Reinventing Office Real Estate: The Art of Revitalizing Office Buildings with Hospitality & Design
Welcome to another episode of the A.CRE Consulting Podcast! This time, we’re diving into the evolving world of office real estate with Matt Legge, Principal at Polaris Development Group, and Brian Tolman, Principal and Co-Founder at Origin. With decades of experience in real estate development, design, and repositioning distressed assets, Matt and Brian are reshaping the office sector by bringing a hospitality-driven approach to workplace environments. Their work spans across the country, but one of their most notable projects—the Northstar Center in Minneapolis—showcases their expertise in breathing new life into aging office assets through creative design, integrated services, and a focus on tenant experience.
In this conversation, we explore how the office sector is adapting to shifting workplace demands, what tenants are looking for in a post-pandemic environment, and why traditional office models need to evolve. Matt and Brian share insights on the power of amenity-rich workspaces, the financial and operational strategies behind repositioning office buildings, and how they’re creating environments that rival the appeal of working from home. If you’re interested in the future of office real estate and the innovations reshaping the industry, this is an episode you won’t want to miss!
Michael, Matt, and Brian talk about Reinventing Office Real Estate
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Resources from this Episode
- A.CRE Consulting
- Connect with Matthew Legge
- Connect with Brian Tolman
Episode Transcript
Matthew Legge and Brian Tolman
[00:00:10]
Michael Belasco:
Welcome to another episode of the A.CRE Consulting Podcast. I’m here with some incredible guests today. We have Matthew Legge and Brian Tolman. Um, now I’ve known Matt. God, it’s been Matt. It could be a decade.
[00:00:25]
Matthew Legge:
a
[00:00:26]
Matthew Legge:
little bit more.
[00:00:27]
Michael Belasco:
a little bit more. Yeah. You were a couple of years ahead of me in the Baker program, real estate back at Cornell, and we reached out and you were always an incredible, even a mentor in the early days, uh, and still kind of look at you like that a little bit, Matt.
[00:00:39]
Michael Belasco:
So, uh, so yeah, but, um, so we’re going to get, uh, started here. I’m going to, I’m going to intro these guys and, um, we’ll have them elaborate. And so. So Matt leg is the principal at Polaris development group and Brian Tolman’s, the principal and co founder at origin.
[00:01:00]
Um, so Matt is a seasoned leader in real estate, private equity and development. With over 20 years of experience, Matt has served as a senior executive in several commercial real estate platforms that have lived at the intersection of office and hospitality uses specializing in high complexity investments that require entrepreneurial solutions. To transform distressed assets into thriving sub market leading product. Matt focuses on introducing genuine hospitality to office assets through integrated spaces and services to create immersive tenant experiences and optimize investment outcomes. Informed by leading over 3 billion of development and redevelopment projects across North America in several different asset types and situations. Matt and his team are uniquely equipped to make the most challenging projects succeed. And hold on one second, because we’ll get into Brian too. And then we’ll, uh, we’ll kick this off. So Brian Tolman is an award
[00:02:00]
winning architect and designer of industry defining places of work and play. Prior to co founding Origin in 2021, Brian was the founder of the award winning Convene Design Group, where he led a team of over 40 designers, strategists, and architects. The first 18 years of his nearly 30 year career designing buildings and interiors was with studios architecture, where he was a firm leader and managing principal of their New York office. Some of the high profile brands he has led design work for include Bloomberg time coach, Tribune media related the Harlem village Academy, the collegiate school for boys. Brian is obsessed with blurring the lines of typology and creating places that spark the imagination and leave a strong impression in the memories of the users. So, this is an incredible partnership here,
[00:03:00]
and just even reading through your bios, there’s just some magic that’s been happening. I was excited to get you on Max.
[00:03:06]
Michael Belasco:
I was following you through LinkedIn and just through our conversations. And everything that you guys have going on. So we have the meeting of Origin and Polaris developments group here. And I’d love to discuss or just kick things off with how you guys got together, what you guys are working on. And, you know, we’ll take it from there.
[00:03:26]
Matthew Legge:
It’s a Brian and I worked on, uh, our project in Minneapolis. We recently completed. And, um, sort of instantly, I think, recognizing each other that we saw the same opportunity in the, in the office space. And so we’ve worked on more than a half dozen projects since to sort of have a programmatic, uh, partnership going throughout the country and, uh, you know, to some extent have the glutton for punishment aspect of, I think, deeper and deeper into these office assets that are obviously a lot more challenging these days than they were a few years ago. But as I mentioned, I think we see the same opportunity to, you know, reinvent those
[00:04:00]
buildings and make them thrive.
