GDSNY’s Michael Kirchmann On NYC Ground-Up Development, Office Renovations

Fresh-baked cookies can be the ultimate comfort food — the gooey goodness can heal a broken heart, make a moment more enjoyable, or simply satisfy that need for something sweet — but did you also know a warm plate of cookies helped establish a successful New York City commercial real estate firm?

It’s true. Way back in 2010, three years after GDSNY was started as a development company, founder and CEO Michael Kirchmann was ready to acquire the firm’s first building, a church on 177 Franklin Street in Manhattan. The priest was looking for the right buyer, and had already met with some bigwig corporate developers. 

Kirchmann really wanted the building but at the time didn’t have the funds he needed. Undeterred, he invited the priest over to his home for tea and a more informal meeting where they could talk about GDSNY’s intentions to redevelop the property into offices.

“He came around to my apartment, and my kids were making cookies. It was purely coincidental,” Kirchmann said. “So, I’m sitting at the dining room table chatting with him about what he needs, and my daughter comes over and offers him a cookie. He takes the cookie and says ‘All right, I’m going to do the deal with you.’”

Kirchmann was befuddled. He had to ask the priest why he was doing the deal with him, considering GDSNY was offering the priest $1 million less than the corporate developers he’d met with.

It all came down to that warm and welcoming plate of cookies.

“He said to me, ‘You bring me into your home, you offer me tea, your kids offer me cookies, I’m a priest, I’m in the family business, and that’s who I want to be in business with,’” Kirchmann said. “So we did the deal, which turned out to be a fantastic deal. We made a comfortable profit on that, and it set us up to do deals moving forward.”

Commercial Observer caught up with Kirchmann in January for a chat —  unfortunately, no tea or cookies were served — about how GDSNY has evolved over the years, some projects the firm has in the works, and where the firm wants to focus going forward. 

The conversation has been edited for length and clarity.

Commercial Observer: What happened after GDSNY purchased the building on Franklin Street?

Michael Kirchmann: We redeveloped it as an office and ended up selling that building to Tom Kartsotis of the Bedrock group, and that ended up being the Shinola headquarters. And if you go there today there is still a Shinola store. 

Then between 2012 and 2020 we were mainly doing condo projects. We did a really great condo project in SoHo, 25 Mercer Street, which set new records for the sales for the renovated project. And with that one I was on the Bravo reality TV show “Million Dollar Listing” with Fredrik Eklund, which was fun. Then we did another couple of condos, but office has always been kind of our main focus.

In 2016 or 2017 we were talking with the partners that we have on some of these office buildings over in Sweden, which is a company called Corem. And with Corem we built 1245 Broadway, and then 28&7, and we’re also developing a property on Park Avenue. 

We like to focus on design and getting really beautiful buildings built. We look at real estate like Apple looks at products. We’re no different than Apple. Apple makes really beautiful products, and part of the reason why they do so well is because their products are so beautiful. We’re designing products the same as Apple. Our products are just a whole lot bigger, but they’re still products that people are looking to either buy or rent and interact with. 

What is the Park Avenue project?

The Park Avenue property is a little sensitive. I can’t say too much about that project right now, other than what’s publicly available, which is we own, along with Corem, the site that’s on the north half of that block. That’s going to be an exciting ground-up project.

Does GDSNY focus more on building from the group up or on redevelopment?

We are very good at building from the ground up. There’s not a lot of firms in the city that still do that, because it’s very complicated and very difficult to do. There’s probably only five ground-up developers in the city. So ground up is definitely something that we love to do, but New York City doesn’t have a lot of vacant land, so it’s a slightly difficult thing to actually pull off. But a lot of the stuff that we have done and continue to do will be ground up, including Park Avenue.

At the same time Manhattan alone has 47,000 buildings, and so I’d estimate that 99 percent of the real estate work that’s going to be happening over the next 100 years is going to be renovating and repositioning existing buildings. We’re very focused on doing that, and we also do that well.

So we build ground up, we renovate existing buildings, and we asset manage our properties as well. 

What are you currently renovating?

We’re currently renovating Metropolitan Tower, located at 142 West 57th Street. Met Tower is 270,000 square feet of office space and was built in 1986 by Harry Macklowe. And what is interesting is back then Macklowe had an idea that this was going to be the first office building that was going to be run like a hotel. When we started work on the building, and we heard the story it was perfect [because that’s how we design and run our offices]. 

So he built that building in 1986 and it was very successful. And then it would change hands a few times, but over the years there wasn’t a whole lot of work done. I think the last time the lobby was renovated was in 2000 or something. And then with COVID-19 a lot of the tenants were lost in that building, and so it needed a lot of work. 

We’re renovating the lobby and we’re adding amenities. It’s really going to look like a hotel lobby. You’ve got the lounge area, the coffee area, open areas for coworking, and that’s what we think the office environment should be. We’re prebuilding office space to be the same standard as 1245 Broadway. We’re really elevating the quality of the tenant space there and the tenant experience.

Employees in an office environment want to have a good reason to be at the office. They want to be comfortable, they want to be inspired, and they want to do their best work.

What is it about office development that made GDSNY want to focus on those projects?

My GDSNY partner Alan Rudikoff and I started working together almost 30 years ago when I was an architect at SOM and he was on the financial side of the Howard Ronson organization in Paris. Over the years we ended up building over 20 new Class A office buildings together, so we have a very deep history with the office asset. 

What is particularly exciting is that Class A office buildings in today’s market call for iconic architecture, with the integration of an innovative workplace environment, high-quality finishes of condominiums, and the service ethos of high-end hotels and hospitality. It is a product that we know how to design, produce and lease. At 28&7 we are now 100 percent leased with 12 leases signed in the past 10 months.

How was the experience on “Million Dollar Listing”?

It was actually really interesting and a lot of fun! We were selling condo units at 25 Mercer Street at the time in 2016 and Fredrik Eklund and John Gomes were our sales brokers. It was fascinating to see how Fred was able to leverage this media platform to support the sales efforts. We sold out of that project within four months of sales launch and set new records for renovated condo pricing in SoHo. 

It was particularly interesting for me as I have some of my own experience in the media and have a deep fascination with media. In the early 1990s I was a radio DJ and voice-over actor and did adverts for companies like Health & Racquet Club and Coca-Cola, and even a documentary for the BBC. Over the years we have worked with film and media groups featuring appearances by Halle Berry, Nicole Kidman, Vera Wang, the cast of “Billions,” and many more in our properties. A24 Films is currently one of our largest tenants, and we also have 101 Studios who produce the “Yellowstone” series.

Amanda Schiavo can be reached at aschiavo@commercialobserver.com.