Jamie Hodari led Industrious through the category’s volatile boom to a landmark $800M acquisition by CBRE—without ever calling it “co-working.” In this episode, Jamie joins Brad to reflect on the real reasons Industrious outlasted and outperformed WeWork and others, how venture capital incentives broke office operators, and why management contracts—not leases—were the quiet revolution.
Now serving as CEO of Building Operations & Experience at CBRE, Hodari shares how he’s redefining Class A space, what hybrid tenants really want, and why Disney should be your model for office experience.
You’ll also hear why neighborhood locations are outperforming central business districts, what the Yale Club taught him about proximity, and how he’d reposition a struggling Midtown tower today.
This episode is a masterclass in the past and future of the office—from one of the category’s most thoughtful and informed operators.
You can see the full video here on Substack or watch and listen on any of the following platforms:
The Thesis Driven Leader Series is made possible with the support of Neutral.
Neutral is redefining multifamily real estate with a focus on sustainability, resident health and well-being. For example, Neutral is building the tallest mass timber and Passive House residential building in the U.S with a state-of-art wellness club in Milwaukee. Beyond environmental impact, Neutral offers investors access to substantial sustainable tax credits and deductions. Accredited investors can explore available opportunities at invest.neutral.us or connect directly with their team to learn more.
The following transcript is automatically generated. Please forgive us for any errors or misspellings.
Brad Hargreaves: Hello and welcome to the Thesis Driven Leader series. I'm Brad Hargreaves, founder and editor in chief at Thesis Driven, and your host here today. So I'm super excited for today's conversation. We are going to have in Jamie Hodari the founder and CEO of Industrious, one of the leading managed office platforms in the U.S.
We're gonna talk about a wide range of things from the future of office. Where work is headed, how he built that company and navigated a really unique and challenging time in the office sector. Now, as you may have heard, Industrious was acquired earlier this year by CBRE at a valuation of $800 million, making him one of the most successful office entrepreneurs, PropTech entrepreneurs out there today.
He's now CEO of Building Operations and Experience at CBRE, giving him a lot of control over a big part of the future of office at one of the [00:01:00] leading service providers in that category, and that makes him one of the most influential people on the future of work and where office is headed. We're gonna talk about all of this.
Now, I know Jamie fairly well, and the reason is funny, it's that we've been on probably two dozen panels together over the past decade. As regular Thesis Driven readers know I formerly ran a company called Common. It was a co-living company and event organizers love to do these panel discussions where they would talk about co-living and co-working, even though co-living and co-working don't really share that much, there's not that many underlying trends and Jamie didn't really use the term coworking to describe what he was even building. It's a misnomer for what is more an enterprise managed office product.
But regardless, I ended up joining Jamie on stage about once per quarter, and through that, I got to know his business and watched him navigate [00:02:00] an absolutely insane decade in the flex office space. With companies coming and going, the whole sector evolving from coworking, rented desk to true enterprise solutions to what is now today seen as shaping the future of work. So we're excited to have Jamie on to discuss all of that today.
Before we invite Jamie on, I did want to thank our sponsor, Neutral. Season Two of the Thesis Driven Leader series would not be possible without them. They're an awesome institutional grade multifamily developer building with mass timber. They're building the largest mass timber building in the U.S. And the cool part about that is they're meeting all of the industry's most rigorous certifications, including Passive House, Living Building Challenge, LEED, and Energy Star, and by doing that, they're able to leverage sustainability tax benefits like section 48 45, L 1, 79 D, and they pass those significant savings to investors, sometimes up to 60% of investment [00:03:00] value.
If you want to learn more, you can go to invest.neutral. us. They have a lot of tools there and you can reach out to their team to learn more. So thank you to Neutral.
Now let's go ahead, bring Jamie on and dive in.
Jamie, welcome so much to the show. Really excited to have you here.
Jamie Hodari: Thank you so much for having me on the show. I'm super excited.
Brad Hargreaves: Awesome. So let's first start about this article I was just talking about in the intro. You looked at the reasons why Industrious succeeded in a way that a lot of your peers did not, and I'm curious your take on that? Are there reasons I missed there? Are there under-appreciated factors that maybe haven't been talked about as much as why Industrious kind of won the space?
Jamie Hodari: I think this is a complicated topic 'cause I think we have lots of competitors that did and have done and continue to do really impressive things. Anointing yourself, a champion or walking through all the ways in which you saw things, I think it's a little untoward and...
Brad Hargreaves: I'm not asking you to do that. I'm doing it and I'm asking you to react to [00:04:00] that.
Jamie Hodari: Here's what I will say. I think there are industries where you look over the arc of time and there's something about the business itself that's really tough. Airlines would be an example of that. That's how do you become a millionaire in airlines. You start as a billionaire and buy an airline.