[00:04:01]
Michael Belasco:
Yeah. So talk to us a little bit more about what you guys are working on and what you’ve done in Minneapolis, like starting there. Um, I believe it’s the North star center is the name of this, this building. Um, so as much as you can divulge, you love to hear more about like the kickoff, sort of the initial project together and what it was, what happened, how it’s going.
[00:04:20]
Matthew Legge:
Yeah, most of the buildings that we at least, you know, recently have worked on, or have been, uh, you know, mostly in core CBD areas, uh, normally they’re currently distressed buildings that have, you know, great bones and a legacy of being really prominent buildings in their sub markets, you know, in the past. Um, and so they’re heavy lifts by definition, um, in some cases, use conversions. We’re working on some resi conversions at the moment as well, but the commonalities normally. Something that was great in its heyday that’s become distressed that will take a lot of love to to reintroduce and rediscover. But, um, you know, but we see the opportunity in those assets and Brian.
[00:04:58]
Brian Tolman:
the opportunity, you
[00:05:00]
know, often really is in some of these buildings where they’re a little tired. They’re past their prime in the heyday. It is focusing more on the experience on the inside of the of the building and giving it something really unique to the users and visitors rather than re skinning it with, you know, more expensive facade.
[00:05:18]
Brian Tolman:
So it’s a, it’s a, it’s some, some ways, a more cost effective solution, but it’s a much more dynamic. Um, outcome for the end users as a, as a type. And I think, you know, one of the reasons Matt and I connected so early is, well, you know, my bio might sound an awful lot like a, you know, a hot pencil designer. Um, you know, Matt has got every bit of as much creativity coming out of him as I do. And, you know, even though I, you know, sound like an architect, I actually think about the, you know, the, the finances of a job in a way that a lot of them. A lot of my type, my, my, my breed, if you will, architect, um, my profession, um,
[00:05:55]
Brian Tolman:
may, may not.
[00:05:56]
Brian Tolman:
And so we sort of found that we had a little bit of each
[00:06:00]
other’s mindset, um, working together. And that actually makes for a great collaboration. Yeah.
[00:06:05]
Michael Belasco:
So this building out in Minneapolis, is this just a, um, you basically re imagined it, so to speak, and it’s still office, just amenitized. I mean, tell, is that, is that what’s going on here in Minneapolis or what, or give us more color exactly what the,
[00:06:19]
Matthew Legge:
Yeah, sure. It was a 1960s vintage building really transformational when it was originally built, kind of pioneered the skyway system, Minneapolis and the fundamental concept of having they called it a building or apartment city within a city. Yeah. It integrated a mixed use environment before that was a thing at all.
[00:06:37]
Matthew Legge:
Or in most markets, wasn’t a thing.
[00:06:39]
Michael Belasco:
I guess the cold will make you do stuff like that, right?
[00:06:43]
Matthew Legge:
Um, so Wells Fargo had been the occupant in two of the office towers. There’s three towers, two office towers and hotel tower. They rolled out to build their own, um, built a suit, uh, near the football stadium. So this asset fell into distress and we spent the past seven years.
[00:07:00]
Subdividing it out, lining up historic tax credits. Converting or through a development partner, converting one of the two office towers to residential, uh, selling off and reflagging the hotel from a crown Plaza to a hotel Indigo. And then we kept the parking use and the office use and integrated, not just newly renovated office space, but a whole number of hospitality uses that has started to become the prototype of what Brian and I focus on for new opportunities.
[00:07:27]
Michael Belasco:
Wow. So what was, um, like, what’s the total square footage of this project? How long have you guys been working on? It’s fascinating. We can get into a lot more about what you guys are doing now. I think it’s really fascinating to hear. How did you get your hands on like, what’s, you know, there’s a lot to ask you.
[00:07:41]
Matthew Legge:
It’s about 1. 6 million square feet all in if you include the parking space. Um, so monster of a project. Um, and again, we split into pieces and sold off a couple of the projects to, uh, end developers who’ve done a great job, um, renovating and reinventing those pieces. So it took, you know, an army of folks and some external parties to make that all happen.
[00:08:00]
Um, it’s been, like I said, a seven year journey. It feels like 20, but, um, I think we built a really meaningful. And like I said, it kind of fundamentally illustrates our thinking of what’s going to be successful and attractive in the next cycle for office users.
[00:08:15]
Michael Belasco:
Yeah. So you guys are both based in New York.
[00:08:19]
Matthew Legge:
Correct.
[00:08:20]
Michael Belasco:
Um, you guys have a national presence. Um, and I know I keep putting it on this first deal. We’ll get to that. So how did you end up finding this deal and you, do you have connectivity there? Like, how does this happen? Cause a lot of our listeners are, you know, and Matt, I know you like this, they have this entrepreneurial spirit and you know, they’re out, so, you know, they’re, they’re out looking for stuff.
