Location: You work in the Citigroup Center in midtown. Does midtown seem emptier to you lately?
Mr. Riguardi: You know what, I would have to say no. I’m so energized by New York City, so maybe I’m a bad person to ask that question to.
I understand you’re an optimist, but have you seen any things that have troubled you?
The microcosm of what’s starting to trouble me is graffiti. I’m seeing graffiti.
You fear a return to the ’70s …
Well, you know, I can’t imagine we’ll get that far off pace. But I’m just concerned that, you know, budgets what they are, you have to make sure that we’re consciously taking care of the quality-of-life issues.
In the commercial real estate market, there are three pillar tenants: media, finance and law. They’re not doing so hot, particularly media (which we won’t talk about), and finance. Who fills the void?
In 1983, when I started in this business, there were 50 companies that traded money, that managed money, that did some investment banking, cleared their own money; and over the years, we dwindled down to maybe a dozen of them. And they were highly levered and it was a completely different model. I think that the resurrection of that business and the resurrection of the tenants in that business are not going to necessarily be at the scale that they were before. But there’ll be more firms. …
It was not unusual in the ’80s for a 500,000-square-foot office building to be built, and the anchor tenant had 100,000 square feet and there were 50 other tenants in that building. We got to a point where a building was built and, you know, the industry or reporters like yourself were wondering who was the tenant that was going to take that entire building.
Meanwhile, there are some buildings in an unfortunate position right now: 11 Times Square, World Financial Center, the World Trade Center towers …
You know, I remember when Morgan Stanley’s headquarters at 1585 Broadway were completely empty. … Eleven Times Square is a gorgeous building. The market has made a correction in what people want to pay for the best space in New York City. But, that being said, Steve Pozycki has the confidence of the brokerage and institutional tenant community here. He’s had a lot of success in New Jersey. He’s a straightforward talker. He’s a dealmaker. He’s got very strong partners. So, you know, we’re rooting for him. We would love to bring him a solution for a building like that.
Downtown is going to have some real challenges, no question about it. Downtown, first off, has a really great opportunity to undergo an unbelievable paradigm change.
Again?
Yes. … The memorial will attract six, seven million visitors a year. … And the train station … That train station becomes an excellent opportunity to attract a labor pool from New Jersey and the five boroughs. That’s the good news, right? The bad news is that the market will have a tremendous amount of space downtown. At World Financial Center, a lot of leases are expiring. The development of the Freedom Tower and perhaps another tower, the consolidation of Goldman, a big question mark at AIG. There will be a lot of space in lower Manhattan, which will make it very, very competitive.
How low do you think Class A taking rents are going to go downtown and in midtown?
You watch the Dow Index for the last 25 years, and you watch New York City real estate Class A asking rents, and they follow each other like a cat and mouse. … Where the Dow is today is, you know, mid-to-late 1990s, and I think the real estate market needs to get back to that point.
Let’s talk about JLL. You guys had some layoffs last year. How’s the firm doing?
You know what, JLL is doing great. The industry is definitely feeling tremendous corrections. So a service firm relies on transaction fees, consulting fees, and the volume of business that us and our competitors are playing for has gotten a lot smaller. So there’s no question that that’s what we’re dealing with. But the percentage of that volume that JLL is winning continues to increase.
Do you see yourself as the firm best poised to take on CB Richard Ellis’ hegemony?
Well, you know what, the marketplace is so big that you can’t just have one.
No! You’re directly contradicting what you just said!
You know what, look: Do we wake up every morning, yeah, what’s the first place we think of? It’s definitely CB. No question about it. They’re our biggest competitor on a global basis. In New York, you know, I wake up, I think of CB, there are a few other players, too, right, because it’s that type of marketplace. But for the purposes of JLL as a global franchise, yes, CB is a preeminent firm. Yeah, I think we want to be No. 1 in every metric.
JLL recently hired Scott Panzer’s team from Newmark Knight Frank. What was the thinking behind that?
Look, that’s a silly question. It’s like when you hire or sign CC Sabathia to be on your pitching staff; people don’t ask, ‘What were you thinking?’ … We see Scott as what he is. A really preeminent broker, not only in New York City but on a national basis. He has a number of accounts that are tremendously loyal to him and to his team because of the great work he’s done for them over the years. He has got a different passion and energy that, quite frankly, I think we lack here.
He recently made some not-so-nice remarks about his former firm, Newmark Knight Frank, scoffing, essentially, at the firm’s global infrastructure. Do you agree with what he said?
You know, Scott’s an emotional guy. Barry [Gosin]’s an emotional guy. They had an unbelievable success record together, so I’m sure there was a lot of emotion around the time you spoke to Scott, or Barry. I’ve got the Newmark scars and Barry scars all over me from battle. They are great competitors. They play to win. They’re very smart. I don’t discount them in anything I do when they’re on the other side or we’re competing with them.
What would you do if you were a young guy in the business right now? How do you stay in the game?
You know, I just recently read that book Outliers, right? So every situation might create a new opportunity. So if you were let go from one of the bigger firms and it would be difficult to get rehired because of the times, then I would maybe find a place at a smaller outfit. But I would make sure, even if I got to a smaller outfit, that I aligned myself with someone who’s more experienced there who is taking a professional approach to the business.
There’s also the argument that maybe, much as the industries that real estate services were overinflated, maybe the real estate services industry just needs to be a meaner, leaner machine. Maybe there just shouldn’t be that many jobs?
No, you’re right. And I think that the industry is scaling back and it probably did get a little bloated. … But, you know, as I look down our bench, we’re never overstaffed with smart people that can help make a client’s decision better. So we’ll find a place for that type of person.
drubinstein@observer.com
