Most Landlords Get Office Design Wrong – Rod Kritsberg – RFP 64 Transcript
Gordon Lamphere (00:05): Hi, I’m Gordon Lamphere, and welcome to The Real Finds Podcast, the podcast where we have real conversations with key entrepreneurs, activists, and researchers who are shaping the real estate industry and, as a result, our world. On today’s podcast, we’ll be speaking with Rod Kritsberg. Rod is Chief Investment Officer at KPG Funds, a New York-focused investment and development company whose mission is to acquire and reinvent value-add office, retail, and mixed-use properties. On today’s podcast, Rod shares how he turned historic buildings in SoHo and the West Village into some of Manhattan’s most desirable boutique offices. We unpack which office amenities are BS and why boutique landlords get kitchens wrong. Ultimately, we talk about some of the hard truths of what it takes to thrive in high-barrier cities like New York. If you’re a broker, investor, or developer in the world of office space, today’s podcast is well worth a listen. Rod, thank you so much for hopping on the podcast.
Rod Kritsberg (01:07): My pleasure. Happy to do it. Happy to be here.
Twenty Years of Real Estate, Fast-Forwarded
Gordon Lamphere (01:14): Can you tell me a little about how you got into the whole real estate game?
Rod Kritsberg (01:25): How I got into the whole real estate game. I’ll tell you the story as far back as you want to hear it. I actually started in real estate accidentally, during the boom years around 2005, if you remember, when everybody was buying residential housing. I was in college, and my brother-in-law had a residential real estate agency. He said, “Hey, do you want to try it?” And I said, “Why not? Everybody’s making money in real estate.” So I got in about twenty years ago, renting apartments and learning the business that way. I won’t bore you with the details, but fast-forward: I got my broker’s license as fast as possible, turned a residential business into a commercial brokerage, sold the brokerage, went on to run acquisitions for a high-net-worth family office, left that, started a company, started Fund One, raised Fund One into Fund Two, and that’s where we are today. That’s the quickest way I can get through twenty years of real estate.
Finding the Boutique Niche
Gordon Lamphere (02:31): That’s pretty fast. I’d like to get quickly into what makes you unique. We have a lot of folks on from REITs and large funds that aren’t doing anything particularly unique in the market, though they’re still adding value. What makes you and your funds unique is that you’re, in many ways, a boutique New York development shop working with some pretty unique properties, not just run-of-the-mill, standard properties that could plop down anywhere. How did you develop that as your niche?
Rod Kritsberg (03:12): We kind of fell into it. We’d love to say we’re the smartest people who ever lived and knew that, post-COVID, boutique office would be the asset class du jour, and that ultra-high-end Class A office would be what people wanted. But we started with the concept because we saw really beautiful, architecturally significant buildings in markets with really high barriers to entry. By markets, I mean specific Manhattan submarkets. If you know SoHo or the West Village, there are real reasons for the barrier to entry. Part of it is the Department of Buildings, and part of it is something called the Landmarks Preservation Commission. You basically aren’t allowed to touch anything on the facade, or if you do, you have to restore it to what it was a hundred-plus years ago. That created a high barrier to entry for renovating any of these assets. Historically, if one of these buildings was vacant, it would go residential, which was the highest and best use.
As the office market grew and developed, there was a real need for institutional-quality buildings in those markets, because tenants wanted to be there. We saw the opportunity and started doing it back in 2018 and 2019. Then, through the COVID years, that suddenly became what everybody wanted. It was the barbell effect: everybody was looking for something really nice, ultra Class A, something special, or something incredibly cheap, and nothing in between. We luckily fit into that niche. We were Class A, but we didn’t have to compete with the One Vanderbilts of the world, and we didn’t have to fight over Amazon or Meta as a tenant for 300,000 or 500,000 square feet.
Our whole business plan was to take these gorgeous, architecturally significant buildings and renovate them as if they were ground-up construction. We keep only the perimeter walls and the vertical columns and wood joists, and everything else is brand new. That helped attract the tenancy.
Case Study: 132 West 14th Street
Gordon Lamphere (05:41): One unique deal you worked on, and not all of our listeners are in New York, but a significant portion are, maybe 10 or 15 percent in the New York metro area, is 132 West 14th Street. How did you see that project, what got you involved, and how did you pursue it? I’d love to use it as a case study.