[00:08:44]
Michael Belasco:
So I’m curious to get the background. How
[00:08:45]
Michael Belasco:
did you come across this?
[00:08:47]
Matthew Legge:
well, Taconic Capital Advisors is actually the owner. They, I was internal to their investment team when I started working on this seven years ago. And then when I branched off to start my own company, they were great about, um, you know, continuing to work on deals from a different
[00:09:00]
angle together. So. Initially as an employee and then sort of, uh, you know, transform that arrangement, uh, when I broke off this form players,
[00:09:08]
Michael Belasco:
Awesome. Awesome. That’s great. So now you guys still control this, this project. Office piece. Right. And the parking you said is that,
[00:09:15]
Matthew Legge:
correct? And we completed our construction. It’s substantially in September and, uh, really open most of these operating businesses on site throughout Q4 of last year and our residential neighbor delivered their units in November. So pretty recently reintroduced to the, uh, to the CBD.
[00:09:31]
Michael Belasco:
okay. So how’s the lease up going? I mean, how much, what’s square foot, what’s the square footage of office? I know there’s a lot, it’s a menatized office, correct? That’s what like highly amenitied. And we’ll get into the details of that, but
[00:09:41]
Michael Belasco:
what’s the square footage.
[00:09:42]
Matthew Legge:
so we, we pre build for context, 3 floors of flex office product. So fully furnished, fully serviced. We, we flex, you know, our hospitality staff. That’s otherwise there to perform our culinary program and our meetings and events facility and some other things across that office space. The uniqueness of that is that. It’s not
[00:10:00]
just prebuilt and therefore, you know, spec suite space.
[00:10:02]
Matthew Legge:
It’s also fully serviced by this hospitality experience, which makes it, you know, much different product.
[00:10:08]
Matthew Legge:
And then it’s a lot more focused on just from a unit size perspective on enterprise users, as opposed to what a coworking product would normally focus on in terms of like your one, two, four, eight person offices. Um, so net of the prebuilt space and all of our hospitality businesses,
[00:10:25]
Matthew Legge:
well, um, 300, 000 square feet of traditional office space. Um, throughout the upper floors, and we really view that fundamentally as an anchor opportunity. Um, so we have a really good anchor proposition, both from a spatial perspective, but also our parking counts, this overall building experience.
[00:10:42]
Matthew Legge:
So we’re definitely, from a leasing perspective, hunting for an anchor, because we can deliver to them with that block of space. You know, an experience that would normally only be available to someone who had a million square feet in a building from a branding and
[00:10:56]
Matthew Legge:
other opportunity perspective. So, um, we’re currently, you know,
[00:11:00]
chasing anchors and there’s some good. There’s some good role, um, over the next few years in Minneapolis, despite all the. You know, somewhat negative headlines of that office market, um, especially downtown office market for the past few years. It’s a great market with great product and it was on, you know, an absolute heater pre COVID
[00:11:16]
Matthew Legge:
from a leasing perspective.
[00:11:17]
Matthew Legge:
So, um, over the next few years as those tenants roll out of the pre COVID executed leases, there’s, there’s lots of opportunity there. Um, and we’re, you know, trying to get our, our, building into contention for, you know, all the big requirements.
[00:11:31]
Michael Belasco:
Yeah. And so everything I’m here now, I’m not an office guy, but my, my quote unquote breeder pedigree, you know, I used to be at Heinz and obviously the heavy office. And, um, I left right before COVID, but I still had a lot of connectivity with them. And, um, you know, everything that you hear is like, yes, office is suffering.
[00:11:49]
Michael Belasco:
Uh, and you guys are in the space. So I want to get your take on, obviously you’re going this way, but. Yeah. Class A to a much less degree and the amenity strategy was something that a lot of these
[00:12:00]
larger institutional groups are really focused on to preserve their tenant base that they already had. So I’m curious to hear.
[00:12:08]
Michael Belasco:
I mean, you guys are kind of, you know, finger on the pulse. Is this the future? Is this how office needs to go in the future based like your strategy here? There’s highly amenities. It’s highly amazing. I want to know like, what are your amenities that you’re offering now? What is it? What out there is attracting office tenants?
[00:12:27]
Michael Belasco:
You guys are waiting for sounds like this big role. It sounds like there’s a lot of opportunity. It sounds like you guys are sort of in the, In the lead here and, you know, Brian, you had this experience with convi and I’d love to know more about that, but that was sort of a predecessor. And that was sort of helping these, if correct me from wrong, helping these office tower owners, amenities and keep their tenants happy.
[00:12:48]
Michael Belasco:
So, um.
