up a can of worms. Okay, big one. So. So I'm first generation American, my parents European. And I am currently now holding two passports, one from the Czech Republic and also from here. So I spoke the language, a little bit of it. So. So. But here's the deal. Yeah, well, there's about. There's about five languages actually, because. And when I tell you the story, you'll understand. So my parents came out after the war, so both my parents are Holocaust survivors. And my brother was born Sam, which is not the Sam Zell that you may be aware of, but he also went to school in Michigan. He's the same age as Sam Zell and in partnership with a lot of deals.
• 6:20
  Speaker A: Now, are you related at all?
• 6:22
  Speaker C: We think we are, because I think we all, we both came out of the Carpathian Mountains, which was now part of the Lower Ukraine, and so on and so forth. So. But my brother and I have been in business together from the get go. And that was part of what my father wanted us to do, that we would work together and do things together. And so we have basically for my entire life. Where'd you grow up? I grew up in a small town. When my parents finally came to the United States, we lived in a house a small town called McKeesport, Pennsylvania. Yeah, yeah. Pittsburgh is a big city.
• 6:55
  Speaker A: Yeah.
• 6:55
  Speaker C: But it's a mill town. And we lived in a house with three other families. And you know, I had a bedroom with my two, my brother with my brother and my cousin in one bedroom. And that's how I grew up. And now my dad was a woodworker that. That came out of the. Came out of the Carpathian mountains. He would made window frames and doors and basically had basically a elementary education level. But it was mostly vocal technical sk that brought him here and my two uncles with them. And they started a woodworking company in Pennsylvania, started driving a truck. And then that truck was delivering furniture. And then he decided to start making furniture. So I grew up in western Pennsylvania, the whole ride. The problem with speaking English was that in my household we had Hungarian, we had Czech, we had German, we had Yiddish, and then I guess English was the fifth language in that sense. And so I was having trouble going to elementary school because there was nobody that could help me with understanding what I was being taught. I had to learn as I went because at home the reinforcement was in a multilingual household. My brother used to be the guy that helped me through all this because he was ahead of me, seven years older than I am. So he was able to learning English and was able to give me a lot of the American customs as it relates to what people do and how to do it. But at six years old, I went to first grade. My mother put me on a bus without her, and I took a 25 minute ride on a bus from McKeesport to a small town called White Oak. And I do that every day. And I come home on a public bus same way. Until about six months into it. The authorities told my mother she can't do that because a. She bussed me into a community where we didn't live. Number one, register me in a better school. But the other problem is having a six year old kid get on a bus by himself was not really an allowable situation. So that's how I. That's how I ended up going to elementary school initially. And then I. They ultimately moved into that community and they bought another house. My father became Extremely successful at making kitchens and building out department stores. And the best thing that ever happened was that G.C. murphy's, the five and dime store, hired my father to do all their counters. And so that became a very large account. My father at one point probably had over a thousand employees just doing that. And then he got in the steel business, so steel storage business, which my brother and I got involved with. So from a very young age, I was involved in a lot of different businesses understanding how to live in America. And really I'm part of this first generational true story of having people that came over with absolutely nothing.
• 9:43
  Speaker A: Sure.
• 9:44
  Speaker C: Interesting point is my parents came over on a Sabina airline from Belgium, which from Prague to Belgium, Belgium to LaGuardia and into the US they didn't come through Ellis island, which is quite interesting that he found his way to actually take an airplane in those days. That's quite something. And so that's how I grew up in the Pittsburgh area. My brother, I, when he left to go to college, they sent me to a private school because I couldn't get any help from anybody relative to my educational aspect. So I ended up coming to a boarding school for the last three years of my high school. That was at Kiski Minute Springs Prep School in Kiski area. There's like a Kiski Valley.
• 10:27
  Speaker A: That's in Pennsylvania.
• 10:28
  Speaker C: Pennsylvania, yeah. It's about an hour and a half by up above Monroeville to the north. It was in Salzburg, Pennsylvania. It's the actual little town. And then from there I went to Syracuse. So played sports at Kiski. And why Syracuse? That's interesting, because my entire family, all my cousins, every relative you could dream of in the United States went to the University of Michigan. And I was the only one, really, that did not go to Michigan. And part of that is, if people want to understand, I do not talk in my sister. I do not write anything down. Everything I do is from memory.
• 11:02
  Speaker A: Do you have a photographic memory?
• 11:04
  Speaker C: I would probably say yes. And I think everybody around me would say absolutely. I don't. I can do 20 deals simultaneously without documenting. You remember all the details, the numbers. And then I have to learn the jettison everything very quickly because they start piling up again because they get boring. Yeah. So I do not. For me, there is no written materials. If I do have to write, my general counsel is my ghostwriter and he sits with me. And a lot of people when I do transactional business, there's a big fight over to make sure the right people are in a room to take notes. Of what I'm actually structuring and taking pictures of what I draw and all because I'll do drawings and that's about as far as you're going to get.
• 11:44
  Speaker A: I don't see a whiteboard.
• 11:45
  Speaker C: Well, this is brand new office space and it was supposed to be where it says don't cross the line. This was supposed to be a whiteboard that was supposed to be over there. But we're still in the.
• 11:54
  Speaker A: So you're a whiteboard master.
• 11:56
  Speaker C: Yes, we're still. Yeah. And I even have people that have. I have a couple people that have taken pictures of some of the things I've done and actually frame them.
• 12:03
  Speaker A: Oh, that's awesome.
• 12:04
  Speaker C: Because it shows how the creation of a deal over time and it's actually quite interesting. So that's. For me, it's. It's more verbal skills, obviously, since we're having this discussion like this, but it's about organization.
• 12:16
  Speaker A: How old were you when you realized that that was your strength?
• 12:19
  Speaker C: I think that's why boarding school. I ended up in Boris Hole. And then I. I kind of gravitated towards chemistry and other things that were more formulaic and things with numbers versus with science, math versus doing anything to do with literature or English or any humanities. So I actually got through college because I made a deal with the dean of Syracuse Business School saying, look, if you're going to ask me to go to a literature class as part of me graduating from this, I'm tapping out right now. We're done. And so they provided me courses where I was able to do speech and do lecturing in front of audiences as accredited courses for those. For that.
• 13:02
  Speaker A: So are you a reader?
• 13:03
  Speaker C: Periodicals only. Really? No books.
• 13:06
  Speaker A: What about audiobooks?
• 13:08
  Speaker C: No, I've never gotten around to it. I just. I don't know. I don't think I. I think I'm addhd. Although my wife will be laughing if she listens to this, because I.
• 13:17
  Speaker A: She will be.
• 13:17
  Speaker C: I'm sure I go through this way. It's way too fast in understanding different things. But I can't get through a book because I need it to end. It's too. It's too long. And I, you know, and if I do read a book once in a blue moon, it's typically if I'm on a beach or on a vacation for two days and I'll read the whole book in two days.
• 13:37
  Speaker B: Right.
• 13:37
  Speaker C: But so I stay to.
• 13:38
  Speaker A: Like a novel.
• 13:39
  Speaker C: Every newspaper is consumed every morning. Multiple. Multiple news services, economic services. I just kind of eat all that stuff.
• 13:47
  Speaker A: So AI is probably your friend.
• 13:49
  Speaker C: Yeah, it is. Oh yeah, My wife thinks I'm delivering that. Exactly. It's the greatest thing. Isn't it though? I could have them write whatever I want now. It's great. No, I agree. So, so that's how, you know, I went through school, by, by, by, by having people accommodate some of this stuff and not. And not forcing me into having to deliver what I had to deliver. So. And then when I started, even with Rug off and other companies that we'll get into, when you ask me further questions, is it was having the right people that surrounded me that could interpret what I was trying to do and give it back to me so that I can work with it. So people work here by giving me rough drafts first or asking my idea, then they do rough draft, then I'll comment on the draft and then they'll reformulate. So that's how this is done around.
• 14:36
  Speaker A: So you're not like Jeff bezos who sits 45 minutes where everybody reads their six page memo before they start the meeting.
• 14:43
  Speaker C: Yeah. Now I'm more like the Mars family, where if you have a conference meeting then you're fired because you should know what you're doing. So we're kind of much more. We're trying to get people to act on their own and learn and while input. I just had this discussion this morning with somebody. Come in, let's talk through what we're trying to do and I will set you on the right path, hopefully and, and then let you do it. I mean, you don't learn by being dictated to or being told to do things. So I think people should make an effort to work on their own and push them through it. I agree with you. Absolutely.
• 15:15
  Speaker A: John, so you started for rubl. Now tell me how after you were finishing up at Syracuse, what was your next thinking?
• 15:23
  Speaker C: Okay, so. And this is also for discussion because I'm actually at. It's a long story, but I came down here to go to graduate school to get an MBA initially from Syracuse. So I got accepted to gw and they, because of coming out of the Syracuse Business School, they, they gave. There's a 24 hour credit that you need for your degree and your MBA degree out of GW. They gave me a 12 credit. Wow. For my undergraduate work. 12 credits. So that was huge. So that means I had to only go one year. So the problem was it was a completely different environment at GW at the time when I came here, most of the students in the graduate program were military and they were coming at night. And I thought I was coming to a graduate school that was just like Syracuse, that during daytime classes you have camaraderie with the students. And this was. You'd come at 6 and go home at 9:30, and then you'd never see these people again and you'd have to do.
• 16:22
  Speaker A: They all worked.
