Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome Michael Phillips. Michael is the principle and the chairman and president of Jamestown and a member of the firm’s executive committee. As president, Michael oversees the development and execution of the company’s real estate projects globally. During his tenure, Jamestown has grown its portfolio of assets and key markets throughout the US and expanded its investment footprint to South America and Europe more than tripling the firm’s assets under management. Michael is the driving force behind the companies adaptive re-use projects including Chelsea Market in New York, Ponce City Market in Atlanta, Industry City in Brooklyn and Ghirardelli Square in San Francisco. He’s nationally recognised for his creative leadership and ability to build unique, iconic urban centres. He attended the American University in London. So now we are going to hear from Michael Phillips about Jamestown and the vision behind the creation of some of the world’s most successful urban places. So Michael it’s great to speak to you, where are you this morning?
Michael Phillips
Good morning Susan, I am in New York City this morning.
Susan Freeman
Ah well greetings from London where it is absolutely freezing cold. I hope you’ve got better weather there.
Michael Phillips
The same weather here and I’ll be there next week so I am hoping yours improves.
Susan Freeman
I hope so. So it was, it was really good to meet you when you were in London just before Christmas and I understand that you know London pretty well and that you studied here in the past?
Michael Phillips
Yes I did, I studied there in 97 and 88. Quite a long time ago but have been a frequent visitor back and have had a house there for quite some time.
Susan Freeman
And did you think about staying in London when you were studying here?
Michael Phillips
Yes of course, I think that was, certainly was many people’s dream and many people made that a reality. We have often in our family thought about making that our, our full-time spot but circumstances drove me in a different direction as a young man so I ended up on this side.
Susan Freeman
Well tell me a little bit about the circumstances and what happened to you as a young man?
Michael Phillips
Well early in my career I actually started a retail company and that, that was at the invitation of my sister who had the idea and so that’s what brought me back from London at the time and that retail company grew quite a lot and then became a manufacturing business and then became a property business and that’s where I am today. So, one thing led to another and here we are.
Susan Freeman
Here we are. So you are now chairman and president of Jamestown which for our listeners who don’t yet know, Jamestown is a global design focussed real estate investment and management company which has been going for some 40 years and at what stage did you join Jamestown. How long have you been there?
Michael Phillips
So I joined, I was originally a, a neighbour of Jamestown’s on a property that they had invested in and I own the shopping centre next door and I came in to help them post-2008 and then eventually we merged and I never left and here we are today so it was a, you know like many things, I think adjacencies are important and relationships are paramount.
Susan Freeman
That is a real adjacency. So Jamestown are primarily active in, in the US and Latin America and Europe but not yet really known in London other than by the place making experts who insisted when they heard I was going to New York before Christmas, they said, you have absolutely got to see Industry City in Brooklyn. So just to get us started, can you tell our listeners a little bit about Jamestown and how you operate?
Michael Phillips
Yes of course so we are indeed 40 years old and our roots are really in a relationship between German closed end fund syndication and property investment in the US which came through a tax efficient treaty for German investors and we’ve had a series of funds over 40 years. Really we’re on the 32nd of our core plus funds and we’ve had two opportunistic funds and two timber funds and so we really started our roots in that way. About 2011 we branched into institutional fund raising business and investor business with a private re-structure and then we’ve had a series of separate accounts which brought us to Europe only really about 5 years ago and through separate accounts ended up with investments in Wales and Scotland and continued to look at Great Britain. For us, into where we like to invest large adaptive re-use assets are our great love but we also invest in grocery anchored and high street retail and have historically invested in mix use office and residential as well. So we are actively looking for our first sort of major project in England.
Susan Freeman
It’s interesting and you mentioned large because obviously when you look at something like Industry City, that is large, I think it’s about 35 acres. The sort of things that you would be looking at in London, what sort of scale would you be looking for because obviously it is more difficult?
Michael Phillips
Yeah it’s a great question. I think, I think finding historically or ironically relevant properties is not hard in Great Britain but certainly not in London. What we believe is that really to effectuate the strongest place strategy in conjunction with long-term revenue streams to support the community and the investment pieces really between you know, 500,000 and 2 million square feet or 50,000 or 200,000 square metres depending on the metric right, are our ideal and we worked across, we worked in certainly smaller formats, 100 to 300,000 square feet but we find that it really is the same amount of work and the same amount of disciplines engaged so the large the asset, the better the budgets are, the better deployment we can have and certainly when you talk about mixed use, the more critical mass in each one of those sectors you are able to effectuate.