[00:12:48]
Brian Tolman:
absolutely. And I think that, you know, the amenities game has been hitting the office market for a while in certain markets. I mean, it didn’t really hit in places like New York where it was a
[00:13:00]
frothy, highly competitive market for, you know, less space than the market really needed. And it didn’t hit places like San Francisco when it was really frothy. You know, Chicago has been doing the amenity game for a while. Certain cities in the Midwest have been doing this amenity game for a while, and they’re actually starting to do version two of it now. Um, what we what we did it convene, which was a little different, was, you know, really focusing on meetings and events 1st and foremost, creating, um, really best in class, large scale meeting and event spaces and figuring out how to put those in markets where people were willing to travel to, or people already had that, you know, sort of built in built in scale. And needed those types of spaces for their off sites and their specialty meetings and their investor days and and all of that good stuff. Um, what we had the opportunity to do in Minneapolis was sort of that and more. So, you know, you combined serviced office. Highly serviced office, like
[00:14:00]
fine touch, great common spaces, activated and lively pantries, food and beverage that’s out there.
[00:14:06]
Brian Tolman:
That’s everything you might want in the, in the workday. So like tons of great coffee, cold and hot, you know, tea, water, seltzer, you know, snacks and things that keep you going through the day, you know, caffeinated, cold beverages, who doesn’t love a diet Coke, especially like around two o’clock in the afternoon and then combine it with that great meetings and event space. And that property had this, I mean, Matt saw the vision for the, there’s a great terrace in the middle of the building between the office block and the, and the hotel block, huge terrace, like, once, you know, one, once in a city kind of space, and to have that directly connect to the meeting and event space just gives you even more flexibility about how you use that. And then, you know, I’ll honesty, the infrastructure that was there from the hotel. Yeah. Prior to the conversion sort of created an opportunity to do a sort of
[00:15:00]
almost unprecedented food and beverage program and feed, you know, the reinvention of restaurants and food, food establishments that were were there once upon a time, but bring them back to life in a new way.
[00:15:13]
Brian Tolman:
And I think, you know, that that’s really what’s going to set this property aside apart from everything else is having. Everything in the stack. It’s one of the few examples out there of the fully loaded office building that works more like, uh, you know, high end, um, hotel than a typical office building would have.
[00:15:33]
Michael Belasco:
Man, I want to, uh, maybe we’ll do another episode where we all go out there and we do a tour of this place. It sounds, I haven’t really seen pictures or anything, but I mean, I’ve been, I’ve been, I’ve been reading about it. Um, it’s it’s fascinating. Plus you have, like you said, I mean, there’s residential, there’s the hospitality, everything’s kind of self contained right there.
[00:15:51]
Michael Belasco:
So if, you know,
[00:15:53]
Brian Tolman:
Yeah, you’ve got a built in community within the superblock, but, you know, with the Skyway system
[00:16:00]
in Minneapolis, which was really invented at this site and started here. You really are bringing the entire community of downtown Minneapolis together and providing an amenity for them. And while you really want to service your tenants like it’s, it’s just as much a community space as it is for the tenants within the building or superblock.
[00:16:20]
Michael Belasco:
Yeah, fascinating. And then just thinking, you know, just from a commercial real estate perspective, we’re thinking about the end users, but even the groups that are building this thing out, I mean, there had to be a lot of collaboration, right? I mean, you sold it off, but you know, like working through things like CCNRs and things like that, was that a big deal?
[00:16:38]
Michael Belasco:
Was that challenging? I’d love to hear just from like the real estate nerd side of like developing this thing. Any thoughts on that? War stories on the collaborations or, you know, anything you can share.
[00:16:49]
Matthew Legge:
It’s hard to unwind a mixed use complex that was originally designed as a mixed use complex, and, and originally, and until 2020, Um, unsubdivided and just, you know,
[00:17:00]
treated for all purposes as one big complex because it always had a single owner. We had a ground lease subdivided out and, uh, and you line up tax credits and some other things, but, um, but still, there’s only so much you can do to to fully unwind from a building systems perspective, especially all that infrastructure.
[00:17:18]
Matthew Legge:
So, yeah, to your point, it’s still a. It’s still a very collaborative exercise with the neighbors. We still share utility infrastructure. We still share common corridors. And so, you know, choosing your neighbors, uh, intelligently is a good thing. And in our case, we’re lucky. We get along great with them and they’re fantastic developers.
[00:17:38]
Matthew Legge:
And, and so, uh, it’s, it’s working out so far quite well from that perspective.
[00:17:43]
Michael Belasco:
That’s great. All right. So you guys are working on other stuff too. Um, so this is not yet, I mean, there’s still a big lease up. Have you brought in, I mean, you’ve brought in some brokers to assist I’m guessing, and then you guys are expanding and moving on together. You guys aren’t one company yet. You guys are just kind of working
[00:18:00]
together.
[00:18:00]
Matthew Legge:
We, uh, kindred spirits.
