In this episode of Broker’s Angle, Doug Regal shares his 22-year journey through New York City commercial real estate, from property management to tenant representation. We discuss what keeps tenants happy, how tech companies’ space needs have evolved, and why modern brokerage must embrace technology.

Transcript

Hal Coopersmith: Welcome to Brokers Angle. I’m Hal Coopersmith, and in this episode, we are speaking to Doug Regal. Welcome to the podcast, Doug.

Douglas Regal: Thanks for having me, Hal.

Hal Coopersmith: So we were talking a little bit before we started recording, you had a little bit of a journey inside the industry. Do you want to talk about that?

Douglas Regal: Sure. This is, 22nd year, I think in the commercial real estate world in New York. I spent the first 10 years, of my career working with a local family ownership group called ABS Partners. Learned the business from more of the ownership management side, was able to be an agent for some of their buildings and learned really the art of, you know, the ins and outs of a transaction of what goes into making a deal and then keeping a tenant happy in a building. I was able to do a little bit of my own tenant rep brokerage on the side. And after about 10 years, at ABS realized that the brokerage business and the brokerage angle was really what was more interesting to me, to kind of take the next step in my career. So at that point, left ABS went to join Cushman and Wakefield, where I spent the next seven years of my career there and then towards the end of that tenure, my partners and I left to launch the New York office for a startup based out in San Francisco called Rays Commercial Real Estate. Rays was at the time six years old in building a technology platform to support the brokerage and advisory business. Something that we felt was really missing in the world of big commercial real estate brokerage. So we took the plunge in February of 2022 to launch the office here in New York. Was doing that for about two and a half years, and then, in October of last year. JLL acquired Rays as a company. So the last six months have been, at JLLs New York headquarters.

Hal Coopersmith: So you talked about in your career, while you were at ABS learning how to keep a tenant happy from a building side, what do you think a building needs to do to keep a tenant happy? What’s that perspective? What buildings do it right? And then what buildings don’t do it right?

Douglas Regal: I think that answer is an interesting answer because some of it is the same as it was when I started in the industry. I think some of it’s also very, very different today. Some of the basics are maintaining the building, having a pleasant staff, taking care of things when they arise, when there’s a leak or something that goes on. Being present, and being able to remedy that quickly.

Responsiveness, as a category is something that any tenant values and you see, certain owners in certain buildings have reputations that they don’t do that very well, and they’re the ones that often struggle to keep rented particularly when the market, softens a little bit.

So I think that’s something that holds true. It holds true when I started in industry. It holds true today, will probably hold true in 20 years from now. I think, given the changes in the market, particularly since COVID. You know, and what tenants are looking for in buildings is definitely different than maybe what it was before. And just amenities, you know, sort of renovations or new construction, things of that nature are important as companies are figuring out the best ways they can get their employees to come back and return to office, return to office in a way that they’re happy to be there and not resentful that they have to come in, you know, three, four or five days a week. So I think owners that have really found the most success, have done those kind of renovations, added the necessary amenities to buildings that are drawing people back and keeping tenants happy.

Hal Coopersmith: So what was the impetus for driving you from the landlord’s side to the tenant side?

Douglas Regal: It’s a great question, and it wasn’t something that I knew kind of right away, and I don’t have a family background in real estate, so I kind of got into this, actually through an ad in the New York Times because it seemed like something interesting to try and, you know, so I kind learned along the way what I liked, what I didn’t like, and what I thought best suited my personality, where I could find the most success. And what I think I found along the way was I had a great learning experience being the agent for several buildings and just understanding how to see a deal through from start to finish. But on the management side, there’s a lot that goes on after a lease is signed, you know, in terms of just all the things we said about keeping tenants happy and, and kind of being that, that conduit to them when things come up and things need to get fixed, and then kind of dealing with that on the ownership side.

I felt that was not really what I wanted to spend the rest of my career doing. And you know, I had a little bit of success working with some young companies at that time. You know, tech in particular was a new and growing sector of the New York marketplace and I found it just very interesting and exciting to work with younger founders who were more aligned with me from like an age demographic and watching them build a business and start with one office and then grow to a bigger office and a bigger office. And it was, I found exciting to be a part of that journey with them and so that, I think primarily was what led me to the path of wanting to pursue brokerage on the tenant rep side more so than the landlord agency side.

Hal Coopersmith: So it’s a perfect segue. What are some of the tech companies? What do they need? How were you able to fill that void for the tech companies?

