Mitch Rudin’s Quarterly Report
Tom Acitelli Sept. 13, 2011, 12:53 p.m.
In June, Mitch Rudin took the reins as Brookfield Office Properties’s president and C.E.O. of U.S. Commercial Operations following news that Ric Clark would relinquish his role as president of the Canadian firm, which controls downtown’s World Financial Center, while remaining on as C.E.O. of corporate operations. Last week, Mr. Rudin, 58, assessed his progress.
The Commercial Observer: So, why don’t you assess your progress over your first 60 days at Brookfield?
Mr. Rudin: It’s been terrific. I wouldn’t quite call this my midterm report card, but I’ve been here for two months, and to the extent that there have been any surprises they’ve all been pleasant.
What kind of surprises?
I wouldn’t even call them surprises, but the quality of the people, the strength of the office, and the individuals in New York and the other people I’ve met, both in New York and around the country, have been outstanding.
How have you been spending your time since joining Brookfield?
One of the things I endeavored to do was get to every office right away, which I did. My last visits were to Denver and Minneapolis, and I accomplished that two weeks ago. And I was very impressed, as I said, by the portfolio and the people.
I’ve been to, in this order, Boston, Washington, Houston, Los Angeles, San Francisco, Denver and, finally, Minneapolis. I would say that, certainly, each marketplace has a different dynamic, but I would say we have top professionals in each of those markets. Each one has a different dynamic depending on where the market is.
When I started, I wanted to get an understanding of the organization, both with and without New York City, and I’ve really gotten the opportunity to understand the capability of the key individuals here. And I happened to join at an opportune time. We really have a tremendous amount of leasing activity throughout the portfolio—so part of my job is not to get in the middle of anything and not foul anything up.
Do you worry that, as you continue working at Brookfield, your allegiances will shift to Canada? Is there any chance of your turning into a Canuck?
Well, I have been to Toronto, and I’m catching up on my hockey rules.
It’s probably not a huge surprise to many real estate brokers here in New York, but I wonder if a lot of people forget just how big Brookfield is? Behind SL Green and Vornado, it’s the third largest office landlord in the city.
We’re a very understated organization, with one of the best portfolios in the city. But I’ll tell you one thing: when I thought about making this change I was coming from a 100-plus-year organization with a very strong culture and going to a 100-plus-year-old organization with a very strong culture. And that’s what facilitated my decision; and now, whether we call it a midterm review or just two months, the transition has been as easy as can be.
And, while I look back very fondly at the years I spent with CB Richard Ellis and its predecessors, this opportunity has proven to be extraordinary in the short term, and I expect even better as we move into midterm and long term.
What is the latest to happen with Brookfield’s mixed-use project on the Hudson Rail Yards near Ninth Avenue? Is there any progress since earlier this year?
We’re going ahead with the platform in the first quarter of next year. It’s been designed and we have most of the approvals in place. We’ve substantially value-engineered it so that it will be coming in at some number well under $300 million.
And with the site itself—while we have been fairly quiet—we’ve had a number of selective and good conversations with people about it. Many of them were unaware of a few things: first, that the cores of the two lead buildings will be on terra firma; also that we can develop and deliver the first building in 2015; and that the deck, as I mentioned, is designed, approved and being brought in at a manageable price.
One thing Ric Clark had mentioned to me earlier this year is that, while many other developers were scrambling at the outset of the downturn, Brookfield immediately contracted a new engineering study at the site, which resulted in a lot of savings.
We definitely put that time to good use. And we’re seeing that, with new technology, it will be safe, secure and also completely value-engineered.
Nearby that site, Brookfield is also repositioning 450 West 33rd Street, the former Daily News and U.S. News & World Report building. What’s happening at the site now?
We’re in the process of developing a scheme for that building. We have an architect engaged to start looking at some different scenarios. That has attracted a lot of attention, both because it sits in the middle of that neighborhood and also because its footprint provides a cost-effective alternative for a lot of different types of users, from financial services to those in the publishing or advertising arenas.
Do plans for that building run in tandem with the plans for the rail yard project, being as they’re so close to one another and that they’re both being envisioned as part of a project to create something of a brand-new neighborhood in Manhattan?
There is a separate ownership, in part, but we think that they’re going to be synergistic. So you have an opportunity to go into a state-of-the-art new product or you have the opportunity to go into a more cost-effective alternative in a building that’s among the most solidly built in the City of New York—and with larger floor plates and ceiling heights in a location that’s only going to be improving with time.
It’s an interesting building. I used to work there.
And, as the world goes around, in my prior life at Edward S. Gordon, I was part of the leasing team for the building many years ago. So it’s déjà vu all over again.