[00:18:03]
Brian Tolman:
It works well so far. I
[00:18:05]
Brian Tolman:
mean, it’s going. It’s going as well as you could hope it would ever go as a, as a collaboration and, you know, reaching out across the country, looking at a real disparate variety of development opportunities, some of which are our conversion opportunities, some of which are just similar to to Minneapolis, trying to.
[00:18:27]
Brian Tolman:
To juice an existing asset and get the most out of it
[00:18:31]
Michael Belasco:
yeah, awesome. So is there anything there’s you guys are just still you’re exploring There’s some other stuff underway and hopefully you’ll maybe you’ll dive old later on as maybe things start maturing. I guess maybe Or you know anything you could share now be great. But um, why don’t we talk more about like this actual? Business model. Now, are you guys just traditional landlords in the sense of landlords? What differentiates, I know that’s this amenity piece, but like, how does the operations of that
[00:19:00]
differ than like a traditional landlord or does it?
[00:19:03]
Matthew Legge:
No, that’s a good segue because I think the reason that Brian’s firm and ours You know, teamed up on all these projects together is there’s a there’s a real benefit in bridging and overlapping the gap between design and development quite often, you know, things are designed finance built and then, you know, only later in sequence.
[00:19:22]
Matthew Legge:
Do you figure out how to operate them in our case? You know, we both like to think operationally. And we both like, as Brian mentioned, to sort of, um, interchangeably live in the design and the development sides of the industry, that operations piece is the thing that we’re most recently really focusing on because.
[00:19:40]
Matthew Legge:
I think we see a real inherent benefit to straddling that whole, um, outcome and, and especially in an era where, you know, obviously we have to be a lot more meaningful and competitive and what you introduce as amenities, um, it’s, these aren’t, these things aren’t so easy to operate, or they’re at least not so simple to operate.
[00:20:00]
And so we’re more and more trying to really complete that, um, that spectrum of capabilities so that it’s an end to end curated outcome for, for the landlord partner.
[00:20:10]
Brian Tolman:
In some ways, it’s, it’s, you want to think about it almost without the luxury component of this layered on top of it because it needn’t be that, but the level of service you, you’d imagine finding at a four seasons hotel where there’s this anticipatory service where people are sort of, you know, looking ahead at what your needs might be as a tenant, as an individual and getting that to you or for you before you sort of recognize that you even, you know, Meet it. And that’s the magic spot is when you can have that level of service where, you know, everything you might want or need for in your day is thought about in advance and sort of provided, and there’s a path to it and it’s super easy. Um, so that you can really, as a tenant focus on what your core business is, which is not figuring out how to get lunch, get catering, set up a meeting, you know, grow and
[00:21:00]
add more space, et cetera, and really, you know, create that environment where it’s not just for the company, but also for the user. Just eased.
[00:21:09]
Michael Belasco:
So do you guys plug in? I’m genuinely curious. Do you guys plug in as at, so there’s F there’s the FMB component. There’s the space component. There’s like an admin component. Is that what I’m hearing? Basically? Um, is like, what, what else, what else is there? Like that’s, that’s driving the premium. And I also want to talk about the premium too and what tenants may pay for this premium, you know, just on a high level.
[00:21:33]
Michael Belasco:
But is that really at a macro 10, 000 foot level? Like those are the, how would you categorize the buckets of services that you guys are offering?
[00:21:40]
Brian Tolman:
Yeah. At the high level, that’s, that’s, that’s essentially the, the, the, the gist of it. And, you know, it’s, it’s about making sure the spaces are, are, really taken care of, and that, you know, someone’s, someone’s saying hello to you. They’re, they’re reading it. Like, what’s that? You know, the 5 and 10 rule, which is when you’re 10 feet away from somebody
[00:22:00]
in a hotel, you acknowledge them visually when you’re 5 feet away, you acknowledge them verbally, you know, and you sort of want that level in an office building, which you’re not used to doing.
[00:22:08]
Brian Tolman:
I used to a lot of times going into the traditional building, the experience of a user might be, you see somebody who had a security desk is a security guard who. Isn’t going to look up from whatever they’re doing, unless they’re forced to,
[00:22:22]
Brian Tolman:
and we want to bring that something that someone, you know, is away from a desk saying, good morning to you, or on the other side of things, like, you know, if there’s an app in the building, and there’s a food and beverage establishment, as you sort of get close to the building, are you geofenced in it?
[00:22:38]
Brian Tolman:
So that it shows up on your app and says, yeah, Hey, Brian, if you want your coffee again this morning and you know, you can hit a one click button and have your coffee waiting at the counter for you by the time you get there just to sort of smooth things out for you and make it make your day easier.
