Riding the ‘Boomcession’ with Colliers International’s Michael Cohen
Al Barbarino July 23, 2013, 9 a.m.
Over the last three decades, Michael Cohen has been a driving force behind Colliers International’s transition from a family-owned, independent mom-and-pop real estate firm into a global powerhouse. As president of Colliers’s tristate operations, the third-generation executive at the firm splits his time between managerial duties and deal-making, harnessing his firm’s global resources and ownership structure to create a competitive advantage—most recently, as part of the team that sealed AppNexus’s 220,000-square-foot expansion and extension at 28-40 West 23rd Street. He spoke with The Commercial Observer last week about the significance of that deal, the staggering transformation of his company, the city’s changing real estate landscape and even his passion for theater as it relates to Bernard Madoff.
The Commercial Observer: You used to be a small, independent company. What’s it like being an international brand?
Mr. Cohen: There are tremendous advantages to being part of a global brand. You walk into a meeting with strangers and they say things like, “You don’t have to tell us who Colliers is.” That’s very comforting. Colliers has a toolbox of specialists that run the country, if not the globe, dispensing assistance to the brokers and consultants, and that’s something that you just can’t replicate without a deep infrastructure. There are certain nostalgic moments where I look back on some of the people and some of the simplicity of doing business as an independent company, but by and large the pros outweigh the cons.
You and Andy Roos completed a 220,000-square-foot expansion and extension with AppNexus at 28 and 40 West 23rd Street. Can you speak about the importance of that deal?
AppNexus is a very high-profile poster child here in the tech community of New York. They are talked about as the Google of New York City. There’s quite a spotlight on these guys, because they are thought of as New York’s biggest indigenous tech company. Google, Yahoo, Amazon, Microsoft—all of these others are carpetbaggers. They grew up elsewhere. So we’re proud to have AppNexus in our portfolio. The management team is great people, and we placed a very big bet on them, since they occupy a lot of space. We are rooting for them.
You have an executive role, you’re a deal-maker and you own property. Which aspect do you like best?
It’s like choosing your favorite child—I wouldn’t even want to go there. But I guess that the bulk of my time is spent hunting either for tenants for the buildings that we are agents for and we own, or for tenants to represent, which is very consistent with what most brokers in this business do for a living—so I’m not really that different from other brokers. I enjoy the coach part of the player-coach role, and I enjoy elevating the whole team as well as myself—meaning not [just] my team, but the Colliers team here in tristate. I make it a point to work with just about every broker in the office, trying to help them either win business or bring them into business of my own.
When we spoke in April of last year, you described a “boomcession”—i.e., a boom in tech and a recession in finance. How has the financial end panned out?
They have lived up to what I would call—I don’t want to say depressing—modest expectations. We have seen jobs being shed. We have seen space come on the market from the financial industry, and we haven’t seen any growth or glimmer of growth in that industry and there is no horizon line in view. But I don’t want to make it seem like, “Boy, we thought things were going to be bad and they turned out even worse.” I don’t think that happened. They performed as expected under the circumstances and, if anything, I would say things could have been worse and they weren’t.
What about the tech sector?
They have continued to add jobs and continued to fuel the occupancy rates in Midtown South and Hudson Square and so on, and they’ve also begun to overflow and to force other industries to overflow into the Financial District, so we’ve seen the beginnings of what may be the final and permanent turnaround of lower Manhattan. To me, this is the most astonishing and counterintuitive result of the tech boom—that lower Manhattan B-quality buildings have begun to experience rental inflation and a bit of a resurgence. That has taken me, quite frankly, by surprise. Lower Manhattan is the Midtown South of the 21st century. That being said, steel and glass in lower Manhattan is still in oversupply.
Why is the lower Manhattan resurgence you described surprising?
For most of my career, that property has been like the third rail of New York real estate—people who touched it died. The last guy that tried was Kent Swig, and he falls into the category of “no good deed goes unpunished.” He polished up all these buildings in the Financial District and created a lot of value and then got swept away in the last financial crisis. I think what’s happening now is a much more permanent rehabilitation of that building stock, and it’s something I never thought I would live to see.
What impact will Hudson Yards and the World Trade Center site have on leasing across the city?
It’s going to have a continued depressing effect on occupancy rates for other steel and glass buildings. It’s not going to directly affect the prewar buildings in the Financial District. Those [new] buildings are competing with buildings that rent for $60, $70 a foot or more. The buildings that rent below $60 and below $50 are unaffected.
What’s your most memorable deal?
In recent years, the most memorable deal is the Parsons Brinckerhoff global headquarters renewal we did at 1 Penn Plaza with Robert Tunis and a co-broker from, oddly enough, Grubb and Ellis. We had been working on this deal for years, and it had all the trappings of high drama, because you had the building’s largest, wonderfully credit-worthy tenant and one of the city’s largest owners—Vornado. It was a process of bringing the parties together when they started very far apart, and it literally took years to accomplish with a very satisfying outcome.
What gives Colliers an edge?
We have an advantage as owners over many other players in the market who have either recently acquired property or are building property, and by virtue of their capital constraints, need to get the last dollar out of a deal. Like some of the other property owners in this city who are generational owners, we don’t need the last dollar. We are cash-flow oriented, so we don’t sit and say, “I can’t get $60 today. Maybe I can get it tomorrow, so I’ll let the space sit vacant and hope the market comes to me, because my capital is expecting $60.” We don’t do that. If the market is $55 today, we can deal at $55. If it’s at $60 tomorrow, we’ll deal at $60 tomorrow. We’re well capitalized and we’re capable of meeting the market.
You have three teenagers. What else takes up your time outside of real estate … any hobbies?
I’m on the board of directors at the Roundabout Theatre Company, which is the largest not-for-profit theatre company in the world after the National Theatre in London, and I’ve dabbled and invested in a few shows. It’s a passion of mine.
Can you recommend a current show?
I love the Roundabout’s latest show, The Unavoidable Disappearance of Tom Durnin. I don’t want to give too much away, but it’s about the return of a man … it slowly emerges, you realize that he’s been a Bernie Madoff type. As somebody who read the papers with Bernie Madoff and all these other scoundrels who got sent away—I don’t know about you, but I had a certain prurient interest in what these people could have thought and what they could possibly think of themselves today and what must life be like for them. So if you ever had those questions in your mind and wanted to spend an hour with Bernie Madoff and say, “What the f*ck?” go see The Unavoidable Disappearance of Tom Durnin.