The Technology Pushing Office Real Estate Forward with Chris Rising | Ep. 100

 

Chris Rising, Co-Founder and CEO of Rising Realty Partners joins StreetBeats to talk about the technology integrated into his business that allows it to thrive, and the broader impact of tech on office real estate.

Darren Powderly, Co-Founder & VP Capital Markets
CrowdStreet

Darren founded CrowdStreet in 2012 after identifying the need to radically improve people's access to commercial real estate investments via technology. Over his 20+ year career, Darren has transacted billions of dollars’ worth of commercial real estate investments and enterprise software contracts. Darren is a driven leader who loves building relationships based on mutual success. In addition to building businesses, leading teams and advising a prestigious list of national clients, Darren has personally owned commercial real estate, syndicated investment groups and developed properties from the ground up.

Chris Rising , Co-Founder & CEO
Rising Realty Partners

Christopher Rising manages the day-to-day business activities of Rising, while also serving on its Investment Committee. Drawing on his experience as Senior Vice President, Asset Transactions at MPG Office Trust, Inc. (NYSE: MPG), Christopher is skilled at managing acquisitions and creative development. At MPG, he worked directly with the CEO to improve finances through debt reduction and restructuring.

In 2003, he founded his own company, The Rising Real Estate Group (RREG.) As the company grew, he seized the opportunity to partner with Barker Pacific Group and created Hamilton Capital Partners (HCP), an equity fund vehicle. RREG is also a principal in 626 Wilshire Blvd, a 156K square foot office building located in downtown Los Angeles.

He began his professional career as an associate at Pillsbury Madison & Sutro. He worked at Cushman Realty Corporation (CRC) under brokerage legend John C. Cushman, III. Christopher then served as a Director at Cushman & Wakefield of California, Inc. (C&W), joining C&W after its merger with CRC in 2001.

Christopher is a current member of the Pasadena Chapter of the Young Presidents Organization and is a member of the Board of Overseers at Loyola Law School and member of the board of RiverLA. He is a former board member of Loyola High School and LA Phil. 

Christopher received his J.D. Law, Real Estate from Loyola Law School and his B.A. in History and Political Science from Duke University. He also attended Duke on a football scholarship and was a member of the 1989 ACC Championship team.

- Hello everybody and welcome back to our new edition of StreetBeats today. I'm joined by Christopher Rising. He is the co-founder and CEO of Rising Realty Partners in Los Angeles, California. Thrilled to have Chris on the show today. Chris why don't you to please introduce yourself and tell us a little bit about your firm?

- [Chris] Thanks Darren. Well, our firm is a firm that's closing in on 10 years even though my father has been in the real estate industry since 1972. I've been in the business since 1980 or 1996, '97. And it's a firm that we started together right out of the last, the GFC. We had been worked in real estate, but never together. We've formed a company that lasted about a month before he went to reach carbon PG office trust. We were there for a couple of years through 2010 and 2011, we started Rising Realty Partners. And we started it really on the basis of coming out of the GFC. A lot of companies kind of your traditional GP operator was wiped out and they'd either become a reed or they just didn't exist. And what we really were, it was something as simple as my dad and her, like I said, "We just really need to be a company that knows how to fix elevators and knows how to do the work for LPs." And we grew it, today Rising Realty Partners, 'cause we've evolved, my father's taken a little bit more of a backseat now and who's 80 years old. And we brought in a partner, Scott McMullan who used to run HFF here in the West Coast. And he's an equal partner with my father and I, and we're now a company that we own about 4 million square feet. We do property management and another million and a half we're between Denver and Southern California. Most of our current portfolio is office but we do have some industrial. We also have an industrial team and a multifamily team. So we're looking at those three asset classes. We also own data as well. So that's a fourth one that we're in. And you know, we're just, you know, I think people confuse us a lot with a company like Heinz or maybe Tishman. And my father started in real estate, but didn't, but started by being a developer. And he was the president of Coto de Caza in 1972 and still blamed him for the Housewives of Orange County. He hadn't done the water deal on the freeway deal. There would have been no Coto de Caza and there would have been the Housewives. So he did that. He did a lot of entrepreneurial deals in Florida. And then in 1983, he became partners with Rob McGuire and Jim Thomas. And he was the partner in charge of getting entitled with bill library tower which is now us bank tower gas company. He did Playa Vista and then in 1994, he left McGuire and became the CEO and chairman CEO of Tutelas Development which was the merger of the couple of railroads and the railroads never got to merge. But the property was all put there and to go up to San Francisco, you'll know Mission Bay, Fremont. There's a big project in Austin, Texas, there's Miller Air Force Base. So that was a company that he took from a $400 million market cap to a five-- They still live for 5.6 billion. So that was a good exit. And then we became partners later. So, but we're not a company that has like multiple generations of apartments and things like that. We've been very entrepreneurial, we make a really kind of dive into the tech side of world. We've been in prop tech. We didn't even know it was called that when we started making some of these investments and creating some of these companies in 2011, 2012. But we look at it as a very nimble and quick GPLP structure. Yeah we have frustration that we don't control our capital all the times but then I will tell you what, I mean, this point, honestly the crowd street partnership is something we're looking to really expand because I think there's a whole network of investors out there that understand what we're trying to do better than maybe a pension fund does, because we're playing in a dollar amount of investment that's smaller than what pension funds like to do. And we really have our ethos and everything we do is to create great places. That's what we try to do. And those great places, were very big into impact. But at the end of the day, while we make a great place that is a wonderful place to be and we measure carbon reduction all that, we still really rely on getting return for our investors and we've been pretty good at it. So, I'm not saying we're perfect I get really tired of being around real estate people who act like they've never made mistakes or haven't had a deal. They never had a deal go sideways. And SMEEs, they hadn't been in long enough. They hadn't been in the game long enough. So we haven't been perfect, but we've been really good. And I think people like our transparency and our use of technology, we really use it as a force multiplier.

