John Coe 00:00:00  So welcome, Jeff. I've reviewed your background in the introduction at a high level. Please share your current role and how you devote your time currently.

Jeff Zell 00:00:11  currently I'm the president, chief Executive officer, and chairman of the board of Jamsil Partners. I probably spend about 80% of my time here working, still working, transactional business, still looking at development and still doing consulting. And the other 20% I give to working on not for profits throughout the region to make sure we're giving back, some of our knowledge and energy to help those that need help.

John Coe 00:00:37  That's great to hear. Yeah. before we get into your company and its origins, please share some details about your upbringing and early life experiences that influenced your eventual path into real estate.

Jeff Zell 00:00:49  Okay, now you've really opened up a can of worms. I'm open. Okay. Big one. So? So I'm first generation, American. My parents are European, and I am currently now holding two passports, one from the Czech Republic and also from here. So I've enjoyed a little bit of it.

Jeff Zell 00:01:06  So, so but here's the deal. Yeah. Well I there's about, there's about five languages actually because and when I tell you the story you understand. So my parents came out after the war. So both my parents are Holocaust survivors and my brother was born Sam. Which is not the same. So that you may be aware of. But he also went to school in Michigan. He's the same age as Sam Zell, and we are in partnership in a lot of deals.

John Coe 00:01:31  Together related.

Jeff Zell 00:01:32  At all. we think we are, because I think we all we both came out of the Carpathian Mountains, which was now part of the lower Ukraine, and so on and so forth. So but my brother, and I, have been in business together from the get go. and that was part of what my father wanted us to do, that we would work together and do things together. And so we have, basically, for my entire life. Where'd you grow up? I grew up in a small town.

Jeff Zell 00:01:58  When my parents finally came to the United States, we lived in a house, a small town called McKeesport, Pennsylvania. Sure. So, yeah. Yeah, Pittsburgh was the big city. Yeah. but it's a mill town. And we lived in a house with three other families. And, you know, I had a bedroom with my two, my brother with my brother and my cousin in one bedroom. And that's how I grew up. And, you know, my dad was a woodworker. That that came out of the came out of the Carpathian Mountains. He made window frames and doors and, basically, had basically a elementary education level, but it was mostly folk technical skills that brought them here. And my two uncles with them, and they started a woodworking company in Pennsylvania. He started driving a truck, and then that truck was delivering furniture, and then he decided to start making furniture. So I grew up in western Pennsylvania. The whole ride, the problem with speaking English was that in my household we had, Hungarian, we had Czech, we had German, we had Yiddish.

Jeff Zell 00:03:01  and then I guess English was the fifth language in that sense. And so I was having trouble going to elementary school because there was nobody that could help me, with understanding what I was being taught. I had to learn as I went because at home, the reinforcement was in a multilingual, household. My brother, used to be the guy that helped me through all this because he was ahead of me, seven years older than I am. So he was able to learn the learning English and was able to give me a lot of the American customs as it relates to what people do and how to do it. But at six years old, I went to first grade. My mother put me on a bus, without her, and I took a 25 minute ride on a bus from McKeesport to a small town called White Oak. And I do that every day. And I'd come home on a public bus same way until about six months into it, the authorities told my mother she can't do that because a she bused me into a community where we didn't live.

Jeff Zell 00:04:03  Number one registered me in a better school. but the other problem is having a six year old kid get on a bus by himself, was not really an allowable situation. So that's how I. That's how I ended up going to elementary school initially, and then I, they ultimately moved into that community and they bought another house. My father became extremely successful at making kitchens and building out, department stores. And the best thing that ever happened was, that, G.C. Murphy's, the five and dime store hired my father, do all their counters. And so that became a very large account. My father at one point probably had over a thousand employees just doing that. And then he got in the steel business. So steel storage business, which my brother and I got involved with. So from a very young age, I was involved in a lot of different businesses understanding how to live in America. And really, I'm part of this first generational true story of of having people that came over with absolutely nothing.