Rod Kritsberg (06:25): Sure. It’s a funny, and at its start kind of sad, case study, because it was a real mid-pandemic COVID deal. A large national nonprofit owned two assets, one smaller and one larger, and had a business plan to exit and monetize the smaller one. They started that process around January or February of 2020 and wouldn’t stop the train once it started rolling, even through the lockdowns. In March, April, and May of that year, they were still committed to the process.
I’ve told this story before. It was a wild time to be in real estate, especially if you had to tour assets. My family and I had moved down to Florida for a few months, and I flew up to walk this building. There was nobody on the street. Fourteenth Street is a big, wide, busy street, and we were standing in the middle of it without a car in sight, basically in a hazmat suit, walking this vacant asset. We couldn’t understand why they were committed to following through with their business plan, but the brokers explained that once they commit to something, it’s way too complicated to turn them around. So we took advantage of the opportunity in front of us. When I walked it and saw I could get this building at 60 to 70 percent below its 2019 value, it felt like a real opportunity.
It was an architecturally significant building of its time, built in the 1920s, a hundred years ago. But as it was owned by this nonprofit, it was never taken care of. We looked at the historical photos, and it had a beautiful masonry facade with arched windows, all of which, over its hundred-year lifespan, had been covered with awful concrete panels glued on, basically so they wouldn’t have to take care of the facade. They used it as auxiliary office space, and the inside was an absolute disaster. But from a value perspective, we said, “This is a great location and a good building. It’s a great size, with perfect floor plates. There’s demand in this market, and everybody’s going to want it. Let’s take advantage of the opportunity and get it at a really discounted value.”
Rod Kritsberg (08:50): From a development perspective, we didn’t build it right away. We waited until the market was willing to accept new office in this location and tried to figure out where the future of New York City office was headed. That wasn’t very clear. It was opaque, especially in the first year of the pandemic, when the big call was work from home and nobody was ever coming back to the office. We got a construction loan once we saw there was a return to office, but a return to a very specific type of office. As we talked about at the beginning, it was either a great location with boutique, single-tenant, ultra-high-end floors, or an ultra Class A building people wanted to be in. That was it, and that was dominating the market.
When we saw that demand a few years later, we got a construction loan and asked, “How can we build this asset to make it attractive?” Originally, we thought maybe we could restore its original masonry facade, but we quickly realized that wouldn’t make sense. What we wanted was to keep the building’s footprint. It had really great footprints, with floors of about 8,000 square feet, which is great for smaller and midsize high-end companies taking single-tenant floors. We kept the east and west perimeter walls, tore off the north and south facades, added two floors, and reset the floor heights. For all intents and purposes, it’s a ground-up construction project sitting on the footprint of an existing building. By doing that, we kept some of the old code versus the new building code, including rear lot requirements, so we didn’t have to shrink the footprint and could still maximize the volume. That was very important.
Just for the New Yorkers, it mattered because the front of the building, the north side, opens onto a big, wide street, 14th Street, so it gets a lot of natural light. The south side, where the rear of a building usually is, is usually hemmed in by other buildings, especially mid-block. But this building sits in a really interesting place, at the northern end of Greenwich Village.
Rod Kritsberg (11:18): The street behind us is all low-rise townhouses, and they’re all landmarked for the next 15 to 20 blocks south. So as a six-, seven-, or eight-story building, we have an incredible view out the rear facade that’s arguably nicer than the front. By doing everything we did, we managed to add height, maintain volume, get good floor heights, keep the views, and make it feel like a ground-up Class A building without tearing down the full structure.
“Amenities Are All BS”: Location and Build Quality Are the Amenity
Gordon Lamphere (11:59): Fascinating concept. I’d like to dive into one element you touched on: post-2020 amenities and design elements that tenants are looking for. That’s one of the biggest discussions we’ve been having. What does a high-end New York tenant look for in design elements and amenities?
Rod Kritsberg (12:30): I want to tackle the harder one first, because I’m contrarian on this point. Amenities are all BS, and I’ll tell you what I mean. I mean it. Especially in a smaller building. Maybe in a larger building you can amenitize, but candidly, nobody’s going to the gym in the office, meaning a gym specific to the office building. A real amenity in a larger office building is having an Equinox or a Life Time Fitness, a really high-end gym, so people can use it the way they’d normally use a gym. The only other amenity I’ve noticed that has any value at all, if you have smaller office spaces under 15,000 feet, is a massive boardroom that can fit 40 to 50 people. Not a 10-person conference room, but a massive boardroom. Especially with high-end financial tenants, like some of ours, a smaller fund will hold its quarterly meeting or an investor meeting and need a very large gathering space. Outside of that, nothing.
