Sometimes a career needs a little java jolt. Like, say, at PBS. (The real estate firm—not the public television station. Although a little caffeine couldn’t hurt there, either.)
John Brod, a founder of PBS Real Estate, gave a jolt to his career two years ago when his boutique firm merged with ABS Partners Real Estate. (And he knows something about java, too. He was in the import business before real estate, where he crossed paths with Starbucks CEO Howard Schultz.)
Since then, Mr. Brod is playing his traditional broker role, while exploring new avenues of the business.
Currently, he’s marketing 40,000 square feet at 105 Wooster Street in Soho, which he said is one of the largest blocks of space in the neighborhood of trendy retail. He’s fresh off signing a new retail tenant to 915 Broadway, although he could only identify it as a large, New York Stock Exchange company. And then there’s the 25,000-square-foot deal to bring TEI Group to The Factory in Long Island City—a building he believes is a game-changer for the western Queens neighborhood.
But leasing isn’t the only thing he’s doing. He recently helped a global developer find a New York City partner to develop a hotel in the city (again declining to provide who it was, only that it wasn’t Chinese). Because of his new relationships at ABS, Mr. Brod said he’s doing things he wouldn’t have imagined when he established PBS Real Estate.
That’s not to say he doesn’t miss the old days, when he, Laura Pomerantz and Mort Schrader launched their venture. But he’s matter-of-fact about his new position as a partner at ABS. And he’s an astute student of New York City—keeping up with the changes that are going on, such as the shift in foot traffics from Fifth Avenue to Broadway (which got the big-name tenant to sign at 915 Broadway) and the retail scene downtown where he’s representing high-end suit wear company Hickey Freeman in opening a second New York City location. With a bit of humility and genuine interest from his perch at ABS’ 200 Park Avenue South offices, Mr. Brod starts off: “So what do you think of the real estate industry?”
Commercial Observer: What do you think? That’s more important.
John Brod: I think New York is just an incredible place.
Nothing like it, right?
There’s nothing like it. I can think of London. I can think of Hong Kong. I can think of Beijing. But New York is just spectacular. Just looking at the 1 World Trade Center and how [September 11] really, really has started to transform this city. Then, when you take a look at Hudson Yards. I mean, that’s amazing.
You never would have thought they’d be doing something like that over the rail yards.
How about Long Island City? I had a meeting with a developer [who] is doing a project in Astoria. He called me and said, “What do you think we should do? Should it be retail, should it be residential?” I took the N train out to Ditmars. It was four stops. I said to myself: this is closer than Brooklyn.
What did you make of the retail market on Ditmars Boulevard?
It’s an emerging market. I think in terms of the Ditmars area, it’s largely residential, but there are two new developments that are going on. One is the Hallets Point and the other is the Astoria Cove [project]. That’s a total of about 4,100 new residential units.
When you see that happening and you see Long Island City and what’s happening there in terms of what Henry Elghanayan [of Rockrose] has done with residential. You start looking at it and you look at Ditmars and the strip there at 31st Street. Things are going to happen.
People are saying stronger retail in Long Island City will eventually come. What do you think?
Yeah. I really think so. I did a 25,000-square-foot deal with TEI [at The Factory]. It was really very interesting because not only was it a very good real estate deal, but because the incentives. The incentives over the term of the lease probably are in excess of $5 million. I mean, huh? That basically takes the effective rent down to the mid-$20s. The TEI folks were very concerned about how their people would adjust from coming from Midtown Manhattan to over there. And it’s worked out well for them.
To me, that building is what Starrett-Lehigh was to Chelsea. When you look at that and you look at all the residential that’s coming in. There’s going to be retail there. My wife keeps saying, “Why don’t we move to Long Island City?” Seriously.
Have you considered it?
I would. Something on the water. Why not?
Let’s talk about Soho.
To a large extent, Soho has pretty much hit the peak as far as pricing, especially on Broadway, Prince and Spring Streets. Retailers, at some point, they can’t afford to be there. As much as you want to rationalize about advertising and brand identity, I think it’s getting much more difficult to be there.
I happen to be representing the largest retail piece. It’s 40,000 feet, and it’s an incredible space. What’s happening in Soho is the community does not look favorably toward retail over 20,000 feet.
‘Do I miss PBS? Always. It was a great company. [But] there were certain issues that couldn’t be resolved.’—John Brod
Because it’s such a uniquely sized space, and because it’s so hard to get trucks in there and prices are going up anyway, what goes into finding the right tenant?
The target, in my opinion, is a department store or a smaller version of a department store. It’s a brand like an Anthropologie; it’s a brand like what’s there now, which is Room & Board, who has outgrown the space. It’s a unique opportunity. There aren’t a whole lot of retailers that fit that sphere, but one will surface.