[00:22:54]
Michael Belasco:
it. Got it. So, um, I guess the key here for you guys is like really figuring out efficiency, right? Cause if
[00:23:00]
this isn’t efficient, There’s a huge cost implication, right? And either the cost is borne by the, the landlord, landlord, the audit sounds like you guys would do third party management. Is that also true?
[00:23:11]
Michael Belasco:
By the way, that’s
[00:23:12]
Michael Belasco:
a certain,
[00:23:13]
Matthew Legge:
and I think the fundamental thesis or thought is that, um, these amenities don’t need to be and really shouldn’t be static spaces that are unmonetized and unproductive from a revenue perspective. Our goal, wherever it’s possible, is to create. Branded like white label branded operating businesses within a property that stand on their own 2 legs from a profit perspective, because they’re not just depending on the in building tenant population to be an audience for that space.
[00:23:46]
Matthew Legge:
Rather, uh, you know, in most cases, they’re public facing revenue generating businesses that have viability in and of themselves. So, you know, the goal is obviously not to, um. Impose those operating costs certainly on your tenant base through their
[00:24:00]
cam installments. It’s really this Independent operating business that again, stands on its own two legs and that tenants can get preferential access to, and certainly full enjoyment of, but you’re not, you know, closing off the general public, especially in the CBD where you have this, you know, walkable wide population that can enjoy it as well, um, from utilizing it.
[00:24:18]
Matthew Legge:
And, and obviously in that case, you know, yielding additional revenue on it.
[00:24:24]
Michael Belasco:
Got it. Okay. So that makes a lot of sense. So there are these independent, hopefully independent operating businesses that are advantageous and prioritize to the Office tenants, but like you said, they also stand on, but it certainly drives a premium for, for rents. Or do you think this is what’s needed now to, to like keep base rents?
[00:24:42]
Michael Belasco:
Is there
[00:24:43]
Matthew Legge:
Yeah. I mean, I look back at, we bought a lot of distressed office assets in the last cycle, and especially in retrospect, you realize. How little you needed to do to them to make them interesting enough to sign leases in the The location, location, location thing was, you know, it’s
[00:25:00]
still obviously always meaningful, but it was enough right in a lot of cases. And so, yeah, to your point, there’s some degree of needing to show time, right? I mean, there’s, you need to do much more than you used to have to do. Just to make things baseline interesting enough for, you know, what you’re really trying to do in my mind now is make a workplace more compelling than what a person would have at home, even if more and more companies are mandating return to work, I think the mission is still to make that workplace environment more attractive and, and to create a situation where employees. Would want to go there by choice, not just by, you know, mandate. And so that’s what we try to do. And I think the, um, the analogy I always like to use is my uncle’s played professional hockey in like the seventies and eighties
[00:25:49]
Matthew Legge:
at a high level. And, you know, you hear the stories from the old days, they were, you know, smoking cigarettes between periods in locker room, eating hot dogs, showing up to training
[00:26:00]
camp, 30 pounds overweight. I think a lot in a lot of ways, and it wasn’t too long ago, the office sector of. Of not too long ago, a cycle or two ago was, um, the effort level required to be an office landlord was complex, but much lower than it is now. And I don’t think it’s the worst thing that it’s harder now and that you
[00:26:20]
Matthew Legge:
need to do more now. I think the, we, you know, you see it in trophy product in many markets, that there’s a flight to quality thing that, that persists, it’s more difficult to rely just on, on flight to quality in a reno versus a new build, obviously you’re working with the bones. That you have. So I mean, especially in that context, I think the for legacy building the, the, platform required to compete at that, you know, slightly sub trophy level, um, requires a lot.
[00:26:47]
Matthew Legge:
And in some cases, not necessarily a lot more money. It’s just a lot of, a lot more care and attention. And I think the days of landlords, you know, a just making static spaces and checking the box on amenities
[00:27:00]
or be outsourcing the operations to a third party operator and saying, you know, don’t print the place down, send me a financial report once in a while. Are over, you know, and so now what we try to do on the operational side more and more is, um, facilitate that day to day landlord involvement that owner involvement so that everything is end to end is the division that for the space is fulfilled and, and so that leasing and all the other business lines on site can succeed together because often they’re symbiotic, right?
[00:27:33]
Matthew Legge:
They all feed on each other.
[00:27:34]
Michael Belasco:
Right. Right. You know, um, you mean to tell me that now, if I want to get into commercial real estate and make a lot of money, I have to work. I got to actually, I got to actually implement a strategy and
[00:27:46]
Brian Tolman:
Or, or get somebody to work for you.
[00:27:49]
Michael Belasco:
or get somebody to work.
[00:27:51]
Michael Belasco:
It’s funny because you know, this is it. Like, um, the world of, from this perspective, the world of commercial real estate has changed and I think it’s across the
[00:28:00]
board.