• 16:22
  Speaker C: They all worked. And there was no collaboration between her. So to me it was, it was sending me to sail on an ocean with no way home. It was like I couldn't talk to anybody. I couldn't discuss it. So unfortunately, after about a semester, I just said, I can't do, do this. I'm done. Which was very disturbing to my mother more than anybody. She's like, what do you mean you only have six more credits or eight credits and you're not finishing? And I said, okay. So on a cold, windy, rainy day, I was walking around looking for a job and I walked into David W. Cornblatt's office, which I was telling you, got bought out by Ruble off six months after I started. But David hired me. And at that time, and I don't know if you've interviewed him, but Rob Boris. No, he was, was the head of the office. He's with another brokerage firm for many years here. I think he's still doing it. And so I started there and then Ruble off bought it. And then six months after Ruble off bought it.
• 17:15
  Speaker A: Why brokerage though? What was it? What, what turned you on?
• 17:18
  Speaker C: Well, my father was building houses and, and had a couple of factories that we had acquired.
• 17:24
  Speaker A: Yeah.
• 17:24
  Speaker C: And then we subleased parts of it.
• 17:26
  Speaker A: You got to learn real estate?
• 17:27
  Speaker C: I got to learn from my dad, who was really one of the best business people I had ever seen or met. And he knew every aspect of it, not only for manufacturing, but the accounting aspect, the legal aspects. He, he taught me everything about it, anything. And he's all self taught, all self taught and at a very young age, because as he went through it, he would teach my brother and myself how all this would work together. And a lot of his attorneys and accounts would come to me and say, your father never really went to school. But for his knowledge base to understand all this, unbelievable. He knew everything from engineering to accounting. And he would walk my brother and I through everything. So I loved being able to sell things. And I also love real estate because I like to build things and I like to see other people's businesses. I like to see. So a lot of what I did, I started out as an industrial broker. If you can believe this. And part of it was more manufacturing orientation than it was in warehouse. You're in Washington here in Washington. That's crazy, right? It's a very small group of people. The day I started at rubl, where I went out on the road to look for clients, I went over to Washington Business park. And none other than Bill James was over there who was a CRA hall of famer. Bill's a great guy. Bill and I, we started the same day, went to Washington Business park differently. Ended up in Bob depue's office over at Washington Business Park. Sure. And we ended up meeting each other. We couldn't. And from that point forward, Bill and I have been friends forever. And Bob and I became partners in development of industrial stuff all through Prince George's County. So that first day was monumental in a lot of different ways. But yes, I started industrial. Then I went up to 270 corridor and started to get involved in research space way back in the day. And I got hired at the time by Equitable Life, who owned a big portfolio in the 270core.
• 19:28
  Speaker A: Sure did.
• 19:29
  Speaker C: And at Rublev, we started to build a property management company that I was running. And so we ended up getting both Prudential and Equitables portfolios. So next thing we know, we had 7 million square feet of space, which at the time was a lot. Worked with Sharon Oliver when she worked for me.
• 19:44
  Speaker A: Sharon worked for you?
• 19:45
  Speaker C: Sharon worked for me for probably seven or eight years. Yeah, yeah, yeah, yeah. Sharon worked for seven or eight years. Years. She's at Oliver meaning now, right?
• 19:53
  Speaker A: She has her own firm.
• 19:54
  Speaker C: Yeah, yeah. And so a lot of the people work for me. You know, when. When you look at his historically, one of the funniest people that Bob Milkovich came to me one day. Bob worked for me for 10 years before he went off in his career. And you know people at Heinz in New York. Chris Hughes worked for me for 10 years. Who runs now their capital market.
• 20:17
  Speaker A: Yeah.
• 20:17
  Speaker C: So he worked for me for 10 years. So everybody wants to have a get together like you were talking about, John, of past alumni. There's a group that keeps saying, jeff, you should throw a party somewhere because we'd all like to come.
• 20:29
  Speaker A: Well, I had dinner with Ray Ritchie, Bill James Cab Grayson and Vernon Nar.
• 20:34
  Speaker C: Wow.
• 20:34
  Speaker A: All former CBRE guys had started the office here with Jim O'Brien who was the founder of the group. So we talked about that in all the episodes.
• 20:44
  Speaker C: It's unbelievable.
• 20:44
  Speaker A: Yeah, CBRE network is fantastic.
• 20:47
  Speaker C: Yeah, I agree. CBRA network is fantastic. So that's, you know, from my perspective, that's how I started. But then I was given the ruble off office at a very young age of 22 and we grew it to one of the largest property management. We had 200 people at one time.
• 21:01
  Speaker A: Right.
• 21:02
  Speaker C: And that went on until 1988. 89. And then I had to park ways because of a boardroom fight in doing such.
• 21:12
  Speaker A: Did you open all the other peripheral offices?
• 21:14
  Speaker C: No, I did not. I just did the D.C. office. But I had responsibility at the other offices as well and I picked them up because I. What happened was I don't think a lot of people were really sure how to run satellite offices. It's very different when you have a satellite office versus a main office as it relates to support and structure.
• 21:32
  Speaker A: And how did you attract people? I mean, Rub off is not a big name in Washington.
• 21:38
  Speaker C: It was big in Chicago. I think it was. First of all, it helped having the property management.
• 21:43
  Speaker A: Yeah.
• 21:44
  Speaker C: Because that gives you at least something.
• 21:46
  Speaker A: Equitable clients. A big one.
• 21:47
  Speaker C: It is. I, I spent my first seven years working with Equitable on a day to day basis. In fact, Mark Sobel, my in house general counsel, was working at Sigley in Austin at the time and he provided the support to the Equitable portfolio, the production portfolio and all over the leases because we do probably six state leases.
• 22:05
  Speaker A: They were Oliver Carr's main partner.
• 22:08
  Speaker C: They absolutely.
• 22:09
  Speaker A: Back in the day.
• 22:10
  Speaker C: That's absolutely true.
• 22:11
  Speaker A: Before the REIT and all that.
• 22:12
  Speaker C: That's right. That is absolutely right.
• 22:14
  Speaker A: When I moved here, they were the big players.
• 22:16
  Speaker C: Right? For them. Yeah. So those two were really big for us. And then we picked up the IHC out of Atlanta, that's Institutional holding company which had a big ownership in Alexandria.
• 22:27
  Speaker A: Oh yeah.
• 22:28
  Speaker C: And all those buildings down there.
• 22:29
  Speaker A: So Savage Poverty, right?
• 22:30
  Speaker C: That's exactly right. Yeah. And so we put together and most of the people back in the day would come to work for companies that had space to lease. Right. So if you have a portfolio, then people would want. So we attracted a lot of people because of the portfolio. But the other piece was, as I said to you earlier today, we were just having a quick talk. Mary Spellman And I in 1981 decided to start Rublaw's tenant brokerage services group. And we did it together. So she did everything out of Midwest, I did everything on the east coast and the two of us ended up getting a lot of clients.
• 23:05
  Speaker A: So what's the tenant services business talk about?
• 23:08
  Speaker C: The tenant services are users of space, people that are representing tenants. Representing tenants, yeah. Okay, so you're the tenant rep business. They'd say it's tenant rep, but it got more to user services because if. If, like, for Fred Smith, I did 225 Federal Express facilities. Wow. In my day. And the issue was understanding what they need. Needed to function and operate, to provide services to their clients.
• 23:33
  Speaker A: Logistical issues.
• 23:34
  Speaker C: The logistical issues. So we got involved in how they function and operate and understanding that helped you understand what real estate.
• 23:41
  Speaker A: I mean, they were the pioneers of logistics.
• 23:43
  Speaker C: Yeah, absolutely. Yeah. So that's. Yeah. He's an icon in himself. Right. No question about it. Yes. Yeah. They were a fabulous company. They still are. And they still do. They still do it. But that's how I got started. And I was. I had three or four clients like that that actually went on a tear relative to their growth experience.
• 24:04
  Speaker A: You know, I mean, I think of, you know, Studley coming here as a lieutenant rep as Fred Ezra's company. I mean, there were a few people. That was their. That was their main shtick.
• 24:13
  Speaker C: Yeah.
• 24:14
  Speaker A: And so that was pretty much your main stick.
• 24:16
  Speaker C: That was the main thing. Yeah. Except we also had a very good part property management group because of our institutional relationships with Equitable, because in Chicago, rubl had like 12 million feet alone from Prudential. And so that was a. A very good client. So that was part of the business. And the other part was tenant rep.
• 24:37
  Speaker A: Interesting.
• 24:38
  Speaker C: And. And so you got to be careful because the two are in conflict at times. And you have to. Yeah.
• 24:43
  Speaker A: Because the landlords are, you know.
• 24:45
  Speaker C: Right, right. But everybody's crossed over in a way that nobody. They have these curtains that separate the two groups and nobody seems to care about it anymore.
• 24:55
  Speaker A: So that was the foundation of jmzell. Basically. It was the tenant rep business.
• 24:59
  Speaker C: Yeah. We weren't. We made a decision. Two things. One is, you know, the day I had to leave, you know, the two most important things to my wife were is can. Am I going to be home walking around in a robe? But Ruble off provided me two years worth of compensation, facilities and offices, and they let me hire a few people and they paid for everybody. So. And that was for an orderly transition of my client base, which was substantial at the time. And so that's how that started.
• 25:27
  Speaker A: That was in 89, 89 and 90.
• 25:30
  Speaker C: The good news is I got all my money out of rub off because I own a substantial interest in it. And 12 months after I got my money, nobody else did because the entire market collapsed. Yeah. So I actually, my timing was reasonably impeccable because they valued my interest in Shares.
• 25:47
  Speaker A: So how did you survive the early 90s then?