Susan Freeman
In a minute we’ll have a look at you know, some of your specific hubs and properties but I just wanted to turn to a description of you in an article I was looking at recently which says that you are to place making what Leonard Bernstein was to music and that you are a maestro with a sixth sense of your subject and a gift at orchestrating many moving parts and I thought you know, that is quite an endorsement and I just wondered you know, when you are looking at potential site, what makes something transformational, what sort of elements do you need. I mean what makes it tick for you?
Michael Phillips
Well first I think that was a very generous compliment. I wouldn’t put myself in that, in that category at all but I would say that human scale and human accessibility is something that many people take for granted and inadvertently disregard and I think I’m a great fan of architecture and high quality architecture but often I think that we are drawn to architecture as something you see as its whole, not the first sort of 30 feet and the engagement kind of at the ground and how it makes one feel I think aspiration is really important in architecture but intimidation is a really damaging by product of it and so I strive and we strive in our business to really create really approachable places that people really feel, sort of reinforce them and give them kind of tail winds that don’t create head winds and what I mean by that is, so often you see a large white marble lobby with banks of security and turnstiles for security and that’s not how the new workforce sees themselves working or living. They see themselves in a much more frictionless experience and a much more community driven experience. Security’s necessary absolutely but what was thought by our parents to be the work environment that we aspired to be in that represented power and success and money and design, isn’t necessarily what younger workforces are looking for. I think there’s a place for it everywhere but gratuitous luxury for luxuries sake isn’t really what we think drives enduring places. We think enduring places thrive because they have really interesting architecture but most importantly they have really strong senses of community that people feel at once like they belong or they want to belong to and so I think that recipe for what creates that or what, what allows people to feel that, yeah there’s just like in cooking, there’s a million different recipes for us to cook chicken and they’re all really good but the one that each of us choses is unique to our own set of values and approach and so ours tends to be really humble, sort of inclusive, colourful you know, very layered architecturally and quite often I believe that we as humans live in very imperfect environments and so striving to create perfect environments is a little bit of a friction point for people and so I think some imperfection and some things that are unfinished, the story is not ever really completely told I think creates the most interesting environments. I don’t know if that… it sounds a little bit esoteric but, but that’s kind of how we have approached creating place.
Susan Freeman
Okay, so I think what would be interesting at this point is to you know, maybe look at some of your, your projects and your communities and just talk about it a little bit. So I mentioned Industry City in Brooklyn as somewhere that I was told I just you know, I needed to go to and visit when I went to New York last and I just wondered how it came about because it seems to be quite a sort of unique mixture of uses with some you know, manufacturing and, and creative industries and it would be interesting to know how came about, how you created the mix of uses that, that you have and how you, how you see it sort of going forward you know, is there anything not quite in the mix yet you, you know you mentioned you know, these projects the sort of ongoing story, so, so just tell us a little bit about Industry City.
