About Josh Berger:
Josh Berger joined Norman Bobrow & Co., Inc., as Director of Commercial Leasing & Investment Sales in 2009 and has quickly become one of the firm's top-producing brokers. In 2014, he was named Managing Director of Commercial Leasing & Investment Sales for his growing role in educating and training new brokers who join the firm. In 2022, Josh was named Vice President and tasked with running the firm's Broker Development and Summer Internship programs and increasing sales in Manhattan and the Outer Boroughs.
Josh has represented firms in the fields of advertising, technology, non-profit, finance, public relations, and fashion, amongst others. Some of Berger's clients include: Equinix, Boyar Value Group, Clear Street Management, Jordache Enterprises, MMGY Global, Harborview Capital Management, Museum of Women, PETSMART, The Center for Social Inclusion, TADA! Youth Theater, and Transit Wireless.
Outside of his time in Real Estate, Josh explores his many passions, including charity work, abstract painting, music production, and photography. Josh sits on the Board of Directors (and the Young Leaders Council) of Job Path and is also heavily involved with Lighthouse Guild.
Berger received his B.S. in Marketing/Business Administration from Yeshiva University. He currently resides in South Orange, New Jersey, with his wife, Kelsey, and his two sons, Jacob and Benjamin.
Megan Quick:
Hello everyone and welcome again to the Creative Stack, a show about the intersection of creativity and information technology. I'm your host Megan Quick and I am joined as always by the illustrious George Douderman. He is the president of Valiant Technology and today we're really excited because we are also joined by a very special guest, Josh Berger. Josh is a tenant rep broker in New York City and
Georg Dauterman:
Thank you, thank you.
Megan Quick:
Josh, you're also an old friend of George and Valiance in general. Thank you so much for being here today.
Josh Berger:
Absolutely. Thank you so much for having me. I'm excited for the conversation.
Megan Quick:
Yeah, and you know, we chatted before we're talking about office moves today, George and I have found when we talked to folks, this is people don't actually know what goes into it until they're already in the hot water of the move or the lease or whatever. And so we thought we just thought you'd be the right guy to talk to you about like the first episode. Like, what do you do? And George, with that, I'll hand it off to you. Yeah.
Georg Dauterman:
Yeah, exactly. So it's so funny. So I was able to be fully transparent, probably to my own default. I worked with Josh for our office here in New York City. That's how I met him. And he was our tenant rep broker. And it was a very different experience working with Josh and negotiating yourself, which is it's kind of like a lawyer. Yeah, representative of court. It's kind of like a fool for a customer. But Josh, what
Megan Quick:
Representing yourself in court, yeah.
Georg Dauterman:
I didn't know what it was until I met you and then you had to educate me, which is something I know you spend a lot of time on, but what does a tenant rep broker do day in, day out?
Josh Berger:
Sure, sure. It's a great question. The most important and effective part of what a broker does is actually getting a deal done. And I know that sounds crazy, but a lot of people talk about, I'm a great negotiator. I'm a great this. I'm a great that. At the end of the day, it's really about getting a deal done that makes sense for your client and also creating and maintaining a positive relationship between tenant and landlord. Typically, tenants are signing
seven, 10, 15, 20 year leases, right? And the closeness of relationship, the quality of relationship is paramount. So as much as we want to push to negotiate and lock down all the important things for our client, the style of communication and how that deal finishes is very, important because it dictates how the tendency is gonna move forward and what that relationship is going to look like. A very big important part to it is also understanding
what the company's business goals are, right? And then creating a strategy around that, right? A lot of times it can be more reactive. And when you're addressing your office space, it's actually an incredible opportunity to be proactive.
Georg Dauterman:
Interesting.
Georg Dauterman:
such an interesting way of looking at it. think most people just look at the office as a, or now we can go back to COVID and hybrid remote. That's a whole deep dive, but most people, don't think look at the office as a strategic, or at least they don't have that sort of strategic mindset around it. from what, just working with you and just knowing it really is such a strategic thing, you must truly think like higher level.
Josh Berger:
Right.
Josh Berger:
Sure.
Josh Berger:
Yeah, it's incredibly important to be strategic about it because it's something that for most businesses after your employees typically on your balance sheet your biggest ticket item is your rent, right? And so to have the tail wagging the dog for your second biggest expenditure as a business is seems backwards. That being said, it's understandable. Tenants are running their business, right? You're a CEO of a company.
Georg Dauterman:
Right, right.
Georg Dauterman:
Hahaha.
Josh Berger:
You have a lot on your plate. And so you're thinking to yourself, I might as well wait till the last minute. I'm happy in my space anyways. But as I mentioned, being reactive, especially in a market like today, can be very prohibitive.
Georg Dauterman:
Yeah, I so I mean, I have some questions here, like, I'll come back to you soon, but how long have been doing this for? It seems like such a like, it's such a tense field.
Megan Quick:
Mm-hmm.
Josh Berger:
It's a super intense field. I'm approaching two decades. so it's, thank you. Thank you. It's been a lot of ups and downs in the market. One thing that does stay consistent is relationships. And that's a very big part of what I do is as much as I'm strictly a tenant rep broker, having deep trusting relationships with landlords, with their agents, incredibly, incredibly powerful. And also,
Megan Quick:
Congratulations.
Josh Berger:
makes the difficulty of the day to day more manageable and more palatable when you have warm relationships. Now that doesn't mean everything always goes smoothly and there are definitely ups and downs, right? I'm grateful to have built a strong client base of clients who respect the input and the advice that I give. it makes the, called the minefield that we're navigating that much easier.
Georg Dauterman:
Sure.
Georg Dauterman:
Right. Have you always been based in New York City or outside New York or?
Josh Berger:
I'm strictly New York City. I've only done tenant rep office space in New York City for my entire career, which is quite a unique niche. I have found though that having that niche has enabled me to really learn to be the best broker I can be and help my clients. And because of it's such a small niche, I'm able to also work through different industries, right? So it's not specifically only one vertical, which
Georg Dauterman:
Right.
Georg Dauterman:
Right.
Josh Berger:
teaches you a lot about how different businesses are run, which is actually also a very fulfilling and educational aspect to my day to day.
Georg Dauterman:
as I know it's funny you say that that's probably one of the best parts of my job here is I get to work on all different businesses and learn more about all people you never would have met in normal day to day your day to day like life and even I had a couple interns working for me and they said that was the best part of their experience was going to visit and work with people that they would never in a million years interact with and you learn a lot about it you learn you know it's really rewarding.
Josh Berger:
Yeah.
Josh Berger:
Sure.
Georg Dauterman:
So how did you only represent the tenants? That sounds a little different than a lot of people out there.
Josh Berger:
Totally.
Josh Berger:
Yeah, also a great question, you know, the the reason that well, the answer is that I've only ever worked for one company my whole career I've which is also very rare in the brokerage community the brokerage community It oftentimes seems that the grass is greener on the other side What I've learned over the years is that the grass is greener where you water it and and and yeah, and
Georg Dauterman:
Yeah, for sure.
Georg Dauterman:
that's a good one. I that.
Megan Quick:
Write that down, everyone. Sorry.
Georg Dauterman:
Right.
Josh Berger:
No, it's important because so often people look to say, what is prohibiting me that's out of my control, right? The reality is a lot of stuff that holds us back is within our control. And so if we can assess how we can do better for ourselves, you know, that helps that's helped me stay in one place. Now on the tenant only side, you know, I met was introduced to Norman, who's my partner and the president of the firm. I was introduced to him at the beginning of my career, and he's the only guy I met with.
Georg Dauterman:
Right.
Josh Berger:
You know, I had interviewed with some other brokerage houses as into it for internships when I was in college But when I met Norman and he explained to me how the business works It was really just the tenant side that lacked conflict of interest, right? That's really the driver, right? Oftentimes brokers can work on both sides which has its value We have found though that when you strictly represent tenants That's the best way that you can avoid any potential conflict of interest
Georg Dauterman:
Right.
Georg Dauterman:
So interesting.