• 25:51
  Speaker C: Early 90s construct. Okay, so we formed a consulting a consultancy company where we provided pay by the hour services for people that were having real estate issues, RTC workouts, restructuring debt, working through corporate excess of space issues. Because people would just take leases and not worry about excess space. And all of a sudden they had to have their footprint. And the question is, how do you get rid of it when everybody else in the world is doing the same thing? I think it looks a little like now hate to say it, but things go around and come around right back to where they start. So getting rid of space when nobody wants it is a technique in itself. You have to figure out how to get done. And we spent a lot of time working with people and they would pay us hourly to do it versus do it at risk. When you say they time in companies, companies when they over over lease, when they overlease. Instead of just taking a listing agreement, we'd have a consultancy agreement and a listing agreement. Because I said to look, I can't spend all this time working on space. I need to pay rent. And I don't have a property management company which I did not want to start because I believe property management, you need a lot of scale to make any money. It's kind of like the $30 million restaurant. You know, your margins don't start to look good until 16 to 20 million and then you have to build it from there. But if you try and get it on a smaller basis, it takes a lot of time and energy and the rewards are low. So I refuse to have any aspect of property and I'd rather hire it from CBR, Cushman, JLo and let them do it. They do it well than me do it because what I'm paying them I feel is fair and I can't do it for less. Sure, there you go. So we do that and instead we. This consultative services business gives us an understanding of somebody's entire portfolio and then we get to work through how to reorganize it for people so that they can effectively operate in a very efficient manner and cut their costs down simultaneously with deleveraging their portfolio.
• 28:13
  Speaker A: So the roots of your company basically are dealing with workout clients at that time struggling through and then trying to figure things out creatively in a market that is very difficult to work in.
• 28:28
  Speaker C: Right. And remember, there's thousands of brokers trying to help people like this. A lot of competition. So the market that we drifted to that needed the most help, but also had the most money at the time that people didn't see. And candidly they're back. So we're doing the same thing again is the 501c3 not for profit interest system. So when you look at those groups, there has been tremendous amount of capital donated to them over the years where they have stored up substantial capital. But they didn't want to get into the real estate business at the price of it was over the last 15, 20 years because it had been escalating and we out priced the not for profits. Being able to pay for space number one. Number two is they used to be able to borrow money at about half the rate of for profit issuing tax exempt bonds. Except over the last eight or nine years the differential between tax exempt and taxable was 100 basis points at most. And so it wasn't worth going through the entire cost and issuance. Yeah, your net proceeds difference is like 30 basis points.
• 29:35
  Speaker A: Legal fees are just ridiculous.
• 29:37
  Speaker C: Legal fees are terrible. Plus you're restricted on use.
• 29:40
  Speaker A: Right.
• 29:41
  Speaker C: You can only do certain things, whereas on a regular borrow you can't. So when the, when the gapping was wide it made sense, but then it narrowed and it went away. So we picked up at the time a lot of not for profit business that didn't have internal real estate people but wanted to get certain facilities underway and they would hire our firm to put together a real estate strategy for the board to be implemented. Now currently we're back to 50% of our businesses back to 501c3s again. And we've. If you look at who we've represented and I think I can. Or most of it and I won't name them specifically, but I think we've pretty much done 75% of transactional or project management business on the mall. So the mall, all those 501C3s ultimately utilize this for services. And they currently still are. Plus, you know, we had people like we redid the Phillips Museum, we did Shakespeare Theater across from Capitol.
• 30:39
  Speaker A: Have you worked at a Smithsonian?
• 30:41
  Speaker C: We have. Yes. You have. That's in a roundabout way. I have a. We gotta be a little careful as to who we work for or not. Some of these, some of these firms won't allow us to say that we work for them because they don't want any disclosure of who's working for them and operating for them. And the good news that everybody is we've had a 25 year relationship with the National Gallery of Art, which I can say so, you know, and there's a whole Bunch of others.
• 31:09
  Speaker A: So what would the National Gallery of Art paint your service?
• 31:12
  Speaker C: Well, we. Well, we worked with an architectural firm over the years and what they've done is. And I think on the mall there was a group that originally. One of the buildings on the mall is closed. And the reality for the mall is as follows. There's only one mall. There's only a certain amount of space on the wall. And a lot of the entities had a substantial amount of administrative space in the buildings. And the issue is, should it be, should you have administration space in the building or should you use it for more exhibit space? And the answer is there's only one place for exhibit space. The administrative space can kind of go in a lot of different places. So there was a movement that we started with a couple of the institutions on the mall to say maybe we should look at moving the administrative facilities out of the buildings, converting those to exhibits, allowing for a lot more exhibits so that the public can see a lot more of their, of their items and the treasures and so that people can have a look at it. So we started with one group there that kind of fell into. And we moved them to the Victor building up on where Cvory had their offices for a while.
• 32:23
  Speaker A: Right.
• 32:23
  Speaker C: But they were in 300,000ft there. And that opened up 300,000 square feet on the mall for more exhibit space. National Gallery went through the same analysis and we moved them across the street with administrative, then opening up another floor and a half of exhibit space. So that sequentially is still happening and we're still doing it again as the museums close and re look at what they have done. Exhibit space is very hard to replace. Administrators is very easy to replace, especially in an environment where nobody's leasing space. Interesting.
• 32:56
  Speaker A: So let's, let's talk a little bit about your company and kind of your core principles a little bit when establishing it. Originally, what core principles from your ruble off experience did you retain and what did you deliberately choose to do differently? Differently?
• 33:10
  Speaker C: Oh, the number one thing here is the client is number one, we do whatever the client needs. This is not about a brokerage business where I'm worried about somebody making a 50 or 100,000 or $200,000 commission, whatever. This is about servicing the client. So our number one situation here is we will do spend and put in the time and effort to make sure they are 100% satisfied with what we deliver. And because we don't have a brokerage mentality of having you kill with you what you eat, you have a broker that Finds the tenant, he's the one that runs that deal. Our aspect of it and looking at it is that, wait a minute, is that person really the best person to have with that client for that need? Does he understand their business? So we approach everything as a company commitment, not an individual commitment.
• 34:06
  Speaker A: Got it.
• 34:07
  Speaker C: And we being a group of three or four of us that run this company will assign the right people, people to staff that assignment. So if it takes more people, more go on it. It's not controlled by who gets the fee. When the fees come into the company. We pay salaries to everybody here. Bonuses are generated by service to the client and by me as to how hard you work to get the client happy and get the deal done. So over the last, I guess 40 years. Scary. I have distributed single handedly all the bonuses based on every employee in this company every year. One year we tried to make it democratic and it didn't work out. Where we, we did it to a committee, got too political. So I still allocate the bonuses based on performance and the performance is based on service of the clients.
• 34:57
  Speaker A: Now I think the only other intermediary firm that I know of that does that is Eastil Security. Yeah, I think it's the only other.
• 35:04
  Speaker C: One that I know. I think you're right. I think you're right. And so, so that's what made me different. I did not want to be a commodity trader. Okay. In the sense of deals in, deals out. We really want to work for long term operational value.
• 35:20
  Speaker A: So you wanted more than one deal for each client.
• 35:23
  Speaker C: We want to be here forever. And we might be anywhere in the United States. When people say full service real estate, they, you know, their theory is retail, multi. And then they go. We have offices in all of region. We don't need office. I can get into any market in this country in two days. And, and you know this from what you do. If they sent you into Los Angeles for two or three days, you, you'd know everything about LA in two or three days. You don't really. Yeah. And I'm part of a CRE group that I utilize.
• 35:50
  Speaker A: Right.
• 35:51
  Speaker C: That they give me the information. Sure. And most of the time we'll bring them into the deal as well to make sure our client gets the best service and value. What they're more interested in making sure our mentality of how we did their deal here happens out there. They want us to think through the lease the same way they want us to understand how we formulate the utilization of the space our clients want to run Their business, they don't want to get into the real estate business. So we've been very successful taking operational understandings into markets. And I think right now we have projects. And I say projects because it's not only the transaction, some are and some aren't, but it's also the project management, build out and delivery of a facility for these people in probably 20 states right now and Canada and other. And, you know, we were in and out of Mexico, but Canada, we do a lot. We do regional headquarters.
• 36:44
  Speaker A: So talk about how you built your national business. I mean, how did the reputation go beyond Washington?
• 36:49
  Speaker C: Yeah, I mean, I'd like to know myself. I think what's happened is some of the companies here and some of the law firms here and some understand how we do our business. I, when I was with Rubloff, I had national exposure. So like Time Inc. And Norfolk Southern Railroad. And I give it. These are people I work for. So when I started my own firm, they kind of. That kind of we can go anywhere mentality stable with them relative to it. And they, they just want to entrust the transaction to somebody that really wasn't just trying to make a fee. They wanted somebody that could sit in a boardroom and tell everybody why we did this. They also wanted all the bases covered. They wanted us to take it through an understanding of competitive bidding. You know, we do stuff for some agencies here, like National Galleries is a quasi government contractor. We run through the procurement process like anybody else.
• 37:49
  Speaker A: But what's.
• 37:50
  Speaker C: I think what's happened now is because of how successful we've been as a company, a lot of the board members of the 501c3, not for profits that are huge in this city, are members of companies that are all over the United States. So they see what we do. And because we have a pretty good following now out of Los Angeles, and a lot of that's occurring, we brought USC in from LA here to DC with their campus. And everybody was like, how did you do that? And not only that, we build it out. Pepperdine has a class. Yeah, there's a. And we're doing. We did the Reagan Institute on 16th street, the People's House on 1700. These are all, believe it or not, a lot of west coast influence and also a lot of Reagan and Republican influence. It's interesting. Yeah. Yeah. So I think because of the 501c3 organizations that we've represented, the word gets out. The word gets out between them. All right. And, you know, we, we had a wonderful relationship and we just built on a space for Don Grant Program holdings. And you know, we do stuff for the Washington Post for Jeff Bezos. Once you do some of those transactions of that size and understand that these people are very good at what they do and they're very good at allowing us to do our business and making sure that we're providing them high quality service. So.
• 39:18
  Speaker A: Got it. So what were the initial challenges you faced when introducing your innovative business model to the real estate consulting industry?