- The couple of key themes there's this, the longevity, right? You grew up in a real estate family. She has some learned from your dad. You were about 30 by trade when you first started your career out after Duke or understand you were an athlete, right? So, and so when we look at sponsors at CrowdStreet, we look at their track record as a company, how long have the principals been investing together? How they invested through multiple cycles? You know, of course, there's gonna be to have, there's probably gonna be some blemishes on that track record, right? What's the story about and around that so clearly with, between you and your father liked you know, what four decades of experience of more perhaps, and yeah with your dad, for sure. But like, many decades of experience, massive projects, working with a wide variety of GPS, that's the second thing we look at is in addition to the sponsorship, working closely together over multiple cycles, how are the properties performs and look at the property. And then we also look at like, a track record at managing LPs, managing the limited partners both institutional partners and individual investors. And I know you've done both and we look at it as like is introducing investors to this particular sponsor good idea, because they're clearly committed to their investors success. So can you speak a little bit about that? Because some of those, some of the properties that you just mentioned are like, I mean, they're legendary, they're great places, they're incredible places to live, work and play, but just if you could give it a little bit to your LP relationships, that'd be helpful.

- Sure, so we have some of the biggest you could ask for, from Sovereign Wealth Funds, to International Insurance Companies to state pension funds. So we have some really big LP investors and we try to treat them how we would treat anybody else. One of the ways we do is we use technology to interact and have information consistently available for those investors to get to them. We also have individual investors who are really, they're accredited, but that 150,000 or $200,000 investment really matters to them. And they're really trusting us to accomplish the business plan. What I've found over the years is, I've never seen a performer go the way I thought it was gonna go. I mean, that positively and negatively. And so it's all about the constant communication and communicating to people when you have relevant things to communicate. One of the things I've learned over the years and it started with monthly emails and all that, real estate doesn't move back quickly. People's lives are busy. So when you communicate, you really need to communicate effectively, exactly where things are and not set unreasonable expectations. I can give you an example we on One Ca Plaza and we have some issues we're dealing with and there are really big issues that are a result of the pandemic. And nobody, there's not one performer that said that our parking would go down 90, I think we're at 96% reduction in revenue from parking. Nobody saw that coming. How do we work through that? How do we talk to get the lender okay with where things are. And we're, by the way, we're still covering debt service, where all, everything's fine but that's a big mess, that nobody foresaw and the only thing I can say is we talked to the lender, we get all our facts in a row. Then we go back to our investors. We don't try to give two neat, piecemeal updates because things change and it tells us something's definitive I don't want to set an unreasonable expectation. But what you can't do is just go silent. And I certainly see over the years, I've seen that and I get it from a position of you're, everybody thinks we're all powerful but we're really more of a conductor or I always say, we're more like a movie producer. We're not the talent. We're not, we're not the funding, we're not the debt. We're the one who put this all together. So you do have to communicate but you need to be very responsible and how you do it. You have to do it in a way that someone can... you know, what I also noticed investors, it's not always a great time for them to focus when you communicate to them. So how do they come back and see the information on a regular basis and feel good about it? Yeah, it's an interesting world. Life is very interesting. I follow the, still acts a lot, and I'm really into that because I think it's a good basis for the fact that nothing's ever as good as you think it is or as bad as you think it is. And you're gonna go through these things. And the only thing you have to go back to is have you communicated to your investors. Have you been honest about it, which I'm sure everybody on the platform is, everybody I do businesses, but have you been honest, realistic and are you communicating that effectively? So that's we try to hold ourselves to the best. Are we always perfect? Probably not, but we try very hard to have that go throughout our firm is that when communicate, let's have to be honest about the information, let's be very specific, let's not set unreasonable expectations and don't sugar coat it. My dad's something around here, we all talk about, my dad always says, bad news doesn't get better with age. So we have bad news, let's communicate. And yes, we have to realize, no one's gonna pat you on the back when things go great the way they will yell at, you know when things aren't going great.