Here’s what we’ve learned: the amenity is the space, and the amenity is the location. I’ll start with location. How do you attract talent? That’s what everybody cares about. How do you attract and retain talent, and how do you get people into the office? Those are simple. Make their office nicer than their home, so when they walk into the space, it feels like a high-end residential condo. I’ll speak to that in a moment. And put it in a place they’re happy to come to every day. That is vitally important, and it’s been our calling card.
We’re very New York-centric, but I’ll use a neighborhood everyone knows. We’re heavily concentrated in SoHo, which is an international market.
Rod Kritsberg (14:57): Everybody knows it for fashion, models, cool, nightlife, and the high-end SoHo residential lofts everyone pictures and has seen in the movies. If you build offices in that same location, out to a really high-end finish equivalent to what you’d see in a residential space, employees are excited to come to work. That’s the amenity. When they walk out for lunch, they’re happy to be on those streets. They feel immersed in the culture and energy of New York City, the same energy and vibrance that gives SoHo its high-end retail and residential appeal. That’s why ultra-high-end retailers will pay any price per square foot to carve out a little space on that block, and high-end residential goes for $3,000, $4,000, or $5,000 a square foot. The neighborhood is the amenity. In these smaller boutique buildings, location is the dominant driving force.
Full-Height Glass, Wide-Plank Floors, and Real Kitchens
Then there are high-end finishes, and there are a few things we always talk about. This gets technical, but once I point it out, you’ll see it all the time and never be able to unsee it. Everybody loves high ceilings. They’re one of the best things you can have in an office or residential space. That’s why people do double-height entryways in their homes. But what nobody wants to talk about is that glass and doors come in standard sizes. In SoHo, where we’re concentrated, some of our ceilings are 15 feet. They range from 11 to 15 feet. Most people buy off-the-shelf doors and glass, which max out at eight feet, and that’s if you spend extra. Usually it’s seven. So if you have a 13-foot ceiling, you’re talking about a five- to six-foot soffit: plain white
Rod Kritsberg (17:21): sheetrock above a piece of glass. You lose the line of sight to the high ceiling and high windows, especially along the perimeter. You have this really high-end space, but you draw the eye down and it looks squat. You know you’re in a space with a 15-foot ceiling, but for some reason you don’t feel it. That’s because nobody wants to spend the money. We build full-height glass, fabricated on site. If I have a 13-foot ceiling, I’ll have a 12-foot-high piece of glass, with just enough room above it to get the air conditioning in and out. That creates grandeur. That’s number one.
Number two is wide-plank hardwood floors, the same thing you see in a high-end home or condo. Number three, which nobody ever gets right, even though they say they do: kitchens as meeting spaces, not just kitchenettes. This is for all the other boutique landlords out there who want to get it right. Don’t build a little kitchenette with a slab of marble, or Caesarstone, which a lot of people use, that’s five feet wide and two feet deep, and call it a kitchen. Take the space and build a massive kitchen with a massive island. Spend the money. We spend money on real stone and real marble. Why? Because everybody congregates in the kitchen. When it’s open and beautiful, and people are standing at a gorgeous marble island that’s probably ten times nicer than anything some of the junior employees have ever had in their homes, they feel good being there. They want to congregate and hang out there, in the kind of kitchen they imagine while scrolling Zillow for their $20 million mansion. Build that kitchen in the office and let people use and enjoy it.
Rod Kritsberg (19:45): Those are the three things we’ve noticed people really respond to when they walk into the space and say, “Wow.” There are a lot of other nice design details. We always talk about linear diffusers instead of ugly ducts, recessed lighting and beautiful light fixtures, movable walls, and more. We furnish the spaces and do all the extras, spending the extra 25 percent when everybody else is cutting back on the last 10 percent. And in these smaller spaces especially, we attract the companies that aren’t focused on run rate. They want what they want and need what they need. They need it to attract talent and investors. They need show-off space. So, to put a bow on it: location and build quality are your amenities. Everything else is secondary.