• 39:28
  Speaker C: I think the hardest part was getting people to understand that it was even a business because what happened was brokers would provide certain types of this information just as part of their aspect of getting things. So to get people to pay for an evaluation of what they need was hard and especially in 1990, 91 when the market had collapsed. But we had a few 501 C3s and C4s, which are some union groups that pretty much entrusted us with explaining to them the opportunities and how to do things. Yes. And a lot of those groups, like I think we represent almost nine or ten. No, we didn't do union. We actually did like the plumbers and pipers, the bricklayers. We still represent all these firms. Operating engineer and there's a whole list of more. The treasures Employees Union electrical workers. We have never done electrical. We've done a lot of the others. Okay. So, but, but when you look at the, the group, they understand how we do things and we make sure we cover all the bases and, and, and through a procurement process. They're very, they very much don't want anybody to challenge why they did anything. So we cover all the bases and we make sure that we get them what they need. But so we're word of mouth, you know, this whole business and the number of people we have in the size project, it's all been done with pretty little, very small. Yeah, no marketing. Yeah, we just started now and I'll explain to you what's happening going forward, but there's a huge change that's occurring right now. So here.
• 41:06
  Speaker A: Okay. And we'll get into that. Yes, we will keep going trajectorily wise.
• 41:10
  Speaker C: Yes, I'm letting you, I'm letting you stay with your agenda, John.
• 41:13
  Speaker A: Thank you. Can you elaborate how Zelle integrates the client's long term needs, financial objectives and corporate culture into your real estate solutions?
• 41:23
  Speaker C: Yeah, we try and keep it their corporate culture, not ours. But we can read and understand it the biggest. We learned this early on when we worked for a company called Sanofi, which is a very large French Drug company. They're I think the fifth or six, sixth largest junk company in the world. And back in the day, almost 30 years ago, I had a, the president of the US operators Santa Canyon one day and said, just understand one thing, we never know if we're buyers of more companies or we're going to sell. So you need to prepare whoever you do a lease with with the right to terminate their lease. Okay. And you know, so we, we have done almost 10 million square feet for Sanofi over the years. Wow. And all the leases all had five or seven year termination rights, even though.
• 42:12
  Speaker A: They were tenure leases.
• 42:13
  Speaker C: Typically 10 or some 15 depending on if they're, if they're research facilities like we did when Amazon 2 was running around looking for new headquarters and they ended up in Arlington and Crystal City, as we know. Right. Of course, that year when that was signed, that deal was worth $1.3 billion on a signature to JBG. What nobody realized is that we were in Cambridge, Massachusetts and we signed a $2.3 billion deal with Sanofi for their corporate headquarters in Cambridge was a 550,000 foot headquarters with a 600,000 foot research facility. Okay. So it was very funny because that was like the news for the world when that happened. Where are they going? What are the concessions? While they were doing all that, we were sitting in Boston getting that deal done. So technically our deal was almost twice the size of the Amazon deal here. And I don't think anybody knew we did it.
• 43:17
  Speaker A: Who was the landlord?
• 43:18
  Speaker C: It was Texas teacher. It was Divco with Texas teachers and CalSTRS.
• 43:23
  Speaker A: Oh, okay. So is that your Boston property site there?
• 43:27
  Speaker C: No, that's nearby. We left one nearby, actually. Ray tried Kendall Square and Kendall Square, they tried. It wasn't big enough for us. And the only other place MIT had a site that we were negotiating with, but divco ended up getting the deal in Cambridge. It was, it was, it was the largest deal I, I have ever done outside for square footage. We did the patent trade deal with Bill Hart. So that.
• 43:53
  Speaker A: The patent trade deal.
• 43:54
  Speaker C: Yeah, well, that's because that was Norfolk Southern and.
• 43:57
  Speaker A: Right.
• 43:57
  Speaker C: We, we represent Norfolk Southern. Carlisle in Alexandria went from the car company to us and we. Ray Rich is still, he's the only one that told me the following. He said, Jeff, when I looked around and saw that you had the Carlisle site potentially and you. And that's a story in itself, but he said, I realized you were the only woman that's going to make money on this deal, that's what he told me because I said to Ray, I said, do you want me to help you on try and structure? He said no, you stay where you're going to make more money over there. So we did the patent and trade deal with Bill Hard and it really started out as Bechtel Park Tower with George Klein and Michael. I think it was Michael Porthos. I can't remember Michael's name.
• 44:45
  Speaker A: But they want.
• 44:46
  Speaker C: We. They tried to renegotiate the land at the table with myself in the Norfolk Southern and we pulled the deal literally at the signing. And then that was on a Friday. On Monday we signed Bill Hard up Bill one firm in one day on the lease and move forward on the land sale and everything. So we're still involved for listeners.
• 45:05
  Speaker A: Bill Hard was number six in my podcast.
• 45:08
  Speaker C: Oh, I say okay, right Elord, he's awesome. Hey Bill.
• 45:11
  Speaker A: He's retired now.
• 45:12
  Speaker C: Yeah, I know he's. He, Bill and I spent years together doing that deal. So I love Bill, Bill, Bill. And is. Is, is wonderful. But we're still, you know, we bought out the balance of Carlisle front.
• 45:23
  Speaker A: I know you're developing.
• 45:24
  Speaker C: We're developing now.
• 45:25
  Speaker A: Yeah.
• 45:25
  Speaker C: So we bought that as well. And so we've been there a long time. So that's, that's that, you know, so when people look at us and, and you know, how did you do a $2.33 billion. What we did. And so. And it's in Boston, so it's not Washington. So you know, I can tell we've been in Montreal, we've been in la. You know, we do deals. We were just.
• 45:47
  Speaker A: How did you get the son of Santa Fe?
• 45:49
  Speaker C: Through their legal counsel and Mark, Mark came out of Georgetown Law school and so did their general counsel and set up a meeting and we pitched it and it was a 25 year love affair. You know, love affairs relative to getting older. And it was, they, it's the one company, you know, we give back rebates. I don't know if you, you know, we give back part of our commission that's part of the deal because they look if somebody's going to pay me hourly for my services, I'm guaranteed money. So I'm okay. So now for anybody starting a business, this is what you got to do in this role. Especially when there are no deals. But we've been doing it the whole ride. And so when we get into transactional business and do leases, we give back a substantial portion of that fee back to the company. If we have a consultant screen it. Okay, I will tell you that I think Sanofi's rebates over the years have amounted into over $200 million. Wow. Yeah, they made a lot of money. We were almost a line item on their statements in the US relative to 50 fee returns. I mean it's crazy the amount and. And we obviously we did very well as well. So we have no complaints. It worked out great and we're, you know it. That's how a lot of our clients work with us. We want all their deals, we want a long term relationship and we want to make sure we have high quality of service.
• 47:15
  Speaker A: So I met one of your associates probably 15 years ago, I'm going to say Lily Krueger. And he was marketing SAIC site in Tyson's Corner.
• 47:28
  Speaker C: That's right at that time.
• 47:30
  Speaker A: And I thought I had a client that might be interested at the time. And I talked to him about it, got the information and I did chat with a few people and I registered them with them and we never got very far. But then I read that David and Bruce made the deal with you.
• 47:50
  Speaker C: Correct.
• 47:50
  Speaker A: I'm ready and I'll say for the audience and just for knowledge. I'm hoping to have Mr. Cheek on later this year in the podcast. I've asked him. Since the beginning, I've been doing it right. I financed or helped finance four of his first five transactions as a company back in 1992. 93 when they started they left Riggs bank, the two of them. They bought a building in Baltimore and then after that I did a business with them in Rockville. We did the deal up there. The great big drug company that was there starts with a V on Goody Drive. They bought those buildings with a B.
• 48:30
  Speaker C: I think it was Inspector Dixon, wasn't it back then?
• 48:34
  Speaker A: No, it wasn't. It was actually it was the genetics firm that ended up buying the firm.
• 48:37
  Speaker C: Buying it.
• 48:38
  Speaker A: Buying the company from them. They bought it from Northwestern Mutual out of foreclosure.
• 48:43
  Speaker C: Got it.
• 48:43
  Speaker A: We helped them buy another this. We brought Cargill to them as a joint venture partner at the time. So that's a little side story with them getting to this. But I didn't realize that this was their kind of a cup of tea at the time. Otherwise I would have brought it to or at least brought that idea up at the time. But that was quite an assignment. I remember Louis going through the complexity of that deal. That's one of the most complex deals I've seen.
• 49:09
  Speaker C: Yeah, we all our stuff and people will tell you is is usually extremely convoluted. In a lot of different. In a lot of different ways in the sense of what the client's trying to achieve out of the sale. Because sometimes it's not just money, it's performance. It's, you know, they stay in some of the buildings and. And Meridian actually got two buildings. They. They got the TTC building, which is the. Which was the data switch building, which had originally saic, their data center and some of their computer works. And then we got into the borough. It was the second deal, which was all the land owned by saic, that was the towers. And so the way that all happened was really a consulting assignment because we were brought in to divide the company between Leidos and saic. So the buildings had to be separated based on government contracts and different elements of the business because they had separated two different types of businesses at the time. Right. And Lewis was kind of in charge of whether they go to blue team or they go to the white team because of what business and then with it, what space does it take and what buildings do they take take and how long will they want to take them for?
• 50:31
  Speaker A: Did you have to re. Subdivide that site?
• 50:34
  Speaker C: No, we didn't, but we had to restructure leases separately between the groups when we sold it.
• 50:41
  Speaker A: So the land stayed as it was.
• 50:43
  Speaker C: That's correct. But the leases got changed to facilitate those. That went to Leidos, those went to saic big site. Right. And then we took a group out, SAIC and Terreston, and we did the deal with them in Reston as well. So putting the deal together.
• 50:59
  Speaker A: That was with Ray.