- It's actually human nature, I wish it was different but I find myself behaving the same way. But yes, it is absolutely human nature. You know, CrowdStreet, we have a compliance for reporting, where sponsors need to report every 90 days. And so, and if they don't report, if they don't report after 30 days, after the end of the quarter, then we start checking with them if they don't report 60 days later, then they're out of compliance and there's actually some penalties there. So, one of the things we're trying to do to create the best experience for our investor community because the investors are like, Hey, CrowdStreet, you know, I'd expect to have one place to go which is CrowdStreet to log in and see, whether it be one deal or 25 deals that they've done in this one centralized place. And every one of those projects needs to be updated every quarter with an accurate report, in order to make that portfolio view accurate as of course, as well. 'Cause it's all bubbling up to the portfolio view. And so it's really great to hear, how seriously you take that. And I can tell you that it is one of the most important things like, you know...

- Well let me let me be honest about it. So it took us a while in the year since we had this firm and my dad was always on top of it, but a lot of times you go do a deal and you're not thinking about this reporting piece. And so you don't really look at the loan documents. You don't rely on terms of when information is supposed to be revised. You haven't really told your accounting team, this is the cycle we're gonna be on. And we just live our life on checklist. We use a project management software called the Asana and every deal, and so we're not gonna do a deal, if the lender comes back and says, "Oh, don't worry about it, you have 45 days to report, whereas with you guys, we have 30." That mix up. Nobody's doing anything intentionally. But if you're thinking about it in advance and having your checklist in place, somebody can screw that up. And the reason we know it, 'cause we've done that in the past and now we're very, we're like, it doesn't matter what we negotiate with the lender, it doesn't matter what we negotiate, our policy is 30 days, the numbers have to be out for the quarter, the reports have to be done, the business plan has to be updated, the artist has to be updated. And that's how we meet it. But, it take some experience to do it. And I'm happy to be honest about it, that nobody, we haven't had any major blowups with it but we've just learned. Read those documents very carefully and put the checklist in place.

- Chris let's talk about technology for a second. 'Cause it does, it's like it's the checklist. It's like the checklist manifesto was a booked like, probably came out at 10 or 20 years ago. I remember reading it I was like, "Oh yeah, that's a good way to organize your life." And now Asana is this project management software. You know, we use it as well. So I'm glad to hear you use it. That's a great way to stay on task and companies like you, one of the reasons why your depth of experience over decades and having learned these hard lessons, it's like we were talking with another group who has managed a few friends and family, and a few pensions and endowments and major LPs and they're saying, "Well, don't worry, we can kind of handle this." Like, trust us, we'll get it done. We can handle 500 investors or a thousand investors. However many things was that really through CrowdStreet. And it is troubling for us because, you know it's like, I'd rather see you prove it to us or having in the past, because I know you're gonna make mistakes. You're definitely gonna make mistakes. And I just would rather have you made them mistakes in the past rather than with us.

- Well, you hit on a few things there, but let me say whether it's, there's a great new book by Cal Newport called "The End of Email." And I really enjoyed it. I would say we're way at the end of the book already in what we do. But his point was, nobody really got together and said, "Well the great way to communicate, it's gonna be email." And we'll just put everything into email and that's how we'll all of our business lives. And he traces it back to kind of the pneumonic tubes at the CIA that became email. And he says, the problem with email is that becomes, it becomes hive-mind. And you're just, your mind is always going. You need to find some sort of project or task management. And so we found Asana back in 2012, I happened to go to summit series outside at powder mountain, Utah. And I met Dustin. I'm like, "Hey man, we just started using your technology." And I will tell you from '12 to where we are today, there's probably 50 times we were gonna get rid of it, 'cause he couldn't do things like get approval on stuff, but almost every month they keep improving it. And it's just a part of our ethos, when you come here, we have an interactive PDF that goes through every department, how it uses Asana, how it uses checklists, we have a master mistakes list that we go over every quarter that then translates back. We have a person on the team who is responsible for the Asana manual for Rising Realty partners. And we have every six months we have a team meeting that goes through each accounting, acquisitions, senior leadership, asset management, property management, structure management how people are using, and why do we do that? Because you can screw up. You just can. And when you get, when you get a thousand investors across, whatever the number is, I don't even know how many we have, a lot because I know we're partners with you. So, we just can't screw up. And if you can make the mistake once and then you have to have a checklist sign mean. Otherwise you really just can. And the only way I know how to do it is whether it's Basecamp or Microsoft Teams or Asana for us, we're just doing with the Asana. I told you I met Duncan, but also because we use Google as our backup. But I think it'll be interesting to see. 'Cause I think Microsoft has become a hell of a company and the product. They have a teams which also includes a project management, task management. It was a pretty good product as well. So we'll see how it evolves, but we've been well through Asana we've made it work for us. It's not perfect, but I'm happy to share with you what we have for our manual that we put together. We spend a lot of time and effort because you can't make these mistakes. You can't trust me, if you come over to-- come to our office and you didn't see technology with it. I wouldn't trust myself. I mean, I just can't keep everything in my head. So I'm working with my team.