Jeff Zell 00:05:07  Sure. interesting point is my parents came over on a Sabena airline from Belgium, from which from Prague to Belgium, Belgian to LaGuardia and into the US, they didn't come through Ellis Island, which is quite interesting, that he found his way to actually take an airplane. in those days, that's quite something. and so that's how I grew up in the Pittsburgh area. My brother, I, when he left to go to college, they sent me to a private school because I couldn't get any help from anybody relative to my educational aspect. So I ended up going to a, boarding school for the last three years of my high school.

John Coe 00:05:48  And then.

Jeff Zell 00:05:48  Asked that was at Kiski Springs Prep School in Kiski Area. There's like a Kiski Valley. that's in Pennsylvania. Pennsylvania? Yeah, it's about an hour and a half. But up above Monroeville to the north, it was in Salzburg. Pennsylvania is the actual little town. and then from there I went to Syracuse. So, played sports at Kiski and Weiser.

Jeff Zell 00:06:13  Great. Why Syracuse? That's interesting. Because my entire family, all my cousins, every relative you can dream of in the United States went to the University of Michigan, and I was the only one it did not go to Michigan. And part of that is, and if people want to understand, I do not, how can I say I do not write, anything down? Everything I do is from memory.

John Coe 00:06:41  I have no photographic memory.

Jeff Zell 00:06:42  Is that I would probably say yes. And I think everybody around me say, absolutely, I don't. I can do 20 deals simultaneously without documentation.

John Coe 00:06:52  I remember all the details of the numbers.

Jeff Zell 00:06:53  And everything, and then I have to learn to jettison everything very quickly because they start piling up again because I get bored. So yeah. So I do not. Wow. For me, there is no written materials. if I do have to write, my general counsel is my ghostwriter, and he sits with me. And a lot of the people when I do transactional business, there's a big fight over to make sure the right people are in a room to take notes of what I'm actually structuring, and taking pictures of what I draw on, because I'll do drawings, and that's about as far as you're.

John Coe 00:07:23  Going to get. I don't see a whiteboard in here.

Jeff Zell 00:07:24  Well, this is brand new office space, okay. It was supposed to be.

John Coe 00:07:28  Where.

Jeff Zell 00:07:28  It says don't cross the line. This was supposed to be a whiteboard that was supposed to be over there. Right. But we're still in the whiteboard. Yes. We're still. Yeah. And I even have people that have I have a couple people that have taken pictures of some of the things I've done and actually frame them.

John Coe 00:07:43  Oh, that's.

Jeff Zell 00:07:43  Awesome, because it shows how the creation of a deal over time, and it's actually quite interesting. So that's for me it's more verbal skills, obviously. since we're having this discussion like this, but it's about how.

John Coe 00:07:56  Old were you when you realise that that was your strength?

Jeff Zell 00:07:59  I think that's why boarding school, I ended up in borstal, and then I kind of gravitated towards chemistry and other things that were more formulaic and things with, with numbers versus with science and math versus doing anything to do with literature or English or any humanities.

Jeff Zell 00:08:19  So I actually got through college because I made a deal with the dean of Syracuse Business School saying, look, if you're going to ask me to go to a literature class as part of me graduating from this, I'm tapping out right now. We're done. And so they provided me courses where I was able to do speech and do lecturing in front of audiences as accredited courses for those for that.

John Coe 00:08:42  So are you a reader?

Jeff Zell 00:08:44  periodicals only really know books.

John Coe 00:08:47  what about audiobooks?

Jeff Zell 00:08:49  Oh, no, I've never gotten around to it. I just, I don't know, I don't think I think I'm ADHD, although my wife will be laughing if she doesn't, because I.

John Coe 00:08:58  Will be.

Jeff Zell 00:08:58  I'm sure I go through this way way too fast and understanding different things, but, I can't get through a book because I need it to end. It's it's too long and I, you know, and if I do read a book once in a blue moon, it's typically if I'm on a beach or on a vacation for a few days, and I'll read the whole book in two days.