Structuring the Capital Stack for Spec Suites
Gordon Lamphere (20:53): Location and build quality are something we’ve seen play out overwhelmingly in the data, particularly location. Harvard Business Review, Wired, and Forbes have all put out data essentially saying that location is what’s driving high occupancy, particularly at the high end, more than piling on amenities. And we’ve heard the same thing on this podcast about conference rooms. Large gathering space is hugely underdone in the market, particularly for corporate users.
Something I think people underdo even more is deal structuring. A lot of people see the bright lights of putting a space together and don’t think hard enough about the financial structure that gets them there. How do you approach deal structuring and capital stacks for a high-end property? We’re not talking about Class C office. You’re putting real money in.
Rod Kritsberg (22:11): It depends on how you do business, but ultimately everybody has to be aligned on the same vision. You can’t kid yourself that you’ll come into a market, and again, this is New York City-specific, and do just a little bit. In your underwriting, you have to commit to everything that’s real. That means all the costs to upgrade the base building, even if that means new elevators, changing cores, and all the costly things people don’t want to do. It means carrying enough dollars to build pre-built suites. It means allowing enough time for downtime and lease-up, and for free rent concessions, understanding the market dynamics, and being truthful and realistic in your underwriting.
Then, depending on your stack, if you’re raising money for a deal, you need partners who understand the same thing and share the vision: you need to spend money to get this space leased. If you try to do it the other way, you’ll end up in a race to the bottom with non-institutional groups, or even institutional groups, that have owned buildings for decades with a basis you could never compete with, and they can race to the bottom much faster than you. That’s just what’s been happening. And when you get down there, you realize there weren’t enough tenants to fill all that space anyway. That’s a tangent. But be realistic in your underwriting and realistic in your exits.
One other thing: if you’re going to do spec office, especially ultra-high-end boutique office, make sure when you structure your loans that your lender is comfortable with you building on spec and
Rod Kritsberg (24:35): pulling TI dollars for pre-built costs. It’s six of one, half a dozen of the other whether you spend it now or when the tenant shows up. Smaller tenants, those under about 20,000 square feet, don’t carry a big real estate department. They move quickly. It doesn’t take them two years to move like an Amazon. It takes six months or less, and by the time they finally tour all the spaces, it turns into a three-month scramble. That’s just reality. If you want to attract that tenant, the space has to be built.
So your partners and lenders need to know you’re not building it just to show off how well you can design and build a space. You’re building it because a 10,000-square-foot tenant usually has one major decision-maker, usually the CEO. Junior staff and the second and third in command come first. They prep it, see 10 spaces, and narrow it down to three. Then, every single time, the CEO walks in and says, “Yeah, this is it,” walks out, and tells somebody, “Sign this one.” It’s worked that way every single time. So that space has to be ready, and everyone in your capital stack has to go in eyes wide open, knowing you’ll be spending the dollars on spec to make the space marketable and leasable. Nobody is leasing your half-built space. Not a 10,000- or 15,000-square-foot tenant. It’s just not happening.
Gordon Lamphere (26:23): How much are you factoring in for post-build-out costs? Ten percent? Twenty percent?
Rod Kritsberg (26:36): For TI dollars after we build it? Nothing. We might move a wall or two. We have different versions of the build, some a little more office-heavy and some less. If somebody asks us to add some walls, that’s limited dollars, or if they ask us to take some down, same thing, because we’re constantly building and always keeping our people busy. For the most part, very little, less than 5 percent if we spend anything. That’s the whole point. Everybody is generally carrying the same TI dollars. It’s just a matter of getting partners and lenders on board to spend that money prepping the space before the tenant walks in instead of after.
New York’s Outdated Zoning Map and the Midtown South Rezoning
Gordon Lamphere (27:28): What has always fascinated me about New York is its unique political landscape, and a lot of that comes down to the zoning maps. For listeners developing in their own markets, this isn’t too different from issues in places like Chicago and the surrounding areas. How has New York’s outdated zoning map played into how you approach development and redevelopment?
Rod Kritsberg (28:06): That’s a really good question, and we could spend a lot of time on it. I’ll touch broadly on what’s going on in New York City right now, and then on what made us target certain markets. Broadly, the zoning map is problematic because New York, like a lot of other metro areas, was historically an industrial and shipping hub. We’re on a river, and we used to have ports. When I say “used to,” I’m talking about 100 to 200 years ago. That’s how outdated most of it is. We used to have ports, industrial centers, and manufacturing. Once those disappear, it takes the market a long time to adjust. Decades.
