Jeff Grasso Is Reaching New Altitudes Investing in Salt Lake City
By Cathy Cunningham December 2, 2024 6:00 am
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Big life decisions aren’t always easily made, but Jeff Grasso took a 2,174-mile leap of faith when he picked up his life in Manhattan and moved to Salt Lake City in 2020. Grasso had spent the past decade at Silverstein Properties as the firm’s head of acquisitions, and, while the world was frozen in a pandemic panic, he started making big strides west to start his own firm, Vesta Realty Partners.
Four years later, Grasso, 37, has amassed a portfolio composed of office, residential, industrial and life sciences properties and a transaction pipeline exceeding $1 billion across 5 million square feet. He’s fully assimilated into Utah culture, and achieved what perhaps nobody else has in the Salt Lake City market: bridging the gap between local owners and operators and institutional capital.
“Several others have tried to succeed here and failed, whereas Jeff is purchasing buildings from the biggest families in Utah today, and has become a trusted member of the clan,” John Bankhead, a managing partner at Vesta — and a Utah native — said.
The apple falls pretty darn far from the tree
Salt Lake City sits between the Wasatch Mountains and Oquirrh Mountains, but the young Grasso grew up in a very different valley — New York’s Hudson Valley, to be precise. His father owned a demolition company, and his mother owned a beauty salon. When he was 7 years old, his parents took him to Disney World for the first time, unknowingly kicking off his real estate fascination with that trip. As they left the park, Grasso turned to his parents and declared he wanted to own Disney World.
“Well, you can,” his parents replied. Soon after, they bought him 10 shares of Disney stock.
“I thought that was the coolest thing in the world,” Grasso said. “Every year after that, for Christmas and my birthday, I asked people for money as I wanted to buy stock. Somewhere around the beginning of high school, I put two and two together and realized that you can invest in physical real estate. And it’s all I’ve ever wanted to do since.”
When it was time to pick a college, he decided on Syracuse University. Newmark President Jimmy Kuhn had recently endowed the real estate program (now Kuhn Real Estate Center) and the dean at the time told Grasso if he committed early he’d give him a scholarship. Grasso accepted.
A silver lining
“In my sophomore year of college, if you asked me what my dream job was, I’d tell people I wanted to work for Larry Silverstein,” Grasso said. At the time, Silverstein Properties was in the middle of its master redevelopment agreement for the World Trade Center. Larry Silverstein was on the front pages of the Wall Street Journal and The New York Times, being interviewed about the massive undertaking.
“I just thought he seemed like this menschie guy who was larger than life, a self-built entrepreneur,” Grasso said. “It was easy to fall in love with him from the press, and from that moment on I tried to network however I could to get into Silverstein Properties.”
He learned that the firm didn’t hire students right out of college, so he got a job trading mortgage-backed securities for a year at ING Clarion Capital. In 2010, Marty Burger, who would succeed Silverstein as the firm’s president in 2014, was looking for a young and hungry person to help him execute his vision, and he hired Grasso.
“Marty threw me in the deep end, and I didn’t know if I was going to swim or not — but thankfully it all worked out,” Grasso said.
“Jeff was an absolute pleasure to work with,” Burger recalls. “I had the benefit of meeting him earlier in his career, and back then he was willing to drive through walls for us. When a colleague of his declined an opportunity to move to Warsaw, Poland, and be the Silverstein rep for our venture over in Poland with a strong local partner, Jeff volunteered and spent two-plus years there for us.”
Grasso was just 23 when he went to Warsaw. At 26, he went to China for Silverstein to work on the company’s EB-5 capital raise, and he was the firm’s head of acquisitions by the age of 28.
He describes those early years at Silverstein as drinking from a fire hose. “I was in a senior position at a pretty young age, but I embraced it, and I became comfortable being uncomfortable,” Grasso said. “Knowing that I had a great organization behind me with folks who wanted me to succeed was a huge help. It also forced me to become very mature professionally at a young age. I was in my late 20s, Larry was in his 80s, Marty was in his 50s, so there was quite the age gap between us all, but they were both phenomenal mentors to me, both personally and professionally.”