Do you think a lot of people will want to be there because it’s Soho?
I think so. When you think that Neiman Marcus is doing their flagship store in Hudson Yards, where there is no retail yet proven. Soho is proven. I think it’s a matter of time. I think this represents a real opportunity. It’s the largest availability down there.
So we’re in two years after PBS merged. Can you discuss how everything’s gone so far?
I think it’s gone pretty well. Do I miss PBS? Always. It was a great company. [But] there were certain issues that couldn’t be resolved. PBS was strictly a very good brokerage firm. But to be able to take that and take what my partners do here and leverage that into new relationships has been good.
I’ve been able to get into new areas that I wasn’t in previously, whether it’s on the development side or the ownership side. There are some very smart guys here who really understand certain aspects of real estate that I didn’t understand. Whether it’s air rights or rights under water.
Having fun, too?
It’s an entrepreneurial spirit. I’m doing all different things. I’m not saying that I wouldn’t have done that at PBS, but, I think because of certain relationships, I’ve been able to expand what I can do.
There’s a tendency to categorize a real estate adviser as office, retail, hospitality. That’s the box you have to stay in. We really encourage the interplay between the boxes here. That’s the entrepreneurial spirit.
How did you get into the real estate business?
I was in the import business and I was importing large, ceramic cookware and bakeware and coffee-related products. Which is another story, because I put Howard Schultz in the coffee business. I had a neighbor in my building whose name was Ronny Goldberger. He was one of the original partners with Edward S. Gordon, which is where I started. [Mr. Golberger] was a very controversial guy in this industry. People either loved him or hated him—mostly hated him.
Why is that?
Well, because he was incredibly smart. I was running back and forth to Portugal and to Hong Kong. It was tough to make a living. My wife said to me: why don’t you talk to Ronny? Two years after we first spoke, I sold my company. I began by working for Ronny, who taught me the business quickly. He basically took every bone in my body, broke it and then remolded it.
Ronny ended up going to Newmark. I was offered the job to run the downtown office for Eddy Gordon. And I turned him down to go with Ronny. I was loyal. Eventually, we started to grow apart. We were close until the day he died, but we basically split in 1990. He was a tough guy to do business with. I just felt that I had gone as far as I could go with him. There had to be a softer way of approaching people.
How did you differ in your approach after that?
I was much more comfortable in that world than being the tiger in the room. I developed a relationship with a gentleman by the name of Mort Schrader. Mort was the “S” in “PBS.” He was out of the apparel world. Mort was a class act.
It really worked out for well over 25 years. We set up the tenant rep business for SL Green, for Steve Green. Laura joined us in 1994 or 1995. At that point, Steve Green had decided to go public and develop a REIT and to less focus on building a brokerage business. It was very amicable. In September of 2001, was when we launched the PBS brand with Insignia as our partner.
And then September 11 hit. Insignia was really focused on the larger, corporate clients. Our approach was to be the boutique link. It worked pretty well, not withstanding [the attacks]. We kept that partnership alive until 2005 when we decided we didn’t need anybody else to be our mothership. We built a brand already so we took our own office space and that was it.
So why’d we break up? That’s a complicated story.
Do you feel comfortable discussing it?
Philosophically, I was of the mindset to sell the company and to take it to a larger platform. We had the opportunity to sell it. It took a unanimous vote. It wasn’t unanimous. That was really the beginning of the end. That’s really what prompted the dissolution of the firm.
And then you merged?
Yeah. I love Laura. We spent 20 years together. It was a terrific period of time. We did really well together; we complemented one another beautifully. I miss that. There wasn’t anything we couldn’t accomplish.
You mentioned you got Howard Schultz into coffee. How’d that happen?
I was president of a company called Hammarplast, which is based out of Sweden. It’s the Rubbermaid of Europe. I was hired by them to bring the brand into the United States. We focused on the higher end product lines that would segment us into department stores, the Crate & Barrels and Pottery Barns, rather than the mass merchandizers. One of our products was a coffee thermos with a filter that in those days was unique because everybody was buying this Mr. Coffee “thing.” To be able to brew your own coffee with a universal filter that fit on anything was a great product.
Howard was looking to make a career change. I hired him as my sales manager. When I say I put him in the coffee business, I say it tongue-in-cheek. We were selling to Starbucks in Seattle; we were selling to Pete’s Coffee in Seattle, which in those days [had] four stores that sold specialty coffee. They were all buying our filter. I left the company to start my own company. Howard took over for my position. He made a trip to Italy and he put two and two together.
Are you a Starbucks drinker?