Right now, I’m sitting in Tribeca, which is known nationally, if not internationally, as a very high-end residential market. If you walk around, you’ll see beautiful loft buildings converted from industrial buildings that are 100 to 150 years old, sometimes older, that were literally storage and manufacturing for goods that came off the ports, long before the World Trade Center was built. That industry disappeared, with its last vestiges gone around the 1950s and ’60s. Then the area became dilapidated in the ’70s and ’80s. It filled up with artists, until finally people figured out what to do with it and it started going residential in the ’90s. That’s how long it took. I’m using it as a case study to tie into something happening now.
Into the 2000s, all of a sudden Robert De Niro has a hotel here, and Jay-Z and Beyoncé have a penthouse. It didn’t happen overnight. There was a twenty-year period in the ’70s and ’80s when this was a terrible, scary place. Forget living here. Nobody wanted to work here or even walk through here.
Rod Kritsberg (30:31): Something interesting is happening post-COVID, and I want to give kudos to the administration for looking into it. Another part of Manhattan had, and still has, a real zoning issue. Part of it we call the Garment Center, but now it’s called Midtown South because it stretches beyond the Garment Center. There was truly a time in Manhattan when we had the schmatta business, with building after building of factories where people worked with cloth and did everything related to the fashion industry: manufacturing, sales, distribution, and more. That stopped a long time ago. Those buildings went office, but the zoning never changed. They were zoned for manufacturing.
Historically, they were the last to lease up and the cheapest office space you could get in New York City. When the city was humming, your most expensive office space was on Park Avenue and Fifth Avenue, and your cheapest was in the Garment Center. What happened post-COVID? Everybody ran toward the best quality. People’s footprints shrank, some people worked from home, and there was a rush to quality. So certain sections of Manhattan carry the majority of the vacancy, because the buildings are all the same. They look the same, and whether they’re owned non-institutionally or institutionally, they were the last to lease when times were good. When times got bad, I truly believe they became genuinely obsolete.
They’re not all vacant. You’ll have one building 70 percent vacant and another 20 percent. But the majority of the vacancy is concentrated in markets where the buildings all look the same and were historically manufacturing buildings. I truly believe in my heart of hearts that these buildings should not exist as office buildings. If they disappeared tomorrow, it would buoy the rest of the market, and New York City would look like one of the
Rod Kritsberg (32:49): healthiest office markets of all time. What the current administration finally realized is that these shouldn’t be office buildings. We have a housing problem. We can’t build housing fast enough. No matter how many units we build, how expensive they are, how dark or bright, or how many roommates have to share, people will fill them. There will be four roommates in a one-bedroom, one sleeping upside down in a closet, and they’ll be happy to pay $2,000 a month for their little piece of the city. It’s true. It’s unbelievable. When you talk to the younger generation moving in for first jobs or school, they’ll do anything to be here and anything to stay. We have a housing shortage and can’t build units fast enough.
So the current administration is doing a rezoning of that huge chunk of Manhattan, called the Midtown South rezoning, to finally allow these buildings, which haven’t been used for manufacturing in 50-plus years, to become something other than manufacturing or office. I think we’re a couple of months away from it. They also passed something called City of Yes, which loosens some requirements for converting office buildings. We were just talking offline before we started about how some of those rules let you work around newer zoning requirements to make conversions easier. The state has also passed some great tax incentives. It’s a bit of a quid pro quo: if you want the incentives, you have to build 20 to 25 percent affordable housing, and if you build larger, you have to pay union or prevailing wages. So there’s a lot in there taking care of a lot of people.
From my vantage point, I can’t see this happen fast enough. Is it going to happen overnight? Absolutely not. But just like the Tribeca story, what I genuinely hope is that people talk about how, somewhere in the 2020s, they finally changed the zoning, and by 2040, all that completely useless office space was torn down and replaced with great, super cool residential communities
Rod Kritsberg (35:14): with great transportation in the heart of Manhattan. They took down all those awful, dark office buildings and built a lot of new housing, and with it came grocery stores, food and beverage, and everything else. That’s what I genuinely think and hope will happen.