- Yeah, I read your blog last night about all the technology stack that you use and what you don't use including internal email and you no longer have use email internally. And I thought, "Oh my, that would be like arriving at promise land."

- Whatever you get them there. You get them there by saying, "If didn't have an email I think is so important to share with team. We have a directory in our Google Contacts. It says conversations-every project. And all you have to do is forward that email into Asana and everybody will see it. It's not a task, it's an information. If it's a task forward it in, but it's a task. But our rule is there can never be a one-to-one email in this company. It can be outside world. You know, it's outside world. You cc some of your teammates. And then whoever is responsible for that has to get that all into Asana. It's a discipline. And I see this over and over again, if you worked at IBM, you worked at Google, they have the same requirements. Why is it in a small entrepreneurial company people fight it. You can't work here if you don't do that.

- That's a good rule. That's like my main, like one of my major takeaways from this already, I'm gonna go back and say like, "No more email "

- And it's muscle. And you know what happens? And I don't mean this badly against people my age and older, it's mostly the 50 year olds and older. I'm 50 and I get it, we all grew up when we didn't even have email. And it's hard to learn new tricks. The younger people it's like, you know, I look at my kids who are two girls who are 16, 11 year old, they already know how to use Excel and they have, well, "Hey, you come to this company." It's no different than kitty. Nobody really cares, can you use an HP calculator? That was an old standard. Now let's gonna use Excel, can use Asana. If you can do those two things you can and ARGUS, which is another thing.

- So the pandemic last year probably accelerated a lot of this, but it sounds like you were well prepared coming into this year because you had been starting to invest in technology, not only for your own firm, for tools, for efficiency and effectiveness purposes but also like as an investor, as an investment in product tech companies, which is awesome. How how did the pandemic of the last show? What sort of, and maybe even just like, 'cause we've all talked a lot about 2020, so far maybe a couple of major takeaways with how technology helped you navigate the storm that was 2020. And then, you know, maybe leading quickly into, what are you experiencing so far this year? Like we're coming out of this thing. Thank goodness.

- Well, we were very prepared for the pandemic and use of technology. I mean, we were already using Zoom. In fact, I still remember in January of 2020 me getting upset with my teammates because they weren't willing to do Zoom calls everything because it's an awkward spell. And so we were ready. I can tell you I've changed my tune a little, my tune is, if it was supposed to be a face-to-face meeting, I'll do a Zoom call, but please bring back conference calls so I can drive places and beyond them. But right.

- Yeah. We don't need to have a video on like every single internal, you know?