I don't actually think flex is that, and as a result, I think it's a really helpful instructive category or sector to look at the ways in which, whatever you wanna call it, 2000s VC excesses really could actually harm a company. What I think did happen with a lot of companies were there is a business model, which is what Industrious does, a management contract business model, that's quite stable, not particularly risky, but you don't grow as quickly. You don't make as much in good times. You just lose a lot less in bad times.
Then there's a business model, the sort of lease based model, which to me is like putting debt on a house or debt on a business. It's okay, we're gonna leverage this [00:05:00] 90%, so if we can get past this fixed thing we have to pay; we could make a ton of money, but if you fall below it, you could lose a ton of money.
Brad Hargreaves: In accounting terms, it is literally dead.
Jamie Hodari: Yes. So I think what essentially happened is you had an industry where you're up 20% in good years, you're down 20% in bad years, and essentially, you levered the heck outta that business model, so that up 20%, down 20% turned into up 200% and down infinity percent.
That was very risky and I don't blame the entrepreneurs necessarily who chose that path because I think there was an entire ecosystem that said, " I need you to grow. Your valuation is gonna be based on revenue. We'll find out many years from now, whether you're making money per desk or whether you're making money at the unit level, but you are gonna be retired by the time that matters."
It's reflective of an entire methodology and entire ecosystem for how people approached growth businesses, more so than any specific, [00:06:00] misguided business strategy of one company or another.
Brad Hargreaves: So how did you avoid that then? You were around in this ecosystem as well. You raised outside capital. Other people in the space, other operators had experience in the sector. They had seen this show before. Why do you think Industrious did it different?
Jamie Hodari: It's a very good question. I'm pretty impressionable. It's not like I'm like I can push aside any influence or any advice that isn't conform with what's in my heart. I'm probably just like anyone else, if I had enough people on my board being like, come on man, we gotta juice these revenue growth numbers, I probably would fall prey to that. I think we got a little bit lucky in that the first 10, 12 units, we actually didn't bring in VC money. We funded them at the unit level where people put in money to Industrious Philadelphia, Industrious St. Louis and then basically got a preferred return from the cash that threw off.
Brad Hargreaves: That's interesting. It's al it's almost like a bootstrapped PropCo.
Jamie Hodari: It's like a bootstrap PropCo. Exactly. And [00:07:00] as a result, by the time we rolled all those up into a parent company, it was a pretty big business and we basically skipped straight to a Series B and were more in the growth equity, I'm looking for a three bagger, not a 10 Xer type of investor. And then very quickly it was the Canadian Pension Fund System or Brookfield, or people who were happy with an IRR based return that was in the thirties, stuff like that. And therefore, I do think in certain ways, by a quirk of the way the business grew, we skipped the Silicon Valley VC whole sort of ecosystem.
Brad Hargreaves: You sort of jumped over it. You went straight from these I don't wanna call them single asset syndicates, because that means a specific thing, and it's not literally what this is, but it is this bootstrapped site by site PropCo straight to big institutions who think about it completely different. Your board did not have big VC representation, correct?
Jamie Hodari: 5th Wall would be the closest, and there was a fund called Riverwood Capital, that's a growth [00:08:00] equity firm that does a little VC investing, but I found them to be very helpful board members and thoughtful about risk and return.
Brad Hargreaves: Yeah, 5th Wall is not really a traditional VC, and you know that they have these strategic mandates from their LPs. They're obviously return driven, but it's different than having Andreesen on your board.
Jamie Hodari: Yes. Yes.
Brad Hargreaves: So you took this acquisition from CBRE. Obviously, CBRE has been involved with Industrious for a number of years now. When did they first get involved in Industrious?
Jamie Hodari: By fall 2020.
Brad Hargreaves: Wow. Okay. So they jumped in fall 2020. So you've been working with them for some time. There's always a decision though, when you're operating one of these companies, and I dealt with this at General Assembly, dealt with this at Common where there's this debate between do we keep operating independently? Do we take the acquisition offer?
They put a nice price on the company. I think, 800 million was what I read. It was valued at, why take the offer, why join up with cBRE, anyone, [00:09:00] versus continuing to operate independently?
Jamie Hodari: Just so happens. I'm personally super psyched about it. I wanted a mentor and Bob Sulentic, the CEO, is the first chance I've had to have someone who's a hardcore mentor in that way. But I think overall, I was shocked by how much in the process people were like Jamie, what do you want? Wouldn't it be this way for you or this way for that? I'm so far in the direction of - you start a company, the day you start raising capital, you have people who are making a bet on you. You have people who are saying, I could have put this money anywhere. I believe in you. I believe in you to be a good steward of the capital. You have employees who have stock options. I got very lucky that this is what I wanted personally, but even if I had said, woo, this is probably not for me, I still would've done it a hundred times over 'cause I think it was the right outcome for the company.
