Scott Galin: Handling Handler
Jotham Sederstrom Jan. 3, 2012, 11:51 a.m.
Since joining the Handler Real Estate Organization as a principal alongside company scion Scott Handler in 2009, Scott Galin has expanded the firm’s stature as a principal owner of 561 Seventh Avenue, 263 West 38th Street and 315 West 39th Street into that of a full-service real estate boutique. Besides spearheading a third-party leasing platform that has netted nearly a dozen nonprofits, retailers and financial services tenants, Mr. Galin, 52, has also exploited his acumen as the former chief executive of a $500 million women’s clothing company to tighten up day-to-day office operations and expand the company’s reach. After the jump, Mr. Galin speaks to The Commercial Observer about his predictions for 2012, his history with the Handler family and what changes to expect at the firm.
The Commercial Observer: Considering that the New Year has arrived, let’s start with your predictions for 2012. What’s your forecast for commercial leasing this year?
Mr. Galin: In terms of office space I think ’12 is going to be a good year in the city, at least in what we trade in—B space, middle-sized spaces, 5,000 to 15,000 square feet. I think there’s a dearth of this stuff, and you know what hasn’t been built in the last X amount of years. I’m sure there’s still a lot of large A spaces left in New York, but there’s not a lot of mid-size B and B-plus spaces, so that will continue to be good.
In other words, as the supply of Class A space diminishes demand for Class B will grow?
We’re seeing tenants who were heretofore in Class A spaces—and I don’t mean Lever House A; I mean East Side office buildings—that have gravitated towards the area that we trade in because the area has dramatically changed. And I think that’s going to continue. Look, the economy in New York—it’s a very anomalous place. I mean, people come here to visit with us, or me personally, and they spend the week in New York, and it’s hard to find the word “recession” here. In the restaurants and in the theaters, it’s 24/7. From a macro standpoint, the economy is obviously getting better. I think it’s getting better slow, but I think ’12 is going to be nice in New York.
You joined Handler Real Estate as one of its principals in March 2009. Now, nearly three years later, is the honeymoon over for you or is the excitement still alive?
No, no, no—not at all. I don’t know what metaphor to use, but I have had a close personal and business relationship with this group going back almost 35 years. My previous life was spent in what was a small family business that we turned into a relatively large business. And I made my acquaintance with the Handler group in, I guess, the late ’70s, when I was a kid and my partner here, Scott Handler, was a kid. And my family’s business at the time was a small chain of retail stores called G&G. At the time, we had 30 stores or so, but we had offices in one of their buildings, at 229 West 36th Street. So I became friendly with Scott, my partner now, and I knew his dad, Jerry—may he rest in peace—and my dad—may he rest in peace—knew Jerry’s dad. So we went from there to another of their buildings—a Newmark building that they had an ownership interest in at 520 Eighth Avenue—and took bigger space. We went from a few thousand feet to 20,000 feet, turned that into 30,000, and I think it ended up at 40,000 feet of offices. And later they did a big deal for us down at the Starrett-Lehigh Building, and I don’t want to tell you what we paid because it sounds jocular, but it was something in the $5 neighborhood. So, long story short, there’s been a very long-standing relationship and, as such, the honeymoon thing doesn’t really exist for me because I came here as sort of a pseudo-cousin, if you may.
Speaking of G&G, when you left your position as chief executive at the company it was a $500 million women’s retail business. How has that expertise benefited Handler?
Well, we built it into a business with 600 or 700 retail stores so my expertise, I guess you could say, was retail, because that’s what we did. But running a business of that size you certainly get your hands into a lot of things. I became a businessperson, and real estate was a paramount part of what we did. We did a couple of thousand deals over the course of when I was there, whether it was leasing space or buying property and running stores in it—so I certainly wasn’t a real estate virgin. But I thought I could take that real estate background—and moreover the business background I had—and sort of translate it into a real estate firm, which I really had always loved. I think what I’ve learned in the last few years is that the advantage coming into this business with a business background has allowed me to really understand the psyche of our prospective tenants and our third-party clients. You know, I understand the nuts and bolts of a real estate deal pretty darn well, and did before I got here, but I think what I can bring to the table is the running of the firm because running this business is no different than running any other business. We have to do marketing, we have to do accounting, we have to do human resources. I don’t want to say it’s easy, but all those disciplines I’ve had to do on a bigger scale.
So, then, what have your goals been since joining and what have you accomplished?
I think we accomplished a lot. I think this was a terrific name with a lovely balance sheet that was principally known as an owner and operator of a couple of garment center buildings, if you may, with really no brokerage business per se. And when I came—and I was reluctant to come because I had just left being the CEO of a half-billion dollar business and I was doing consulting—I said, “Look guys, if you would allow me the appropriate arrangement and take this great foundation and turn it into a terrific multitiered real estate business where we could do ownership and brokerage and management and consulting, I might be up to the challenge.”
And I take it they agreed to your demands. So have your brokerage goals been achieved?
They were incredibly open to all my requests and desires and wishes, and it’s three years later and the only unfortunate thing that happened was that Jerry passed away a couple years ago, which was unexpected, and I was very close to him. But from a standpoint of what I’ve accomplished, we now have a portfolio that’s 98 percent leased with, I think, a different quality of tenant. We have a third-party brokerage business with five brokers who do a lot more than work on our buildings.
Are you recruiting more brokers?
Yes, 100 percent. It’s happening as we speak. We have eight licensed brokers now, and we’d like to hire, in 2012, three to five additional people. Do you want a job?