Jeff Zell 00:09:18  Right. But so I stay to a novel. Every newspaper is consumed every morning. Multiple, multiple news services. Sure. So economics services. I just kind of eat all that.

John Coe 00:09:29  So AI is probably your friend.

Jeff Zell 00:09:31  Yeah. It is. Oh, yeah. I ask.

Speaker 3 00:09:32  A question.

Jeff Zell 00:09:33  My wife thinks I live with that.

Jeff Zell 00:09:36  It's the greatest thing, isn't it, though I can have them write whatever I want now. It's great. No, I agree. So, so that's how, you know, I went through school. Bye bye. Bye bye. Having people accommodate some of this stuff and not and not forcing me into having to deliver what I had to deliver. So. And then when I started, even with ruble off and other companies that will get into when you ask me for the questions, is it was having the right people that surrounded me that could interpret what I was trying to do and give it back to me so that I can work with it. So people work here by giving me rough drafts first or and asking my idea.

Jeff Zell 00:10:14  Then they do rough draft and then I'll comment on the draft and then they'll reformulate. So that's how this is done.

John Coe 00:10:19  So you're not, like Jeff Bezos who sits at 45 minutes. Everybody reads their six page memo before they start the meeting.

Jeff Zell 00:10:27  Yeah. No, I'm more like the Mars family, where if you have a conference meeting, then you're fired because you should know what you're doing. So we're kind of much more we're trying to get people to act on their own and learn and well input. I just had this discussion this morning with somebody. Come in, let's talk through what we're trying to do and I will set you on the right path hopefully and and then let you do it. I mean you don't learn by being dictated to or being told to do things. So I think people should make an effort to work on their own and coaching through it. I agree with you. Absolutely, John.

John Coe 00:10:59  So, you started for Rubloff. Now tell me how after you, were finishing up at Syracuse, what was your next thinking?

Jeff Zell 00:11:08  Okay, so, and this is also for discussion because I'm actually, it's a long story, but I came down here, to go to graduate school to get an MBA, initially from Syracuse.

Jeff Zell 00:11:19  So I got accepted to GW and they, because of, coming out of the Syracuse Business School, they there's a 24 hour credits that you need for your degree and, your MBA degree out of GW. They gave me a 12 credit. Wow. For my undergraduate work, 12 credits. So that was huge. So that means I had to only go one year. So the problem was it was a completely different environment at GW at the time when I came here, most of the students in the graduate program were military, and they were coming at night. And I thought I was coming to a graduate school that was just like Syracuse, that during daytime classes you have camaraderie with the students. And this was you'd come at six and go home at 930, and then you'd never see these people again and you'd have to do.

John Coe 00:12:10  They all.

Jeff Zell 00:12:10  Worked. They wouldn't work. Then there was no collaboration between them. So to me it was, it was setting me to sail on an ocean with no way home.

Jeff Zell 00:12:18  It was like I couldn't talk to anybody. I couldn't discuss it. So unfortunately, after about a semester, I just said, I can't do this. I'm done. which was very disturbing to my mother more than anybody. She was like, what do you mean? You only have six more credits or eight credits and you're not finishing. And I said look. So on a on a cold, windy, rainy day, I was walking around looking for a job and I walked into David W. S office, which I was telling you got bought out by ruble off six months after I started. But David hired me. and at that time, and I don't know if you've interviewed him, but. Rob. Boris. No, he was was the head of the office. He's with another brokerage firm for many years here. I think he's still doing it. And so I started there. And then Ruben bought it. And then six months after Rudolf bought it.

John Coe 00:13:06  why brokerage, though? What was it? What? What turned you on?

Jeff Zell 00:13:09  Well, my my father was building houses and had a couple of factories that we had acquired, and.

Jeff Zell 00:13:15  Yeah. And then we subleased parts of it.

John Coe 00:13:17  You got to learn real estate.

Jeff Zell 00:13:18  I got to learn from my dad, who was really one of the best business people I had ever seen or met. And he knew every aspect of it, and not only for manufacturing, but the accounting aspect, the law, the legal aspects. He he taught me everything about anything.