I think the primary reason it was the right outcome for the company is twofold. One is I do think it made economic sense. The management contract business model obviously gets higher multiples than the lease based model, but it's [00:10:00] still a physical network business. You're not going to get SaaS multiples.
And so it was never going to be a $15 billion business or something where you're leaving gobs and gobs of capital on the table as an independent business. I think it's probably could get there as part of CBRE. And that would lead me to the second point. About four or five years ago, Industrious, in all clarity, moved towards being more of a workplace experience platform than a flex provider. Flex office wouldn't be an accurate description of it. We run all the shared amenities for large office buildings, we'll run companies' headquarter space for them. People are hiring us to run workplace experiences in a variety of different settings, and I think we got good at it.
It's not like being an architecture firm where you give the plans, you do the ribbon cutting and you move on. You have to live with these spaces day after day. And if you're not delivering, people vote with their feet and as a result, we had to get very good at why do people go to work? What makes them go to work four days a week instead of two days a week? What makes them feel like the workplace is enriching their life and their life is [00:11:00] better off for going to the space versus not being there? And I think that's a very valuable competency in today's world.
And I think we felt like crap, we know so much about what people want in a workplace in Singapore and Sydney and New York and Berlin, and we're applying it a across this relatively modestly sized flex office network, which is great, but we felt hungry to apply those learnings to the big tech firms headquarters, to how do you run million square foot office buildings, to whole network networks of buildings.
This gives us the opportunity to do that as part of the largest real estate firm in the world.
Brad Hargreaves: So I wanna get back to those insights and what you're seeing in terms of secular trends in office preferences but I do wanna stay on the CBRE thread for a minute.
One of the things I do every quarter is I listen to all of the major REITs and publicly traded real estate services companies, listen to their earnings calls. The subtitle of that series is I listen to their earnings calls so you don't have to and every time they mention [00:12:00] technology innovation, I write it down. I try to summarize like what is the zeitgeist of the behemoths right now? And I was so impressed with CBRE's last earnings call, because usually when these acquisitions happen, it's just a note that the CFO mentions, or maybe like an offhand comment in the introduction, but Bob Sulentic spent like real time, referred to it several times, talked about you as an individual in the introduction of their earnings call and the potential they see in you and Industrious.
I just thought that was really notable and impressive, the airtime that was spent talking about Industrious and how it fits into their strategy. When they think about it strategically, maybe tell me a little bit about what you're looking to accomplish within CBRE.
Jamie Hodari: So first, let me say, I noticed that as well and felt very flattered and it's not lost on me that Bob and the company are making a big bet on me.
We [00:13:00] can get into this, but the role I'm in now at CBRE is far more expansive than just running Industrious within CBRE. I do think part of it is, part of what I really respect about Bob, and I think part of what has driven CBRE's outsize kind of growth over the years and stuff like that, is that he doesn't really do things halfway.
He doesn't do things 'cause optically, that's the buzzword of the quarter. That's what you have to do. He's really if I'm gonna do it, I'm gonna do it 'cause I believe in it. And then if I believe in it, I'm gonna really, i'm gonna do it. And I think that probably applies to both Industrious and me in terms of, Hey, if we're gonna do this, we're doing it for a reason and let's really commit to it.
What they ended up doing is they acquired Industrious, reorganized the company to put all of their business lines that relate to operating the built world into one mega segment called Building Operations and Experience, which includes property management, facilities management, real estate outsourcing, which is a very big part of their business, and then Industrious, and I am the [00:14:00] CEO of that segment. The goal is to be the world's expert in what does it mean to run a data center, an office building, a logistics center, a warehouse, a hospital in today's day and age? We know people need help. Like it keeps getting more complex.
The idea that a big bank is gonna be an expert in finding people who can run really complicated HVAC systems and building management systems, and who are gonna be excellent at how you greet people when they walk in the door is becoming, I think, harder and harder to imagine, and therefore there's just greater and greater demand for expert partners to do it for you and that's essentially the premise.
Brad Hargreaves: I think it's remarkable alone that you know all of that within CB, rolls up to an organization that had department that has experience in the title. You would never have, like even could just go back five years ago, property management at a huge real estate services firm roll up into experience.
Jamie Hodari: And it's not costless 'cause building operations is a hell of a [00:15:00] lot crisper of a word or a phrase than building operations and experience, so we wanted to strip it down. Everyone felt like you're gonna lose something fundamental to what we're trying to accomplish here, if you don't say right in the title, this is building Operations and Experience.
Brad Hargreaves: Is there anything you could share about the cultural side of how that is going? I didn't understand this when I read about the acquisition, you're taking over traditional, like building operations teams and rolling them into what is a very, 21st century organization and Industrious. How is that going culturally?
