Scott Panzer: Jones Lang LaSalle’s Triple Digit Threat
Billy Gray June 18, 2013, 10 a.m.
Scott Panzer no longer wears a tie to the office. But despite his nod to Gen Y’s watering down of the workplace dress code, the Jones Lang LaSalle vice chairman shows up to our interview in a snazzy pair of suspenders and a starched white button-down. A 26-year veteran of the real estate industry, Mr. Panzer is at a stage of his career when he doesn’t sweat the small stuff, like neckwear. Instead, he focuses on matching elite tenants (like Interpublic Group of Companies) with A-list landlords (including Sheldon Solow) and their trophy properties (e.g. 9 West 57th Street). Mr. Panzer spoke to The Commercial Observer about his real estate salad days, the comeback of triple-digit rents and the negotiating power of cowboy boots.
The Commercial Observer: When did you get involved in real estate?
Mr. Panzer: Back in 1985, I was working for the British publisher Robert Maxwell on his M&A team. By ’87 we’d amassed about six million square feet of real estate and 600 properties in the Americas. We didn’t have anybody in the organization that was responsible for that or knew what to do. The Maxwells came to me and said, “Why don’t you pick up all the real estate and see if you can make heads or tails of this, make hay out of it?” That was my initial foray into the real estate world.
And how did you land at Newmark?
I joined Newmark in early ’94. [Current Newmark Grubb Knight Frank Chief Executive Officer] Barry Gosin and I were courting each other and finally made a deal. I remember Barry and [President] Jimmy Kuhn asking, “What are the five things you think you need to be successful here?” And I said the first thing they needed to do was get a color copier. They were still doing presentations on these oak-tag boards that were made up the night before. I remember one meeting, walking in, where half the words in the presentation were misspelled. And there was nothing you could do.
We did a litany of good corporate deals, and Barry and I had a good run.
And why did you decide to leave the firm for Jones Lang LaSalle in 2009?
Let’s just say there were philosophical differences of the direction where that firm was going versus what my team was saying it wanted to be a part of.
You made that transition with a team of 13 people. That’s a bulky move. How did it go?
Well, everyone knew it was happening. We’d spoken at length about it in our own little war room. At the time, there were really only three options under discussion: Cushman [& Wakefield], CB[RE] and JLL. And each of the firms offered something similar, but then there were nuances. In the end, we felt that JLL was the better fit for us. And it was unanimous, not me saying I wanted to do it.
Without the Staubach merger [of 2008], I’m not sure we’d have made the jump. We’d have been way too entrepreneurial for the legacy JLL. The merger brought a bit of entrepreneurship to the firm. And we felt comfortable that we’d come in here and wouldn’t be absorbed by JLL, but rather put our own brand on top of what was starting to morph. We brought a lot of scrappiness and tenacity to an organization that was very structured. And they’ve smoothed out some of our rough edges.
You made the leap six months after Lehman Brothers and the markets collapsed. Looking at New York real estate almost five years later, how is the industry faring?
It’s schizophrenic. It’s Jekyll and Hyde. You have this excitement around Hudson Yards and Downtown. And this emergence of traditionally California-based companies, the web component. New York is now clearly on par with Silicon Valley. California’s a cool place to be; New York’s cooler.
It’s certainly boom times at 9 West 57th Street, where you recently closed nearly $200-a-square-foot deal with Ruane, Cunniff & Goldfarb Inc. Can you talk about the resurgence of triple-digit rents? There have been 27 so far this year, compared with 35 in all of 2012.
Unlike having developable land and sites, like at Hudson Yards and Downtown, there’s a limited availability of Central Park-view tower space. So, similar to how the residential developers are recording record sales prices for residential towers with park views, the commercial buildings that [are] available to those same tenants are booming.
It’s not like they’re mortgaging the future of their business or taking away from the shareholders. They do happen to make enough money where it’s a rounding error in some cases. Now, it’s not as well-publicized, because companies are more concerned with perception than certain individuals are. If a company’s paying $200 a foot, there may be a question of “Why are they doing that?
People say that. But that’s fueled by our global legislation. I’m not going to say, “Oh, Obama’s going after this sort of thing.” But I’d argue that it was frivolous for Obama to spend $7.5 million to fly back from his vacation in Hawaii, only to fly back two days later, for something he could have done by videoconference. It’s all relative, and it’s all about who’s yelling the loudest.
What’s the latest on 130 Fifth Avenue, which you’ve been shopping for The Olnick Organization?
We were awarded the agency in September of last year. We had been positioning the first three or four months. We had a tenant, BLACK ENTERPRISE, in place for the top three floors. And the space was just a disaster because of the tenant who had been there. It was very hard to get prospective tenants through the space where they can get some kind of vision. The tenant only moved out a month and a half ago. So we were dabbling, but only started truly marketing about a month and a half ago
It’s priced right. When we finished the white-boxing, it showed really nicely. And that’s in the sweet spot of where a lot of companies really want to go.
And what kind of tenants are you looking for there?
That’s all tech, media, publishing and creative advertising.
On the tenant side, you’ve worked with the U.N., IPG, NBC Universal and North Shore-Long Island Jewish Health System, among others. It’s a fairly eclectic group. What’s a common thread?
I don’t think it’s any one SIC code or affinity group that I work with. What excites me, and why I’ve gotten into my career, is a comfort level to pick and choose: one, the type of assignment I want to work on; two, deals where people say, “that can’t get done,” and I’ll figure out how to do it; three, clients I can learn from; and four, deals I’ll have fun with.
Those are the criteria I live by now. It’s not about the money anymore. I’ve gotten to a point and never lived above my means. I’m comfortable and don’t need to worry about closing every deal. And I’ve consistently said that when I stop having fun with this, I’ll go do something else.
Do you think you’re near the point where you’ll stop having fun?
I don’t know. The business is competitive, which is part of the fun. So I think I’ll stick around for a while.
On the landlord side, you’ve done several deals with the Solow Realty and Development Company. What’s your relationship like with Sheldon Solow?
Well, I typically haven’t done a lot of landlord agency work. It’s only in the last four years that I’ve considered it. The young guys on my team like having the agency business. My run with Solow … it’s been a wonderful relationship.
In the past year, Mr. Solow filed a lawsuit over the LIBOR manipulation scandal. And Steven Cherniak, Mr. Solow’s former colleague, sued him over withheld retirement funds. Have those been major bumps in the road?
Not with me. The key with Sheldon is honesty. He may not always like what you’re going to tell him, but as long as it’s the truth, I’ve never had an issue with him. The problem with this business is it’s not very transparent.
Tell me about your portfolio outside New York.
I’ve worked on Lowe in Hamburg, Draftfcb in Chicago, Health Net’s corporate HQ in Woodland Hills, Calif. The beauty of real estate is it’s fungible and transportable anywhere in the world. The approach, at least in my mind, is always to do all your homework up front. You choose your direction, validate it with numbers and pummel the other guy. Then you have to be able to walk out of the room together, shake hands and have a beer.
That’s interesting, because the New York City real estate world can sometimes seem quite insular.
Well, there are cultural differences. Do I wear cowboy boots when I go do a deal in Dallas? Sometimes I do. Do I end up talking with a twang down there? Not necessarily, but you start adapting. The key to this business is to be somewhat of a chameleon … without pissing anybody off.
And yet plenty of real estate chieftains do piss a lot of people off.
I’m sure you’ve heard the stories! I’m certain that not everybody loves me. But my guess is that far fewer people disrespect me.