By Orlando Lee Rodriguez
“It’s who you know.” That is the tagline on GFI Realty Services Inc.’s logo.
Anyone with experience as a commercial broker knows that, unlike residential sales, where your first deal could be your mom’s Cape Cod house in Larchmont or your drinking buddy’s ranch in Fort Lee, commercial real estate sales, especially in dense New York City, are an entirely different animal, where getting access to a decision maker is not easy without a guide.
And that is where a senior executive comes in handy as a mentor with a map.
“I manage the brokerage group, but I’m not a broker,” said executive vice president Michael Weiser, at GFI’s lower Manhattan office. “I don’t work on commission and I don’t sell properties. I’ve seen the chess board from every side and I’m trying to put that all to use helping each part of the company.”
At GFI, Weiser is that confidant with a compass for junior brokers. After 17 years of making his own path through the forest, he has a machete to clear the tall reeds, helping others through the salesmen’s wilderness.
At one time, Weiser was the newbie. Given his first break in 1996, he started out doing equipment financing in GFI’s finance group was just beginning, not property sales. But it was in the course of doing his regular duties where he recognized an opportunity.
“At the time, parts of the limited service hotel industry were redeveloping from the old exterior corridor properties to interior [ones], and developing what came to be known as what “limited full service,” Weiser said. “In order to maintain the franchise property, owners were required to upgrade. That new included furniture, new signage, electronics, whatever the property required.
“But a lot of those properties throughout the country had owners who lived on-site and requiring a quarter-million dollars in improvements would be a whole year of profits. So I started helping those guys by financing their Franchiser mandated improvements, helping them improve the properties.”
Then he asked the key question.
“I asked them where they were getting their mortgages from,” he said. “They were getting them from local banks at 65 percent loan to value. CMBS was fully started at the time and those guys were more than happy to get 75 percent LTV versus what they had before. As I got into that, I got into sales.”
Weiser then started to invest in properties himself, gaining experience in that area as well, which he then started to do for GFI. Today, he specializes in identifying key investments in neighborhoods just before they become “up and coming”.
GFI, which started in 1983 as a residential mortgage banking organization in Brooklyn, added an ownership and development arm, creating space for Weiser to use his talent for finding value added properties.
“We bought 1186 Broadway. It was that grimy example of the kind of deal that was available and on sale for years,” he said. “Everybody saw it and nobody was buying. So one day, we said ‘There is value here, we got to unlock it’.”
GFI then bought 1186 and put up the Ace Hotel, expanding it to Palm Springs, California. The company also developed 470 Vanderbilt Avenue near the Barclay’s Center in Brooklyn, another commercial property.
“We got in there in 2006, before Atlantic Yards was in the early planning stages,” said Weiser. “We have the other half of the block where we are building rental housing. We are an early mover into areas because we see it.”
Areas of New York City that Weiser says GFI sees as untapped include the Grand Concourse in The Bronx, where multifamily buildings in the Art Deco and Tudor style are in abundance, yet still largely undervalued.
“For some areas in the Bronx, it’s just a matter of time,” he said. “People go to those buildings and say, ‘Wow.’ If you put those buildings on Park Avenue, you would never know, right? A guy would pay you ten-grand-a-month to live [on Park Avenue], but in The Bronx he will pay $1,200 a month for the same building. There are people who are looking for value and want to be in a nice place. I think landlords will have the opportunity to reinvest in those buildings and will get the rent.”
That being said, Weiser also knows that markets are not made by developers, but by tenants who “discover” neighborhoods first and create value.
So the key is to move first, but not too early.
“It’s the tenants,” he said. “Look at it. Williamsburg was the tenants. Bed-Stuy is the tenants, Bushwick is the tenants. It’s never led by a radical developer. Usually a radical developer puts something up and says “if you build it they will come” and usually ends up sucking wind. Eventually they come, but that’s when the tail is wagging the dog.
“Any time you are talking about who are the first people coming to an area that is up and coming, it’s always the artists.”
Regardless of who leads the charge into these new frontier neighborhoods, Weiser feels that GFI’s growth strategy to cover all the bases in a transaction just brings more value and makes things easier for their clients, whether they are investors looking to improve an undervalued property or a family seeking their first mortgage.
“We’re a real estate firm, that’s our first, last and middle name,” he said. “We recognize that time is money. You can explain a deal to one broker and then to your sales broker and then to your insurance broker. It’s the same explanation, everybody needs the same information. We want to be a one stop shop for our clients.”