Jamie Hodari: So just to be clear for a moment, on the structural side, I am running the segment. It's not that those people now report to Industrious the company. There's Industrious is just one of the parts of that segment, although obviously I bring my learnings from Industrious with me. I bring a certain methodology for how to lead.
Brad Hargreaves: It's being integrated and you, former CEO of Industrious are now running that big piece.
Jamie Hodari: Yes. I think that's fair. [00:16:00] Here's one way I would think about it culturally, strategically. I think in the real estate world, first, there's a lot of people who, it's almost like they haven't even graduated to caring enough about operations. They think of assets as giant stores of value, that you buy 'em at one price, you hold on 'em, you sell it a different price, and the operations are incidental.
We're finally at a place where most people would accept, you gotta run the hell out of a data center, if you want Amazon to be your client and want to use it. You've gotta run the heck out of an office building because people every day care less about how many floors the office building is and care more about can you deliver great experience there that's gonna make people want to go to it.
So we're finally at a place I think, where people get that the heavy operations component are important and are trying to pull them into saying, and it's actually the high touch, very human experiential components as well. What I think is special about this opportunity and what I think we're trying to put out into the world is that people perceive there to be a dichotomy between [00:17:00] the blue collar, highly technical back of house, of running physical assets, chillers boilers, software systems that run buildings, people in highly technical roles, and the greeting, high touch, I feel like I could be on Delta One or at a great hotel right now that there's almost this, hey, those two things are intention. And all I would say is if you try to run Disney under the premise that there's a tension between a great front of house experience, fun experiences while you're waiting in line for a rollercoaster, and the back of house technical, does the rollercoaster break or not, you wouldn't last one week running Disney.
You have to accept that these two things are actually completely intertwined. That delivering a great, joyous experience at a theme park on the front end means that everything has to be airtight in terms of the actual operations of it. And that is, I think, the stake that we want to claim is that CBRE is [00:18:00] going to be the world's absolute best at the highly technical we can run level five, whatever medical research labs, and we can deliver really special front of house experiences that feel exactly like you're staying at a Park Hyatt. And those two things aren't different. They are self-reinforcing in a lot of ways.
Brad Hargreaves: I love that you brought Disney as the example to this. Because they're so good at this and they've been good at this for a very long time. One of the best experiential operators worked with me at General Assembly, like spent time at Disney prior to coming to General Assembly. One of the things she did there was dealt with a very sensitive part of the park experience, which they handle a lot unfortunately, kids with terminal illnesses. If you can imagine an absolutely horrible, wild, but needs to be absolutely airtight experiential piece of running an amusement park, I can't think of anything beyond that.
Jamie Hodari: I [00:19:00] totally agree. That's a company I really respect and I think they probably are willing to take on complicated endeavors like that in certain ways because they believe in their ability to deliver all those things versus saying absolutely this is too high stakes.
Brad Hargreaves: If not them, who? So on that note, let's get back to some of the the trends in the office market writ large. You have a really unique vantage point to see what's happening right now in terms of enterprise preferences in the office market. And a couple of trends I want to just throw out at you, get your take on, one thing we're seeing is just this huge divergence between class A+ offices, which we're seeing records set on leasing prices and everything else. Some of which seems unsalvageable. Is that what you're seeing in the market as well? And do you think that trend's gonna continue?
Jamie Hodari: I have a few thoughts on this front and I think there is the, what is happening right now and what could be happening. What do we owe the market to make happen? You're obviously right that right now there is this [00:20:00] distinction in performance between what are defined in the market is class A+ buildings and everything else?
If you strip away from features to benefits from does it have a gym or not, to what is the actual thing that building is delivering that's making it more desirable? Everyone is chasing buildings and the ability to deliver workplace experiences that employees want to go to. They're looking for buildings that can be their partner in doing that, versus I've gotta go up to the 21st floor and figure out how to make all my people wanna be there myself 'cause the building isn't particularly helpful in that endeavor. That is very stark and very real. I like to think that there are other methods to get to the God I'm so excited to go to work other than you have to spend $50 million to clad the entire lobby and marble and everything like that.
So I have a lot of opinions about what that would look like, but I'm such a true believer in almost like how the Ace Hotel or some of these Freehand hotels took in [00:21:00] the bones, definitely the hotel equivalent of Class B motels, things like that, and made them fun and made them magnetic and made them awesome places to be. And sometimes you can hear the person in the room next to you, but I've stayed at the Freehand in Miami multiple times. I came back. Part of it was the price, but I definitely came back. I gotta believe that there is an office version of that where you say, this is an amazing magnetic place to be. It's not one Vanderbilt.
Brad Hargreaves: I mean it's almost changing the definition of what is Class A. You could have all the marble in Italy in a lobby, and if it's not in a location and you don't have the environment that people want to go to, you don't have the amenities that people want. You don't have the service layer. Is that really a class A building?