Josh Berger:
And so that's listen, as I mentioned before, that's not to say that meaningful and deep relationships with other brokers who represent landlords and other and landlords and service providers are not important because that's the bedrock of how we get deals done is through clear communication and trusted relationships, right? A big part of that is if you don't have those relationships, you kind of can get hoodwinked sometimes in deals. If I have a relationship with someone that I've done a lot of work with,
Georg Dauterman:
Right.
Josh Berger:
They may give me a little more clarity about what debt structure is on the building. They, without me asking, right, they may offer it, right? Or they may say the transparency, correct? Or they might say, hey, and this is particularly relevant in today's market, which is moving very, very quickly. Oftentimes, almost every time we're negotiating with competing offers. So understanding where we fall in that thought process internally with the landlord or the landlord's team.
Georg Dauterman:
Right, more transparency upfront. Right.
Georg Dauterman:
to.
Josh Berger:
is very important for how we can A, manage my client's expectations. Hey, we're in third place on this deal. I think we should really be focused on our backup or our backup of the backup, right? Because we always have a multi-pronged approach, right? And so that, the tenant rep interest, the tenant rep conflict of interest, avoiding of conflict of interest is what we do. That's not to say that the other side, we don't have deep relationships with the other side.
Georg Dauterman:
All right.
Georg Dauterman:
Right, that's so interesting. And it's interesting that just how you could very easily not understand that. I think it's actually interesting how unclear that kind of is for most people. I would say that myself, yeah.
Josh Berger:
Yeah Well And I think and I think and I think Yeah, I think I think that ambiguity is is intentional, right? I think that and I'll give you a little inside scoop, right? So tenant rep brokers earn a full commission Landlord rep brokers earn a half a commission on any given transaction So if you're a landlord's agent as much as your income is coming from those deals
There can be significantly more income if you represent both sides of the deal. And so sometimes a landlord rep may reach out to a tenant and say, there's no conflict. It's fine. I do this all the time. Brokers represent landlords and tenants, which is also not untrue. And I have friends in this business who do represent both sides. And they're very ethical, wonderful people. Sometimes that's not made so clear to people of who is representing whom in the transaction.
Georg Dauterman:
Right.
Josh Berger:
Right? so that disclosure can sometimes make or lack thereof can make the water a little murky, which is uncomfortable.
Georg Dauterman:
Especially, yeah, you just don't know where it all kind of lands or ends up and sort of like, so that kind of gets me to like, so having done this for long time, for 20, almost 20 years, what are the first three things you recommend people do with their moving offices or even thinking about moving offices? what process would you recommend this or even a thought exercise?
Josh Berger:
Yeah.
Josh Berger:
Love it. Yeah, first get introduced to a great broker. I'm No, no, no, but no, but that that that no, that is a really it's a really big part of it. And I do mean this seriously, like, you know, I'm not going to work with every tenant in Manhattan, right? The reality is that a lot of people have deep trusted relationships within their network. And I would really recommend reaching out to people that you trust to ask if they have someone who represents tenants in New York, to help, you know, just put a
Megan Quick:
Not no.
Georg Dauterman:
Hahaha!
Yeah.
Josh Berger:
broad game plan out there, right? So, but again, that's not the question. I understand the question. The first piece is start early, right? That's a big, big mistake that people make. Leverage only exists when there's optionality. Simple, right? So, meaning, and so to clarify, right, let's say, George, like in your scenario, right? We were pretty confident that we wanted to stay in the building.
Georg Dauterman:
Right.
I got you.
Georg Dauterman:
Write that down. That's almost as good as the grass one.
Megan Quick:
I know. I know.
Josh Berger:
and that we were gonna renew the lease, right? Great relationship with the landlord, landlord's been running the building well, they built the space nicely, our needs for the space hadn't changed, right? But we didn't just say, hey, we're going to go negotiate a direct deal with the landlord as a renewal, we said, let's explore the market, right? If we didn't begin that process with enough time, that exploring of the market would be seen by the landlord as just an exercise, and therefore, they wouldn't feel it as true leverage in negotiation.
Georg Dauterman:
Correct.
Georg Dauterman:
Correct.
Georg Dauterman:
correct.
Georg Dauterman:
Right, right.
Josh Berger:
Right? so starting early is a very, very important part. Now, that very much varies based on size. Right? What that means starting early. Right? So if we're looking at a footprint of, say, 50 or 60,000 square feet, that timeline starts two to three years out. Right? If we're dealing with something that's maybe five to 10,000 square feet, it's a year out or 18 months out. Right? So but you always want to leave yourself at least a year, if not 18 months, to go through the process.
Georg Dauterman:
Correct.
Georg Dauterman:
Right.
Josh Berger:
So that's the first thing, right? The second thing is, well, it's which is part of the first thing, begin an internal conversation, right? Get clarity on what you need, what you're looking for, and what your goals are for your space, right? You know, so some questions, you know, we could ask ourselves in that scenario. Does the space still fit us from a headcount standpoint? Where does our rent fall as a percentage of our gross revenue?
Georg Dauterman:
Right. Right.
Josh Berger:
Right? should, you know, how does that metric play according to the comps in the market, if you will? Are we happy with the building? Are we happy with the services of the building? Right? So these are some questions that if you can ask yourself internally, and I would say build an internal team, no matter how big or small the organization is, you should have multiple stakeholders involved in the conversation. Again, that's also dependent on the structure of an organization. Sometimes decisions are strictly made at the C level. Other times there's other people who are involved. And so,
Georg Dauterman:
interesting.
Right.
Georg Dauterman:
Right.
Josh Berger:
Again, that internal conversation to get clarity on what you're looking for and what your goals are is absolutely crucial before you can go out and even create a strategy. So that's the second thing. And then the third thing I would say is get a true understanding of the market. Really understand what's expectable. Because if you can't manage your own expectations from the start, there's going to be a point where everything blows up in your face.
Georg Dauterman:
Yeah. Yeah.
Georg Dauterman:
Right. I think, I think a lot of people think they kid that it's, they don't really understand like what these costs are or what they look like or what they begin to look like. And actually where I was going to, my, my tack on question to all this is, one of the things we, we find challenging at times is people who've never moved office, never built an office before. And they just signed a lease sort of blindly or maybe not.
Josh Berger:
Totally.
Georg Dauterman:
or you think they understand, but, and you know, w what's your advice for people who were going for the first time around? Like, Hey, I've never, I've never, and, and I can say that like learning this the hard way myself. it's, it's, it's, it's like the first time you buy a car, or anything big purchase of that. The guy's laughing. Myles is like, he's like, man, yes. Yeah. Yeah. And sometimes you get lucky. Sometimes you don't, but I mean,
Josh Berger:
Right.
Josh Berger:
Love it. Yeah.
Josh Berger:
Yep.
Josh Berger:
I've been there.
Josh Berger:
I got him good.
Georg Dauterman:
Mostly, where would you say that people start? Like, if I'm a net new company, I hit this like inflection point, I want my own space, that sort of thing.
Josh Berger:
Yeah.
Josh Berger:
Yeah, I think it's I think it's a great question. And I think one of the things to be most aware of is the timeline that it takes to complete a deal. Right. So if you're if you're looking to go into a new space, how long does it take to find the space? How long does it take to negotiate those offers? How long does it then take for a landlord to draft the lease draft? Then how long does it take to negotiate the lease document? Right. If there are plans being drawn and construction is being done to build a space, what does that time frame look like?
Once you get the space delivered to you, does it need to be wired for low voltage from an IT standpoint? How long does that take? Do you need to order furniture? How long is that lead time? So I think people are very much unaware of how long it takes to go through the process in a proper way. So that's one thing. Another super important thing is having an attorney represent you who is competent representing office space deals in New York City.
Georg Dauterman:
Right.
Josh Berger:
Right. that's a very small niche again.
Georg Dauterman:
Hold on, you don't think it should be that the divorce lawyer from Minnesota doing it for you, your cousin?