- If you think about it, it just ties you to a desk and that's not what we're trying to do, right? We're trying to, yeah. So anyway, we were well-prepared, but here's the problem. Most of our portfolios office we're big believers in the reason that there is office. So it was very hard emotionally. I know for me, especially in Los Angeles where we had a lot of starts and stops and I tried to come up, all our buildings were open. Our property managers were there, our engineers were there. But you know, some of our senior people rightly so were scared and didn't want to come in and we're still kind of dealing with that. But at the end of the day, we were able to make it work. We were able to... People sacrifice just a few things here and there. 'Cause we just were unsure about the world, but we got through it and we're getting through it now. During that time, it made my partner, Scott and I and father really looked at our dependence on office. We decided to make some investments. We invested in a couple of key people. We hired a head of industrial. We hired a head of multi-family. We decided to invest a lot of money on our investor portal for our current investors and for newer investors. That was a big thing for us is that we've to see this world continuing to move to where you guys are well-positioned, but people just don't wanna communicate on email. They wanna know there's a place for their K ones are. They wanna know there's a place for the quarterly reports are, they don't want to have to be saving property management reports. They want to know it's all there. So we really invested in that. Yeah and since we've hired our people Scott word, on industrial we're under contract on a couple of buildings in south Texas, we're in a contract in an industrial building in North Las Vegas. We did the deal in El Monte which is kind of a hybrid office, industrial deal or under contract for apartment deal and in Colorado. So all of these things have all happened because of the pandemic. Now this does not mean we're given a phone office far from it. And I think what's happening with office is what we see out of every recession. If you're a CFO, how do you reduce that fixed liability? And if you have a lease coming up and we don't know where the world's going, you're gonna see people get smaller. But I do think that nothing replaced, we have a rule now that, 'cause we have enough people who are coming back into the office, either all on Zoom or all in person. It doesn't work to have like five people in a conference room and then three people on Zoon because we had to go back to what's the point of the meeting when the meeting is to, whatever it is. And most of them are investment type meetings and we need some collaborations so we have to do it most effectively. During the pandemic, the most effective was Zoom. I think where the world's heading is I don't agree that we're going to a three-day work week. I just don't agree with that. I don't see that happening but I do think what you're gonna see, number one, and I'm written a lot about this lot is dress codes are out the window unless you worked for the government or you're a lawyer in court. Just goes out the window and traditional work hours are out the window. I think the one thing that I feel comfortable with my team is if there's busy work that has to be done which we all have, they can do that at home and we're gonna have set meetings and this is what we already are into now. We have every Monday we have a two hour acquisitions meaning from 12 to two, that's intended to be in person. We ever senior management on Tuesday and that's expected to be in person. On Wednesday... But they're all manageable times. So if you want to come in early drop your kids off, come in. I think that's what I really took out of this is, people are being held responsible for their actions and their work product. And we're willing to say, "Hey, you don't have to be here at seven in the morning and stay till seven at night, have that be some check on your progress in the company, that's kind of gone. And what also has gone. And it's just the reality is if employees and employers think there's privacy out there, there really isn't. I mean, we know when people are working 'cause we pay the bills for the software. And that's the reality. And that's a trade off. You may not have to be in a seven in the morning, but if you're not getting your work done, we're gonna know. I was gonna say one other thing, which is in July I wrote a white paper that we've published about what I thought was gonna happen with office. And I looked back to it. Not that I think I'm brilliant about it but I think a lot of it is coming true. And I think what people haven't appreciated. And one of the points that I made that I think just talking to you, that proves my point which is that there is a generational changeover of leadership happening. And it's very obvious in the numbers. You see gen X and millennials taking control of companies and the baby boomers moving on. And when you really look at those two demographics, I'm a gen X-er. I remember getting the first pong game. I was huge into Atari, huge into video games. My dad is still convinced that I did my undergraduate work at duke and Nintendo. And in my graduate work in Sega, it uses that joke a lot. And then a millennial the same thing. And because of that, the way we were gonna approach business is going to be different. We didn't grow up when cut and paste and all that were real things that you were cutting out paper and then we see it a computer. So because of that, I think that we can adjust to what we just talked about very easily, which is we hold people responsible, there certain means are going to be in person. There's certain new this are, office will have a life. I think it will be actually a better quality of life for all of us. And it's being driven hard by the Googles and the Apples about what is expected from an office space. But given that Apple has made it very clear that they're all expected to be back and Google has to. And granted Twitter has said that if you really read between the lines. So I don't think Twitter is saying everybody can work from home because at some point the fear of missing out, I think, is gonna hit Twitter like it went anywhere else. So like to that person, doesn't get a promotion. Well, why not? Well, you were in your office, you weren't in the office you were at home all the time. So I didn't know what you were working on.

- Exactly. There is, some positive or actually less than positive but there is some peer pressure in life, in sports, in business, you know, it's just like, if you want to rise up, sometimes you just have to show up. You got to show up to win, right? So there there'll be some of that. I totally agree. And I think that applies to business travel as well. Caressing, you know, people are like, "Oh like we won't have to travel for business. And I think that's true as much. And you know, relationships start to sort of fray a little bit. They start to become weak and that's okay. Maybe you put some of those relationships aside and you sort of, you know, sunset them and say, "Oh, those are great at that point in time in my life." But when you talk about new relationships and really strengthening the key relationships, like the interpersonal, the showing up and the time spent together is just obviously totally priceless. So we'll be doing business travel I think we'll, bounce back. I don't know if it bounces back to 100% of what it was pre-COVID in the short term. I like the economist article about the 90% economy, which was, I think is might might be applicable to business travel for at least for a little while until the population increases and so forth, right. We're gonna hit new highs again like so many other things. But, so this is interesting--

