The Leasing Laureate: Centric Real Estate Advisors’ Gregg Lorberbaum on His New Book, Leasing NYC
Gus Delaport Feb. 12, 2013, 9:30 a.m.
In March, 30-year industry veteran Gregg Lorberbaum will release his new book Leasing NYC, a primer for the complicated leasing process in New York City. The book, initially targeted at end users, will also benefit the brokerage community, and at least four major firms in the New York metropolitan area have already snapped up copies. Mr. Lorberbaum, a principal at Centric Real Estate Advisors, spoke with The Commercial Observer about the book, its audience and the current gap of information in the market.
Mr. Lorberbaum: The audience for the book is twofold. It’s directed toward end users of space that do not have real estate departments. In one-off deals, if you don’t have a real estate department, you are ill-equipped to handle the process. People are better informed to buy a car than they are to buy office space.
People are not well-versed in how to do this. I said to myself, why not write a book about it? The format I have is geared toward the end user.
Is there any use for the book on the brokerage side?
All the brokerage companies are buying it for their training programs. One company has bought hundreds at a time. The other audience is young brokers.
I coach young brokers, and I know what they don’t know. If you work at any one of the big shops, they have entire departments that do each of these things. A young broker isn’t really exposed to skills he needs to do his job.
Are there books like this already on the market?
No books like this one. No other books that combine a beautiful aesthetic [with] a generosity of spirit. It’s an $85 coffee-table book that will retail for $35.
It’s sort of a career milestone. After 30 years, I thought there was a need for it.
Can you talk a little bit about the photography in the book?
Rather than go with stock photography, we had Adrian Wilson, with a prominent following, who has never done a book before. He’s the photographer for Apple. When he’s photographing a site, they trick the place out and close it down and the light comes in right when it needs to.
These are hedge funds; he ends up photographing around people’s lunch. People understood the dexterity with which he did that.
In your experience, what are brokers doing right or wrong?
My book is written for the one-off person, and they suffer, in my opinion. Most people that own privately held companies have a broad skill set, and the process is way more complicated than just leasing space. The brokerage industry has grown beautifully to accommodate corporate users over a national base, but the one-off user doesn’t get the benefit of that. The one-off deal doesn’t get the A-team.
There’s a lack of transparency, since it’s largely a commodity. Brokerages are commission-based and are internally competitive. The biggest issue right now is conflicts of interest. Clients need to know to ask questions. The role of the real estate adviser is something I introduce in the book, and it’s been very well-received by corporations. That’s the area where I’ve gotten the most significant response.
How did the industry reach this point?
The industry has grown tremendously. If you look at the metamorphosis of the industry, it has grown beautifully and is very symbiotic in its development in corporate America. What happened is, brokerage companies were these small companies that only represented landlords and were hired to find tenants. Landlords then started owning space in different cities and landlords become national.
Brokerage companies expanded when a tenant wanted space nationally. For instance, when a company like Morgan Stanley needed space in New York, they also needed space in Chicago and L.A. Small brokerages became consortiums and went national, which didn’t really work. Then the question became, how do you serve two masters? How do you represent landlords and then represent the tenants?
What makes New York such a difficult market, and why are leasing issues magnified?
The first reason is there are more Fortune 500 companies in New York than any other city. The demand exists here.
If you look at L.A., L.A. is an entertainment town. New York is driven by many different industries that work in tandem to balance out. If you look at the financial sector, they’re laying people off, while technology is hiring people.
New York is the fashion capital, and it’s also got the medical industry, entertainment and tourism. When you have all those things, you have an acute demand, and that makes competition.
There is also an inconsistency of service—skill sets vary significantly. What are you paying per square foot? That’s the nomenclature, but what it doesn’t address is the amount of square feet, the efficiency and condition of the space.
The thing I’m most proud about is 92 percent of my clients are repeat business. Some of my clients I have done three, four or five different transactions for, and these are 10-year leases. The case studies are long-term clients that were comfortable. Clients don’t want their spaces published, generally, so it was a very kind gesture that my clients agreed to have their space photographed, because at the time, they didn’t know it was Adrian Wilson.
It was very touching to me that my clients were willing to have their spaces photographed. After the book has been released, they will be very pleased. They were selected based on being my long-term clients, and each company is a best-in-class privately owned company.
If a company is looking to transition for the first time, what are the key pitfalls to avoid?
The biggest mistake would be to not buy the book, if you were looking.
Next thing, people don’t understand it’s a process. If you have a real estate department, then you are in good hands. The industry is very adept. But if you are a one-off company, you don’t have the proper personnel, necessarily.
How important is time as a factor?
Orchestrating the timing is most important—underestimating the construction process. It’s very nuanced, building office space in New York City. Largely it’s still a union town. You need to partner with someone who understands the entire process.
Can you cite any examples of businesses that handled the acquisition of new space particularly well or poorly?
The one that comes to mind would be right after 9/11, and it was Morgan Stanley. Morgan Stanley had given up their space, and after 9/11, they realized they had to stay. But the landlord had already committed the space to a new tenant.
There were five companies that had to move simultaneously to accommodate Morgan Stanley, and all five companies benefitted from the transaction.
How can an efficient use of space benefit a company?
The companies that work the best, they have a horizontal structure. The most important thing is to share light. It’s important for the human condition. Form follows function and behavior follows design. Anything that has creature comforts is beneficial. The office is a very effective way to reduce employee turnover.
Toward the end of the book, you summarize chapter takeaways. Is there one point or theme you would highlight as a takeaway from the book as a whole?
I would sum up: your office space is far more important than almost anything else. Most people I know have spent more time working in their office than at home in some point in their career. Because it matters to them, it matters to me.
It’s way more complicated than it seems. Availing yourself of the resources that are out there is my message.