Jones Lang LaSalle’s Mitti Liebersohn on the First Quarter, Downtown and Beyond
When Mitch Konsker, Matt Astrachan, Alexander Chudnoff, Paul Glickman and Mitti Liebersohn departed Cushman & Wakefield for Jones Lang LaSalle last January, the aftershock was palpable. Noting that it had been the second major defection from Cushman in as many months, one broker described the team as rock stars and suggested that the brokerage firms they worked for not so much paid their wages as orbited their personalities. Now one year later, with much of the hoopla gone, Mr. Liebersohn spoke with The Commercial Observer about his past 12 months at Jones Lang LaSalle, the reasons behind weak first-quarter results, and what to expect in the second quarter.
The Commercial Observer: With April finally here, it’s now clear that this was one of the weakest first quarters in nearly two decades. Give me your thoughts on why.
Mr. Liebersohn: We had, I thought, a big pop of activity at the end of the year, and I don’t know what was driving that. Was that artificial? I’m not really quite sure what it is. I get a sense that everybody is sort of in a wait-and-see pattern with the upcoming elections. It just seems to be a bit of hesitation.
Do you see owners readjusting their rates?
No. I haven’t seen any of that, but, again, I’m really focused on the tenant side. But if you’ve got a really good credit tenant, which is what I try to focus on, the owners really want to talk to you. I feel like there’s more on the table if you are representing a really great credit tenant.
When people talk about Midtown South right now, they’re talking about tech companies. Any other tenants coming to that particular market in significant numbers?
It’s really any firm looking to draw a younger work force. I did a deal about a year and a half ago with a company called Every Day Health. And they took a floor at 345 Hudson Street. And they came in from Brooklyn, which is really interesting. And they did it because they really felt that they could attract the work force that they wanted more easily in Manhattan, and when they were looking in Manhattan they wanted to be in that Hudson Square area.
With availability so low in Midtown South, and so much of the creative underclass living in Brooklyn, why haven’t we seen more dramatic rent increases in the Downtown market?
I think we’re going to start seeing it. I think, soon, you’re going to start seeing more companies looking really seriously at Downtown. There are some great products at relatively great pricing.
How much does this new appreciation of Downtown have to do with Condé Nast’s decision to relocate there?
Condé Nast sort of legitimizes the fact that anybody could go down there. It’s not going to be just one segment of the tenant market. It’s going to be a much broader tenant base that looks at it. And I hear that whenever we are having our market meetings here, you know, it’s just a very, very, broad-based spectrum of tenants that is looking at Downtown now.
How much longer, do you suspect, before Downtown experiences a meaningful shift in rental rates?
I think it is going to be a while because Downtown has a lot of space that it has to fill.
You and your partners left Cushman & Wakefield in January 2010—so a little more than a year ago. Give me your one-year review of Jones Lang LaSalle and its business model.
Fabulous place to work. They … what’s that expression? They, uh, walk the talk. Is that the right expression? As it relates to collaboration, they really mean it. We came over as a team, and the team has now integrated with everybody, and every one of us is working with many people at once.
Besides Mitch Konsker, Paul Glickman and Alexander Chudnoff, all of whom you work with extensively, Matt Astrachan seems to be on fire. I read about a new deal every day. He’s kind of a rock star.
He’s got good PR, I think. No, you know, first of all, he’s a fabulous broker and he’s involved with a lot of stuff. Honestly, that’s another point on the agency side: It’s thinking about the asset, where it is, who’s going to be attracted to it, and then putting the right people on it.
Since shifting to Jones Lang LaSalle, have you won all of your clients back finally?
I did. I transitioned over some of my big clients—really all of my clients—from C&W over to here, thankfully, which is always a very stressful situation. So now my machine is back up and running. Last year, a lot of my time was spent transitioning clients, or hoping to transition clients over. Now that’s finished and the machine is up and running again.
What does that entail? Do you have to win over each of your clients’ hearts and minds?
The clients put the accounts up for the review. And then we compete.
And so you got all of these guys back. That’s gotta be satisfying.
It was good, but I gotta tell ya, I lost a lot of hair worrying about it.
Speaking of the first quarter, give me an example of a deal you completed over the past several months with a national client, especially where it concerns a tenant in a New York building.
In one case, I just finished a deal Downtown. But you know at the same time, I’ve had a large transaction that hopefully is going to close very soon—100,000 square feet in Boston.
Yeah. And we’re also looking at about 70,000 square feet in Washington, D.C.
Besides New York, where are you seeing the most leasing activity?
You know, with me, it depends on where the client is looking. We proactively look at different markets and if there’s an opportunity to jump in and a make a good deal, we’ll do that. But a lot of it is based on the climate and what’s happening in a particular location in the business model.
Do a lot of clients strive to break into New York? Is it harder for them here than anywhere else?
They are here, and it’s rarely a matter of breaking in. They are here. But, you know, I did have one situation about six months ago where it was a client coming in from out of town, and they didn’t have a presence in the Northeast. They were based in the Midwest and were exploring where to move their hedge fund. And in this particular case, they opt to go to Stanford, Conn.
And why was that?
Internal reasons that I can’t really get into, but mainly costs.
What are your predictions for the next quarter?
It’s really funny, but, just in the past few weeks, I’ve seen a lot of activity pick up, in my own portfolios and then also from what I’ve been hearing within the firm. The first quarter was certainly very slow, and you can sense it. But every one I’ve spoken to as of late agrees that there seems to be more activity now on the agency side and the tenant rep side.
I wonder why such a rosy prediction? Is it because they can see what is in the pipeline?
Or there’s a sense that now’s a good time to be exploring what kind of deals are out there.
As recently as three weeks ago, everyone in real estate was saying the exact opposite. Are your colleagues really that optimistic, or are you putting on a show for the journalist?
No, I agree. A month ago, I was absolutely, totally in agreement.
Is there a sense that anything will be better than the first quarter that just passed?
That seems so negative, that statement. I’m not really seeing it. I do have an opportunity to know what’s going on in the agency that the company is working on. I see and hear what’s happening, and in almost every single case there’s a whole lot of activity going on, and I mean that. It’s not just tire kickers; it’s serious proposals and leases out.