Jamie Hodari: I think there's an instructive building in New York. If any of your listeners either live in New York or happen to be in New York, it's called Penn One. It's owned by Vornado and by some agreement with the city in order to do the redevelopment of it, the lobby and second floor of it are essentially open [00:22:00] to the public.
So any one of you could walk in, pop in, work for three hours in some of the common spaces of that building, and that is a very nice building. So that's not quite as far as my freehand analogy. But that is for the most part a fun social, like I'm watching the World Cup on this giant screen with 200 other people, cheering for Argentina, kind of office building and in certain ways it's probably less fancy feeling than some of the very elegant buildings in other parts of town. I think it's very special and in certain ways I have to think you're gonna see more buildings like that where they make the bet on communal experiences, on fun, on almost third space elements over every square inch of marble in Italy getting shipped over to the U.S.
Brad Hargreaves: I look at what the Milstein organization did with, company now 22 Vanderbilt. I think as well, I think it's a great example of just opening the lobby up, creating a coffee space [00:23:00] that flows into it, using the bottom floors for like more flex. And then above that, you have your more standard enterprise leases. And I don't know exactly how they're programming it, but evidently that building is doing tremendously well. And you're seeing more of that kind of thing. Do you have examples in you would point to in the other direction of people who have screwed it up?
Jamie Hodari: I don't wanna name names but I think the buildings that I am less drawn to are built to make CEOs and CFOs happy. I think one of the great things that came out of COVID is a democratization of what you're trying to accomplish with a workplace and really saying, it's not just what does the CEO wanna brag to their friends about at Greenwich Country Club, it's what is the Deputy Head of Procurement want to walk into every day? What does the Head of Marketing wanna walk into every day? And there's certain buildings I walk into and I'm like, there's no chance anyone thinks that the head of social media is thrilled to be here every day. [00:24:00] This is built to impress, it's not built to invite. I think those buildings will be less competitive over time than the ones that are really meant to be enriching, engaging, very welcoming experiences.
Brad Hargreaves: So let's make this a little more specific, because I care about these evolving preferences and almost the do's and don'ts. Without naming names, listing specific buildings, don't wanna put you out there, but, what do you look at, you walk into the lobby of the building, what do you see that makes you say they get it versus some CFO decided by dictat that this is what they should do?
Jamie Hodari: I'll give you some micro concrete examples and then let me zoom out and say the more conceptual sort of wrapper for it. Sound, smiles, are people lingering, or are they just trying to transit through that lobby as quickly as possible, when you get to the shared spaces of the building, if there's an amenity center, in the simplest possible terms, people vote with their feet, how highly utilized is it? It's not much more complicated than that. The really fancy [00:25:00] buildings that I think have missed the mark, they're impressive, but there's not a lot of people are lingering in the common spaces of them.
What I would say when you really zoom out is there are traditional ways of thinking about what a workplace is that are very productivity focused and they're very work focused in the most narrow sense of work. How many lines of code are you putting out? How many widgets of output are you putting out? And then there is a more expansive view of brainstorming, being receptive to new ideas, your workplace playing a bigger role in your life. I think that is what employees want right now. I think that's where companies are headed. I think they're trying to get the best outta their teams, not just the most outta their teams and therefore, walking in and feeling like you're in a third space that is a mix of workplace and just a space outside your home that checks a lot of boxes for you is a good sign.
And I think somewhere feels oh, this is a place where work gets done in the most [00:26:00] narrow sense of it. If you have that feeling evoked in you, then that's the category that I think has maybe missed the mark a little. And it doesn't mean you have to, don't have to get a lot of work done. It's just work in the modern world is very varied and it looks varied. People are laughing, sometimes people are serious. Sometimes people are talking, sometimes people are silence sometimes. So if everyone is sitting in monkish silence, staring cow-eyed into a laptop, then you are missing out on lots of the other modes of interaction that make work come alive.
Brad Hargreaves: Love that. And I know you mentioned Vorn and One Penn, just right up the street from our studio in Chelsea, who are some of the other groups, not necessarily big owners, but other companies, designers and users that you feel are doing interesting things right now in office that are indicative of where the world is headed in terms of the office market?
Jamie Hodari: On the occupier side. Let me say a couple.
I was meeting with a large drug company and kind of thought in advance, they're gonna wanna focus on [00:27:00] manufacturing, safety, and things like that. Because again, the segment I run at CBRE now has every asset class, if anything far beyond office. All they wanted to talk about was experience in the meeting. How do I make people wanna work here the next 30 years of their career? And not once question like, oh man, this company's wrapping its arms around me and honors me and wants me to be here. That was probably indicative to me to, you can't find a sector right now that is not trying to crack the experience code for its employees and I love that. It's no longer just the province of Google or Meta.