John Coe 00:13:33  He's all self-taught.

Jeff Zell 00:13:34  Self-taught, and and at a very young age because as he went through it, he would teach my brother and myself how all this would work together. And a lot of his attorneys and accounts would come to me and say, your father never really went to school, but for his knowledge base to understand all this is unbelievable. He knew everything from engineering to to accounting, and he would walk my brother and I through everything. So I loved being able to sell things. And I also love real estate because I like to build things and I like to see other people's businesses I like to see. So a lot of what I did, I started out as an industrial broker, if you can believe this.

Jeff Zell 00:14:13  And part of it was more manufacturing orientation than it was in in warehouse here in Washington, here in Washington.

John Coe 00:14:20  Which is.

Jeff Zell 00:14:21  Crazy, right? It's a very small group of people. The day I started at Red bluff, where I went out on the road to look for clients, I went over to Washington Business Park, and none other than Bill James was over there, who was a CRA. Hall of Famer?

John Coe 00:14:38  Yes.

Jeff Zell 00:14:38  Bill's a great guy. Yeah. Bill and I, we started the same day, went to Washington Business Park differently, ended up in Bob Pugh's office over Washington Business Park. Sure. And we ended up meeting each other there. We couldn't. And from that point forward, Bill and I have been friends forever. And Bob and I became partners in development of industrial stuff all through Prince George's County. So that first day was monumental and a lot of different ways. But, yes, I started industrial. Then I went up to 270 corridor and started to get involved in research space.

Jeff Zell 00:15:15  way back in the day. And, I got hired at the time by Equitable Life, who owned a big portfolio, and the 270 quarter did. And at Rublev, we started to build a property management company that I was running. And so we ended up getting both prudential and equitable portfolios. So next thing we know, we had 7,000,000ft² of space, which at the time was a lot.

John Coe 00:15:37  To work with. Now I want you to.

Jeff Zell 00:15:38  Share and work for me.

John Coe 00:15:39  Sure. And work for you.

Jeff Zell 00:15:40  Sure. And work for me for probably 7 or 8 years. Yeah. Yeah. Yeah, sure. And it worked for 7 or 8 years. she said all of her meaning now, right?

John Coe 00:15:48  She has her own firm.

Jeff Zell 00:15:49  Yeah. Yeah. And, so a lot of the people work for me, you know, when when you look at this, historically, one of the funniest people that Bob Milkovich came to me one day. Bob worked for me for ten years before he went off on his career.

Jeff Zell 00:16:04  And, you know, people at Hynes in New York, Chris Hughes worked for me for ten years. Who runs now? They're capital markets globally. Yeah. So he worked me for ten years. So everybody wants to have a get together. Like you were talking about John of past alumni. there's a group that keeps saying, Jeff, you should throw a party somewhere because we'd all like to come.

John Coe 00:16:26  I had dinner with Ray Richie, Bill James, Cab Grayson, and Vernon are all former CBRE guys that started the office here with Jim O'Brien, who was the founder of the group. So we talked about that and all the episodes that I've had.

Jeff Zell 00:16:42  It's unbelievable.

John Coe 00:16:43  Yeah, CBRE network is fantastic.

Jeff Zell 00:16:45  Yeah, I agree, CBRE network is fantastic. Yeah. so that's you know, from my perspective, that's how I started. But then I was given the rule of office at a very young age of 22, and we grew into one of the largest property management. We had 200 people at one time.

Jeff Zell 00:17:00  Right. and that went on until 1988, 89. and then I had to part ways because of a boardroom fight, and doing such.

John Coe 00:17:13  And did you open all the other peripheral offices?

Jeff Zell 00:17:16  I did not, I just did the DC office, but I had responsibility at the other offices as well. Yeah. and I picked him up because what happened was, I don't think a lot of people were really sure how to run satellite offices. It's very different. when you have a satellite office versus a main office as it relates to support and structure and maintenance.