Josh Berger:
I mean it could be it could be you just might end up with you know Seven comments on a hundred page lease in which case I'm saying hmm. I'm not sure if that's exactly the direction we should be going But that's a big part of it and sometimes companies can say hey, you know, it's an extra couple thousand bucks I'd rather not hire, know that lawyer. I'll just keep it here It's a very very important thing to understand of the the amount of liability you're taking on when you're signing a lease right and it's not something to be taken lightly and it makes sense to
Megan Quick:
you
Megan Quick:
Ha ha.
Georg Dauterman:
Right.
Josh Berger:
Now I'm not saying don't hire a white shoe law firm where you need to pay $3,000 an hour. I'm not saying that, but you have to find someone who's appropriate for your deal size. Now, when you're working on the larger transactions, 50, 60, 100,000 square feet plus, it is very important to have one of the top law firms negotiate on your behalf because there is a certain way that it's done, there's a certain level of respect, and there are certain things that you will get because there are relationships involved at a very high level. So that's on the attorney, yeah.
Georg Dauterman:
It's, it's, yeah. Well, it seems like it, at a certain point you really need like the very narrow band of experts who do this day in day out. Because if you bring some, hey, these were randos at a table, there's going to get chewed up because they've never done it before here. And even though they're really smart. And Mark, yeah. Yes, you are. Yeah. That's, yeah. Yep. Yep.
Josh Berger:
Yeah.
Megan Quick:
I think the word is Mark, a mark in New York. Am I allowed to say that? I moved here from the Midwest. I was once that. Yeah.
Josh Berger:
Yes, totally Yeah, we were all you know, we were all and that's and that's and that's what's so hard and by the way This is also people coming out of like a we work or a co-working space They've also never gone through this experience, right? And the other part is when you're at a we worker or the or the like There are all-inclusive numbers. Whereas when you're dealing with an office space, there are other costs that aren't included, right? Your internet, right? You're you're electric
Megan Quick:
right.
Georg Dauterman:
The cleaning service, by the way, the part that no one ever thinks about until they're like, holy smoke, or in the city building in New York City, the garbage removal. That's a charge every month. Yeah.
Josh Berger:
The cleaning service. That's right.
Josh Berger:
That's right. Absolutely. Some buildings have water and sprinkler charges. Some buildings have a guard charge. Some buildings have a fuel escalation. And so there are a lot of different things that can add up to two or $3 a foot, which is not insignificant when that price is every per square foot per year. And if you're a 10 year lease, it's meaningful. And the last thing we want is surprises. You have enough surprises as a growing business. The last thing that you want is to have a surprise on something like this.
Georg Dauterman:
Right.
Georg Dauterman:
in.
Josh Berger:
So another couple of things on this front because it's actually a very good question. If you take too much space without a plan to grow into it effectively, right? A lot of brokers say, take the bigger, larger space, you'll grow into it. Well, what if you don't in the next six months? What if your revenue doesn't catch up? Now all of a sudden you have this albatross of a monthly rent hanging over you, right? And so that's incredibly important.
Georg Dauterman:
Yeah.
Georg Dauterman:
Right, right, right.
Josh Berger:
Now there are different ways that you can limit that exposure, right? And like for example, one time we had a law firm that was growing. They only needed about 10,000 square feet, but the floor plate was a full floor on a tower floor. And that floor plan was about 15,000 square feet. So we negotiated an additional seven months of free rent on top of the regular free rent period just for that portion of space to allow them to grow into it without having to pay rent during that time, right?
Georg Dauterman:
Right.
Georg Dauterman:
Right, like escalation, like a managed escalation. Graduate, right?
Josh Berger:
Like a graduated free rent period to offset the higher rent during that growth period. Right? Exactly.
Georg Dauterman:
like a ramp basically, you ramp into it. That's interesting because, I think this is stuff that if you've never done this before, you wouldn't even know that was like an option. You don't know what you don't know.
Megan Quick:
Mm-mm. Mm-hmm.
Josh Berger:
And right and not to toot my own horn but many brokers never even think of an idea like that, right? Because the reality is that you have to really understand and it doesn't have to do with the fact that I'm so smart I've just been in scenarios where clients like this is what I need and I'm like, my god I'm like I know this is the right deal for him. I know it's the right building but I That this is the right space and so you have to kind of adjust accordingly, right?
Georg Dauterman:
Right.
Georg Dauterman:
Right. And it's also like, you know, you have a good, like the, I want to say, I to use word chemistry, but the chemistry, use that word, the vibes for the, for the event, for the, uh, the tenant and the, and the landlord actually is working. they're, they're, they're the kind of tenant they want in the building and you're the kind of, you're right. is important, I think.
Josh Berger:
Yeah. Yeah.
Josh Berger:
Absolutely.
That's right. And you're the type of landlord that the tenant wants to be with. That's the other side of it, right? Right.
Georg Dauterman:
Correct. Right. Right. Yeah. It's a business relationship that you, and it's one that you're gonna have for more years than you might have with any other partner or vendor. Actually, if think about it.
Josh Berger:
That's something that it's hard to explain to people that there are very few things, let's say, that you're committing to this long of a term for. Very, very few things when you really think about it. Which means that that length of term actually touches on the other point of taking too much space, which is taking too little space. If you're a growing company and you take space and you commit for a long term for a smaller piece of space, you could end...
Megan Quick:
Mmm.
Georg Dauterman:
Yeah.
Georg Dauterman:
I've been there, seen it.
Josh Berger:
Yeah, I had a meeting just two days ago with a tenant who, know, we did a lease. They didn't expect growth, right? So we did a five-year lease, right? And then they had a growth, so we added another space in the building. And now they're growing gangbusters, so now we have to try and find either another space in the building or find a space outside the building, right?
Megan Quick:
You're stuck.
Georg Dauterman:
What happens then? What happens to the original space?
Josh Berger:
So one of three things. One is we tried to find an existing tenant in the building who may want to take it over so that we can alleviate our liability. The second thing is to do a termination with the landlord where you pay a fee and you're relieved of your remaining liability. And the third is that with this particular client, they actually said, we wouldn't mind continuing to occupy that space because our headcount is growing so much and we have different divisions. So we would keep one division here.
Georg Dauterman:
Okay.
Georg Dauterman:
Right.
Josh Berger:
and then we would move the other division there and when this lease rolls, then we'll consolidate everyone to the main space. Yeah.
Georg Dauterman:
That's interesting. Well, they're in position to do that. And that's cool that they are. But not everyone might have that optionality and sort of that. That's so interesting. So that's so cool. you've been, one of the things that we were talking about at the top of this was like COVID, obviously.
Josh Berger:
Correct. Yeah.
Josh Berger:
Sure. Yeah.
Josh Berger:
Mm-hmm. Yep.
Georg Dauterman:
and the overestimation of the demise of New York office space. So tell us about that.
Megan Quick:
Mm-hmm.
Josh Berger:
What do you mean? Yeah, I love that. I love that because, you know, that's such a top, a big topic of conversation is, you know, the work from home, the office, how is that played out? How is it playing out? I'll say a few things on this. Number one is that New York City is a resilient place. And we've been through 9-11.
Georg Dauterman:
true.
Josh Berger:
We've been through COVID. We've been through, I'm not gonna go back to like the 1600s, but New York has been the center of commerce for a very, very long time, right? Exactly, now we're not gonna have a history lesson, know? But the reality is that it's such a place, such a center of culture and business and arts and creativity. And there's a mythical nature about New York from the movies.
Megan Quick:
but there are a lot.
Georg Dauterman:
Ha
Georg Dauterman:
Yes, I was on the Hamilton, Erie Canal, very important.
Yes.
Georg Dauterman:
Correct.
Josh Berger:
Right. And so there's a constant right there's a constant draw of people to this place When you have a constant draw of people there's constantly new ideas. There's constantly change and differences, right? And so that propels growth right now That's not to say that we don't have to adjust to the different realities, right? And that's something that you've seen a massive amount of conversions from commercial to residential buildings in the last few years Right. And so in the last couple years moving into the next couple years
Megan Quick:
There is.
Georg Dauterman:
Right.
Josh Berger:
You're talking about almost 20 million square feet being converted from commercial to residential.
Georg Dauterman:
And I'm sure that's going to have first, second, third, fourth order effects that we don't really understand yet. I'm sorry, I'm sure you're already seeing them.