I also think some of the companies that are aggressively hybrid or semi remote. In certain ways you'd think, oh, then they must not care much about the office. Like Atlassian would be example of a company that is both famous for saying, we wanna give people the freedom of what to do and also seems to be pushing the envelope on what it takes to make an absolutely amazing workplace, in part because they're saying you have the choice of whether to use it to not or not, so we better make it [00:28:00] incredible. I think sometimes casual readers of what's going on in workplace might miss that fact and think the people who talk nonstop about office and mandates must care a lot about office and the people who talk more about freedom must not. I think that dichotomy is not the case at all. Some of the ones that talk the most about freedom are also the ones that are most committed to making really exceptional workplaces. That's on the occupier side.
On the landlord side. There's a new breed of mid-size developer or owner that specializes in. Mixed use to me, seems a little reductive really leaning into this third space thing. It's like you would look at one of their developments and you're just like, I don't even know what this is. It feels like there's a hotel here, but the fourth through seventh floors are in office and there's also like a underground mini golf thing and there's two charter schools in it, and it's like mixed use to the nth degree.
Asana is the name of a developer that I think if you could get [00:29:00] the CEO on, they're amazing at stuff like that. I don't know the name of the company but the people who just did Nashville Yards in the middle of Nashville would be a great example of that. That to me is very cool. I love exploding this idea of space is one thing or another, and never the twain shall meet.
Brad Hargreaves: Love that. If I were to hand you an office building today, let's say I took a sad class B, B- office building. You've got, pick something 250,000 square feet on 38th Street and Midtown West. No debt. Let's just say you, you get it free and clear. It's totally vacant, I hand it to you. What would you do with it?
Jamie Hodari: I would do one of two things, depends a little bit on when do I plan to sell it? Do I eventually plan to put debt on it? How creative are my capital partners? The more aggressive, progressive version, would it be to turn the whole thing into one hotel style productized workplace, [00:30:00] where it's 80% kitted out to you. You get whatever to the finish line. You can take 50,000 square feet, you can take 5,000 square feet. The building runs the day to day for you, runs the events, runs your whiskey tasting classes. There's all sorts of shared spaces and the actual model for running it looks more like a hotel or a cruise ship in the sense that instead of, there's an asset manager, there's a property manager, there's a leasing broker, there's a, there would be a GM of the building the way there's a GM of the Ritz Carlton on Central Park South. Everything goes up to that GM so that they're able to make sure that all of the components of the building are working in concert.
If that's a bridge too far, then I would turn the second through fourth floors into the nerve center of the building, the engine of the building. And I would have it be a hybrid of flex space, common space, 30 conference rooms, kitchen, and I would say this is when you take long-term space upstairs, so we maybe we do sign long-term leases in a more traditional sense on the 15th floor, you [00:31:00] don't have to build out as many meeting rooms. You have this playground of spaces you can access, and this is the key that not enough buildings are doing right now. This is also the nerve center for running your experiences upstairs. Because we have this nerve center, we can run whatever you want for you up on the 15th floor. And then, if I'm in the market to sign a long-term lease and I'm deciding between the building I just described and the one next door, and in the one next door, they've got a list of a couple amenities, but for the most part, I gotta go build that space out myself, run it, and every single experience my employee has once they get up to my floor, I'm on the hook for, or I pick the building I just described, where 80% of that stuff can be done on my behalf by the building with more efficiencies, more expertise, I would imagine 99% of occupiers would pick the one I just described.
And I would finish by saying that points towards this point about what is class A gonna mean? What is quality gonna mean moving forward? What I just described doesn't necessarily need a marble clad lobby, [00:32:00] it's just a different operating model.
Brad Hargreaves: And you took a building that was, class B, B- in an area nobody wants to be in right now.
Jamie Hodari: I've not thought of this before, but hearing you say that about the sort of, Hey, where did you start? Do you know that Malcolm Gladwell was like a New Yorker article and then he turned into a book about the basketball team? That that the owner of the Sacramento Kings coached his daughter's basketball team and they were like a ragtag group of undersized players. And so instead of trying to meet other teams in the traditional way of playing basketball, they basically did, they pressed on every...
Brad Hargreaves: I remember this, it's a universal press defense of just press on everything.
Jamie Hodari: And the basic concept was when you're a David fighting a Goliath, you don't try to meet them at their terms. You reframe the terms of what the competition itself is. In certain ways, there's flavors of that. If you've got the Class B building at 39th, don't try to meet one Vanderbilt on one Vanderbilt's terms, try to [00:33:00] completely explode the concept of Class A versus class B and say, you got it all wrong. You're grading on the wrong scale. There's a whole other scale that matters even more.