• 51:00
  Speaker C: That was with Ray. That's absolutely right. I called Ray one Saturday morning and he said, let's do this deal. Okay, we can do this. It's absolutely true. But what we left behind for Meridian Dubai was a very intricate weaving of the two companies and different lease terms and different credit obligations between the entities.
• 51:24
  Speaker A: And then not many developers could figure that out.
• 51:28
  Speaker C: No, no.
• 51:28
  Speaker A: David and Bruce are smart guys.
• 51:30
  Speaker C: They are very smart. And at that time, they had Gary with and Block as well.
• 51:34
  Speaker A: That's true.
• 51:35
  Speaker C: So Gary added a little horsepower to them. Sure. And the reason why we went to them on this deal is we had done the TTC deal with saic, so they had some credibility with SAIC at the time, which was. Eric Hazard was their head of real estate at the time. So that's how that went on. And it wasn't just a sale of the facility. Right. So. And we actually people twice. The TTC deal went out with a different broker initially. And didn't get the number that Eric wanted. And then he handed it to us, and we were able to get it for him like 120 days later. They got about 40% more than they had.
• 52:12
  Speaker A: Your angle must have been different than the previous broker.
• 52:14
  Speaker C: We don't auction property. We don't hold bidding. We don't put like, oh, by April 24, four of you come in with the bids. And then we gotta. We do not do that. What we do is we target who we think is the best. Two or three buyers.
• 52:27
  Speaker B: Interesting.
• 52:27
  Speaker C: And we sit them in a room and say, this is. We try and explain. Look, when I sold Oliver car and all over. Do you have Oliver on this yet?
• 52:34
  Speaker A: Twice. Twice.
• 52:35
  Speaker C: I love Oliver. Oliver's my buddy.
• 52:37
  Speaker A: Yeah.
• 52:38
  Speaker C: Okay. So the same thing happened, the Freddie Mac deal down here. Fannie Mae. Fannie Mae.
• 52:44
  Speaker A: I'm sorry, Losing my mind.
• 52:45
  Speaker C: Yeah, Fannie Mae. What happened was we represented the Washington Post at the time. Yeah. And it was a very, again, crazy deal because we had a site that was the corner that Akron had a 20 year ground lease still on and had been traded multiple times. And then we had the building behind it, which was the plant, the original old facility in plant. And when they went out to bid this, they used one of the other firms to bid it. I think it was sub $100 million. And I'm giving you factual information that people know about, so it's not anything anybody doesn't know. And Don Graham said, that's. I'm not accepting that. And Jeff, you know how much. What I need to do to make this building work. And I said, I understand. I said, but I'm not selling the building. It's another group of people. So Don called me and said, then you go do the building. You go figure it out. So I called Oliver and I said to Oliver, let me show you why the bid that you made wasn't correct. And we have a development team here that scaled the building, showed them the density, and showed them how this all worked. And Oliver came back and said, look, you're right, I missed some of the density. You guys really picked it up. And so the deal closed. And it's recorded so you can look it up. It closed out at 162 million. And that happened four months after the first bid of sub 100. Okay. And it was because we had drawings. We walked him through it, he understood it, and he was happy that he was able to control it. And then the second part of the deal came in when he bid the Fannie deal and when he bid it, he lost the bid. I don't know if you know, he's a tell story. Oh, yeah. Did he include me or not? I didn't hear Christmas Eve, I think.
• 54:34
  Speaker A: Or New Year's Eve.
• 54:35
  Speaker C: I think he lost the deal he did on Friday. Yeah. And I'm mad because what happened was we put him in the deal. And I'll tell you how. We had a lease that didn't have us leaving the building for two years. Yeah. And he couldn't bid that deal unless we agreed. This is the Washington Post, to vacate early by like 8 or 9 months. So we had to accelerate our delivery at 1301, the premise building. So Oliver and I came to terms with an amount of money for us to do all this and to incentivize the Post to do it at the time. So that all went well. And, you know, I had allocated some of the money for furniture budget for the Post. So when Oliver called me on Friday night, I was like, you didn't lose that. I said, oliver, we got to talk. So I met him for coffee at the Starbucks on MacArthur Boulevard. And I said, oliver, you know, I was you. I dropped the price a couple bucks and see what they do make 49.99 instead of 51. 50. I mean, come on, Oliver. And Elder's like, why are you. So I said, you have our money. You're going to lose it. We need that money for furniture. I need you to do this deal. He said, yeah, but they already chose down the street on 12th Street. They've already announced it. It's in the papers. I said, I don't really care. I think you need to make an unsolicited revised offer. And he said, really? I said, please, please do it. And he said, okay, I'll do it. I said, look, we're gonna say no, right? That's the worst. They already told you no. So he does it the Monday afternoon. He calls me. He said, they took the deal.
• 56:25
  Speaker A: So you helped him make that.
• 56:26
  Speaker C: So I pushed. Well, we had our money. You know, it was a lot of money, by the way. Yeah, because it was a bonus because. And I had set up the move. We were ready to go. I was like, you can't. You can't now back out of this. We, you know. Cause I had sold that. We were gonna get this extra money, and it helped pay for a lot of the furniture and moved to 13. So that's how that.
• 56:45
  Speaker A: But we told this before, but I got a long relationship with Mr. Carr.
• 56:50
  Speaker C: I know best start his company actually the best. I mean, I, I, he knows that he. We talk all the time, so he's. And I'll see him again at this DC Live. But the bottom line is, it's that extra step that we understand. And the only reason I was, I mean, I was pushing the beginning because we were selling the site to him. But the second piece, that wasn't the real important thing was we got involved in the actual mechanics of the deal, and he got involved in my mechanics, and Ed Lash, who was his head of development time, ended up overseeing us because they gave us a lot of money to go to move, and they reimbursed us for a lot. We all became friends. In fact, we're still using.
• 57:34
  Speaker A: He's not your landlord, Oliver. Yes.
• 57:38
  Speaker C: You know, this deal was too good to trade to the Abramsons.
• 57:42
  Speaker A: Got you.
• 57:43
  Speaker C: Yeah, yeah, this worked fine for me. So. So no, that's, you know, that's, that's a good way of how we do our business. It just wasn't a deal or a situation, so on and so forth, so. And that's why people keep coming back.
• 57:59
  Speaker A: So how has your client base evolved since founding the. And what factors have driven these changes?
• 58:06
  Speaker C: Well, I think there was a trust issue of size, that we were potentially too small to handle some of this stuff. And so, you know, public companies would presume to be skeptical of our size if anything went wrong. What do they. How do they tell. How does Norfolk Southern tell their board? How does Sanofi tell people that we don't.
• 58:27
  Speaker A: You're not cbre.
• 58:28
  Speaker C: Right, right. And we've had issues recently. CBRE come in, say, these guys are too small. They can't perform. And then we do things like, well, we'll give you a half a million dollars in deposit if we don't perform. You can keep the money. We'll draft an agreement. I said, but do me a favor. I'm only putting it up if CBRE will put up the half million under the same terms. And you know what happens when you ask CBRE for the half million? The answer is absolutely no way, and we don't even want to consider it. So then that was. Department of Agriculture came to us and said, okay, you guys have the deal to us. So I just said, you know, we can respond to things that others can't. But now that we, you know, Fast forward to 2025 and the number, as I said to you, $2.4 billion deals down to $2 million deals. We can do the whole thing. It doesn't matter. And we have the staff and the. In the seniority and the knowledge and the. To deliver this. And people trust us with some very large big assets. They want us that are typically extremely complicated. Like you just mentioned, both the post deal saic. Those are extremely complicated deals. Extremely complicated deals.
• 59:37
  Speaker A: Yeah. So how has the post pandemic environment changed your clients real estate needs and priorities, particularly in the D.C. market?
• 59:46
  Speaker C: In the D.C. market. Okay. Well, you know where I think zoom teams and whoever else is in the. Google has created the ability of having meetings without space. You can do it from anywhere. I think there's a large group of people in this market, specifically lawyers, who don't really interact with people within their own office to begin with. Most of them work at specific assignments relative to what they're asked to do. And they can research it, do it, do a paper, and then they would just pass it around on the computer and then they would hold a zoom call and go through the editing of the document and then submit it to courts or do whatever they have to do. So I think the biggest issue we have in D.C. is that law firms are all going to shrink by 50% because they just don't need. They haven't already. Yeah, right. It's already happened and it's actually there could get worse. So that's number one. And number two, you don't, you didn't.
• 1:00:47
  Speaker A: You haven't mentioned one law firm yet. So you have law firms as clients.
• 1:00:51
  Speaker C: Yeah, Silly is our client. We just did Lowenstein over at Ray's building. Okay. On another floor. So we do that. Yeah, we, we kind of people that we use usually use us too, because we use a lot of law firms for a lot of transactional business. And we have others. I mean, we have a list, but those are two that I can give you. Right. Right away. Okay. And I think when you look at other groups, lobbying firms. We did the original Jerry Cassidy law firm here, which at one point Jerry Cassidy and him, Jim Bay Fabiani owned the lobbying market here in D.C. he was like the dean of lobbying and he was dean of earmarks, which is kind of going, by the way of the government going. So. But those firms now are shrinking in size and a lot of these people are coming in and doing their business by just showing up for three days in town. They'll do their bidding with people on the Hill and then they'll leave. So they're not really spending a whole lot of time here. We're not seeing any growth in that, in a sense. And in fact, they're Shrinking. And a lot of the law firms who were dealing in the lobbying efforts are now getting concerned because, as you know, our current president has singled out some law firms for being on the wrong side of his situation, which then stops people from lobbying because they need those firms to take those positions. There's a lot of change and there's a lot of things going on. Right. So I think this is in for still more contraction. I think the need of any new office buildings is zero. You know, And I said, I do believe the market you will see is those buildings will be replaced by 501c for profits. Who will come in, which will be universities, colleges, certain groups of people that are trying to accommodate, not for profit, like univers, like nurses association, AMC people, healthcare. Healthcare, very big on the healthcare. And we did AMC's headquarters down on New York Avenue, which was a great building. We did that with Gerald Heim. And I'll tell you, the other group here watch for even like K through 12 schools show up in some of these. There seems to be a big charter school. Charter and private schools.