- Can I just address on the business travel, 'cause we're on the same page, but I think what's gonna happen is business travel is gonna be treated more like it was 25, 30 years ago where the Senior Executives fly to New York to have a meeting, but it was a huge perk when you were young if somebody paid for your airfare to go somewhere. And I think people are just gonna do, they're going to look at, and there's a real savings. You talk to law firms, but no one saving has been not flying their younger attorneys to team meetings and things like that. So I don't, I think I think business travel is absolutely gonna continue but it's just, I think you hit it, right. It's going to be less because it's just, people are really looking at where they can save money and sending a 25 year old to a New York for four days, it's an expensive proposition. So they're gonna look at it and not be a Zoom meeting. Are you going to be one of my dear friends is the new GM for the Denver Broncos. And he was telling me one of the ways that they've saved a lot of money is just not having the Scouts come back to Denver all the time. 'Cause put them up in a hotel and all that. But you know, you haven't come back for a big meeting at the beginning of the year and maybe midway through the season, but everything else is on Zoom. So all businesses are gonna find their ways to keep their costs down and use Zoom where it's applicable. But there's, if I'm going to get a $300 million loan, I kind of want to be in New York and see JP Morgan so that we see everybody that's, I don't feel comfortable. Maybe I will one day. But at this point I don't feel that comfortable.

- Maybe it's, you and I are gen X-ers. Maybe that's how millennials sort of like a tastes, every generation it's a little bit more comfortable. So it's fascinating because I know I was part of that emotional swing as well, in the last year and trying to really figure out like what's going to happen in office. I mean, I just admitted, like, I don't know, right? And then I admitted and then I formulated an opinion, I was like, well, this is like nine months ago. And I've, yeah I generally think there's gonna be a net decline in demand for office for a little while, right? And then my thinking has changed on this Chris because of what we're discussing and the passage of time and the corporate policies and so on and so forth, like and this spreading out and sort of and just population growth and job growth, and all of these things are going to offset, some companies working entirely remotely, some companies go with the hybrid, but I think that overall, it won't be long before we're like offices back and strong as ever day.

- I think you really just have to look at, this is my been, my biggest question to people over were last year is, what does work mean to you? Tell me, explain to me what work is? Can you think about some of the GitHub and some of these who've made a very big pronouncements. They don't need to have office. Well, maybe they don't.

- Yeah, so this dumb, right? Exactly.

- Yeah, but you telling me the government's not gonna have offices. You're telling me that most businesses or just around the school day it's gonna force people to offices. I mean, I just, I just don't buy it. I think there are certain businesses maybe you should never have an office and that is just fine but most people, and you have to deal with the most, not the exceptions, need that interaction in some way, shape or form.

- Well, Chris let's pivot that because we were wanting to also talk about environmental, social, and governance and ESG and also impact investing, something I know you're really passionate about. I do think we're related to the office or usage of office and what work means to a certain company or certain person. Right, it will mean that it probably accelerated, some buildings being just out of date and can probably need to be torn down, right. So, there's some of the stock of office has sort of been, you know, completely accelerated its demise and it's to be repurposed into something else, right? Either torn down and completely redeveloped a site and/or deep rehab into multi-family or some other use, but there's this most of the stock of office is going to be, repositioned and through and advanced with technology and then green building. Can you just speak to where you see the best...

- I mean, I used to say that, you know every company is a technology first company whether they recognize it or not, if they don't recognize that they're not around. So if you're not using, I mean, really you think about I was joking about the kids use Excel and Asana but at the end of the day, if you're not using technology as a company, you're not gonna compete. And I would say, if you're not focused on impact strategies as a company, I just don't know how you can compete. We've gone over the precipice. It is a global phenomenon now. People are scared about what's happening in the climate, but deny it. People, you can try to deny it but there's still the majority out there that believes it. And so when you are looking at an investment or the investments we have, we've been doing this for a while but we created some technology that we own around scorecards about every asset we own that goes down from everything from talking about office, a wired scores, so how connected it is, a walkability score. We know exactly how much carbon we're producing. We know what our footprint is. We you try to tie it in with things like lead and Fitwell and well, all these different standards. But at the end of the day we wanna give our investor not only their IRR, but what lowercase impact rate of return is all, what is your investment done in terms of impact? We've been doing that since 2012, it's now kind of gotten on steroids because things like broadband and connectivity with those wired scores are unbelievably important. And I think where we're gonna continue to move to and by the way, this was happening, the amended decisions of assets, I mean, you go to Hudson yards. I mean, that is the quintessential example of the emendation and the impact strategies. And I just think there's a ton of buildings in Midtown Manhattan and around here in Los Angeles but just because of the way the ownership is and they just don't have the money to the TIs, they're going to become obsolete. And we're sitting in the building here, the trust building, which was the original home of the law firm, O'Melveny and Myers and the trust Title company, we bought it. And it has been out of commission since 1994 and we bought it, we've now made it so that the SEO and SQL for the seismic is under a 20 it's built, you know, we have these moment frames everywhere. It's really well built. Well, got the historic around us here. We also have the facet broadband anywhere around here. We have a gym, restaurant, all of these amenities coming to where we have operable windows, which I think is a big draw. Now, the unfortunate thing is we came to market in basically February of 2020. So we've now gotten a little more momentum coming around we announced the deal with Curtis Stone to do restaurant on top and a restaurant and a grab and go on the bottom.