Brad Hargreaves: Love that. While we're on this topic of neighborhood though, and location, one thing that I think, we mentioned in the article and has been just this thread that Industrious, I think got right throughout is this idea that neighborhoods, places where people live, where there's mixed use on a neighborhood level, not just a building level, are going to be the hottest locations, the most desirable locations for offices and that's certainly proven true over the past five years.
Do you think that's gonna continue? Are you seeing. Those neighborhood locations continue to be in vogue and where people wanna go and enterprise users wanna rent, or do you think we're gonna see a return of the central business district?
Jamie Hodari: I wouldn't pit them against each other. I think there are lots of people that wanna be in central business districts. I think people want clusters for their teams. There's enough office in most central business districts. There's not enough great office, [00:34:00] so it's less about one winning outta the other.
It's just that there is an enormous amount of demand for workplaces and neighborhoods, and there's no office in certain neighborhoods. It's not like Cobble Hill and Brooklyn or something, or certain parts of Lincoln Park in Chicago or something. It's just there's no office building.
If you wanted to work there, it's no where would you work? And we're really struggling with that as Industrious 'cause every time we find a way to create an Industrious in a neighborhood, the thing fills up at triple the rate of something in a more traditional office setting. So we're trying to figure out, do we take over restaurants? Do we take over former retail settings? Do you take over apartment buildings? Like how do you create that?
But yes, I just had a moment yesterday that's instructive for this. I went to Yale for law school and they gave you a screaming deal on joining the Yale Club when you moved to the city as a young person, straight out of school and I was like, oh, that's not me. It's elitist. It's stodgy. I just joined the Yale Club yesterday because my office, CBRE's New [00:35:00] York headquarters, is basically attached to the Yale Club.
I realized that all of my stuff over the last 15 years, it's just that I didn't wanna get on a subway and go four stops to go to a gym or to go have a drink after work. The moment it was a block away, I was like, I can deal with the fact that it's stodgy. I don't mind that there's a leather Winchester sofa in the locker room, like maybe that's actually cool. Everything I had experienced as this quality or cultural distinction was really a commute distinction, and I think people underestimate how much that's the case.
Gyms, the average travel time to a gym is like four minutes or something. If you're 20 minutes away from a gym, you'll just basically never go to it and that's true for restaurants. It's just true for all, for most things in our life. Workplaces got off scot-free for a very long time. I think they're just getting closer to the other places people use in their life, which is they want them damn close to their house.
Brad Hargreaves: And there's probably another factor about the Yale Club, which is they have a pretty strict dress code and I assume now that [00:36:00] you're an executive at a public company, you're wearing a jacket and slacks to work every day anyway. So...
Jamie Hodari: I had to go buy these blazers. I might as well put 'em into good use.
Brad Hargreaves: So one last thing I wanted to ask about is more of an idea, but all of the operators, more or less in the flex office world. Just going back to the ecosystem, certainly WeWork, Serendipity, Industrious, most of them, when they started certainly had this more identity of quasi coworking. You can rent an office, you can rent a desk, and that's been deemphasized over time and for good reason. It feels like many of those companies have said, we're going to serve enterprise clients. There is this massive transformation that has happened in the enterprise world of what kind of office they want, and this is what we've spent this whole episode talking about. I think what that's done has left an opening that if someone went today and created 2012 era WeWork, it would actually do really well. Obviously you can't raise venture [00:37:00] dollars. It's not gonna trade at a crazy multiple, but man, the options for " Hey, I need to rent like four desks or a private office" are pretty limited right now.
Jamie Hodari: That is dead on. For what it's worth, I think as CBRE, we are going to use Industrious capabilities to serve much larger teams. But for what it's worth, Industrious has essentially never served teams of over a hundred. We never felt like the value was there. We never felt like you could create a differentiated enough experience. Now, lots of large enterprises have an enormous number of teams where they have 31 people in West Palm Beach and 70 people in Berlin and four people somewhere else.
Brad Hargreaves: The key term there is team, not company.
Jamie Hodari: Yes. Yes. And I actually think from an actual product point of view, you're right as well. I think there are starting to be more and more people that are like, Hey, at three people, do I really wanna be in a tiny glass box? I actually would prefer to get a membership where I'm in a beautiful common area as long as I have phone rooms and meeting rooms and private [00:38:00] offices that I can book by the hour when I need it.
And I think that's gonna be very cool 'cause you can do more interesting with the design. But in certain ways it's like 2012, with 2025 technology, is a dream combination. Because in 2012, if you took an open floor plan coworking seat, you're like scrambling to try to find a meeting room and you're walking around with your laptop now, I think the software is good enough that it can say, Hey, I know your two o'clock is actually a Zoom call. You're in phone booth 12 at two o'clock. There's just so much more you can do right now to make that a seamless, more delightful experience.
We haven't talked at all about the loneliness, epidemic, isolation, people feeling stuck in their houses, stuck in their lives. I don't wanna oversell the ability of the workplace, either coworking more narrowly or workplaces in general, to overcome really scary and very consistent and what appear to be quite durable cultural trends.