Douglas Regal: So again, 10, 15 years ago, the tech industry in New York was in its infancy stage. I mean, Techstars had its first class, and I worked with a company that came outta the first Techstars class right, in New York. I don’t remember their name. I think they exited successfully, you know, several years after that, and the founders are onto other things now. But you know, it was interesting at that time, it wasn’t an industry that brokers really service, right? There were brokers where at the time more focused on larger corporate service clients, largely focused in Midtown or downtown. You know, Midtown South at that time was still a relatively sleepy market. It’s nothing like it is today. and I found that, frankly, there was a pretty willing audience of these younger companies who were just happy that there was a broker kind of willing to kind of reach out to them and help them with, you know, a small short term, type of lease that most people weren’t focusing on. And so I kind of found a bit of a niche doing a lot of those short-term deals. Back at a time when, you know, that was not a big part of the market. I think fast forward to today, owners, as tech has grown and in its importance as part of the overall leasing market in New York. Owners have had to adapt to the needs of those companies, so now short term leases, are much more commonplace things like WeWork and other managed service providers didn’t really exist in a meaningful way back then. They exist in a much more meaningful way today, so those kind of things were always important to tech companies, just being flexible and trying to find them solutions that were more tailored to what they needed and not more tailored to what the broader market necessarily was accepting at that time.

Hal Coopersmith: What are the space needs of tech companies, like in terms of a physical requirement? What are some of the things that you focus on when you’re working with a technology company?

Douglas Regal: Yeah it depends, is really the answer. And I think that’s kind of an overall theme of the market today, is that there’s not just one answer for a company’s real estate solution. You can have three different companies that may have the same headcount or maybe at the same, you know, phase of their growth series A, series B, whatever that may be. And they may have three completely different needs for spaces, right? So it’s kind of finding out what is the space? What does a workplace mean for them? What’s important, for their company culture? What are they trying to achieve with the workplace? Is it going to be sales teams and engineers that just need open bullpen space and meeting space? Is it going to be more of a collaboration hub where people come in once or twice a week to take bigger meetings or all hands?

All of that leads into, you know, where this space is located, how it’s designed, what the purpose is going to be. So I think all of those things can be important, but it’s really about finding out what the workplace means for this particular company. What goals are they trying to achieve with the workplace? And then tailoring your search and your search for them in that way.

Hal Coopersmith: And so when you were at Cushman and Wakefield, what attracted you to going to raise?

Douglas Regal: Cushman was a great platform. One of the sort of oldest companies, you know, based in New York, great firm to work for, a lot of great resources there. But what we found that they were lacking and not specific to Cushman, I think we found industry-wide at all the major large firms was an adaption to technology just really wasn’t there. So, the process of finding an office space, what we would have to do, you know, on behalf of our clients was kind of a very old, and it just felt like an outdated process. It didn’t match what clients were interacting with and how they engage with things in their personal lives. Right. When you, for instance, go look to book a hotel or an Airbnb somewhere. You don’t call up Expedia and ask them to send you a PDF report of what hotel listings are available that day, right? You go to their website and it’s a platform. It’s interactive. You can filter, enter in criteria. If you go back the next day, the inventory may change and the office space world didn’t act that way. We were working in a dynamic environment of the market, but we’re sending static information and that just seemed like if there wasn’t a match there.

So what we found in raises, and I can’t take any credit for starting raises, they were six years in the making by the time that we started talking to them, based out in San Francisco by some other folks who had left large firms and had this same kind of idea. And they were well on their way to building a modern platform. To help modernize and bring the commercial advisory and brokerage business into the 21st century. And so when we saw what they were building, I couldn’t unsee it. It was everything we conceptually had wanted. It’s everything we thought our clients would want. So we took the leap of faith to open up their office here in New York. My, my partners and I, back in, February of 2022

Hal Coopersmith: How did clients react to the platform?

Douglas Regal: Universally well, I don’t think we lost a single client because of it. You know, they all. When they saw it, they got it. They said, this is fantastic. I, you know, I can’t tell you how many times we’d finish a tour with a client and they would take the nice tour book that we put together and had bound and delivered to them, and they would throw it right in the garbage, right? Like it’s not something that they ever valued keeping past the tour. So, you know, having, being able to sort of tour on a digital platform, show them what we’re looking at out on iPad, they can look at it at home when they have time, they all really value that. So it’s been pretty much universally well received by our clients.