Michael Phillips
Sure so Industry City is 6 million square feet on what was originally 35 acres. Now it’s a 110 acres which includes a big piece of working water front which we are employed in wind power project on but the original site really when we acquired it with our partners was 6 million square feet, about 50% occupied, about 40% red pen with mostly storage and fairly dormant uses. There were 800 people working there every day. It’s in Sunset Park in Brooklyn which is a part of Brooklyn which no one would have ever really heard of, it’s not Green Point, it’s not Williamsburg, it’s not Brooklyn Heights, it really is between many places and what we, what we sensed about it was its scale alone and I would liken this a little bit to something that might be a little closer to, to you which is River Café in Fulham which was originally a canteen and was really not open to the public but 31 years later and I was there the first year it was open when I was in Uni and I was there, I go there every year, many times. It resonated with people as a place for food and culture and community and it’s a very small example but we saw very much a similar thing in this part of Brooklyn in that as families formed they moved from the northern neighbourhoods more on to the southern side of central Brooklyn to where the schools were and the parks were and we could create a place to catch both families, very much rooted in community and place, the food culture, the arts culture with over 500 artist studios and also respond to what is I think the backbone of New York which is a very multi-ethic, multi-cultural experience so our food culture we have 45 food businesses and they represent a very wide spectrum of, of that but we also have film production and music and graphic design and architecture and furniture making so we have traditional crafts and we have really interesting industries. We early moved the Brooklyn Nets which are basketball, the pro-basketball team their practice facility and their offices and also hospital for special surgery clinic there so that became a great anchor around sport and engagement for young people as a community outreach programme so Industry City is now about 15,000 people a day working there and has visitors of between 25 and 30,000 on weekends. It is representing I think a cross section of the city and was the beneficiary much the way kind of outlying areas in London have become the beneficiary of pressures in Manhattan and Central City to find more affordable but also more like minded people in a collaboration of community and so it is an example of that for us. We are about 8 years in, we’ve enjoyed it immensely. What’s still yet to come are probably more performance and art venues, certainly more and more professional services, offices and increasingly capturing the design and home furnishings industry which is something we have focused on quite heavily from the beginning. We have Cowtan & Tout offices there which is obviously, you have them at Chelsea Design Centre in London but more of those kinds of uses as it goes and as I said, it’s a story that’s never really completely written because buildings have many half-lives and so we’re just one, we’re stewards for one portion of time but we think that we took something that was originally an industrial facility built to support the military that really lost its purpose after the Wars and repurposed it as a really strong community space and a business transactional life.
Susan Freeman
It’s really exciting and so you presumably have curated this, I mean the, the uses haven’t just evolved, you’ve sort of looked at it and sort of you know, to see what’s, you know, what’s going to work best. I mean is there anything that you’ve put in there which you thought would work tremendously well and just didn’t take off at all?
Michael Phillips
Yes I think there’s, there’s lots of examples of people who come early and really want to be there and maybe, yeah we at one point we had antiques dealers who I think were some of the best antiques dealers in, in the east end of Long Island, a place called the Hamptons and they wanted a New York showroom and they came to do it but they weren’t really, it was a side goal for them and I don’t think anyone doing something in New York or Brooklyn should ever do it as a side business, it should be a primary business and we didn’t have critical mass of home furnishings at that time so I would sort of maybe give that as an example. One thing I think that has been really resonant and exciting is we have 14 buildings, obviously it’s a very big site, we decided to curate areas and one thing we created was something called distillery row which has Admiral and gin distillers and vodka but also has a really important sake brewer and beer breweries and so its centred around a courtyard at the base of an 800,000 square foot building but that became the amenity base and the engagement aisle that allows multiple kind of layers of community to come at different times and so I thought that it’s turned out to be a surprisingly enjoyable obviously, as anything with spirits would be, but also a great creative outlet as people test and innerate new, new flavours and products.
Susan Freeman
That sounds like real, real fun and then the other Chelsea Market in the meat packers district is obviously you know, one of your sites that you are pretty well known for and that has, that has a food focus doesn’t it?
Michael Phillips
It does, so the base of it is quite a famous food hall called Chelsea Market. It actually sits at the base of a 1.1 million square foot office and industrial building and is in between about 6 million really the total of about 6 million feet of office that represented the office in the meat packing district just adjacent and at one point we owned all of that square footage with our partners and developed Chelsea as the base kind of engine of community and it started early as really a food manufacturing spot where you had windows that you could walk up to bakers and butchers and seafood importers and take something away bur it was a secondary purpose. The real primary purpose because the rents were low were to provide people a place to produce the product and distribute their product and over time it really grew into a very credible, well respected food market with some elements that were kind of added. Great rotating art shows, some really specifically carefully curated Moroccan imports of a variety of other things that were non-food but the food culture was really the basis and we had the food network which incubated upstairs, we had New York One the television, the local television station, we now have YouTube studios there and ultimately Google bought that for part of their New York campus all of that 6 million square feet and more and we most recently worked with them to develop the Pier 57 food hall which is a mission based sort of fundamentally local incubator food hall but all that would really have centred around being the economic generator for the whole West Chelsea district where the highline is based.