Josh Berger:
So, yeah, one of the effects that you're seeing already is that it's a simple supply and demand. Once a bunch of supply leaves the market, the demand has to go elsewhere, right? A lot of these commercial buildings still had a lot of tenants in them. And so those tenants have to re-tenant to other buildings, right? And so that increases activity. And so, I mean, this is a great story. So there's a deal I'm working on downtown right now in the financial district where the landlord,
so we started the negotiation talk about starting early. We started about 18 months out understanding that the market was shifting and trying to lock in good economics. The negotiation took slightly longer than expected. So about seven months later, we agreed to terms and as we're about to go to lease, the agent calls me and says, Josh, I hate to say this to you, but you know, we just had a call with ownership and we're
Increasing the price per square foot by five dollars a foot across the board in the building not one not five dollars a foot He said we've had so much activity absorbing all these tenants who were leaving So we ended up negotiating for only a one dollar increase which was palatable to my client. So we were able to do the deal But it just it shows the point of how in such a short period of time You had such a drastic increase in rent, which you've never you never really seen that right?
Georg Dauterman:
No, it's always a linear sort of like slow progress. Like this year it's X dollars and next year it's Y dollars. And then it goes up and then maybe there's a little softness in the market. So comes down a little bit. then, but that's like a bit, and that's interesting because that goes, that flies in the face of what was, you know, predicted by a lot.
Josh Berger:
Right.
Josh Berger:
Correct. And on top of that, and that's what we're talking about, like the B-class buildings, Or B plus, A minus. What you've seen also though in the last year and a half, two years, is that super top end of the market, completely flying off the shelves. Insane, right? And so there are buildings on the Park Avenue corridor here, because I'm right near Park Avenue, right? The Park Avenue corridor has a vacancy rate of like 4%. The national average is like 21.
Georg Dauterman:
Right.
Georg Dauterman:
Right.
Josh Berger:
Right in the city. It's like 15. 4 % is non-existent, right and
Georg Dauterman:
Right.
Georg Dauterman:
That means when people leave, they're not even really, they're not even empty. Function is without saying.
Josh Berger:
And the landlord is happy for them to leave because the next one coming in sees that, well, the comp in the market is $200 a foot now when three years ago it was 180.
Georg Dauterman:
Hold on second. sorry, no, sorry. I have to interrupt you. I just realized, people who not know, what is a B and A office building? Sorry, I was like, I know exactly what you're talking about, but I think for people who don't live in New York, that maybe is something missing.
Josh Berger:
Yeah, please.
Megan Quick:
Good catch. I was like zoned in. Yeah.
Josh Berger:
great. Yes. Yes.
Josh Berger:
Yeah, so, so sure. So, so, so let's call let's just categorize them in a as a and B for argument sake, you obviously have different tiers within each a or B, but a B building is typically a pre war building that has a brick facade that has, you know, three foot thick slabs that because they used to be manufacturing buildings, a lot of them have been upgraded. And so it's not always doesn't always mean a garbage building, right. But typically, these buildings max out at usually like 25 stories.
Georg Dauterman:
Yeah.
Georg Dauterman:
Right.
Josh Berger:
give or take and With exactly we call it wedding cake Exactly, exactly versus the class a buildings tend to be your glass office towers That you're seeing in Hudson Yards or a lever house on Park Avenue the Seagram building And then you have buildings that are kind of older but also have been upgraded like take the Helmsley building or 200 Park, right older buildings But you know have been have been upgraded significantly since
Georg Dauterman:
Right, the setbacks, like, ye olde New York-y, yeah.
Georg Dauterman:
Beautiful building.
Josh Berger:
and heavily amenitized. And I think that's one of the biggest differences we see between A and B buildings these days is quality of amenities. And that's a big driver for a lot of companies these days.
Georg Dauterman:
Sorry, I didn't mean to interrupt you before we talking about unit economics and I was like, wait a second, if you didn't know anybody, you'd be like, I don't even understand what, I don't understand, yeah.
Josh Berger:
No, you're good.
Josh Berger:
Totally, and to give you even a little bit better of a sense in terms of the difference in the buildings, Class B buildings typically these days your rents are going between let's say $38 and $50 a foot, maybe $55, and your Class A buildings really pick up at like $75 and go up to $300, depending on the quality.
Megan Quick:
Okay. Okay.
Georg Dauterman:
So like, like one of those, like, you know, that building, the new building is going up like Grand Central or like that 275. Yeah. One Vanderbilt.
Josh Berger:
Yep, like one Vanderbilt, which is Essel Green's large development, the most recent deal they did was at like 275 a foot. Which is crazy, and again, talk about the duality of our market. You can buy a building in some scenarios to do a conversion at less cost per square foot. You can buy a building at $180 a foot versus paying rent for $300 a foot.
Georg Dauterman:
which is bonkers.
Megan Quick:
Yeah.
Georg Dauterman:
But you wouldn't have the bragging rights to be in the same building as the...
Megan Quick:
And that's New York. That's New York.
Josh Berger:
Yes, that's, but no, but, but, it's, an interesting point that you're making because these buildings are very much driven by that mentality of I have to be at the front. have to be the best I have to be. and, and as little Wayne said, if it costs to be the boss, well, I guess I got to pay, you know, and, and, and so, and so that's very much how, how these, these tripled a top tier buildings, get those rents and achieve those rents.
Georg Dauterman:
Yeah.
Georg Dauterman:
Right.
Megan Quick:
Wow, that's so interesting.
Georg Dauterman:
It's fascinating. That's so great. It's so great. All right, I'm keep moving forward because I have so many questions. So, all right, what are the top five pitfalls? If you were like, okay, these are the things that you should be very careful of in March, 2026.
Josh Berger:
Yup.
Josh Berger:
Love that love that question and I love that question because it is so relevant to where we are in the market we were having a We have a market meeting every week on Tuesday mornings discussing what we're seeing in the market and things like that One of the more senior brokers said I hate markets like this. I love a down market I said why he goes because you have more optionality you have more leverage to negotiate Right. And so it's so dependent on the market, right? And so that kind of leads into the first pitfall, which is overplaying your hand
Georg Dauterman:
Right.
Georg Dauterman:
Right.
Josh Berger:
Um, many many people think i'm a great company i'm the strongest company you will capitulate to me mrs. Landlord No No, right. We're good, right? We we had a scenario recently where you know, we represent a a triple a credit tenant, right and they were looking for some back office space in a b building And the landlord said you have to do this you have to do this and and they said, excuse me We are x company where we have a triple a credit tenant. We're worth, you know
Georg Dauterman:
you
Georg Dauterman:
Good. Right.
Josh Berger:
$20 billion, we're not just doing what you want because you said so, right? And so that's part of how to manage that interaction is what a broker's job is. But as a tenant, make sure that you're aware of what the market is and so that you're not overplaying your hand, right? Or if there's a clause that's being negotiated, understand what's market, right? So for example, like a lot of days these days, landlords are reinserting demolition clauses into their leases, right? So this is a big, big, big pitfall.
Georg Dauterman:
Right.
Georg Dauterman:
Right.
Georg Dauterman:
interesting.
Josh Berger:
Right as buildings have been rezoned which is another pitfall being aware of if you are in an area that is has been rezoned for conversion or commercial or residential or additional higher FAR which is Florida air ratio, which is your buildable square footage on a given piece of land, right? And so, so what you have, I got you, which, which.
Georg Dauterman:
Mm-hmm.
Georg Dauterman:
Thank you.
Megan Quick:
No, no, and I was like, yeah, sorry, that's like when you have a view from a building, right? And you have like, is that, am I wrong about that? Like if you have your zoned first room out of airspace in New York City and it's like, it's predicated on the like views of other buildings as well. And yeah, sorry, now I'm tangent. No.
Georg Dauterman:
Hahaha!
Josh Berger:
What in terms of in terms of.
Josh Berger:
Yes.
Josh Berger:
So, yeah, when you're transferring air rights, No, no, no, when you're transferring air rights, which has to do with FAR and Florida Air Ratio, right? That's how you do, so with the new laws, it sometimes has to do with what building you can see from that building, right? So one of the pitfalls could be not realizing that you're looking at a building or doing a renewal in a building that's in that zone, right? Because...