But they're one of a very small number of potential bull works against them. [00:39:00] And I guess I would finish, from my end, by saying I'm not embarrassed about that. I don't have mixed feelings about that. I know there is a version of people saying, your job is a paycheck. Don't try to make friends there. Don't invest too much in it. And I get that, and I'm probably in that world. And yet what I see for me and for my friends is you gotta take. Life as it is and make the most of it. And right now, a workplace where you're friends with your colleagues and you're meeting new people and you're exposed to new ideas and it's getting you outta your house, so you actually do go to the jazz concert in Central Park you had been meeting to go to, I think that's very valuable. And the workplaces that are really succeeding are the ones that lean into that.
Brad Hargreaves: Love that, love that last part of the conversation, lightning round. Quick questions, quick answers. You ready?
Jamie Hodari: Not my specialty, but I will do my best.
Brad Hargreaves: Same questions for every panelist. For every for every guest. First question. Tell us about one startup, developer, or entrepreneur you're watching?
Jamie Hodari: Lisa Picard, who used to [00:40:00] run Equity Office, then EQ Blackstone's office arm is maybe the most creative person in office or commercial real estate and I think she is starting a fund or just got a fund funded. I guarantee whatever she ends up buying and find. I think she's gonna do very interesting things in that space.
Brad Hargreaves: Awesome. Just got connected to her actually. Hopefully she'll to join us on the show. When you and I are recording this podcast in 10 years, in 2035, what is the most important real estate tech topic we're gonna be talking about and why?
Jamie Hodari: The problem is, I think the obvious answer is AI, and I wanna give a more interesting answer, but by 10 years from now, it might be, we don't even call it AI. I think by 10 years from now, we're gonna be trying to figure out what is the interaction of the physical and the digital world.
What does it mean to get up and walk somewhere 17 blocks away, in a more sophisticated, subtle, but also complicated way than we are right now. The dividing line right now is pretty clear. I am either [00:41:00] going to be on my laptop or be on a digital device, or I'm gonna be navigating the physical world, but you already see it walking around New York City.
People are on their phone, but they're looking up, but they're not. And I think eventually workplaces and buildings and the entire built world is gonna have to figure out what does it mean when the dividing line between those two worlds start to mush together a bit more.
Brad Hargreaves: It's fascinating. Love to talk more about that. But I know we gotta wrap up. What's one city or place you'd bet on?
Jamie Hodari: Tokyo, I think. That the fact that country is starting to change its immigration policies and open up a bit to what does it mean to try to marry what I would argue is the greatest city on earth with a bit more economic growth and a bit more freewheeling approach to certain things on the cultural and economic side. I'm so excited to see where that goes.
Brad Hargreaves: Love that. Think you're the first person to mention Tokyo, which is both surprising but also remarkable. Last question, what's your favorite app on your home screen?
Jamie Hodari: I can't believe I'm gonna say this. I'm in a workout [00:42:00] competition called SquadRun, and I'm perennially in last place. I think the founder of SquadRun would be floored if they looked at my sort of like outcomes and to think that I would say that. But basically it's team based and it's a bunch of us and you get points for eating clean, you get points for, and you go to the gym. As I already said, I don't get a lot of points, but then we talk every Wednesday and we cheer each other on and what I love about it is it just opened my eyes to all of these micro communities that we could all be joining and different weird and quirky ways that we could be forming new networks and new groups and opening up the SquadRun app makes me wish that I had a book club app and makes me wish that I had a psychology like group based app or stuff like that. Not to sound too mushy, but that's probably my favorite right now.
Brad Hargreaves: I love that. Jamie, thank you so much for joining the show today. Really enjoyed the conversation.
Jamie Hodari: Thank you. This was great.
Brad Hargreaves: Thank you so much for tuning in today to [00:43:00] that awesome conversation with Jamie. You'll wanna join next week's too, because we'll be joined by a true renaissance man of real estate, Adam Gordon, the founder of Wildflower. He's a New York based real estate developer and true creative.
He's tackled a wide variety of asset classes, categories, projects. His main thing right now is Wildflower Studios, which he's doing with his partner Robert De Niro. He's building almost 800,000 square feet and over a billion dollars of high tech film production facility in Queens, New York. One of the coolest projects happening here in the city and he's done a wide variety of things over his career that we're gonna discuss.
He was building the first e-commerce facilities for Amazon in New York City. He's built town homes. He's done EV charging. So he has a wide range of experiences.
We're gonna talk to 'em about those niches, talk about those sectors, and what's next and what he has to say, about where real estate is headed, so you don't wanna miss my conversation with Adam Gordon next week.
I will see you then. Thanks so much for joining.
Share this post