Susan Freeman
Interesting what you said before about engagement at ground floor level because having been to Chelsea Market on several occasions, I don’t think I’ve actually you know, I probably haven’t looked up, I’ve just been on the ground floor and one of your other assets which I find quite fascinating is One Time Square and the site of the New Year’s Eve ball drop which obviously appears in many, many films and I’ve been reading about the virtual version of the building that you have in the Metaverse which you know, obviously you are doing refurbishment works now and so you’ve got this virtual presence in the Metaverse and I believe you run a virtual New Year’s Eve event in the Metaverse which you know, is attracting millions of people and it would be really interesting to hear from you how that came about, you know, how people are engaging with it?
Michael Phillips
Sure so maybe before we leave the ground plain thing I’d make one more comment which is often developers think about what happens on the upper floors of the building as the most important thing and the ground plain is an afterthought or requirement by municipalities by planning, by code to create an active street scape. We actually believe that you create the most dynamic ground plain that is really agnostic of what happens upstairs. Not in actuality but in intent because then that being the most healthy and vibrant thing really drives the experience on the upper floors and creates an identity and a workplace that helps employers attract and retain the best and brightest workforce, that creates the most engaging non cost amenity to the employers upstairs but really not really thinking about it as a second priority but thinking about it really very much as primary priority and that community in place wins out in terms of driving ultimate value. It doesn’t mean you don’t create all of the ESG compliant and best quality office space upstairs but you have to have equal priority there. So on to One Time Square, I would say One Time Square we’ve owned for just shy of 27 years, it’s a 100 year old building that was built at the nexus of the south end of Time Square, it’s what you would call us by a flat iron building. The floor plates are about, on average about 42 hundred square feet so quite small and it’s a knife edge at the southern end of the bow tie. For most of our ownership and long before us the building had been largely vacant inside except housing our production staff on a couple of floors but it’s a 22 floor building wrapped with signage and having the mechanism that the ball drops. As a result of owning it for this period of time we produced New Year’s Eve with Time Square Alliance in the City of New York and it’s been a really robust, incredibly dynamic partnership but one of the things we found going into Covid, really 2017 before Covid is that the nature of signage and the competition in the New Year’s Eve space around the world was continuing to change and evolve and so we embarked on creating a virtual experience and streaming experience both in the Metaverse and virtual online. Some of that was about sort of digitally twinning and creating a second marketplace but as we think about Web 3.0 and how we engage post a simple Google search world, but where we actually want to three dimensionally experience places and transport ourselves to other locations and to experience goods and services without physically being there, the Metaverse is an incredible tool to do that as a marketing engine and so as we launched that experience it included avatar performances of real singers and performers and bands in the virtual space, it included a gaming platform which had people gaming with 3 million people gaming on 2 January, well after the event. We extended the hours of experience and spoke to a fundamentally different demographic and generation that grew up experiencing life not through broadcast television but really through online and gaming and so we found that to be a really important aspect of how we communicate. I think I stated that the building’s a 100 years old, it started its life as the home of the New York Times Newspaper so it’s always been a communication beacon to the world and what we say in the US is that every sort of major win or loss of event that happens in the US and certainly throughout the world happens at some level in Time Square, either a celebration, a protest, a sense of mourning, whatever that is and so using the Metaverse and virtual as another tool to expand broadcasting communication much the way this podcast – you know podcasts really didn’t exist the way they do today, 10 years ago and now they’re a pretty ubiquitous part of the way we, we consume content. We really thought the virtual and the Metaverse experience was essential and through that process we took the viewers of New Year’s Eve from 110 million to 300 million over two and a half years and so that has been a really rewarding, not easy, but a rewarding experience and I would say that you know, the, the crypto world which took tokenomics and all that dialogue which is separate but related has created a little bit of a quell on the information about what’s happening in the Metaverse but the Metaverse is really still a really vibrant growing platform for marketing and engagement.
Susan Freeman
Yes I hope so because you know if you roll back a year or so we were talking about Metaverse the whole, you know the whole time and what was going on, what you could design in the Metaverse you know, who was taking space in the Metaverse and it’s gone, it’s gone a little bit quiet.