• 1:03:05
  Speaker A: That's interesting.
• 1:03:06
  Speaker C: And private schools, you know, we, we're now doing work for the Lab school. We're doing work for gds, we're doing work for the River School. We just did the Deener School.
• 1:03:16
  Speaker A: So are they coming to a downtown office building?
• 1:03:18
  Speaker C: You think they're looking out, isn't it? Is there an option? Right. You know, the British school took an office building on Wisconsin. So. And they're, you know, they took their hundred and some thousand feet. You're going to see the question is, can people afford those schools going forward if they're unemployed or don't have they lose their job at the government or they're rift in some way? Yeah, there is. So that's. Well, as I'm saying to everybody and I'm telling the people, we have a cascading effect of government that is now working. It's like a waterfall that's washing everything downfield out. And everybody's looking at the top jobs, but it's all the peripheral that's getting knocked out with it. I don't think we've even started to understand to what extent that waterfall is going to hit everybody that'll have. We'll see more of that in June, July, August, September when this speed of these programs start moving through and this drain the swamp concept in April that the President has deemed a response from all his different cabinet members and agencies as to what you're moving out of the D.C. area. I think. I think that's a problem. And then the last thing, and I'll move on from the District is, I think, and I said this from the get go, a bunch of things. I think everything here in the District's in trouble, including our mayor. And I think we're going to see a control board. Yeah, we're going to go back to Congress running the District of Columbia through a control board. I think she's going to have to ask for everything. We're a billion behind. I think. And I said this when it happened. Everybody thought I was crazy, but I heard it last night, somebody else said it, that they don't want to fund the Cap center deal that was signed. They're saying we're not doing it. So that means RFK for the functional teams.
• 1:05:06
  Speaker A: Who's going to administer the city government? Are they going to have to set up a new Congress to.
• 1:05:12
  Speaker C: It's possible.
• 1:05:12
  Speaker A: Elon. Elon Musk is not going to administer.
• 1:05:14
  Speaker C: Washington D.C. no, but they're going to have to put. They're going to have to put a small group together and, you know, it just means nothing will get done and we're going to be stuck.
• 1:05:24
  Speaker A: Are we going to get any zoning, Any land use issues?
• 1:05:27
  Speaker C: Okay, so now you. You now you want to get. I'm started here.
• 1:05:31
  Speaker A: I'm open. Opening Pandora.
• 1:05:33
  Speaker C: Well, real fast. Problem with zoning in this city. Even if you get a zoning change for something you want, it can be appealed numerous times. And what you think can take two years could take five to seven, and you can't stop. We have this issue with the River School. We're now five and a half years into it and it's being appealed.
• 1:05:52
  Speaker A: Well, if home rule goes away, what happens? How does that all get accomplished at one point this city never had.
• 1:06:03
  Speaker C: You didn't even have lot and blocks.
• 1:06:04
  Speaker A: In a lot of areas of the city.
• 1:06:06
  Speaker C: Correct. No, no, you're right. Oh, no. In my house, when I went to settle on. Yeah. I didn't have. I didn't have a lot for my house. I had to go back and find out how that's done. I agree.
• 1:06:17
  Speaker A: Jeff, with the rise of the hybrid and remote work models, how are you advising clients on office space optimization and portfolio management? We talked a little bit about this.
• 1:06:26
  Speaker C: Yeah. The triggers have flexibility and the plan and flexibility in your lease. Whether you give back space or you take more space, we have to go. But we have. When we do deals, we do both directions. Sure. We have the ability to expand. We also have ability to give back during certain periods. And that the give backs have been, have been a very wise thing and a lot of my clients are using them. And the biggest one was the termination. Right. That the Washington Post had, that they had to, that Heinz had to renegotiate the deal over because it could have been terminated.
• 1:06:57
  Speaker A: How are your clients leveraging technology in their real estate operations? And how does JM Zell help them navigate these technological.
• 1:07:05
  Speaker C: Yeah, yeah. I mean everything's plug and play. Everything we do. I mean all the spaces have become much more almost like lab benches and that's the easiest way to explain it. So they have to be interchangeable. You have to have more than one person be able to sit there in a sense of dual space utilization. You have to be, you know, the WI fi is not an issue. I mean it's everywhere so it's not an issue anymore. Relative to bandwidth we can pretty much do everything we can within a space but reconfiguration without substantial capital expenditure has been the key. And we lately we've added a lot more single offices backing again versus so it's now a mix. We for a while we were going through 80% open and 20% perimeter office. Right. And, and I would say right now we're probably 60% office, 40% open space.
• 1:08:02
  Speaker A: What about conference rooms? I mean those have to be important, aren't they?
• 1:08:05
  Speaker C: Yeah, they are. Although a lot of people try not to have meetings in conference rooms. It's, it's, it's interesting. Some companies don't want them and because they think it's a waste of time of way too many people. Mars, the Mars company is anti conference. Anti conference. So but you know, I think there's a need for it. I still do face to face negotiation. I don't zoom when I do a deal. It's all in person. I, I don't think I've ever negotiated deal.
• 1:08:33
  Speaker A: Tell me why that makes something to you.
• 1:08:35
  Speaker C: Because I got to look at how people are reacting to what I'm telling them in the room. You can't do that, cannot see that. And I can't see the full. We, we've been working with new technology now Cisco has the best system where it actually goes. You even in a room on a conference table, the person talking, it actually zeros in on you and leaves you the other people in the background. So I can at least have a better look. But it's still not the same because there could be a CFO or somebody else that's reacting negatively to it. I'd like to see it and the fact that I don't write anything down and I don't. I'm constantly. People see this locking in on the visual expressions in the body movement. Constantly.
• 1:09:13
  Speaker A: So non verbal is important to you?
• 1:09:15
  Speaker C: Very. Oh, you kidding me? It's, it's. I will tell you this right now. You're the only one knows this. I built a conference room, brand new over there and I'm tearing it apart. We're redoing it because I had a negotiation in it and I could not get comfortable in how I felt while looking at the people negotiating with them. I came out of the room saying this is all gone. We're changing the entire way this looks and I'll show it to you and I'll tell you why. But it's just I do every. So that's why some people write and take note. I'm constantly just looking at the person I'm trying to deal with in the room.
• 1:09:48
  Speaker A: So to read them as opposed to understanding.
• 1:09:51
  Speaker C: Correct what they're saying per se. Yeah. And I think if you talk to Ray and others, they'll tell you the same thing about me. They've never seen me with paper in my life or write anything down.
• 1:10:02
  Speaker A: So has any client come in and you met with them, said, aren't you going to take notes at this meeting?
• 1:10:08
  Speaker C: Always. They always say that. I go, no, don't worry what I will do. I won't get back to you, you know, Mark or somebody as far as dates and all those things. Yeah, no, we're going to meet that.
• 1:10:20
  Speaker A: You remember all those dates.
• 1:10:21
  Speaker C: I do, I do. But I also usually have one person with me and that's their job scribe. Okay. All right. There's usually one person with me in the room.
• 1:10:29
  Speaker A: Cause once in a while you might make a mistake.
• 1:10:32
  Speaker C: Yeah, I don't think I'd admit to it, but I don't remember. But we're doing so far so good. I'll try not to. Okay, I get it.
• 1:10:42
  Speaker A: What trends are you seeing in adaptive reuse of existing properties and how are these opportunities reshaping your clients portfolio?
• 1:10:48
  Speaker C: I mean the problem with this office to resi concept is the footprints of the buildings do not work in many cases. Yeah, you're talking 80%. It's just the dynamics of the operational aspects of an office building are substantially different than residential, even if you cut it into a whole bunch of different parts. So that's one use. The second use, I mean, we've done everything. Some people tried to change them into grow houses for marijuana and office buildings and that didn't work either because of the power consumption and humidity levels.
• 1:11:20
  Speaker A: Data center, it was hard to do.
• 1:11:22
  Speaker C: Can't do that either. Right. So the bottom line is the most valuable part of downtown real estate right now are the garages.
• 1:11:32
  Speaker A: Interesting.
• 1:11:33
  Speaker C: Yeah. And they're expensive garages. Now per space, you're looking at over 110,000 space. You know, when I started this business, they were like 25, 30.
• 1:11:43
  Speaker A: So what's interesting, just last week we toured Georgetown park with the, with Jamestown and the asset managers of one of my community members.
• 1:11:52
  Speaker C: Right.
• 1:11:54
  Speaker A: They are under contract to sell their garage there. But it is for the use of parking.
• 1:11:59
  Speaker C: Correct.
• 1:12:00
  Speaker A: Because that is the biggest parking garage in Georgetown.
• 1:12:03
  Speaker C: That's right.
• 1:12:04
  Speaker A: And of course there's no metro there. So you know, it's used and it's very profitable, apparently.
• 1:12:11
  Speaker C: It is, it is.
• 1:12:12
  Speaker A: They're selling it for about a 6 cap rate.
• 1:12:15
  Speaker C: A garage. Not replaceable down there. Yeah, absolutely true. And you know, all the people. Georgetown, I live in Georgetown. The fact that the metro never made it there is just mind boggling because they don't have parking. So yes, parking garages, very valuable. But in any building, you know, the garage, I'm doing a deal in New York, same thing. In New York, the garage spaces are worth more than the office space.
• 1:12:41
  Speaker A: Isn't that because people are saying you don't even need garages because of autonomous driving coming.
• 1:12:46
  Speaker C: Right, right. You're gonna need them.
• 1:12:48
  Speaker A: So when Waymo hits the market here. And that's probably coming.