Keith Kurland, a senior managing director at Walker & Dunlop, met Grasso during his Silverstein days. He recalls his initial impression of meeting Grasso as “Intimidated — the guy is a 6-foot-5, Sicilian!”
The two worked on Silverstein’s acquisition of 1735 Market Street in Philadelphia in 2019, with Kurland’s team arranging the financing. He describes Grasso’s transaction approach as “very focused and thematic.”
“He’s the best kind of partner, friend or client you could ask for,” Kurland said. “We can argue over different views, but none of it is ever personal and he has no pride of authorship — meaning it doesn’t matter who has the right answer or how you arrived at it, only that the team got there. He’s honest, loyal, and takes fiduciary responsibilities very seriously.”
In addition to executing new acquisitions, a big part of Grasso’s role at Silverstein was assessing which new markets the firm should enter, which would come in handy later in his career — although he didn’t know that just yet.
“Jeff was always investigating new markets and would have great instincts about why we should develop or invest in certain markets with different product types,” Burger said. “He would develop a sound thesis and then give us a great view of the market and the opportunities to transact in that market. He was excellent on execution, and able to take a transaction from start to finish and underwrite, win, finance and close on large, complicated deals. It was a privilege to work with him and help him along his path to success.”
At ING, Grasso had underwritten securitizations originated in the pre-Global Financial Crisis heyday of 2005 through 2007, essentially entering the business by seeing what not to do and the trappings of financial engineering. He received an education of a very different kind of real estate when he joined Silverstein.
“Larry’s very disciplined and very prudent,” Grasso said. “I was really fortunate to learn real estate in a very traditional, old school setting. He taught me what he’d learned over the course of six downturns in cycles in the industry, and it was like learning from the encyclopedia of real estate.”
Silverstein remembers his time with Grasso fondly, too.
“I am so happy that Jeff has achieved such success in Salt Lake City,” the Silverstein Properties founder and chairman said. “He worked with us at Silverstein Properties for 10 years, and was a terrific colleague. I wish him all the very best in everything he does.”
Go west
As the years passed at Silverstein, Grasso’s entrepreneurial roots began calling and he started mulling going out on his own. In 2016, while he was busy researching new markets for Silverstein to target, he came across Salt Lake City. As a self-confessed “real estate nerd,” he soon became enamored with the market’s macro fundamentals, the city’s depth and diversity of corporate occupiers, and its in-migration.
“I looked around and I said, ‘You know, there’s not institutional ownership in the market, and not as much institutional capital in the market,’ and, when you size up Salt Lake City compared to a Nashville or an Austin, it tracks pretty well,” Grasso said. He started talking to his friends in the business who control capital, and asked why they weren’t in Salt Lake City yet, and their answer was simple: They hadn’t broken in because they didn’t have relationships there.
“I started combining this investment thesis with a business model, maybe with a little bit of hubris around my belief that I could break in and do it right,” Grasso said. “That confidence was largely fueled by my move to Poland for Silverstein when I was 23 and doing business in China when I was 26. I had the confidence that I could be successful and build relationships in the market, and attract capital.”
A few years later he left Silverstein, jumped off the cliff, and the parachute opened.
Bridging gaps
Vesta started with two people — Grasso and Vesta co-founder Adam Rubinstein — and two laptops.
Out the gate, Vesta secured $100 million of equity from Craig Spencer’s Arden Group out of Philadelphia — one of Silverstein’s limited partners that Grasso had helped to bring in — and the firm’s first foray was to buy an office portfolio of almost 1 million square feet.
“We were buying directly from the large families here, and building quick, close relationships with the brokerage community,” Grasso said. “We closed on time, we never retraded. We did what we said we’re going to do. I think investing $100 million of equity within 12 months was something this market hadn’t seen before. It helped build credibility, and folks had confidence that we weren’t just some group who showed up and said a bunch of things. We executed on what we said we’re going to do.”
In total, Vesta bought five office buildings in the Utah cities of Lehi and Draper as part of the Arden partnership. Vesta’s first purchase was software development company Entrata’s headquarters office building in Lehi from the Boyer Group. The second was SolutionReach’s headquarters building — also in Lehi — from the Gardner Group. Both sellers are local Salt Lake City families.
At the time, John Bankhead was Gardner Group’s co-head of development and represented Gardner in the transaction. The meeting was serendipitous.