Hal Coopersmith: And what are you seeing among tech firms in the market now in terms of they’re taking on office space?

Douglas Regal: I think by and large, they’re returning a lot more than they’re not. And they certainly lag behind some other legacy industries, financial services. I think as the leader of, at least in New York, they really kept the market afloat in 2020 and 21, as early, early adapters to kinda returning back to the office. And I think tech,

Hal Coopersmith: That’s one way of phrasing it.

Douglas Regal: Yeah. You know, politically correct. And I do think Tech by and large has started to follow, not started, has followed suit, and it started from the top down. You know, as some of the bigger firms, the name brands, you know, Apple and Meta, Microsoft and others, announced their increasingly more rigid return to work policies. That has a trickle down effect and sort of the, the smaller firms downstream start to adapt those policies, as well. I think universally, I don’t want to say universally, but almost universally at the executive level, at the C-suite level, most people that we dealt with, founders CEOs, CFOs, wanted to get people back. It was more of a how do we do this? In a way that we’re not going to lose talent. And when that has now largely been taken off the table as expectations have, I think largely been reset to at least a few times a week, there’s some level of we’re going to be in an office, that’s allowed the leadership teams of these companies to take a more direct stance of we’re going to be back in person, now it’s just as we were talking about before, what does that mean for us? Does that mean we’re five days a week? Does it mean three days a week? You know, one of the founders of Ray’s has a great line. They build a church for Sundays. If you, if you just need a space for one or two days a week, you still need a space.

And so once that argument was kind of put to bed, it’s really, you know, the market’s woken up from, with a lot of the tech and media firms kind of returning back and being very active in, in taking space in New York.

Hal Coopersmith: Well, and one of the things that you said to me before we started recording is it’s no longer an arithmetic formula. We have this number of employees and this number of square foot per employee. Can you talk a little bit about that?

Douglas Regal: Yeah, absolutely. And I think that that’s a really interesting, history’s going to look back at how the market evolved from COVID until. Post COVID. I think it has a really interesting, you know, historical point in the commercial real estate world. As you mentioned, I think before COVID, you know, a lot of firms just had a very basic math equation. If you were an open plan user, it might have been 125 square foot per person and we have X amount of people and therefore we need about this much space. And if you’re a law firm, maybe that number’s 200 square foot a person, right? But it was always based on, we have this many people, we probably need this amount of space because everyone’s in the office five days and we’re all using the office pretty much the same way. And what’s come out of COVID, and as I mentioned before, is the office in a workplace mean very different things to different companies and that leads to very different outcomes for companies of the same size. And so I think it’s, we’ve seen the rise of people in workplace, workplace experience, HR, all of these people are now very involved in the real estate process and the office process where pre COVID, they were not nearly as involved. Right. And because so much of finding a space is now directed at what are we doing to maintain, retain our employees? What are we doing to attract new talent? Workplace experience is a huge talking point, right? And what does that mean for my company? How do we design a space around what our goals are going to be?

Those are all part of the conversation that go into defining, okay, this is what we’re looking for in the market.

Hal Coopersmith: And can you talk a bit about adding value either yourself or kind of through the raise platform to clients?

Douglas Regal: So the raise platform, which I have to plug now, is JLL’s leasing OS platform. It’s really designed not only to modernize the process of managing, finding and managing your office, but also to add value, you know, outside of when there’s a transaction. And I think that was always an important point, of how I built my business, was not just to be there when there’s money to be made, but to kind of be valuable to clients outside of that time period. And the platform that Ray’s built and now JLL is amplifying, does the same thing and it does it through, you know, transaction management, just making, you know, making the transaction process a lot more modern and smooth. But also, you know, we have the ability to, you know, take on clients’ leases, abstract them, provide them with a way where they can manage that data and keep track of important things like critical dates, which often get lost. In the shuffle, you know, of a 5-10 year lease or if you have a five or ten-office portfolio, it’s hard to remember all those things.

So we have a way that, you know, we can provide you access to that data when you need it, and even when you’re not thinking about it, it’s kind of presented to you as a reminder at key times. And then we have a workplace analytics portion of the platform as well, which really takes in data points of how people are using their space and kind of gives them, gives it back to them in a way where they can understand it and let that data lead them to make intelligent decisions on their rea estate.

Hal Coopersmith: Well that is a wonderful note to end things on, Doug Regal, thank you for being a part of Broker’s Angle.

Douglas Regal: Thanks for having me.