Michael Phillips
I would say part of that is, is you know, the world itself is you know, we saw what happened with some of the exchanges and the challenges around regulation and compliance which is really much more about tokenomics but the Metaverse also had a lot of different messages about how people were engaging with it but I think the thing that’s really interesting is digitally twinning buildings for four managing energy consumption and use and heat maps of how people are engaging with them and I think obviously Web 3.0 as a way to experience goods and services so if you think about online purchases and mail order yeah, which is an older term and the amount of returns that an Amazon gets the idea that you can build an avatar of yourself that is your exact dimensions and you can try on clothes virtually promises incredible opportunities for reduction of waste and packaging and shipping and carbon if people adopt it as a widely used technology.
Susan Freeman
Absolutely, so I mean, yes it’s, I mean it’s really, it’s really the beginning with the Metaverse isn’t it and I think we are just sort of feeling our way a little bit. So I also wanted to ask you about you know, how you reposition assets because you have a property in Rotterdam which I can’t pronounce but it’s, it’s GHG isn’t it? Maybe you can pronounce it but I was reading that you are planning to reposition it as an innovation hub and I just wondered how you go about doing that?
Michael Phillips
Sure so for all the Dutch people that may be listening and please don’t judge me too harshly but I would say it’s called Groothandelsgebouw which was originally the first building built of scale in the Netherlands post-World War 2 and it sits on the land of the original zoo next to the central train station. It is a 1.3 million square foot building and was built really as an innovation hub at the time which is quite fascinating. It was built as a sort of trademarked to showcase the goods and services of the Dutch manufacturing base in the port city right that for people coming in and out of Rotterdam and to showcase how the best the Dutch had to offer and included food, included car dealerships, included offices and shipping and distribution and what we focussed on, it also had a theatre on the roof and a bowling alley in the basement so there was an entertainment retail component so what we focussed very much on was creating a very acclimated roof top with gaming and amusements and the theatre to sort of bring that back but we also have Cambridge innovation centre which is a key talent there which has been fostering incubation of really innovative companies from people in shipping logistics to energy to carbon sequestration, so we have that innovation happening in the hub and then we have architects and engineers and clothing designers and import and export companies around food and fashion so we approached it really from the stand point of it had this great history and was an incredible piece of mid-century architecture but also was you know, Rotterdam’s quite a serious city, it has one of the best universities and far south of us something called Eindhoven which is considered to be the brain port of Europe and in terms of where Phillips originally started but then became also an innovation hub so our goal has been to have the building communicate across channels, across locations and to build a workforce and a tenant base and a community interface that still showcases the best of the Netherlands but also invites people from all across the world. You know, the Netherlands is a place that has a very diverse ethnic make-up as well so you, you know, the 110 countries represented in the building and workforce and companies and so as we think about what makes the most dynamic places, whether it’s in Brooklyn or it’s in Rotterdam or it’s in London or Leeds or Birmingham or Manchester, any of these cities that have great, really bright workforces and diverse representation, we want to create places that I think I said earlier, are humble, are aspirational, are inclusive, are dynamic and at very base level, nurture the communities they serve and so Groothandelsgebouw or GHG for those of us who are not great Dutch speakers, promises all of those things and has delivered that way for quite a long time and so I don’t know if that gives you a little bit of colour on it.
Susan Freeman
No it sounds, it’s really useful. I am sort of listening to you talking about these projects and thinking about you know, what we have in London and the UK and I just wondered what your thoughts were on the, on the London market and you know, what our challenges and opportunities are say compared to the other cities that you are active in?
Michael Phillips
I find it a singularly fascinating eco system. I think it is truly for many, many years has been sort of the most international city in Europe in terms of sort of trade, engagement, people. I think Brexit has put a bit of a temporary kind of question mark there but I think it’s still very much is that place. I don’t think any other city operates in quite the same way. I find one of the challenges obviously is the London property market is really considered to be super prime prime no matter what even if it isn’t prime you know, there’s either families or sovereigns or people who are willing to pay and that doesn’t always equate to value creation for the community. I think obviously housing is a challenge, affordable housing for everyone but I think as London leans in to what the 21st century really means to attracting and retaining the best workforce, I think it has all of the components of that. Maybe with the exception of the best weather but I think your food culture is outstanding, I think the arts culture is amazing and I think what’s really fascinating is really just how international it is and for all of us I think we want our children to be exposed to as many influences as they can and I think this city really offers that and in many ways.
Susan Freeman
And when you look at London and obviously you know, knowing what you are doing sort of elsewhere in the world, I mean are there projects that you see, things that are happening on the ground, I mean in London or the rest of the UK where you think, oh you know, that’s the sort of thing I would do, yes you know, that’s good, that works?