- That's cool.

- Yeah, so we got a feed, we got a little momentum coming down but I think the reality is if you think you can own a building and have people come in and you can have a little tape on the HPAC with some dust there, someone signs on a piece of paper, and maybe you take a picture from the 1998 camera of them, you're just not gonna attract any tenants. And the other thing that's out there is as I do think that flex, you know we work Saga, which was, was so predictable.

- That was so predictable, it was at slow motion car crash or something.

- But it's all gonna come back again. Yeah, I know of if... Anyway we don't have to talk about that. It was like given addict drugs, it just, you know kept back raising money and they never got a business plan together, but here's the reality, flex workspace is going to be important. They're gonna see people say is, can I go into a building that has a floor or two to a flex so that I don't have to make a big commitment? And, you know, we're not there yet but at some point it's gonna be driven by people like CrowdStreet. But at some point we're gonna get our financings in place where we can do shorter term deals. Not everything has to be a five, seven or 10 year deal. And we're gonna get there over the next few years because that's just, that's what the market demands.

- Yeah, one of the other silver linings of the pandemic was this acceleration of focus on health and wellness. And I personally always knew HVAC was important and filtration systems and HVAC were important, right. Clean air, of course, but now it's like hyper important, right? And so, and there were gyms and there were, different things in terms of like making the office a place that is healthy and sort of focuses on wellness. But what are some of the things, especially being in LA with such highly aware population, what are some of the things that you think will really separating an office building of yours in the future versus the others out there?

- Well, it's technology, you know? So we've looked at some of the owners would spent a lot of money with their own IP creating building apps. I just have had such bad experience doing that. So I personally just fall along the lines, it's gotta be publicly available off the shelf tailor to what we need. So we partnered with a group called Equian, an Australian company that we think is amazing. You go to one car, you come to the trust. Everything is there. From your tenant interaction about, "Hey, I want to get a reservation for lunch." To what's the quality of the air right now. And we just put all that information into the app. We partnered with a group called openPASS so that everything is touchless. You just have to have the phone app and you don't even have to take anything out and go to the elevator, your doors, all open for you. We do things like with carbon lighthouse and yeah obviously, internet and all of that information then gets pulled into our building apps so that people can see it. I think the biggest struggle with big landlords we're one of those, has to deal with is how do we continue to improve the HPAC? So you can get it down to like 10 square feet. You look for somebody, we're not most people are a long way from that. And there's still buildings that you have to turn on whole floors. But I think that's where everything's heading where are like our whole lives. Like whether you have Alexa at home, and you have Google you have Apple at home, in the office there's that same kind of expectation and I can control my life through my phone. And so we, as I said we use EQUIAM ethos, there's HQO is out there. There's some other really quality products. And I just think it's just the price of admission, if you want to own office building.

- Right, and just for the audience of your sponsor listening to this Michael Beckerman and in his team at CRE tech, I hold them in high regard. They're the front edge of this. He's built a huge community of people like Christopher and myself and others who were, on the front lines here and researching different technology in prop tech and really green building technologies overall. So took out Michael Beckerman, CRE tech. The, hey, one as we wrap up here to come to a close Chris, I think it's, you've touched on a lot and I know we focused more on office and maybe that's because there's some uncertainty there and it's an area of your expertise. And obviously we're bullish on it. Are there other things that you think you, we're not out of the woods yet but we're coming out really strong. I'm very optimistic, but that's my nature. And then I also worry a little bit about, the bubble of asset prices, basically everything. I've been reading the wall street journal and say, from copper and lumber and basically every material and then every asset like NFT is that, gosh! I don't have any interest in trying to figure that out, but apparently those are selling for an incredible amount. Like it's where do you-- how do you make investment decisions in real estate? You know, even in the mountain regions and California where you focus Western region, knowing that there's still continued uncertainty in 2021.