Why High Barriers to Entry Create Demand
To circle back after my very long-winded diatribe about what I want for New York City: from our perspective, some neighborhoods have very high barriers to entry. Part of it is zoning, and part of it is the difficulty of knowing how to build with certain buildings. The buildings I just described in the Midtown South rezoning, I hope most of them get torn down, so we never have to talk about this again. Nobody needs a low-ceilinged, dark factory building. Just let it change.
The markets I find most attractive are ones where you go back far enough to find incredibly detailed architecture, like SoHo. I keep coming back to SoHo because I’m fascinated by the cast-iron architecture, the ways they used to build, the build quality, and the architectural detailing, which I personally love. And because it’s so beautiful, there’s a whole extra set of regulations on top of the regular Department of Buildings rules about what you can and can’t do. They come from the Landmarks Preservation Commission, which wants you to maintain the character of the SoHo Landmark District and never change what makes it what it is. That adds time, complexity, and architectural requirements.
The one thing I always point out is that we replace all the windows in all our buildings, and very few others do. Some of these windows, and I’m sitting next to one right now, are 10 feet high, and the requirement is to replace in kind, meaning one for one. If it used to be a 10- or 12-foot-high,
Rod Kritsberg (37:30): double-hung, operable wood window, that’s exactly what you have to build. That’s not something people are used to building anymore. There are no factories pumping out 10-foot-high operable double-hung wood windows, because a glass curtain wall is cheaper. But we build them, on site. So we have new windows where a lot of people in SoHo don’t. They’ll keep a hundred-year-old leaded window, and you can wash it until your hands bleed, but it will never be as clean as a brand-new window. That’s the kind of thing that creates a high barrier to entry, but it also creates demand, because of the limited availability of these spaces. Very few people are actually doing it. So when somebody sees one, just like they’d say, “I want that high-end residential loft,” they see one of these high-end offices and say, “We’ve got to have one.”
The Final Four: Where Commercial Real Estate Goes in Ten Years
Gordon Lamphere (38:29): One thing we’ve always got to have is our Real Finds Final Four. It’s a great way to wrap things up. I’d like to stay on future trends: where do you see commercial real estate, even if it’s just New York, going over the next ten years?
Rod Kritsberg (38:51): Commercial real estate is a big segment. I think logistics and data centers will still be drivers, and if you can attach it to commercial real estate, the energy sector that powers the data centers will be a big driver too. From an office perspective, I think the trend line will continue much the same, toward ultra-high-end office. It’s been proven that people work together better collaboratively, face to face. Once we get off this podcast call and go our separate ways, we forget what we talked about. So those are two sectors I think will always be healthy.
If you count residential housing, especially in urban markets, as commercial real estate, which technically it is, certain markets will still have demand drivers: where population is expanding, you’ll need more housing. And if you count hotels, lodging, and food and beverage, I don’t think the US economy is changing direction. I think it will remain healthy and growing, and a healthy, growing economy has people who want to spend money, go on vacation to Miami or wherever, and stay in a nice hotel.
For my segment, in New York, I think there will be an absolute explosion in office-to-residential conversion, and more specifically, in building residential housing, because there’s a need and the sector is flush with capital. I think we’ll see an explosion in residential housing over the next decade. And believe it or not, there’s a limit to how much new high-end office has been built. You had Hudson Yards, but that’s basically all full. At some point, people will start dipping their toes back in to build new, really high-end office buildings, and the trend line will continue: everybody moving to those buildings and new office and retail leasing records being broken. The last office lease I heard of was $250 a foot in some of the new ground-up
Rod Kritsberg (41:11): office space on Park Avenue. We’re breaking records every time, and I don’t think that will change. It’ll just be fewer buildings, more high end.
Advice for Young Professionals: It’s All Sales, and It’s a Numbers Game
Gordon Lamphere (41:18): I don’t think creative destruction is going to change as long as humans remain humans. A solid percentage of our listeners are starting out in their careers, and they always love this question: what advice would you give somebody starting out in the industry?
