When the Covid-era sky falls on commercial real estate, someone has neglected to tell Rob Speyer.
The CEO of Tishman Speyer Properties, one of the world’s largest developers, closed more than $ 11 billion in deals in the past year. In recent months, Tishman has purchased two office buildings in Austin, Texas, a trio in Paris and a technology campus in the Bay Area, among other things.
It is also developing entire neighborhoods in Boston, San Francisco and San Diego that will be built around life science labs – the real estate world’s new darling – with a mix of offices, retail space, and residences.
There’s also The Spiral, a dazzling new office tower on the edge of New York’s Hudson Yards with a garden that twists like a vine around its 65 floors. Half of the Spiral will be the new headquarters of Pfizer, the pharmaceutical company at the forefront of Covid-19 vaccines. The rest has yet to be let.
Behind all this is Speyer’s belief that headquarters – as it evolves – will remain an essential and valuable piece of real estate for years to come, and that leading technology companies, which Tishman increasingly advocates, will have the means to pay for it.
“I’ve had hundreds of conversations with chief executives about how they see the future of their workplace, and virtually all of them point to the importance of physical, in-person interaction and the critical role that offices must play. keep the time going strong, ”said Speyer.
The office he is referring to is not the standard issue, but an upgraded version with the kind of equipment that makes people really want to come and work – even after a pandemic. “It’s not just four walls and a floor: you need great hospitality, you need flexibility, you need things that will help you build a community among your people, and we have an important role to play in that” , he explains. .
Speyer’s opinion is being contradicted almost daily as companies dump record amounts of unwanted office space into the sublet market, putting rents under pressure. At the same time, Google and Facebook are expanding in New York and other cities.
The true picture will only become clear in the coming months – and years – as leases gradually expire and more companies determine whether the revolution in telecommuting caused by the pandemic means they need less space.
How things turn out could shape Speyer’s rule over one of New York’s great real estate dynasties. The company’s roots go back to the late 1890s, when a department store owner Julius Tishman built a tenement house on the Lower East Side.
In addition to acquiring the Chrysler Building and the Rockefeller Center, Speyer’s father Jerry led the family business to Europe, South America and China, where he built lasting relationships with wealthy clans and sovereign wealth funds. Tishman now has $ 59 billion in assets under management and manages 88 million square feet of real estate around the world. At home, Jerry was chairman of the Federal Reserve Bank of New York and the Museum of Modern Art, and a confidant of governors and mayors.
“When he was closing the deal to buy Rockefeller Center and started talking about his plans for what he wanted to do to reanimate and reinvent it, it brought real estate to life in a way it wasn’t before. for me, ”said Speyer, who worked for New York Governor Andrew Cuomo on affordable housing and then as a reporter for the New York Daily News before joining the family business in 1995.
Tishman stumbled badly in the financial crisis. The record $ 5.4 billion buyout in 2006 of the Stuyvesant Town-Peter Cooper Village residential development in Manhattan was congested and ill-timed. In 2010, Tishman was forced to hand over the property to lenders. Investors such as Calpers and the Church of England suffered heavy losses, and Speyer took a beating in the press. As penance, he spent hours interviewing Charles Bagli, the New York Times reporter who documented the debacle in his book. The money of others.
“We learned a lot and moved forward,” said Speyer, now 51. Among other lessons, Tishman’s deals now taught on average no more than 50-55 percent money borrowed. “When I look at our global portfolio, we don’t have any situation where we have a difficult conversation with our lenders. And I’m not sure there is another real estate company of our size that could say the same thing,” he added. .
Still, Speyer has sought to bring about a more sweeping transformation: to push Tishman from the ranks of hidden New York developers to become the real estate company at the forefront of the information economy and its leading lights.
Speyer is close to technology companies such as Apple and Facebook and venture capitalists, including Sam Altman and Mike Volpi, to better understand their world. Such relationships encouraged Tishman to start a life sciences business with Arie Belldegrun, the noted oncologist and biotech entrepreneur. According to Speyer, technology now affects everything – from the regions where Tishman invests to whom it hires and the look and feel of its buildings.
“We have a very close connection with the tech industry and we have seen the flares they shot up into the sky. And that’s why we have radically changed our company, ”he explained.
A special wake-up call was heard in 2015 when the head of real estate at one of the world’s largest companies spoke glowingly with Speyer from WeWork, the start-up that offers flexible, short-term leases and trendy offices. It grew almost overnight to become New York City’s largest tenant before nearly collapsing last year.
“WeWork understands us. They understand our business, ”Speyer recalled the Warden telling him. It was a realization, he said, that “real estate companies had focused on their building, their investors and their lenders – but not their customers.”
Speyer has since banned the use of the word “tenant” and considers it a feudal term. He launched a flexible office product from Tishman, Studio, to compete with WeWork. Tishman has also invested in real estate technology start-ups and hired hospitality staff to improve the service and ambiance of its buildings.
The hope is to restore the feeling of joy Speyer experienced when he got off the elevator in a LinkedIn building in San Francisco years ago and encountered pulsating music, bountiful food, and outdoor space. ‘Every person I saw. . . had a smile on their face. They were thrilled to be working, ”he recalled, noting,“ Much of what we’ve learned, we’ve learned from innovation economy companies, we’ve learned from technology companies. ”
Tishman is increasingly following those companies outside the Bay Area to cities like Austin, Nashville and now Pittsburgh. Speyer mentions Volpi, who he became friends with while on the board of Exor, the holding company of the Agnelli family, opening his eyes to the former steel town’s rebirth as a leader in artificial intelligence and robotics. .
“That conversation made me realize that there are places in the US that will benefit from the growth in the innovation economy that will be different from previous cycles, and we need to get ahead of those cycles,” he said.
First, like other developers, Tishman will have to deal with Covid. The company’s experience in China gave it an early sense of the magnitude of the crisis. A year ago, when Covid destroyed Europe and closed New York, Tishman’s employees in China were back in the office.
“We started by setting up virtual conversations between our Chinese team and other global teams so people could see that there was light at the end of the tunnel,” said Speyer. “And people can learn from our Chinese team how to get back safely.”
Tishman is now sharing those lessons with clients – through Zoom briefings, face-to-face meetings, and phone calls, including from Speyer himself – to help them solve the complications of returning to the office. “It is our responsibility to be here for our customers when they return, to welcome them and to convey how happy we are to have them return,” he said. “What better provision during Covid than helping them deal with such decisions?”