Georg Dauterman:
It was important.
Megan Quick:
Got it. Cool. Thank you.
Georg Dauterman:
Right, right.
Josh Berger:
It could affect how the landlord's going to be negotiating with you and or might they might insert a clause which is what I was mentioning earlier a demolition clause in their lease Which essentially gives the landlord a right to terminate your lease if they're going to redevelop the building
Georg Dauterman:
It actually happened to a client of mine where they got less than six months to have to move a fairly substantial operation from a building that they had invested a significant amount of build costs, like beautiful showroom space. It was gorgeous. And they got the notice like you're out here in six months.
Josh Berger:
That's right.
Josh Berger:
Yep. Yep.
Josh Berger:
Yep. And so that's to me, you know, one of the biggest things that tenants need to be aware of in 2026, because it's not as though you have enough leverage, and again, don't overplay your hand, right? It's not as you have enough leverage to have the demolition clause removed. The question becomes, how do we make it palatable for our business? So as an example, right? So one of the things that we're doing right now with a client, the landlord's saying, I'm insisting on having a demolition clause.
Georg Dauterman:
Right?
Josh Berger:
Was I thrilled that he brought it up all the way at the end of the negotiation? No, but that happens, you know, and you have to pivot, right? You have to adjust. And so what we said is if you're gonna demolish the building, first of all, you need to show us documentation that you're actually doing it. You can't just say you're doing it. Number two, we need 12 months notice. This is where we settled. We're getting 12 months notice. We're getting six months of free rent. And we're also getting reimbursed for all of the build out costs
Georg Dauterman:
No, no.
Megan Quick:
Hmm.
Josh Berger:
that we put into our space.
Georg Dauterman:
smart. That allows you to rebuild the new space. it's really what you're doing is, I'm not saying you can't do this demolition thing, but I need to be able to run my operation.
Josh Berger:
Exactly. Exactly.
Josh Berger:
Right, the high level philosophy on it is if you're demolishing the building, there is a huge massive upside for you, which is fine. I'm cool with that. I don't own the building. However, if there is this massive upside for you, the least I deserve is to have my costs covered and have enough runway to go find a new space. That's the angle.
Georg Dauterman:
And going back to our first thing about how much less space we have available to us, this is very impactful now to have that sort of a little bit of financial cushion.
Josh Berger:
Yes, yes and on top of that because of all these conversions landlords are now much more aware like hey Maybe the the highest value for my building is not commercial, right? So typically when you're looking at commercial buildings, right if you're getting thirty forty dollars per square foot for your building It might make sense for you to do a conversion because you can get probably 95 to 100 dollars a foot on a one-to-one basis from a residential standpoint But if you're a building that's seventy five dollars a foot
$80 a foot and you can get get to a hundred It may not be worth it However, those landlords are still want the optionality because they don't know what the future holds, right? If you're a landlord in New York City, you're looking at this game on a 50 to 100 year timeline, you know
Georg Dauterman:
Man, I'd worth it. The juicy hand with the squeeze. Yeah, yeah.
Georg Dauterman:
Yeah, they're living in, playing different game than we're playing, for sure.
Josh Berger:
Exactly. And so as a tenant-aware broker, I need to be mindful and aware of that, right? And so that's another major, major pitfall. And then the last one that I'll mention also relates to overplaying your hand, but not really. It's waiting too long to address your upcoming expiration, right? Saying, I'm gonna renew, I'm happy here, I'm happy here, but you don't even know if that's possible anymore. And if it's possible,
Georg Dauterman:
Right, right.
Josh Berger:
Maybe the landlord has you so against, your back is so against the wall that you're going to agree to a demolition clause without all this notice period because you're thinking I have to keep running my business, right?
Georg Dauterman:
I don't have the mental bandwidth to deal with this. So I'll just take the chances on this. And then 18 months later on a 10 year lease, you're getting jammed out with zero recourse and zero financial cushion.
Josh Berger:
Right?
Josh Berger:
Right, and or there could be another scenario where let's say the floor above you has a company that's been growing like crazy and they need to add headcount. And they called the landlord and they said, hey, Mrs. Landlord, I'd like another floor, please. And that landlord says, well, know, company B hasn't reached out to me to talk about the renewal. They're probably going to be leaving. I'm gonna make a deal with these people. And then when you...
tenant B reaches out to the landlord or has their broker reach out to the landlord to discuss a renewal. They say, that's not even on the table.
Georg Dauterman:
It sounds like you've seen this before.
Josh Berger:
Couple times. I've seen a few things. I've had, mean, there's the scenarios are endless, which is why we always have a deal, a backup and a backup of a backup. So here's a scenario where we had a deal that was for a sublease space in a building, right? And the landlord told us, we have a very good relationship. We are not going to recapture the space, which means we take it back for ourselves instead of giving consent for you to sublease to a different company, right?
Megan Quick:
No.
Georg Dauterman:
Right?
Josh Berger:
So the landlord said, I won't recapture, but the landlord had 30 days to give their notice. Day 29, we get an email. I'm so sorry. And this was genuine. He's like, I'm so sorry, but the tenant above you guys just told me they needed your floor. I told them they had to pay me $40 more a foot in order to do it, and they said yes. And so.
Please understand, for my position as a landlord, can't, blah, blah, blah, blah, blah, blah, blah, blah, blah,
Georg Dauterman:
Right. And also the, sort of knowing taking their temperature so that if they're not going to be amenable or wanting to like, Hey, maybe they have plan and dad, their business to run to their plans. So, and if you find out that they're like, they're like, yeah, we really don't want to renew with you or whatever it is. So so now you, then you lease you your, you're starting from a position of, of clarity of what you have to do.
Josh Berger:
Correct.
Josh Berger:
Yeah.
Josh Berger:
of correct and and for example a landlord might say not they might not say no but the deal might not be right for you for example the landlord might have in their mind I might redevelop this building in three years so I'm willing to renew you but I'll give you a two-year lease whereas from an internal standpoint we're saying we don't want to address this again in two years we want to make our move or stay and be there for 10 years we don't want to think about this again you know it's it is it is a crazy headache to move spaces
Georg Dauterman:
Just speaking 100 % my own personal experience, we decided that our biggest, we obviously liked the space with the building, but when we looked at the opportunity cost of the, and the strategy of moving versus having a space we really liked already and seeing what was out in the marketplace, we decided to stay in our building. Folks were amazing. They worked with us really well. We a great relationship with them.
Megan Quick:
Mm-hmm.
Josh Berger:
Yeah.
Josh Berger:
Yep.
Josh Berger:
Yep.
Georg Dauterman:
They did a lot of great stuff with us during COVID. They helped us out. And so, I mean, at the end of the day, like, that was a really big decision factor for us. Like, knowing that, as a business owner, not taking my IT guy hat off for a second, but as a business owner, it really weren't. Right.
Josh Berger:
Right? Of course, of course. Right, as an owner, right? No, and to your point that you mentioned about like, about they always treated you well. They always did right by you. You still had a broker represent you. Did it create any conflict? It did not, right? Because if it's approached properly, because they understand that it's standard for a tenant to be represented by a broker in this market, right? And so,
Georg Dauterman:
Of course. They know.
Georg Dauterman:
Correct. yeah, sorry, I didn't mean to be wrong.
Josh Berger:
No, no, was gonna say that's and that's such a crucial point about relationship and tenancy that you guys are live ones living in the space, know
Georg Dauterman:
Well, also I to go back to you don't know what you don't know, but like, I don't know enough about the marketplace to make a decision without someone giving you some level of advice. You know, um, it's unbelievable. I I said, Megan, I speak with many people over the years, office moves, office relocations, build outs, and it's the most junior person in the company in charge of possibly, as you said, the second largest item on your balance sheet.
Megan Quick:
Yeah.
Megan Quick:
Mm-hmm.
Josh Berger:
That's right. That's right.