- Well, you hit on a few things. So let me just start with, I really do believe we will have inflation as a real estate owner. That's not a bad thing. As a tenant, that's not a great thing, but as a real estate owner is not a bad thing. But I just don't, I agree that anything I learned in 1990 at Duke on economics doesn't apply as much today, but, I have a little tough time with the new monetary theory that is purely dependent on our place as a world power really if we can just keep printing all of our money, but at some point it's gonna catch up to us. And I think lumber is a very scary thing because what it showed was the reason lumber prices have gone up is we didn't replant at a pace to keep up with our use. And it showed basically that the timber industry has a lot that needs to improve on. And it's not like you can just get a tree to grow right away. And so this is gonna be with us for a awhile. I think that's going to drive to new technologies and things that people use that isn't timber. But I think you have to be aware of where inflation is. If you're building anything can be Roundup today. There's a lot of risk. We tend to, even though in our career, my father and I've done a ton of development and it's going to San Francisco and you can see that or other places, we tend to like the adaptive reuse and buying assets and upgrading them to try to take a little bit of that risk off the table, whether it's industrial, whether it's a multifamily office. You said a little bit about NFTs, which I've been following really closely. I think that is much more a cause and effect of people trying to get out of the cryptocurrencies into something else so that they can kind of liquidate some of their assets or at least hold longer term without the perceived swaves of the market. It's gonna have it stay along with just art that is globally. And I think it's a real thing. It's not going away. I don't think it's as relevant to real estate per se, as certain other things yet. I think it could be. I think at some point and some we're focusing on is, I wanna own the facades of my buildings and I don't want someone Apple to create these augmented reality glasses and Coca-Cola pays Apple as someone's walking down the street to throw the Coca-Cola sign up on one of my buildings. So we got to stay ahead of that and NFT is gonna play a part in that, I think, I think there's , but any of that switching it back to just what we see from an investment, I do think what the pandemic has shown is people are questioning how they wanna live their life, doesn't mean they're gonna act on it. They're questioning it. And I think one of the things you're gonna see is the startup community view the San Franciscos, the Seattles the LAs as really important to their birth but maybe not as important to their existence. And I think if I was a VC, depending on what it was, I would tell somebody, "Hey, why don't you go look at Boise? Why don't you go look at Bozeman, Montana? Why don't you go look at Park City, Utah?" Look at these just because the costs are less there. But I just, at the end of the day, I mean for the VC community to work, for most of economy work, we need to have these hubs, we need a New York city, a Dallas, a Los Angeles, a San Francisco. And LA and San Francisco and Manhattan, specifically, those three are what we're dealing with with the city, shut down. People moved out so you don't have enough people there. So it's not a pleasant place to be in most places, now I can tell you here in Los Angeles it's improving, but the homeless situation is a terrible situation that needs a lot more to improve, but we gotta get people back before these centers. So when I look at our investment thesis and we have a house view on all three and in every market, so it's hard for me to generalize but I will tell you this, but we like Mountain States. We'd like where population growth continues and so we tend to follow population growth 'cause that goes to demand whether it's industrial, office or residential. And if you're looking at the top markets right now, I think Denver is one of my favorites. Salt Lake City is one of my favorite. Industrial I would say Texas and Nevada, are two of my favorites, 'cause he just trying to find these markets that aren't overbuilt yet, where population growth is coming. So you'll need to store things. And then I would say, lastly, I think if you're, if you're looking at office as much as we own and like these big, big office buildings, I don't think there's any wrong with owing 50, or 100,000 work with buildings in Boise, Idaho or Salt Lake City, and 'cause the quality of life so great. And I think you build them out right, if we can get ourselves away from the ton of millwork and therefore lumber and have more modular offices, I think there's a lot of money that could be made to that. So that's what we're looking at. And we're looking every day, Monday, we've got our two-hour acquisitions meeting. We'll talk all about this, so--

- It's top of the hour, now you better get ready for that. And then what's interesting about all the things that you just mentioned. I think we have a total alignment with the areas where you focus with our investment thesis, right? The CrowdStreet, marketplace, investment thesis. And so, you know, and then we obviously operate in that way, and the Eastern region as well. So there's more to it, but in the areas that we both do business from Texas West, we have total alignment and where we see opportunities out there. So, Chris, thank you for--

- But before you finish Darren, I just wanna say one good thing about, a couple of good things about CrowdStreet. And I want the audience to know this. So, we've done one, one deal with CrowdStreet, which quite frankly, is kind of a no brainer. We worked on it for a long time and we would . We would babysit for you guys when we think when you have a 10 year lease with the county of LA, that's a good thing to have, but the process was really smooth and easy. And our view was we wanted to give you a deal we felt was one of our better deals so that we could start the relationship. We showed you a few other deals and I think everyone should know. It's not, not everything's a slam dunk, nor should it be. We have good back and forth and we can agree to disagree or we can agree. But it's been a very pleasant working relationship. And you all are funding at a level that we really like kind of the dollar amount size. So we're gonna bring in more deals and I really would be a strong advocate for GPS out there for operators out there. This is very legitimate and a really good way to fund some deals.

- Well, thank you very much. Yeah, we liked the, a five to say $25 million range and that $10 million range is about our sweet spot right now Chris as you know, so I appreciate that compliment. Thank you. It's always great to hear and we look forward to doing more and more business with you and your team in the future and a great having you on the show. Great to see you hope to see in LA sometime soon here.

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