Oxford Properties’ Dean Shapiro: 5 Questions

The global head of development for Oxford talks at MIPIM about St. John’s Terminal, the mixed bag of Hudson Yards and his new role.

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The office market might have borne the brunt of criticism during the talks at the annual MIPIM real estate convention in Cannes, France, this week, but not every area of the asset class has been treated the same.

Oxford Properties’ Dean Shapiro was in town partly because his company’s St. John’s Terminal project, which it developed and later sold to tenant Google for $2.1 billion, was nominated for the “Best Office and Business Project” award by MIPIM. The 1.3 million-square-foot Manhattan development opened last month to house 3,000 employees of Google’s Global Business Organization. 

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And while many on MIPIM’s panels took shots at office, Shapiro cautioned not to lump all office properties together. The top of the market has been doing well, he said, pointing to the terminal redevelopment as well as Oxford’s recent development in Vancouver, British Columbia, called the Stack.

Meanwhile, Shapiro himself got a new role, being promoted to global head of development for Oxford, the real estate arm of the Canadian pension fund Omers.

Commercial Observer sat down with Shapiro at MIPIM to talk about St. John’s Terminal’s opening, how Oxford has been navigating the current market, and the casino plans at Manhattan’s Hudson Yards.

This interview has been edited for length and clarity.

Commercial Observer: What was it like finally seeing St. John’s Terminal open last month?
Dean Shapiro: That’s a long story. People have been wanting to develop that building for decades. It was important for us when we finally got control of it, which was an extremely competitive process, there were 11 bidders. I’m a lifelong New Yorker, and I ran CB [Richard Ellis] for 19 years, so I really understood that building and the whole hoopla around the building. We felt a huge opportunity but, more importantly, a responsibility to get that right because so many wanted to do it.

We wanted to do something that would propel our business and also do the right thing for the city and the community because we wanted to make a name for ourselves.

I’m proud of the building because I think the building is beautiful. We made some critical decisions like keeping the historic building, not only keeping it but highlighting what’s cool about it. We picked the right architects [Cookfox and Gensler], we picked the right mass by keeping the building low. We kept the existing building to maintain the authenticity, and we created a modern building within a historic building. All those things resonated with our target market. And Google was fully in. What we had designed, they were fully on board with.

Was Google buying the building always part of the plan when they got on board?
They told us it was an important option for them. They didn’t commit to it, but we committed — somewhat begrudgingly — to give them the option to buy it because we like to keep good real estate. But it was important to them; they own a lot of their own real estate. The reality is that owning is numbers-driven, but it’s also strategic. It is an irreplaceable piece of real estate, and you could see the degree of celebration from the opening — they’re never getting rid of that. It’s going to be an important part of their culture in New York.

You recently got a promotion. Can you talk a little bit about what your new role entails?
The background of that is our leadership at Oxford — and Omers for that level — are very committed to development. It’s a key part of what we do and have done historically, but also they believe that it’s a distinct competitive advantage, particularly compared with how our peer group is evolving.

Our development reach has grown over time. Basically, I would say it’s in four pieces: Canada, U.S., Europe and Asia, each one of which has a completely different profile. Consequently, I think over time they’ve worked quasi-independently. Our general strategy right now is a one-team strategy. How that translates to the development side is if we can bring all four pieces together, there’s so much — it’s more than efficiency, it’s effectiveness — that can be squeezed out organically by connecting people. So my job is really to bring that together: Maximize that value, work particularly hard in a time like this where we’re not quite as busy, and position ourselves to be a powerhouse when the market turns around.

Part of what we’re doing is we’re coming up with a common methodology for evaluating development opportunities where we’ve never really done that before. It’s really been kind of regional advocacy for projects as opposed to what’s best for the company. So we’ve come up with a methodology to evaluate our existing book, to figure out what to activate and then to evaluate future opportunities.

In the meantime, while you’re waiting, what are you focused on?
We are busy with refinancings, we’re doing a lot of lending, and we’re spending a lot of time on asset management. As I’ve said before, this is a time for real real estate players to create value.

How’s Hudson Yards been going?
It’s a mixed bag. It’s a gigantic, multi-asset class, long-term project. Anybody who will tell you they know exactly how a project like that will turn out at the beginning is deluded. It turned out very differently from what we originally thought, but, generally, we’re very pleased. It’s a great thing for our business and we made a lot of money. But it continues to be a work in progress.

It’s not a secret that the retail is a challenge. It was seven floors of retail that was super expensive and built at not a good time. We have a great partner [Related Companies] in terms of their innovation and their resilience. The sale of retail space to Wells Fargo was a great example of creating value with a troubled asset to try and make the trouble smaller.

The office has been enormously successful. The residential I would tell you is doing fine, but creating a legitimate new neighborhood for residential doesn’t happen overnight. Particularly in New York, it could take a decade. So we’ve done fine but it will get better with age.

Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.