Rod Kritsberg (41:43): It’s a good question, and a loaded one. It depends where in the industry they’re starting, but here’s what I believe to be true: it’s all sales. You’re in sales no matter which sector you’re in. If you’re a broker, hit the phones. If you start as an underwriter or anything else, you’re selling somebody at all times, whether you’re a broker selling a property to a buyer, selling your underwriting to your boss when you pitch a deal in committee, or raising money and selling your company as the next thing to invest in. Don’t get disheartened, because it’s all the same thing, and it’s a low-probability game. It just is. Whether you’re raising money and talk to a hundred investors, some of whom take six months to give you a no, or you’re in brokerage, which you know about, and you have to show a building five hundred times before somebody buys it, don’t get disheartened. It’s a numbers game. Keep working the numbers and you’ll be fine.
Gordon Lamphere (42:58): I remember a day when my wife was working in the room next to me and heard me getting yelled at all day by various people in various ways. People can be meaner over the phone than in person. We sat down for dinner, and she asked, “How was your day?” I said, “It was a great day.” She asked, “Why was it a great day?” I said, “We did two really big deals.” She said, “All it seemed like was that people were mad at you all day.” I said, “That’s the way the business works. All you need is one really good hit in a day, and this was a two-hit day.” She said, “I do not know how you do your job.” So I think that’s one of the best bits of advice you can give anyone starting out: it’s about the hits, not all the times you strike out.
Book Recommendation: Cryptonomicon
One thing we love to talk about on the podcast is books or educational materials that could help someone at any point in their career, maybe reshape their mindset. It could be a podcast, anything you’ve been listening to that has inspired you.
Rod Kritsberg (44:17): You’re not going to like this answer. I’m a bit of a nerd when it comes to books, and what I read and listen to is the opposite of my work. I don’t listen to business podcasts, and I don’t read business nonfiction. The reason is that this is all I do all day. When I pick up a book, I want fiction. I want to get lost in some other world. The only nonfiction I read is science-related, and the only podcasts I listen to, other than cultural ones, are science-related.
Gordon Lamphere (45:02): So is there a book we should pick up on that?
Rod Kritsberg (45:06): I’m not going to embarrass myself with the silly fiction I’m reading. But if you want a really nerdy one, and if you have a couple of nerds in the audience, they’ll dig it, my favorite is by Neal Stephenson. It’s called Cryptonomicon. It’s historical fiction touching on Newton and Leibniz fighting over the creation of calculus and on the first computers. If you want that, read it. That’s really good nerd stuff.
Who Should Be Our Next Guest? Water and Energy
Gordon Lamphere (45:38): We’ll put that book on the list. But there’s one question we won’t let you out of, and it’s the whole point of the podcast. We believe the men and women in the arena tend to know the next person to reach out to. Who should we talk to next?
Rod Kritsberg (45:53): I don’t know the person myself, but you should ask around, because this is something I truly don’t understand and think will drive all of commercial real estate, and actually all of industry, for at least the next decade: water and energy. How do you get the water to cool and the energy to power everything we’re trying to do, whether it’s data centers or the Tesla I drive? Is it municipalities? Are we leaving the real estate community and going to scientists? Can we create clean nuclear energy? I don’t know, and I wish I did. I wish somebody could wrap their brain around what we do, and I want to know how I can make a buck by prepping sites with energy.
Gordon Lamphere (46:52): The podcast we filmed about a week ago, which drops the day after this one, is with a nuclear engineer who’s doing exactly that for a number of data centers all over the Midwest. So that’s very much top of mind, and a great recommendation.
How to Reach Rod Kritsberg
There’s one last question, which I think will be relatively easy in comparison: if somebody wants to get in contact with you, Rod, what’s the best way to do so?
Rod Kritsberg (47:27): They can email me or call my office and leave me a message. I try to make it easy to get in touch with me. Like I said, I was an investment sales broker for part of my career, so I know how hard it is to do those outreaches, and I do the same thing. I reach out to people all the time. We do a lot of off-market deals directly with the largest landlords in the city. So if you want to email me or reach out, or you have a deal you want to sell me, give me a call.
Gordon Lamphere (47:57): Rod, I’ll be sure to. Thank you so much for this conversation today, and we have to have you on in the future. Thanks again to Rod. We appreciate his insights. If you enjoyed the podcast, please give us a like and a five-star review. Your interactions and subscriptions truly matter and help us continue to bring on quality guests. You can find us on YouTube, Spotify, or wherever you get your podcasts. I’m Gordon Lamphere with The Real Finds Podcast. Thank you for listening.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, manage, or invest in energy-adjacent, mixed-use, or transit-oriented property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.