“From that moment, through that transaction, John quickly became my best friend in Utah,” Grasso said. “We started going on whitewater rafting trips to get me out of my comfort zone and to Moab to explore the great outdoors. We built a lot of trust, and a lot of confidence in each other from those personal experiences.”
That trust was needed at times. The first time Grasso tried whitewater rafting, he recalls Bankhead assuring him the raft wouldn’t flip. When they got in the water, Bankhead started to walk Grasso through what to do if they did flip. “I was like, wait a minute…?!” Grasso said and laughed. “I thought I had an airtight guarantee from him!”
“My first big impression of Jeff — and this continues to be my impression today — is how impressed I was that he’d arrived in Utah, a place he’s never been to, and soon knew more about the culture, the people and the food than I do — and I grew up there,” Bankhead said. “He’d immediately embedded himself in the local community, and got to know all of the local development families, the politicians, and the restaurant and bar owners by name. He wanted to know everybody. Today, he knows more people in Utah than I do, and is so genuine in wanting to get to know even more people. He loves people and the community he’s in.”
Fully embracing Utah life meant Grasso — unperturbed by his first whitewater rafting experience — engaged in multiple outdoor pursuits in the state, from rafting the daunting rapids of Cataract Canyon to floating the Colorado River with his dad to climbing Moab’s heady sandstone cracks (“He was hardly successful there, but he tried,” Bankhead said of the latter pursuit, and laughed.) He also attended a Latter-day Saints church service and embraced rodeo life, cowboy hat and all, Bankhead said.
Bankhead underscored that what Grasso has achieved in Salt Lake City is no mean feat. He describes Utah as a very tight-knit culture, while its history of the Church of Jesus Christ of Latter-day Saints also makes its natives something of an isolationist group. But it’s a group that has embraced Grasso, even as an institutional developer from New York.
One day, roughly a year after the two met, Bankhead called Grasso up. “Hey,” he told him, “I have a crazy idea: I want to be an entrepreneur, and your platform is something that I haven’t seen in this market before. It’s the kind of platform I’d like to be a partner in.”
The two became business partners — in addition to best friends — in 2022.
“Utah is becoming more sophisticated and a destination for institutional capital, and Jeff is able to bridge the gap between local operators and that capital,” Bankhead said of his pull to Vesta. “It was a great opportunity for me, and Jeff was building this business in a way that was better than anyone else I had met.”
Not to say the two don’t have a healthy amount of disagreement in their partnership, having learned the investment business in very different locations. “We learn from each other and find common ground to move the business and our partnership forward,” Bankhead said.
For his part, Grasso has had to adapt to Utah work culture, which places way more emphasis on work-life balance than the Big Apple.
“Attorneys in Utah don’t work Saturdays and won’t take your call after 4 p.m. on a Friday,” Bankhead said. “Jeff learned things like that from me, while he taught me you have to underwrite and provide data and you can’t go on gut feelings — as we’re big on gut feelings in Utah. We both adapted, but Jeff is unique in that he is strongly opinionated while also very willing to change his direction based on facts and data.”
Indeed, “Jeff is very data driven, analytical and thematic,” Kurland said. “He moved to Salt lake City after studying market drivers in primary and secondary cities around the country. It’s that same level of analysis which gives him instincts, or some may say foresight, when looking for deals in specific submarkets or property types.”
Grasso has also had to adapt to the way Utah’s commercial real estate market does business, which Bankhead describes as “slower, less rigorous and more trusting” than New York. The beauty of merging Grasso’s past and present and with Bankhead on board, however, is that today Vesta can comfortably meet with a broad spectrum of deal partners, from MetLife or Prudential to the mayor of a small town.
“The marriage of the two of us — me having this deep, institutional background investing around the world, and John being a sharpshooter who spent over two decades developing in this market, with phenomenal relationships with counterparties, cities and government — is we’re able to navigate issues that folks from out of state just wouldn’t have the wherewithal or the relationships to be able to execute on,” Grasso said.
The opportunity
There was plenty of opportunity in Salt Lake City for Vesta to pursue. In 2022 alone, it attracted approximately 44,000 new residents net in addition to a steady flow of new tenants across industries. There was no spec office construction in the market, yet firms were growing, and national as well as international firms were relocating to Salt Lake City.