Michael Phillips
Yeah absolutely. Well we have some great friends in the space called Kinrise and I think what they did at Canada House in Manchester is fascinating. I think there’s many, I think London’s second cities in many ways are nearly dynamic places where that is hurrying in an organic way. I certainly think you know, Birmingham has lots of that. I think you know, something like Olympia oddly kind of promised that because it has the traffic, it has the association, it certainly has the capital investment. I think it will be interesting to see how real human it really is when it delivers because I think it’s important that places offer that. You know, I think Battersea Power Station is a truly an inspiring place, I’m not convinced it’s a place that has enough humanity yet, I think it could really, it could use a few layers of that. I see a lot of traffic there but I don’t see a lot of stickiness in people calling it their place. Not in the way that, that people call other neighbourhoods their place in London.
Susan Freeman
But anything you, you used the word yet. So it’s early days I think for Battersea and I mean just amazing that after 30, more than 30 years we actually got the project, you know, it’s amazing that the power station building is still standing and it would have been so much easier to bulldoze it and just you know, build lots of flats.
Michael Phillips
Yep, I think it’s astounding and I think that it is a testament to great perseverance and investment and vision and I think it is a place that I aspire to go and engage with and so I, I mean it with no great, more as a critique around the edges of how do you make it feel a little more human. Not that it isn’t already amazing because it is but as we think about place, it almost speaks to some of the same questions earlier, is architecture alone enough. The answers no. Does food really need to be local and does retail also need to, to be non-nationally or internationally anchored, does it also need to be local and what do we do to create places and casual collisions for people and how do we make the architecture feel human enough that you can feel like you just want to hang out there and I think that there’s lots of examples of that on that site and that’s why I say yet because I think you know, warmth is, is important.
Susan Freeman
Yeah even if we don’t have the weather we can provide warmth but as you’re talking about that and how you get people to engage I am thinking about Kings Cross and Granary Square and the you know, The Fountains. Somehow you know it works you know, people come in from the you know, surrounding community with their kids and when, when the weather is a little bit warmer you know, you just sort of see them playing in the little fountains in Granary Square and that just somehow you know, seems to work.
Michael Phillips
Yeah absolutely I think it is a sort of singular kind of social infrastructure investment that merely functions the challenge a little bit is you want it to function 365 days a year not just when the fountains are there so I like that they bring the food trucks to the plaza and we’d love to see more embedded permanent kind of engagement around that plaza. I think something that’s really successful there that I think is fantastic are the little kind of, the retail on the little lanes in the alleyways in the crevices. I also thought that the David Hockney show at the Lightbox was really fantastic.
Susan Freeman
That was brilliant.
Michael Phillips
I think that was a space that maybe was intended to be a movie theatre and at the end they pivoted and came up with this solution. I think that that production experience was fantastic. I know it’s ending now but I really, I think Kings Cross is a really dynamic interesting area.
Susan Freeman
Yes you mentioned the Hockney exhibition and what I was particularly surprised at, as how many young children there were there and they were literally, these little kids were just dancing around enjoying the lights and everything and you know, it definitely worked. So as I mentioned, I’ve been in New York recently, I hadn’t been since well before Covid and I wonder you know, what’s going on there because you know, places like Brooklyn and Soho and the Meat Packers District were buzzing but Mid-Town just seemed that people hadn’t come back to the office, you know some of the department stores are boarded up and you know we keep hearing that the US office market is suffering but you know I just wondered how you, you see that, whether you know, that’s somethings that going to need reinventing or whether it’s going to bounce back, what do you think?