[00:28:00]
Michael Belasco:
Like gone are the days of a property in New York city Just writing it for, for however long and you don’t have to do much.
[00:28:09]
Brian Tolman:
Yeah. Or worst case scenario, you, you refresh your lobby with a new color of marble.
[00:28:15]
Michael Belasco:
yeah,
[00:28:15]
Brian Tolman:
the, the great marble mausoleum lobby is sort of done. And now it’s really about creating an environment that people can interact and connect with. And, you know, while COVID certainly drove some of this, I think the other, the other driver was, you know, people wanted the great democratization of the Googleplex where that thing that, you know, Google and companies like them built for all of their employees to make them stand out. If you’re a landlord and you take a million and a half square foot asset and put all of those things within it, everyone who’s a tenant in your building from the 5, 000 square foot tenant to the whale now has access to those great amenities. And, And, that’s a drive for the, for the occupant, you know, the occupant wants to be able to tell their employees, we’ve got
[00:29:00]
great stuff too. Not just Google.
[00:29:02]
Michael Belasco:
Right.
[00:29:03]
Brian Tolman:
Certainly, certainly it’s gotten us thinking about like, okay, well, when we, when we move to our next space, like, can we find, you know, a small pocket of space in one of these great, um, you know, really activated buildings because it’s such an attribute, um, and such a such a gift to our staff.
[00:29:20]
Michael Belasco:
So are you guys, obviously you’re looking for the anchor. Are you guys, and you had mentioned flex space. Is this, um, are you guys open or thinking about like membership models, like, like the Regis is of the world? Or, um, is that a focus as well? Or is it like the Regis of the world, but for larger institutions, they have flex space.
[00:29:42]
Michael Belasco:
I think you kind of maybe mentioned something like that. Or maybe I just imagine that.
[00:29:46]
Matthew Legge:
Then there’s a few different use cases or for customer populations that we, for that particular property, we Have both private office suites, which again are more enterprise sized in nature. They’re thousand to 4, 500 square feet as opposed to your little fish
[00:30:00]
bowls, um, that you see a lot of other coworking product. Um, and then we do have the lounge membership access that a lot of other flex product does that facilitates, you know, both. Standalone individual enjoyment of the space, but often a user has certain contingent of employees who only, you know, need to be there once a week. And so it’s a more cost efficient variable cost way for them to have overflow capacity for their folks.
[00:30:23]
Matthew Legge:
And really, the reality is we have. Private office suites, but if you’re a user in this particular facility, you really want to be in the work lounges in our outdoor space in the bar. There’s, there’s so many places across like 100, 000 square feet. You can roam around and enjoy
[00:30:38]
Matthew Legge:
and sitting at a desk is probably the least compelling place for work.
[00:30:41]
Matthew Legge:
And especially everyone’s gotten ergonomically used to working on sofas the past year.
[00:30:47]
Brian Tolman:
There’s a time
[00:30:48]
Brian Tolman:
and a place for
[00:30:48]
Michael Belasco:
Not us. Real estate, financial modeling, Excel nerds. We like our desks and our 10 monitors.
[00:30:56]
Matthew Legge:
but, you know, the added benefit aside from those two, you know, pure play use cases
[00:31:00]
is when we do, you know, anchor proposals, we’re always proposing that they consider a full floor or certain degree of suites within that flex product as, as, additional space. Because, I mean, often these days, it’s a bit of a crystal ball to guess. Uh, what your space requirements going to be in 5 to 7 years. So
[00:31:17]
Matthew Legge:
if you’re a 10 year lease as a tenant, there’s a benefit to taking a flex floor and having it be a give back space that you can enjoy for a year. You either fall in love with it and want to stay there or build more contiguous to your premises, but it gives you an option to, uh, To sort of bide your time on, on seeing how your company continues to grow or not, and how your employee base continues to, to prefer to work at the office or not.
[00:31:41]
Matthew Legge:
But, um, but then, but that’s the third benefit to it as well. And that’s sort of a deliberate, um,
[00:31:47]
Matthew Legge:
design feature that we considered at the front end of the project.
[00:31:50]
Brian Tolman:
So much more flexible than a five year rofo, you know, or a 10 year rofo and like building and within like growing your business and being like, well, we need to constrain ourselves because
[00:32:00]
we don’t get more space for another two years. You know, it’s, it’s just so much more flexible for a business owner.
[00:32:05]
Michael Belasco:
Yeah. And there’s that recent fear of sort of what happened with COVID where now it’s like you can, you’re kind of playing into that and offering that, um, flexibility. What, sorry, what, one, uh, additional questions I’ve been, my wheels have been turning just, just some things I’m seeing. What, If you guys know, like, what is too small of a building for this type of product to work like?