Pre-COVID, Salt Lake City was a local, regional market that was interesting for potential investors because of its population growth. “Since COVID, when groups like Amazon showed up and took 10 million square feet in the Salt Lake City area, other logistics providers woke up to that,” Grasso said.
The influx of tech tenants continues, with Salt Lake City earning the “Silicon Slopes” moniker as AI and data analytics firms set up shop there. In April, Gov. Spencer Cox launched the Startup State Initiative, which encourages entrepreneurs to open their new business in Utah.
Ultimately, Utah’s tailwinds lie in its population growth, its continued business formation and people recognizing the quality of life they can have in Utah while still building a meaningful career, Grasso said. “Candidly, it’s also the deep infrastructure that this state and communities built over the last century. Bloomberg rated us the highest-rated airport in the country, and infrastructure of the highways is reminiscent of Los Angeles with a fraction of the population. Then there’s the light rail system, our heavy rail system, and the Olympics coming back in 2034 to continue the theme of Salt Lake as an international city.”
Vesta saw some mispricing in the Salt Lake City market relative to where the debt markets were at the time, and began targeting brand-new buildings with strong credit tenants on long-term leases in its acquisition strategy. There were also some value-add initiatives across the portfolio, from developing new buildings for tenants that were well capitalized and growing, to re-entitling excess surface parking lots for residential for-sale housing.
After deploying the initial round of equity from Arden, Vesta continued to grow. As the firm started getting ingrained in the Utah market, it built relationships that facilitated the sourcing of market opportunities. Vesta started getting involved in residential development, then industrial acquisitions and industrial development.
Then, it teamed up with the Woodbury Corporation, a 100-year-old Utah developer that owned all the research parks in the state, and started developing projects off the research parks for tenants to grow into, given how tight vacancy was. TPG Angelo Gordon was one of Vesta’s partners in that particular strategy, marking TPG’s first foray into the Utah market on the life sciences side.
“They liked the market fundamentals, and, then, when they could marry that with a team on the ground that could execute in the fashion that they’re used to, they felt more comfortable deploying capital,” Grasso said.
On the industrial side, Vesta owns and is developing about 3.3 million square feet of space today. On the residential side, it has both for-sale and for-rent properties in its portfolio, including build-to-rent, high-
density townhomes in infill locations. It currently has around 500 units being rolled out right now for development.
“We want to understand the demand, and what residents are looking for that might not be readily available for them in the market today,” Grasso said.
More broadly speaking, the Vesta team is looking at the macro environment for what it is today.
“We’re not leaning into rate cuts or cap rate compression,” Grasso said. “We’re looking at the inefficient places to play in this market where we’re not going to compete on a mass scale — for example, designing a build-to-rent product that will only compete with 220 other townhomes for rent under construction in all of Salt Lake County. Meanwhile, there’s 5,000 apartments under construction.”
As for the industrial side opportunity? Today, there’s 1.7 million square feet of unleased space under construction in Utah, but, over the last 12 months, the market has experienced 4.5 million feet of positive net absorption. “So, that’s a space where we actually feel comfortable starting to develop into,” Grasso said, “because there’s a supply-
demand imbalance.”
Perhaps not everyone realizes that Salt Lake City and its surrounding area is home to a variety of tenants taking major warehouse and manufacturing space. A typical tenant could be a third-party logistics provider, a maker of food products, or a manufacturer of advanced materials. Boeing’s Salt Lake City plant manufactures the 787’s tail wings, while Northrop Grumman is its new intercontinental ballistic missile in Ogden, Utah. Domino’s makes all its pizza dough for its Western franchises out of Utah.
“We’re becoming a pretty key logistics hub in the U.S,” Grasso said. “Given that we’re a 12-hour drive from all the major West Coast ports, we’re within a 24-hour drive of 40 percent of the population, and whether goods — based on labor disputes or supply chain disruptions — are coming from the West Coast or coming from the East Coast, or coming up through Mexico on rail, we sit in a relatively strategic and central location for those goods to move either which way. Salt Lake City is a pretty key artery.”
And one former New Yorker is bringing plenty of new oxygen to that artery.