Michael Phillips
Yeah it’s a great question, so I think that Mid-Town as defined, the central Mid-Town which I would say from 44th Street to 55th or 56th sort of Lexington to Seventh Avenue has always been a bit commodic and really going back to we sold our, we had 1290 of The Americas there, we had 530 5th, those buildings really didn’t see a lot of major rent growth in the last sort of 12 or 15 years. The Plaza District which is 57th Street to the park and parts of Park Avenue really are a bit of a more boutique higher end story but we saw that the re-zoning of Mid-Town East which was the idea that you could really supersize those buildings as a solution to redeveloping that housing stock and the first one is obviously One Vanderbilt and it’s been an incredible success achieving really the highest rates really in the United State I think for that kind of product and so I think it’s going to take more of that. I think this idea that office repositions as residential is really an empty promise for most of that BC office stock. I think the winners are going to be truly interesting historic buildings or mid-century buildings that have a real sense of place and connectivity or very modern new construction ESG compliant cutting edge buildings but that middle stock whether its New York or its London or its Hong Kong or any place are going to have to find another solution and some of that is the impact of AI, some of that’s the impact of just simply back office functions which occupied a lot of office space in many cities continue to migrate to less expensive markets whether it’s cities in those countries or other countries altogether and going off shore and that really requires us to think about space differently. You know Mid-Town is a place that really doesn’t have a food culture, it has a very nationally chain anchored very commodity based food culture which can also be said of lots of places in London, in London City that has a similar kind of dynamic. How many Pret A Manger’s do you need on you know, in a five block area. I think that as we think about kind of what resonates with people and resonates with kind of creating community, I think the ground plain in Mid-Town is a key challenge right. By contrast I would say Maddison Avenue which had a lot of vacancy is almost all re-opened and full again, many with the stores who vacated during Covid and I think part of the strategy around more savvy retailers was to vacate and to go back in at a much lower occupancy rate and a better format of store and to use that arbitrage to pay for new improvements so I don’t know if that answers your question but I definitely think, I think cities have to reinvent large parts of their office stock but I think cities fundamentally are, are dynamic offerings that you just can’t get in the suburbs.
Susan Freeman
Yes and as you, as you said, it’s those office buildings that you know are older, they’re not sort of particularly heritage buildings so they haven’t got much going for them, they don’t necessarily convert to residential so you know, what are we going to do with them. Sort of rhetorical question?
Michael Phillips
Yes exactly.
Susan Freeman
Which actually takes us nicely on to sustainability and ESG and obviously one of the USP’s of Jamestown is that you own a lot of forestry. You actually grow your own trees which I find incredibly impressive and so maybe you could tell us a little bit about that and how it came about and whether you are using your timber for your own construction?
Michael Phillips
Sure, so you now I’d love to say that we had a brilliant strategy behind us but I’m not sure, I think a couple of strategies converged at an important moment in time and one of those strategies were we do have timber farms which are as an alternative investment class in our close end fund structure are an appealing investment model and so we have about 100,000 acres of timberland in the southern United States which is used for pulp wood and for boxes and for home building a variety of things. At the same time we saw mass timber as a solution to sustainable buildings and solutions to kind of the challenges around global steel costs and a variety of things become more appealing and what we found out is that it was cheaper certainly before the War in Ukraine to buy that mass timber from Eastern Europe than to process it from in the US domestically. We just didn’t have an industry that was developed and so we spent some time getting our timber FSC certified which is an important designation and we really leaned in with Georgia Pacific who is a local southern kind of based company that does that and we built the first mass timber building that was sourced from within 200 miles of the location and worked with the, the cross laminated timber processing plant to disintermediate the forest timber growers are not making the money and the, the end distributors are not making the money, it’s the processing in the middle which is obviously often times the issue and shipping costs and carbon and all of the issues around distance really argued for that and so we think this is a model that people should be using more broadly, certainly in Britain where you have, where you have opportunities for that but also in central Europe really to hyper locally provide a solution. The idea for this came from one of my partners who had been in Austria and had seen a building in Austria that oddly differently the concrete was made from the site, everything was locally made on site just not timber because Austria also meets you know, a timber structure, cross laminated timber structure construction but really this idea of how do you take a hyper local approach to how you build buildings. Certainly I think any designation and certification in Europe and America has disregard conveniently the cost of landfill for demolishing old buildings versus refitting old building versus building new buildings and so I think it will become even more compelling to use cross laminated timber going forward and/or to renovate and restore older buildings versus just solely construct new buildings.
Susan Freeman
And so you are, you are using the cross laminated timber to build on your own, on your own sites now?
Michael Phillips
We are and we’re currently actively seeking investment in construction of cross laminated timber production facilities so we can continue to hyper locally deliver that and so our next sites for this will be projects in South Carolina and North Carolina which are adjacent to this land as well.