[00:32:27]
Michael Belasco:
Could you guys go pure flex space in like a, in like a 30, 000 foot building? Does that not make sense? Or is there, is there a model by which you guys can take this on a small scale? Or,
[00:32:40]
Michael Belasco:
um, is it needs a, it needs.
[00:32:43]
Matthew Legge:
will Brian hop in here, but just as an example, we, yesterday, Brian and I were, we, we fell in love with something on LinkedIn. It was a suburban office project that had been converted over to a, to a Uh, a country club. There’s a group out of, I think, Dallas who’s starting to get into the thesis, but a good
[00:33:00]
example of in that, in that case, I forget the exact square footage, but it’s probably something somewhat similar to that. There’s very interesting things to do, both in urban and suburban locations. I don’t think size really dictates the, the viability of us being interested in something. It’s more the surrounding Submarket and whether there’s a A multidimensional customer population for that use. And Brian, please add to that.
[00:33:23]
Brian Tolman:
Yeah. I mean, I think we’re seeing even small, um, buildings that are You know, less than 100, 000 square feet are still wanting to do amenities because they’re being told by the, by the leasing community that that’s a, that’s table stakes. Now it’s, it’s the floor, not the ceiling for, for tenant engagement. And so, you know, what you have to be careful with is that you don’t try to do everything. everything. under the sun in a small building and that you also just don’t take the boxes and build space that maybe isn’t activated and use the way it could be. And you sit there and look at it. Go. Well, that was a waste of money. So what we’re trying to do is really
[00:34:00]
craft in an appropriate solution to the building type building size tenant mix. You know, the worst thing you could do in a building that’s going to be. More, um, uh, let’s call it more service industry side of things versus a high end. Um, very bespoke building is is provide the really luxury lounge in the building that where people would really just want to a sandwich that’s less than 10 for lunch.
[00:34:25]
Brian Tolman:
Right? Like, finding the right mix of uses based on your tenant base, based on the size of the building is key. Um, and then making sure it’s, you know, It’s got that level of service. If it’s, if you just build it and leave it rarely gets the activity that gets people excited about
[00:34:44]
Michael Belasco:
Interesting. And I’m even thinking on the smaller, if there’s ancillary services just outside that can be coordinated and mutually beneficial, you know, coordinating.
[00:34:53]
Brian Tolman:
Often there’s a, there’s a, there’s a restaurant or a food and beverage establishment that’s a tenant in the building, in the retail
[00:35:00]
space, like, can you leverage them to be your provider of the, of the baseline food and what you’re really facilitating is an easier way to get access to it. Or, you know, even in a place like New York, you know, no one wants to go downstairs and stand on the street corner and wait for the seamless guy to bring your lunch delivery in the freezing cold snow, but no landlord is going to let them through security and up into the building.
[00:35:23]
Brian Tolman:
So, finding those solutions to facilitate even just delivery is a sort of fresh way of thinking about these amenities.
[00:35:31]
Michael Belasco:
Got it. Awesome. Well, Matt, Brian, this is, this has been awesome conversation. We could probably go on for another hour and maybe I’ll have you guys back on. I’ll definitely have you guys back on soon to, uh, continue the conversation before we wrap up anything else. You guys want to add something? We didn’t cover that.
[00:35:48]
Michael Belasco:
Maybe you want to share with our eyes. If not, we can, we can roll to the close here. But I’m just curious. Maybe there’s something critical that you guys might want to hit on.
[00:35:56]
Matthew Legge:
I mean, at least from my perspective, like I said, I think there’s a lot of negativity on office.
[00:36:00]
Um, a lot of people are putting the. The gravestone on that sector, especially in urban markets. I think there’s. There’s certainly going to be a lot of pain and a lot of attrition, but. There’s a massive opportunity.
[00:36:12]
Matthew Legge:
That’s the way we see it at least. So we’re interested in doing some interesting things around the country with assets that have a lot of opportunities. So that’s what we’re focused on.
[00:36:22]
Brian Tolman:
And the office isn’t going away, but it’s, it’s definitely different. It’s different forever. And, um, we want to sort of help guide older assets into the different world and, um, make sure they’re equipped for the next generation.
[00:36:37]
Michael Belasco:
Awesome. All right. Well, Matt and Brian, this has been incredible. Um, you know, I’d love for people to be able, you know, part of our platform is education and just kind of spread networking and all that. So, you know, If it’s okay, I’d love to be, you know, for people to be able to reach out and talk to you guys more about this, if that’s okay.
[00:36:53]
Michael Belasco:
And we can share your, share your, you know, your LinkedIn and all that. And, um, yeah, to all our listeners, you know, I
[00:37:00]
hope you guys enjoyed this as much as I did. And, um, again, Matt and Brian, thank you guys for coming on and we will see everyone on the next episode.
