Sterling Bay CEO Andy Gloor On Building Citadel’s New Miami HQ
And how Chicago and Miami are … alike
When Ken Griffin decided to move his kingdom to Miami, the founder and CEO of investment house Citadel threw down more than $600 million on prime Brickell real estate and then hired fellow Chicago firm Sterling Bay Development to build a ground-up headquarters on the bay.
Andy Gloor, CEO of Sterling Bay, is leading that effort from his company’s Chicago offices, though it’s not the company’s first foray into Miami. Sterling Bay developed 545 Wyn, one of the earliest office buildings in the once-industrial Wynwood, which has lately turned into an office destination.
Sterling Bay had similar success, on an even larger scale, when it transformed Chicago’s Fulton Market neighborhood, beginning with turning an abandoned meatpacking plant into Google’s Midwestern headquarters.
Gloor wasn’t ready to share too many details about Citadel’s new headquarters just yet, but he had plenty to say about adaptive reuse, the office market, and thawing a frozen warehouse when he spoke to Commercial Observer in late 2022.
The following has been edited for length and clarity.
Commercial Observer: Let’s start with the present. What are you working on these days?
Andy Gloor: Sterling Bay is in a dozen markets around the country. And in each of those markets, we do four different verticals: office, life sciences, industrial and multifamily. We’re a 200-person-plus firm here, fully vertically integrated, and in all major markets around the country in those four property types.
So just to dial back a little bit: The redevelopment of Fulton Market in Chicago, which became Google’s headquarters, certainly stands out in terms of your career and Sterling Bay’s as well. Can you tell me a little bit about how that came to be?
This was always a neighborhood that we liked to go have dinner in and it’s really close to the city, but it had industrial zoning so you couldn’t do anything here other than meatpacking. Our previous mayor, Rahm Emanuel, he allowed for commercial development to happen in Fulton Market. And he also built a brand-new L stop a block away, which I think is the first new L stop in [many] years.
I think a combination of the zoning, access to public transportation, and the neighborhood just being a very cool neighborhood to be in — it was a combination of all those things that drove us to do the original Google deal. And then we ended up buying 31 buildings and sites in the neighborhood. A lot of those sites have become McDonald’s headquarters as well as hotels and office buildings. So it’s really been fun to see.
I heard that the initial building, the one that became Google’s headquarters, was so frozen over when you bought it that people feared it would collapse once it thawed.
It was frozen. It was literally a block of ice. The previous owner was worried that if you shut the cooling system down, it may not start up again. So over decades, a lot of the building was not usable. It was literally like blocks of ice. It took us almost a year to thaw the building out. There was concern about what the structural integrity of the concrete would be after being frozen for 40, 50 years. In fact, they ended up preserving the strength of the concrete and everything was OK.
What was the contingency plan if it wasn’t structurally sound?
We were comfortable that we would be able to restore it. We didn’t think it was gonna fall down, although there were definitely different opinions. It ended up being the best-case scenario where the cold kept it extremely secure and preserved over a long period of time. So it was good, but it’s not every day that you buy a frozen building. It definitely was a totally unique situation.
Right, so fast-forward to today. Sterling Bay has been tapped to build Citadel’s new headquarters in Miami. How did you guys get the project?
There are many touch points between the organizations. Obviously, both being from Chicago and knowing some of the folks over there, it happened organically.
In terms of the project, at this point, all the attention has been focused on finishing up the design. And we’re making good progress. It’s obviously a very exciting project for Miami and for us to be involved in.
Do you have a sense of a construction timeline, broadly, as in when you want it to be wrapped up?
I don’t know that yet. There’s a few variables in this department, but it’s a significant-sized building. We’re moving as fast as we can, but there’s a lot to do.
The new building is going up at 1201 Brickell Bay Drive. Is the office building at 1221 Brickell going to be connected to that?
It’s an existing office building that obviously is adjacent to 1201. But it stands on its own.
Sterling Bay had previously worked in Miami. You have 545 Wyn, an office building in Wynwood that was completed in 2020, which means you were ahead of the curve and you were ready in time for the influx due to the pandemic. What was your thesis about Miami and about Wynwood in 2018, when the project started?
Everything is about attracting the right labor, competition for labor. It’s an overused term, but these live-work-play communities like Wynwood, Miami, and Fulton Market in Chicago, those types of markets, they’re small markets and people already want to be there. And a lot of times, there’s holes, either residentially or commercially in terms of Class A product. So that’s an area where we have focused on. Wynwood is an unbelievably dynamic neighborhood, they just didn’t have any Class A office. There were companies that wanted to be there, but just didn’t have the product. So we addressed that.
And what’s the response you’re seeing?
Strong leasing. We’re getting there. We expect to be fully leased at the end of the first or second quarter.
What kind of tenant is interested in 545 Wyn? Who are you talking to?
It’s a mix of traditional, like PwC is a tenant in the building. So it’s not just tech. What we’re seeing in these markets is that traditional businesses coming out of the pandemic are trying to figure out how they can get employees to come back to work and feel safe coming back to work. Going back to the same old space is more of a challenge, and so a lot of companies, both traditional and tech, gravitate toward new buildings and the new markets that people want to come back to.
When Citadel announced it was moving from Chicago to Miami, Ken Griffin made it pretty clear he had some issues with Chicago, and that Miami is an exciting city at the moment. Having worked in Chicago and in Miami previously, how do you see the strengths or weaknesses of the two markets?
Are you trying to get me in trouble here?
I mean, listen, there’s a lot of tailwind in Miami in terms of job growth. It’s business friendly, it’s a great place to live, and everyone’s competing for the best and the brightest from a talent standpoint. And Miami is a really attractive location. So the idea is that by relocating to Miami, and creating a one-of-a-kind, state-of-the-art environment for Citadel to work in, that’ll be very attractive for retaining and attracting the talent. So Miami’s got a lot going for it. As does Chicago: strong labor market, good transportation, great schools, hospitals — there’s a lot of benefits here. It’s just different.
On a national level, given the economic climate at the moment, and particularly the shifts in the office market, how are you guys anticipating or adapting to what you think is coming in the next year?
I believe people are coming back to work. I think there are certain positions in certain industries where maybe remote working might work. But if you’re going to build a brand or culture or a company, you need to be together. So we’re believers in that. Now, with that said, not all office is created equal, so I think you do see this flight to quality, to make employees feel safe as well as give them incentive to come to work. It’s too broad of a brush to paint all office in the same light.
There are skeptics out there who think the office will not come back as it once was. I wholeheartedly disagree, but I also think there will be winners and losers. And I think the right buildings with the right amenities in the right neighborhoods are the ones that are going to win.