Susan Freeman
And is there the resistance to sort of large scale timber construction in the US in the same way as there has been over here?
Michael Phillips
So I think there’s active lobbies in all countries against this but a lot of that is people protecting their turf for the kind of building materials that the systems are so productive in. The evidence continues to reinforce the cross laminated timber is a much safe building material at scale for you know, higher burn rates, temperatures before they start burning compared to steel and its melt ratio but also just its ability to create safe environments. I think people think wood which is a very kind of medieval reference point that it could burn down and be at risk which is why they let what they call fire proof buildings but in actuality the opposites true with technology today. I think the other real benefit to that which we’ll only see the more people occupy those kinds of buildings is just the incredible warmth and finishes that come with the substrate and the structure that don’t require me to finish all of this internal finish certainly around the office environment and residential environment. There’s just an added benefit that makes people feel good. So I think the more people experience that the more rapid you’ll see the adoption of that.
Susan Freeman
Yes so we just had our first multi-storey office timber building developed by The Office Group in the city and it’s I think, the first sort of multi-storey commercial building made out of timber for an awfully long time but I think we have this collective memory of the Great Fire of London so maybe that, that holds us back. And I mean generally on sustainability is Europe ahead of the US on that would you say?
Michael Phillips
Oh without a doubt, I mean without a doubt I think Europe is taking steps to mandate it and to create both incentives and penalties for not complying so I would certain say Europe is ahead. I think we are starting to see and evidence a showing in what I would call the super prime office market in the US that occupiers really want that and that their employees want it and that they see value in it and that the highest level of sustainability and we just saw a project in Boston actually by Millennium get passive house certification at 50 storeys which is tremendous right and so I think you’re seeing more and more of that. It obviously is happening at the top end because the cost to get there is much higher in many cases so until that gap gets narrowed I think you’re always going to see the US be a market that is divided on how essential it is versus the European countries being very focused on it.
Susan Freeman
No that’s interesting and I mean generally there is so much change going on you know, where, wherever you look which must make it quite difficult to keep up you know, because development takes quite a long time. I just wondered, I mean what you, I mean looking at your crystal ball sort of see as the trends that we are going to be seeing over say, you know the next 5 years. Are we going to see you know, any change in the way we build or you know provide community centres. What do you see happening?
Michael Phillips
It feels like two things are happening at once. The convergence of big tech and obviously Covid taught us that we could adopt technology at a very rapid pace and I think you are really seeing the most rapid adoption of that in our lifetime and that’s leaving many people behind. It’s not just leaving people behind from a social and economic standpoint but really from an age standpoint and an interest step right. We all have friends who say, I’m just not going to engage with that but what ends up happening is increasingly you can’t check in at the airport speaking to a person. You can’t order food and speak to a person. You can’t, services and goods just are being delivered in an automatic way and so the challenge in that is that we need to bring everyone along in this process or create work arounds for those who aren’t. At the same time that’s happening I think we’re all craving for more meaningful interaction with one another. We are all craving for sort of civil pursuits. There’s not anyone who doesn’t love going to a Christmas market for example or a holiday market and the idea that we want to connect in ways like just going round the park and having a drink after work on Friday evening, that’s a meaningful pursuit and I think in England craft is still very much a part of everyday life so I think you are going to see very aggressive and divergent paths kind of coming together as we sort of craft what our life looks like going forward. Certainly more technology but also more humanity and I think that the two of those things have to find a way to co-exist and so we, that’s for us, that’s the you know, we lean into both very heavily maybe that’s how we’re wired but I think it does reflect a little bit kind of the way the world is operated.
Susan Freeman
And I think you are absolutely right, we do need the hum element and we also need to make the best of the technology that’s available to us. So Michael there is so much more we could talk about but we would be sitting here for hours so I am going to say you know, thank you so much for your time, it’s been so interesting and you know we all look forward to seeing more of Jamestown in the UK in the coming years.
Michael Phillips
Well thank you very much, what a pleasure and I look forward to seeing you in the coming months.
Susan Freeman
Thank you so much Michael Phillips for your take on the ingredients that go in to creating transformational places and I really like the Leonard Bernstein analogy; Bernstein had a talent for making classical music cool and accessible and Michael Phillips is doing just that for real estate.
So, that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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