Georg Dauterman:
I mean, I think it's like a madness thing to me. It's like insanity that you're delegating this to a person and not design knock on them as a human or their abilities. But this has never done it before. I mean, there's so many things in life you haven't done.
Josh Berger:
Yeah.
Josh Berger:
No!
Right, right or or or may not Have the perspective the high level perspective from from a c-suite level to understand what's important and why right and then But that's what I talk about the internal conversation. That's so important. Like we that's where we started right having that clarity internally is so important
Megan Quick:
Yeah.
Georg Dauterman:
Yeah.
We joke here at Valiant about people arguing about finishes. But they haven't even established it. Do you even have wiring? Power?
Josh Berger:
yeah. yeah. No and people overlook simple things, right? That's why like I mentioned earlier about the wiring like there are a lot of people who will walk into a sublease space Thinking it's fully wired and ready to go and then you come in and it's cat four, right? And and and it's simply it's simply cannot Carry the infrastructure that you need to run your business
Georg Dauterman:
Right. Yeah.
Georg Dauterman:
I've seen, mean, hey, more than I wanna admit, I've seen, it was wired in the 90s. We have employees that are younger than the wiring. It sounds bonkers when you say that, as New York City. And people have this, if it ain't broken, don't fix it. But at some point, you do have to make the investment in that sort of thing. So, all right, I have a couple more questions for you. I'm so, I love this perspective on it.
Josh Berger:
Cure.
Megan Quick:
That's New York City.
Josh Berger:
Yeah.
Josh Berger:
episode.
Georg Dauterman:
So obviously we talked about hybrid work and COVID and the death of office space. What's your sort of take on it today? As this moment in time, 2026, because I'm sure as someone, you know, five years ago when you and I talked about what happens now, I don't think I expected it to be this. Let's put it that way.
Josh Berger:
Yeah.
Josh Berger:
Yeah, Let me let me again not to toot my own horn but No, no, I I I said this and these are recorded webinars so you can go back and check it out, but I said this in Yeah in in peak covid peak covid I said I said that well there will be an adjustment but businesses are still based on people and Most environments and cultures of companies are not set up
Georg Dauterman:
No, I don't know.
Georg Dauterman:
I think I might have had you on one.
Josh Berger:
to not have people in an office together to be most productive to achieve their goals. And so I knew there would be a pendulum. And we've seen that pendulum in office space. Again, I haven't been doing this as long as some people, but almost 20 years I've seen a couple of cycles. You saw the same thing when it came to types of office layout. It was always office intensive. Now it's all open area, all shared space, and blah, blah. Then they thought, wait, there's not enough privacy. So let's add some meeting rooms and some phone booths and some offices.
Georg Dauterman:
Yep, I agree.
Josh Berger:
So guess what? We're pretty much back to where we were, you know?
Georg Dauterman:
Yeah, I mean, it's so funny you say that. I walked past, I was in a building the other day and I just looked at a peek through the window and it was offices again. Like there was office offices. It was so interesting to me. And I hadn't seen that, I mean, like when I started my career many years ago, everyone had an office. Like literally very few people actually sat out in the open. was like, it was only with junior people.
Josh Berger:
Yep. yeah. yeah.
Josh Berger:
you
Right, right and it's and it's Exactly and it's interesting because I was I won't say there was a friend I was talking to works for a very big bank and he was saying that they all moved into a new space recently and the senior managing directors lost their offices and They're sitting on the trading desk with everybody else and he said to me and I didn't ask him I just saw in his face and I said and he said I Don't know how they feel about that
Megan Quick:
Ha.
Georg Dauterman:
Right.
Josh Berger:
And so I said, do you think it will impact whether they stay or not? And he said it could. So it's just interesting to see how those dynamics play out. But the answer is that it's incredibly nuanced, right? And it is totally on a case by case basis. I'm not gonna be the broker here saying, everyone's back in the office, it's amazing. No, it's incredibly nuanced. I had a client who has completely shut down and got fully remote, right? This company though, prior to COVID was an international company who worked on infrastructure projects.
Georg Dauterman:
Yeah.
Georg Dauterman:
Right.
Josh Berger:
had a huge backend that was all in the cloud, so they all were already used to having that working dynamic. They all took immense ownership over their own work, and they figured out ways to collaborate and had a collaborative culture even though they weren't together. That is, to say that's the exception to the rule is an understatement, right?
Georg Dauterman:
Right.
Georg Dauterman:
Yeah, 100%. I mean, just even our own experience. Yeah, just trying to train people in the work without them being together is really, really challenging.
Josh Berger:
Sure.
Yeah, and I think it would be short-sighted to think that people are as present on a Zoom call than they are when they're in a conference room together. Right?
Megan Quick:
Yeah. Yeah.
Georg Dauterman:
It's actually interesting. I met someone that I hadn't met in person today. Today I met them in person for first time. And we had probably the most productive hour of conversation over a glass of water. You know what I mean? Like just, had a cup of coffee. It wasn't even coffee, it was water. Like you want a glass of water? And they in the office. Yeah, exactly.
Josh Berger:
Yeah.
Josh Berger:
Sure.
Josh Berger:
Right? Right? No. Right? Right? Cheers.
Megan Quick:
Yeah.
Georg Dauterman:
And we had this unbelievable, it was like just an hour of productive, I don't wanna say riffing, but it was like just so useful. just educating each other on what we do, it was really interesting, so yeah.
Josh Berger:
Yeah.
Josh Berger:
I love I love that what you said riffing right because so much of what happens within a company is the je ne sais quoi, right? It's this thing that we can't put a pin on but you're walking past somebody you hear something you do something and I'm sure that varies by business. I can't tell you how many different types of business owners that I've talked to whether it's a law firm a tech company a media company an AI company who share how
productive it is to be able to overhear a conversation, ask a question, instead of, or if you're in a law firm and you're a junior associate, not having to send an email to your senior partner to schedule a Zoom call to discuss a topic, but simply popping in, not gonna, hey, Rachel, quick question for you, know, blah, blah, blah, blah, blah, right? And so that's something that's taken away when you're not in the office.
Georg Dauterman:
It's funny, it's not funny. What's interesting is, know, some people here at Valiant said, you know, when we were much smaller, some of our management team, and like we trained them ourselves. And the way they were trained was not formal in any way, shape or form. It was like, come with me to this client and you observe what I'm Shush. You know, mom's the word. But they would sit and I was talking to another customer of mine, a lawyer.
Josh Berger:
Right.
Megan Quick:
Yeah.
Josh Berger:
And don't say a word.
Josh Berger:
Mm.
Georg Dauterman:
So the same thing he goes, when I was a junior attorney, I literally sat next to my partner that I was assigned to and another associate and I took notes for him. And then he would literally grill me on my notes. like, did I take, I see his face when I said this thing? And it was all like body language and nuance and stuff. that's, that, that you you do miss that on zoom. And these tools are amazing. We can stretch.
Josh Berger:
Yeah.
Josh Berger:
That's right.
Yep.
Josh Berger:
Yeah.
Georg Dauterman:
And I think there's a lot of cool things you can do, but there's a certain joy in having a meal with someone or a cup of coffee.
Josh Berger:
There is, and I think by the same token, we have to be mindful of the next generation and their working habits and their priorities and their values, right? The incoming generation, which I'm also kind of on the back end of, I'm becoming old, but there is an immense value on work-life balance, right? And, or some control or perceived control of your time, right?
Georg Dauterman:
You're old.
Megan Quick:
Yeah.
Georg Dauterman:
Right.
Georg Dauterman:
Yes.
Josh Berger:
And so companies that are smart are aware of that, understanding that the smart people that they're hiring, the young smart people that they're hiring have a different requirement. And so they're adapting and adjusting, right? And so one of the challenges though with that is that if you're not in a hoteling concept where you're kind of, you you don't have an assigned office,
Georg Dauterman:
Yeah, for sure.
Josh Berger:
Like we have we have 20 offices and you know 100 cubicles and you come in and pick your cubicle or pick your office for the day or you There's technology platforms that you guys, know, we can book the conference and booking all stuff like that, right? There's there's a whole different Perspective that you need to have the same amount of space so so if you're going to be Exactly, and or a lot of times people come in on the same day
Georg Dauterman:
Right, you don't know who's gonna be there any given day.