• 1:12:51
  Speaker C: Yeah.
• 1:12:52
  Speaker A: It's in San Francisco already, big time. What's that going to do to park driving? Driving in the cities, you know, not easy.
• 1:12:59
  Speaker C: Yeah, yeah, I agree. And we have all the service road issues, so that's a whole other thing. Situation. But we too don't have a lot of off street parking in this, even in the CBD or any, you know.
• 1:13:10
  Speaker A: So you may not need it though, if you have Waymo. Do you. I guess that's the question.
• 1:13:16
  Speaker C: I think it depends on volume of traffic. You know, like right now, the city, even though everybody's supposed to be back to work, it's still, it's still, it's still very quiet. And Mondays and Fridays you can shoot a cannon through here. Not hit anybody. I know. So Tuesday, Wednesday, Thursday is getting better, but it's still not going to happen. And now with the federal government, you know, they sent them all back to work.
• 1:13:36
  Speaker A: And so your client base is mostly users, not landlords.
• 1:13:39
  Speaker C: That is correct. That is correct.
• 1:13:41
  Speaker A: So you're not sitting with landlords saying so what are we going to do here?
• 1:13:44
  Speaker C: That's correct. Too much correct. I sit with people that say, can we buy a building and change it to our need and do what we have to do in it? And so we look like for the building we bought for usc, the whole first floors, conference hall, and then they're putting in a studio for broadcasting. Different purpose, different use, but some buildings can do it and some buildings can't do it. So I think we're going to see, we're going to see a lot of buildings torn down. There's a lot of bad buildings in the industry of Columbia, architecturally and structurally.
• 1:14:17
  Speaker A: The brutalist buildings particularly.
• 1:14:19
  Speaker C: Yeah, you're going to see them all go. That's what's going to go.
• 1:14:23
  Speaker A: I agree. We've already mentioned it. With the new administration's disruptions, are you seeing both challenges and opportunities?
• 1:14:31
  Speaker C: Perhaps I don't see any opportunity. Yeah. Because to make things work in the District, we need a mayor that can give people incentives to try and make this work. The problem is she's now going to be knocked out of any ability to give money to anybody. So that's going to be a problem. Our administration that's on the Hill, that's running this country right now, good, bad or indifferent, is not really a fan. A friend or somebody that really likes the District of Columbia never has and never will. So he likes it as the federal government center of the universe of this country. So that says to me it's everything from Pennsylvania Avenue to the river. And you know, from Pennsylvania Avenue, a river is not a whole lot of office space. It's pretty much open, green, it's museums and it's federal agencies. The ones that survive will be here. Obviously the Smithsonian and all the museums will stay because they don't need to move. And even though they receive fair funds. Where are you going to go with the museum that's not here.
• 1:15:36
  Speaker A: So where do you see with the old federal office space going? What happens to that space?
• 1:15:40
  Speaker C: I think what happens to that space? I was looking at the Veterans Administration building the other day, drove by, it went, wow, beautiful building. Location's great. I think some people will start to creatively try and figure out how to put mixed use in that building. So you may get some combination deals, you may get some. What about independent South?
• 1:16:01
  Speaker A: Oh, Southeast South.
• 1:16:03
  Speaker C: I know, I, I, I just don't know. I think you're going to. The only hope is residential. It really is, but you need some retail quarter with it. So, because people that are going to live their need general ability to drop dry cleaning, go grocery shopping.
• 1:16:17
  Speaker A: So the wharf of course is just about the trade.
• 1:16:20
  Speaker C: Yeah.
• 1:16:21
  Speaker A: And it was trade. It's more or less a forced trade.
• 1:16:23
  Speaker C: It's not a voluntary trade. Yes.
• 1:16:26
  Speaker A: So that is the largest mixed use development in Washington. Right, Right. And you've got everything there. You've got theater, you've got hotel, you've got, got office, you've got residential, you have both for sale retail and you got everything except industrial there.
• 1:16:44
  Speaker C: But, but they also, they got the, the reason why that's trading the way it is and why it's failing. If you really look at the core problem of it is that it was built at the low mark of interest rates.
• 1:17:02
  Speaker A: Yes.
• 1:17:02
  Speaker C: Okay. No, Covid. And then you fast forward, you add 300 basis points to your loans. You have your retail component. Half them didn't pay rent for two to three years or marginal rent.
• 1:17:20
  Speaker A: Right.
• 1:17:21
  Speaker C: And when you take that all into consideration, and now you're still up until last week, it changed, changed a little. But you're still at the high water mark of refinancing rates. Right now that 250 basis point, 300 swing of additional interest, you're dead. It's just not going to happen. And so the retail sunk that project, the hotel sunk that project. They're not doing anywhere near. There was four, four years of nothingness.
• 1:17:56
  Speaker A: We were involved, we built Williams Connolly there. I mean you've got some big law firms.
• 1:18:01
  Speaker C: Those buildings will be fine because they have long term set leases. I don't know if they have termination options. I don't know who did the deals. I don't know what they were planning. We built the yacht club there, but that's on a 99 year ground lease from the district and it's separate from that whole deal. But they're a function of a loss due to high interest rates. Even though construction costs have gone up 30% during that same period, it still hasn't transitioned into the rent. Rents haven't gone up appropriately to deal with it. And they're not because we have job loss. Rents go down. So they got whipsawed. It's, you know, the project, great project. I'm not. There's nothing wrong with the project. It shows where timing and potentially a natural disaster like Covid can basically wipe you out if you happen to be.
• 1:18:54
  Speaker A: In the middle of it. Well, I think of every major mixed use development in Washington D.C. has gone through basically major surgery. I mean the first project that I worked on when I moved here and I was involved in servicing alone was national harbor or National Place Place. National Place, which at the time was by far the largest mixed use development in Washington. And that deal was financed in 1980. And interest rates on that deal, I don't know if you know what the rates were. They were on the 14 to 15% first mortgage and then 12% for a second mortgage. And this deal had two structures, it had a ground lease. And so Bob Gladstone used all of his intellectual capital, put that, that deal together.
• 1:19:41
  Speaker C: Yeah, yeah, it was tough time. It was. But those, when you refinance, not the cash flow just came cascading into you. I mean, you know, we have the reverse scenario occurring now. Everybody. And, and the biggest threat to all this right now is, I don't know if you're aware and you're, you understand the debt market, there's all kinds of new products, debt products. We're going to get in trouble. It's, they're coming up with all kinds of.
• 1:20:09
  Speaker A: It's like early cmbs again.
• 1:20:11
  Speaker C: It is, it is, it's not, it's not good. It's going to create another problem.
• 1:20:15
  Speaker A: Yeah, I, I don't think Lehman and the Mirror is out there, but, you know, because I don't think they have that capital base to do what they did. I mean, they were doing. It was insane.
• 1:20:25
  Speaker C: I agree.
• 1:20:26
  Speaker A: But it was like the SNLs were in the, in the late 80s too.
• 1:20:29
  Speaker C: Yeah, I think you got, I think we're having that happen right now. Now there's repackaging. I mean, look at the fact that they tried to get Elon's X out. I mean, a lot of these guys hit, you know, $38 billion worth of his debt and they're saying it's not worth More than 14, 15 million total. You know, so they got some of, they repackaged it. They're coming up with interesting ways.
• 1:20:51
  Speaker A: Yeah, well, if cryptocurrency does what it's going to do, that's going to be strange anyway. How have public private partnerships evolved in the District market? And how do you see them shaping the future development, if any, if at all?
• 1:21:05
  Speaker C: I don't think you'll see them. As I said to you, I think we're in a pause for probably five years and I think it's because the federal government's gonna, I don't think she'll have, I don't think Bowser will have the ability to create public. We're doing Food and Friends over by Catholic University and we're having issues over there relative to the District they're working with us to try and get it going, but it's, it's been difficult.
• 1:21:28
  Speaker A: What do you consider your most significant contribution to, to evolving how real estate consulting services serves clients?
• 1:21:36
  Speaker C: I, I think we led the industry in, in, in this hire for advice concept and then execution of our plans. I mean, I go back in time. The first one we did, the biggest one we did was Blue Cross Blue Shield down in Southwest, the twin buildings that were just underneath Longfellow. We did that for Dan Glazier and the Blue Cross Group. And we put together like 100 page. How do you reposition these buildings and how do we move people in and out? And Jim Davis is involved in moving the air conditioning, all the different things of keeping it operational while we were dealing with it. And just as we were getting ready to start it, they tried to get somebody else to implement it and it failed. And then they said, your plan didn't work. And I said, give it back to me and put me there. We'll make it work. And they did and we did. So, you know, it's not only putting a plan together. We, what we say we can do, we make sure it can be done. There are others that can't execute a very complicated plan. And you know, so for us, I think what we've done is basically gave corporations five Cs the ability to outsource to us and know we're handling it like part of them, their company. I tell people, we're part of your family now.
• 1:22:48
  Speaker A: Right.
• 1:22:49
  Speaker C: So we're not going to make a decision that hurts other parts of the family. We have to make sure that this works for the universe that you're operating in. And so we're very good. And what we've changed is we pay attention, as you said earlier, the culture of that company, making sure we don't change it, making sure that we can deliver on time and on budget. We're not like a project management firm that keeps getting ads to the construction budget. We keep making more money. We handle like a developer. You have X amount of our equity and we're going to protect the house. So when we go after and we deal with things for line. Yeah, yeah, yeah. We protect the house and they're the house and we just make sure that we don't. We're not in it just for collection of fees. We really do care. And I will tell you of the 501s 95, if not 100% of everyone we dealt with, we have made donations that have been substantial at the End of the projects to those entities. Because we care that much about them. Yeah, yeah, we really do.
• 1:23:50
  Speaker A: So what advice would you give to professionals currently working in established firms who are contemplating starting their own ventures?