Georg Dauterman:
yeah.
Josh Berger:
We are in the office Tuesday, Thursday, and Friday. And so.
Megan Quick:
Right.
Georg Dauterman:
So you had to build the office the same as if you were gonna build it for everybody every day. It doesn't change.
Josh Berger:
Correct, correct. And so I think we're starting to see how this is playing out and how each company culture is adapting and changing to these different things. So here are a couple of things that we're seeing. So one is that you might be a tenant who says, need a certain amount of space, but I only hold an all hands meeting or a large board meeting four times a year. We wanna be in a building where we don't have that amount of space in our space, but there is an amenity space in the building.
that offers a large boardroom, that offers a team room, things like that, right? And so that can help offset the need to pay that rent per square foot for that space that you'd use four times a year, right?
Georg Dauterman:
That's cool. Yeah.
Georg Dauterman:
Yeah, you know, it's funny you say that we worked for you many, we had built an office for someone like that, that had mostly 95 % remote time. And they only had the office space for an all hands meeting that was once a quarter. And they were paying hundreds of thousands of dollars a year. It was bonkers, in my opinion. Yeah, for sure.
Josh Berger:
Right.
Josh Berger:
yeah. it's wild. so you see, so people in that scenario, they're not even gonna do a lease anymore, a lot of them. it's really four events a year, a lot of them will just rent out a venue for those four times a year, right? Or go to a client's office who they're friends with and borrow the space, right? So people are nimble and people are adjusting and adapting. The other side though, is that companies are investing a lot more in their offices in order to make their employees feel excited to be there.
Georg Dauterman:
Yeah.
Megan Quick:
Mm-hmm
Georg Dauterman:
Right.
Megan Quick:
Mm-hmm.
Georg Dauterman:
Right, right.
Georg Dauterman:
Right, be nice. Yeah, the crappy office is not acceptable. It really isn't.
Josh Berger:
Right? Right?
It's no it's really not and especially when you're talking about, you know the the the Challenge of acquiring good talent especially in the tech and AI sectors these days is Really really a serious part of their business I've seen a lot of financials of companies who have booked 50 to 70 million dollars in bonuses or signing bonuses paid to get people on board for a given year large companies granted however
Georg Dauterman:
Yeah.
Megan Quick:
Wow. Yeah.
Josh Berger:
Big part of that is they want to be in a great, wonderful office where they feel respected and they feel cool and they feel like what they want is being taken care of.
Georg Dauterman:
And there's a prestige to it and all that. All right, all right. I'm keep going because I keep talking about this for hours. It fascinates me. So, all right. So, all right. I'm gonna sign a lease. I'm good. I figured out I a great broker relationship. I found the building. Who do I call? Who do I talk to?
Josh Berger:
Yeah. Yeah.
Josh Berger:
You
Josh Berger:
Yes, so great question. Number one is you. No, no, my God, me, what? no, my God. No, so in all seriousness though, because we were talking about earlier about going to a space that's pre-wired, right? So something like that could be an unexpected prohibitive cost. A, B could also add timeline to when you're doing something, right? And so understanding what your IT needs are and then also from a budget standpoint, right?
Megan Quick:
What?
Georg Dauterman:
Us? Me?
Georg Dauterman:
100%.
Josh Berger:
wiring means a lot of different things to a lot of different people, right? Like I just, yeah.
Georg Dauterman:
I can, I can, go ahead, I'm sorry, I was gonna say, Pete, no one ever really budgets what it costs to wire a space fully. And the definition, as you said, means a lot of things to different people. And one Megan and I hear a lot is like, we're just gonna use Wi-Fi for everything. And I'm like, no, yeah, Megan said the best thing I did. Right, like.
Megan Quick:
No.
Josh Berger:
Yeah.
Megan Quick:
No, you won't. Sorry.
Georg Dauterman:
And yeah, and I think that's a huge, it's a huge problem because, and then there's like the whole aspect of like, like the cost of it and working with the vendors and the drawings and submitting the, and all this stuff. And it's like, it's like, and I, know, and then you have the weird thing with the, the landlord is like, we'll do it. And you're like, well, we're going to do this one part of it and not finish the job, but you got to find someone to finish the job, which is a terrible idea by the way.
Josh Berger:
That's right.
Josh Berger:
That's a terrible idea. And mostly, in my experience in the past, wouldn't touch low voltage wiring. These days though, to your point, because people want that full service, fully furnished situation, the landlords may offer that. And oftentimes it's not sufficient for what the company's needs are.
Georg Dauterman:
Or I've seen it, just bluntly, a substandard install, where as you were spending the kind of money per month, it's like lipstick on a pig. And this is my IT guy talking right here, sorry. But it's like, you just did a bit, this is like sloppy work, it's not verified, you didn't tone test probe it, there's a lot of things wrong with it.
Josh Berger:
Right. Right, right.
Josh Berger:
Yeah.
Josh Berger:
I don't know what you just said, but that's why they should call you. I don't know what tone testing is, but yeah, the cost and the timing, but the plans and the drawings, the cost and the timing can be prohibitive, right? And that's the last thing that you want is to be stuck not being able to occupy or operate properly in your space. And so that's why I do, all seriousness, I do, that's why I call you all the time for stuff like this, right? Second thing is a great lawyer.
Georg Dauterman:
Yeah.
Megan Quick:
You're like, for sure.
Georg Dauterman:
Yeah.
Georg Dauterman:
out.
Josh Berger:
That's what I mentioned earlier, is you really need to have a lawyer who knows office space in New York City. Because otherwise, you can either get taken advantage of, or you're just asking for the wrong things so you don't get what you want. Or what's important to you. And then also like an architect. Because as you're having that internal discussion, even figuring out how much space you need, it could be helpful sometimes to understand talking to an architect, especially because of this thing called loss factor.
Georg Dauterman:
Yeah, yeah.
Georg Dauterman:
percent.
Josh Berger:
Right in New York City. Yeah. my god. What so so loss factor is something that is unique to New York and this is a ron bergen the unique New York unique New York and so It it it means it's just got you got to find it. Yeah, of course There's usable versus rentable square footage, right and so in in in a normal market that may be three five percent
Megan Quick:
He made his way into the airwaves. Okay, we got it.
Georg Dauterman:
You got it you got in there
Megan Quick:
Mm.
Josh Berger:
Right, which means you're paying for your common corridor or whatever in New York City You're paying for your proportionate share of the lobby of the elevator shaft of the roof of the basement of all the risers Everything right and so that's what they say you're paying for but the reality is that it's a kind of an arbitrary number And it's 27 to 35 percent is the loss factor Which is absurd and so if you don't and the loss factor varies building to building
Megan Quick:
Wow, wow.
Georg Dauterman:
yeah, yes. yes. It's,
Josh Berger:
So if you don't have an understanding of what your space program is, from talking to an architect, many open seats am I trying to fit? How big are those cubicles? How many offices do I need? How many small offices? How many big offices? How many boardrooms? How many small meeting rooms? All these different things. then, because you end up wasting time. You end up going to see a space that doesn't make any sense, which as a broker, my job, one of my biggest jobs is to be mindful of your time and take things off of your plate, right?
Georg Dauterman:
Right, help you out. Yeah, so let's say like we're not like in the size to justify a true architect. Was there a good stand in for a good architect? Someone that can really help you like lay the space out?
Josh Berger:
Yeah.
Josh Berger:
Yeah.
Josh Berger:
Yeah, so mean, that's, that's a great, it's a great question. And that's, again, why you should be working with a broker. Number one is that brokers have a lot of relationships with architects. And so even if even if even if you don't want to even if you can't afford one, a good broker can say, Hey, Mr. architect, I've referred you, you know, a bunch of business, can you help my help my client do it just a high level space program, right? Totally fine. Right.
Georg Dauterman:
Right.
Georg Dauterman:
Right, it's a little like built out of that sort of thing.
Josh Berger:
Yeah, just a high level thing. The other part is that most landlords these days, if they're going to be building a space, are willing to do test fits for you, a test layout for you to see what you can fit in the space and how. And so there are ways that you can go and explore one building, get a layout, and then see how it goes from there.
Georg Dauterman:
Right.
Georg Dauterman:
great.
Georg Dauterman:
Okay, makes sense.
Georg Dauterman:
Interesting. What about a furniture vendor, a furniture dealer? Yeah, okay, sorry. I was like, furniture is the one that always kills us. Like the furniture timing destroys our souls. It's like a big thing.
Josh Berger:
Yeah, that was that was the next thing that I was going to bring up, which is furniture. Because yeah, no, no.
That's, that's, that's so I, so I'm literally, I'm, I'm, I'm going to a nonprofit event later on today with a good friend of mine who does, is in the furniture space. And we have this conversation all the time, which is even if they, the, vendor explains to them the timeline, people some, for some reason, poo poo it. And they're like, that's fine. He's like, I told you it was a 90 day time, you know, lead, lead item. So why are you expecting to be here in 60 days? Right. And yeah. Yes.
Megan Quick:
Mm-hmm.
Megan Quick:
Yeah.
Georg Dauterman:
Yes. Sorry.
Megan Quick:
wishful thinking, I don't know. Yeah, yeah.
Josh Berger:
No, and what I believe what it has to do with is, is the tenant not understanding truly that this person is giving them real information. Sometimes people feel that they're being sold a bill of goods in order to force them into a conversation earlier, which is, unfortunately, a lot of how business people or salespeople operate, right? And so I think that's the one of the reasons that we run into that issue. And the challenge, the challenge, though, is, as my friend has shared with me, there are things we can do within a compressed
Georg Dauterman:
Right, right.
Megan Quick:
right.
Georg Dauterman:
Yeah.
Josh Berger:
timeframe, but the optionality will be limited.
Megan Quick:
Yes, yes, yes.
Georg Dauterman:
Go back to your leverage. Yes, leverage. Also, think the other problem is that I think people are very used to like IKEA, where there's a palette of the things waiting there. But commercial furniture doesn't work that way. a lot of times it may be actually built to order, like manufactured for you for that job. They don't have stuff on the shelf, off the shelf. It's customized.
Josh Berger:
Love exactly.
Josh Berger:
Yep.
Megan Quick:
Yeah.
Josh Berger:
No.
Josh Berger:
Correct.
Correct.
Megan Quick:
It reminds me, George, when we talk to people about networks for your residence versus net like for office, right? Like it's just a different volume and a different wear and tear, different, it's different variables. Yeah.
Josh Berger:
Yeah.
Josh Berger:
yeah.
Josh Berger:
Yes.
Georg Dauterman:
Yeah, you don't use home. mean, once again, the quality and why we use the systems we use are different for a reason, right? They're built, they're, right.
Josh Berger:
Correct and and it and it goes to the point that we were saying earlier of you know Pennywise pound foolish right where they say I don't I don't want to Arbitrary number ten thousand dollars on furniture. I'd rather spend three thousand dollars on furniture Not understanding that that three south three thousand dollar furniture will be broken a year from now And then you're gonna have to buy it again
Georg Dauterman:
Yeah, exactly.
Megan Quick:
Yeah. Yeah. You're just going to spend more.
Georg Dauterman:
or might not even pass the code test that we have here in New York City for furniture.
Josh Berger:
More money, right.
Josh Berger:
Right, right. That's another very good point another very good point and and and again to the point of of Of the test fit right a lot of times if you're working with a good furniture vendor vendor They can do a test fit for you They can have it they have their team They can not only lay out the space your offices your conference rooms your breakout rooms your pantry Wherever your lounge they can also put the furniture in there which gives most tenants don't which gives you a visual most tenants
Georg Dauterman:
Correct.
Josh Berger:
don't have creative vision to see how a space could be. And so how can they make a decision of such importance without having that understanding?
Georg Dauterman:
99 % of people really can't wrap their head around a wide open space. Like you go in a demoed out space with a busted out column, you can't see an office there.
Josh Berger:
Yo yeah.
yeah.
Josh Berger:
Yeah, that's one of my favorite just to interrupt you as I do. One of my favorite one, one of my favorite questions asking clients when I take them on a space tour. A lot of times we'll look at a raw floor and then a built floor. If there's multiple floors available and I and I asked them which feels bigger to you. And see, that's one opinion. What do think, Megan?
Megan Quick:
haha
Georg Dauterman:
Yep.
Megan Quick:
Right, right.
Georg Dauterman:
The RobFlower, of course. Always.
Megan Quick:
Bye.
Well, I often think the furniture in there makes it feel bigger. yeah, like, yeah. Psychological. Yeah. Interesting. Wow. That wasn't planned, listeners, by the way.
Josh Berger:
Okay, well so so here this is a case study of exactly one so no, like literally it's 50 50. It's literally 50 50 of people. Yeah. Yeah
Georg Dauterman:
Right. Oh, I see an open floor. I want to roll a skater round in there. It's amazing. I think it's the coolest place ever. So all right, we're going to wrap it up, Josh. Because I could talk to you for another seven to 10 hours. And we can call it real estate.
Josh Berger:
Hehehehehe
Hahaha.
Megan Quick:
Yeah.
Josh Berger:
Yeah. Megan's like, yeah, okay. I'm kidding. I'm kidding. I'm kidding. I'm kidding. Yeah.
Megan Quick:
No, no, this has been so interesting. I think Josh just reflecting on George and I have had conversations with people who also are people you've talked to in this moment of like, what do I do? And I think it's so fascinating that there's so much to know, especially in the New York market, but in commercial real estate in general. So it's been so interesting. Yeah.
Georg Dauterman:
Yeah.
Josh Berger:
Yeah.
Josh Berger:
Totally. Yeah, no, thank you.
Georg Dauterman:
Yeah. So any last words for people, the listeners that I can say like, hey, one last, one last like, if I could give you one thing, what would it be?
Megan Quick:
Last warning.
Josh Berger:
I would say that where's that quote that I had? Let me find it. I wrote it down somewhere.
Megan Quick:
You did already quote little Wayne. So if that was it, don't know.
Josh Berger:
Yeah, that one that one. No, it was the it was the one about leverage.
Georg Dauterman:
That was pretty good.
Georg Dauterman:
It was the optionality. Optionality creates leverage. I love that. I'm going to use that one. That's a great one. awesome.
Josh Berger:
Yeah, optionality creates leverage. That's it. Thank you. Yeah. Optionality creates leverage. Yeah. Yeah. No, and it's, and it's, it's, it's the truth. because you know, when your back is against the wall, you don't have options. So yeah, thank you. Thank you so much again for having me. it's, it's, it's a great conversation.
Megan Quick:
That could apply to so much. Yeah. Yeah.
Georg Dauterman:
That's right. No, this always Josh is so good and Megan thanks as always. This is putting us all together. Yes, voice a reason.
Megan Quick:
Yes. No, it's fine. Thank you guys. No, thank you guys. Thank you, Josh, for joining us. Honestly, I can't wait to have you on again. This has been such a fruitful conversation and you're the exact kind of person we want to chat with on the creative stack. thank you. And thank you everyone for joining us. Like and subscribe. last thing, Josh, where can folks find you if they want to get to know more?
Josh Berger:
Yeah. Megan, thanks for being the quarterback.
Josh Berger:
yes, you can. Yeah, LinkedIn is a great place. You know, you can find me Josh burger on LinkedIn. I have a my I have a personal website. It's very surreptitiously named I am Josh burger. Is it I think it's iamjoshburger.com. One sec. I think so. Yeah, yeah, I am joshburger.com. There it is. And that gives it gives a little more flavor into who I am as opposed to just the real estate side. Yeah.
Georg Dauterman:
Hahaha
Georg Dauterman:
That's a good one.
Megan Quick:
Awesome.
Megan Quick:
Awesome. Okay, cool. Well, everyone looked that up and thank you again. We'll see you next time. Bye.
Georg Dauterman:
That's great.
Georg Dauterman:
Thanks, everyone. Bye now.
Josh Berger:
Thanks so much, guys.