• 1:23:57
  Speaker C: You have to be, you know, you have to be well rounded. You can't be just a broker. You can't just broker space. I really think that's a bad way to get in this. I think you need to be a student of real estate. A student? Real estate understands how it functions, the debt portion of it. You know, real estate can get you in so many ways that you just don't understand if you don't pay attention to things. But contraction, flexibility, debt, how long debt, house of replacement debt, you know, credit. The one thing that always got me in this business is, and you've been doing it a long time like me, combine the two of us. One was still other than a very large triple net lease deal. If I rented space in this building or one across the street and took a floor 20,000ft, they look at my balance sheet. That's about it. But IBM would take two floors and they pay the same price the I pay. It's the most bizarre thing I've ever seen. Credit has been never really looked at in a multi tenant building or in a multi complex the way it should have unless it's a single user building. I don't understand it, but I think you need to understand what kind of building you're moving into. Who's the builder? Maintenance, long term obligation, capital expenditures, all that. You know, we have people in here. I'll walk you through for a minute. But whose disciplines? There's probably 30 disciplines in this office. And if I tell any of the young guys that we bring on and the smart ones want to be in an office to learn from these people, you got to learn from all of them. They all have a piece of this puzzle that you don't need to be an expert in, but you need to understand why it's important and know where to get help. So anybody trying to start a firm, but that's expensive because you need people to understand that we do everything in house. Because I couldn't afford to hire, you know, hire Covington or Sidley or anybody to be my lawyer.
• 1:25:58
  Speaker A: You have an internal attorney?
• 1:25:59
  Speaker C: Oh, yeah, absolutely.
• 1:26:00
  Speaker A: You do?
• 1:26:00
  Speaker C: Yeah, he came from Simpson Thatcher, he was at Sidley. He's been with me since the beginning, is my original partner. The amount of procurement documents we go through.
• 1:26:10
  Speaker A: Well, that's right, you don't like to write. So.
• 1:26:14
  Speaker C: Good point. But you Know, know, like to get procurement from USC or get procurement from the National Gallery of Art or procurement from any.
• 1:26:22
  Speaker A: You need a scribe.
• 1:26:24
  Speaker C: Yeah. These are 2, 300 page. Yeah. Documents.
• 1:26:28
  Speaker A: So what's interesting is that, and we didn't talk about it yet is AI.
• 1:26:32
  Speaker C: Yeah.
• 1:26:33
  Speaker A: AI is changing the legal profession.
• 1:26:35
  Speaker C: Yes.
• 1:26:35
  Speaker A: Dramatically.
• 1:26:37
  Speaker C: Yeah. But you still need to understand it. You can't rely, you can't really. You can rely it. On it to draft. To draft in the bones. We'll say, oh, put the bones together. But you need to make sure it's doing.
• 1:26:49
  Speaker A: You could tell AI you can give them seven terms on the lease and draft a DC lease that you can start negotiating right now.
• 1:26:58
  Speaker C: That's right. That's absolutely right. So I think it will change, but you still need to understand what goes in it. Right. You'll also still need to put in things that are relative to your client and that's that you have to spend time with the client to find out what they're trying to actually do. And it can't be just, oh, these are five year leases, these are ten year leases. You know, we're seeing, we're seeing a whole lot of different.
• 1:27:23
  Speaker A: Are you seeing change happen so quickly today that today people know what they're doing but tomorrow they have no clue?
• 1:27:33
  Speaker C: That's a, that's a great question. And some of my clients actually understand that. But so it comes to flexibility. Okay. I have a client right now that needs to rent a couple hundred thousand square feet of space. But if things go right, they're going to need another couple hundred thousand feet of space. And what we get them is not going to be big enough. On the other hand, if it doesn't go right, they don't, they need to shrink by 2/3, all within a 3 year span. Right. So you sit there and what do you do? Oh my God. The good news is because there's so much space around that if you take the bigger piece and give back the lesser piece, are they on reminder. Yes, thank you. That people will give us what we need because they don't have anybody else there. So if I say to somebody, I'll take 200, I'll give you back 100 if it doesn't work. But I'll take the other building within three years if it does work because there's so much empty space. So we pick the position in a business park or in some area that has like five buildings. So we'll take one, we can get part back and then we'll have a second one that we'll have an option to take.
• 1:28:44
  Speaker A: So you build flexibility.
• 1:28:46
  Speaker C: You have to. Everything is flexible and they're telling us and then they're saying if worse comes to worst, you have to put a termination option in. In. We'll write a check for 30 million and then we'll go up the street and rent a million square feet. If we, if what we're doing, these are true conversation, we may need a million square feet and we'll just get rid of what we have. Okay, but we'd rather have a termination option because we know we can just write a check and be done. We don't have to go through the bloodletting of a subleaser. So.
• 1:29:16
  Speaker A: Wow.
• 1:29:17
  Speaker C: Yeah.
• 1:29:17
  Speaker A: That's incredible. So what advice would you give your 25 year old self today?
• 1:29:22
  Speaker C: I still do this and I start this company and the best part, which then I'll tell you right now is, you know, I'm probably gonna, I will be handing over this company to my son who's sitting in an office over there probably within the next three months. Really? That's. Wow.
• 1:29:41
  Speaker A: This is your sweat song right here.
• 1:29:42
  Speaker C: Yeah. So CEO, president and chairman. I'll be, he'll be president and I'll gradually over the next couple years, let him run it. I'll be here every day, though.
• 1:29:52
  Speaker A: So you gotta buy a vineyard.
• 1:29:54
  Speaker C: I did already once and it's not, it's not fun. And to drink your own wine every night, it gets tiring because it's the same thing. So my advice is, you know, buy bottles. Don't have a winery, do not own a winery. It's not fun.
• 1:30:11
  Speaker A: My son is going to buy. He's buying 100 acres to build an apple.
• 1:30:14
  Speaker C: Oh, that's okay. Apple. Much more fun than wine. Yeah, that sounds interesting. Yeah.
• 1:30:21
  Speaker A: So talk about your life priorities. You already said you give back 20% of your time and money to charity.
• 1:30:27
  Speaker C: Yeah.
• 1:30:28
  Speaker A: Family work and giving back.
• 1:30:30
  Speaker C: Yeah. Grandchildren giving back. And I have a house in Bethany Beach, Delaware that I plan on seeing all of them at. During anytime they can come visit us.
• 1:30:39
  Speaker A: That's nice.
• 1:30:40
  Speaker C: So. But I'll be here for a while. I'm not going anywhere and I'm enjoying working with you today, John. And as I said, I think I'm on ULI panel next week and I'm giving more time to talk about what I think is going to happen because we lived through it. Candidly. This looks a whole lot like 1990.
• 1:30:56
  Speaker A: It does. I think I was thinking the same thing.
• 1:30:58
  Speaker C: Yeah, it looks a whole lot. People say, is it 2002, 2000 or 2008? And the answer is no. Now it's 1990. So I worked for Frank Saul in.
• 1:31:06
  Speaker A: 1989 from 85 to 92.
• 1:31:09
  Speaker C: Okay.
• 1:31:10
  Speaker A: Okay. So in December of 1991, he was three days away from handing over the keys to Chevy Chase bank to the rtc.
• 1:31:21
  Speaker C: Yeah.
• 1:31:22
  Speaker A: So Mike Bush of Giant Food and Izzy Cohen bought two shopping centers from cvf. Saw company end of the year, and that saved the bank.
• 1:31:33
  Speaker C: Yeah. And then they split it off. Right. To cap one. And they still have the trust company, which is a big, big winner. He's done well. He's done well. No question.
• 1:31:43
  Speaker A: So if you could place a billboard on the Capitol Beltway.
• 1:31:46
  Speaker C: Yeah.
• 1:31:47
  Speaker A: For millions to see, what would it say?
• 1:31:49
  Speaker C: Jeff? That Washington is a great city. I really do. I think people, People, the open space, the fact you can walk your grandchildren and your kids on the Mall, see.
• 1:32:00
  Speaker A: Museums, you think it will stay.
• 1:32:02
  Speaker C: That portion will not change. And in fact, we may see more of it. That's what I'm hoping. My hope is that the people that come in open more museums, more institutions that are more educational by nature, and that whether the federal agency here or not, the Phillips Museum's not going anywhere. You know, the National Gallery is not going anywhere.
• 1:32:22
  Speaker A: None of the monuments are going to move.
• 1:32:24
  Speaker C: And so my point is, what other city in the world, other than maybe Paris, can give us that type of enjoyment? Yeah, yeah, yeah, I agree. But, you know, that'll never go away. It is a wonderful city to be in, and sometimes people need to just slow down, take it deeper. One of the reasons that I love being here is because of all that. And the other portion is you I can get. I live in Georgetown. I could be at the airport in 15 minutes, in and out. And there's no other city that I know that has that type of transportation that close to where you live.
• 1:33:02
  Speaker A: As long as helicopters aren't hitting airplanes.
• 1:33:04
  Speaker C: Yeah. Very unfortunate situation. But, you know, the river. I mean, Boston has really kind of nice common areas, too, but that's the beauty of this city. And. And it's also low in scale. Some people say it's been the. The new. It's been a nuisance to the city for getting retail and more dynamics of people here. But what it's made is it's quaint. And that quaintness is what makes it special. I. I love the city. I really have to tell you, I think people that don't spend time here and really understand what's here are missing out on some treasures that are hidden in lots of buildings around here. You just gotta kind of make your way around the city.
• 1:33:43
  Speaker A: Well, Jeff, we may have to do another sit down because there's a lot more to talk about, and I know you're busy, so thank you very much for your time today. I really appreciate it.
• 1:33:53
  Speaker C: John, it was great. I'll do this anytime.
• 1:33:56
  Speaker A: Thank you, sir. I appreciate it.