John Coe 00:17:37  You attract people to. I mean, the ruble was not a big name in Washington. It was big in Chicago.

Jeff Zell 00:17:43  I think it was, first of all, it helped having the the property management. Yeah, because that gives you lease something to sell clients.

John Coe 00:17:51  A big one.

Jeff Zell 00:17:51  It is I spent my first seven years working with equitable on a day to day basis. In fact, Mark Sobel, my in-house general counsel, was working at Sidley and Austin at the time, and he provided the support to the equitable portfolio, the Prudential portfolio and all the leases, because we do probably six, eight leases.

John Coe 00:18:09  They were all over cars, meaning they were two partners. They absolutely back in the day. That's absolutely true. Before the REIT and all that.

Jeff Zell 00:18:16  That's right. That is absolutely right.

John Coe 00:18:18  Yeah. When I moved here they were the big players right for them.

Jeff Zell 00:18:21  Yeah. So those two were really big for us. And then we picked up the ihcc out of Atlanta. that institutional holding company which had a big, ownership in Alexandria.

John Coe 00:18:31  Oh, yeah.

Jeff Zell 00:18:32  And all those buildings down there.

John Coe 00:18:33  So Savage.

Jeff Zell 00:18:33  Fogarty. Right? That's exactly.

John Coe 00:18:35  Right.

Jeff Zell 00:18:36  Yeah. And so we put together and most of the people back in the day would come to work for companies that had space to lease. Right? So if you have a portfolio then people would want. So we we attracted a lot of people because of the portfolio. But the other piece was we as I said to you earlier today, we were just having a quick talk. Mary Spelman and I in 1981 decided to start a tenant brokerage services group, and we did it together.

Jeff Zell 00:19:04  So she did everything out of the Midwest. I did everything on the East Coast, and the two of us, ended up getting a lot of clients.

John Coe 00:19:11  So what's the tenants services business talk about?

Jeff Zell 00:19:13  The tenant services are users of space people. That or.

John Coe 00:19:17  Representing tenants?

Jeff Zell 00:19:18  Representing tenants. Yeah.

John Coe 00:19:20  Okay. So you were the tenant rent business.

Jeff Zell 00:19:21  They'd say tenant wrap, but it got more to user services because if like for Fred Smith, I did 224 express facilities. Wow. In my day. And the issue was understanding what they needed to function and operate to provide services to their clients.

John Coe 00:19:39  Just.

Jeff Zell 00:19:40  The logistical issues. So we got involved in how they function and operate, and understanding that helps you understand what real.

John Coe 00:19:47  Estate they were the pioneers of logistics. Yeah. Absolutely. Absolutely.

Jeff Zell 00:19:51  Yeah. So that's it was yeah. He's an icon in himself right. No question about it. Yes. Yeah. They were a fabulous company. They still are. and they still do. They still do it.

Jeff Zell 00:20:01  Yeah. But that's how I got started. And I was the I had 3 or 4 clients like that. that actually went on a tear relative to their growth.

John Coe 00:20:10  Yeah. I mean, you, I mean, I think of, you know, Studley coming here as a tenant rep, as Fred Ezra's company. I mean, there were a few people that was there. That was their main shtick. Yeah. And so that was pretty much your main step.

Jeff Zell 00:20:24  The main thing. Yeah. Except we also had a very good property management group because of our institutional relationships with equitable, because in Chicago, Root Bluff had like 12,000,000ft of loan from Prudential. And so that was a very good client. So that was part of the business. And the other part was tenant rep. And so you've got to be careful because the two are in conflict at times. and you have to.

John Coe 00:20:51  Yeah. Because the landlords are, you know. Right, right.

Jeff Zell 00:20:54  But everybody's crossed over in a way that nobody they have these curtains that separate the two groups and nobody seems to care about it anymore.

John Coe 00:21:03  So that was the foundation of Jamsil. Basically, it was the tenant rep.

Jeff Zell 00:21:08  Yeah. We weren't. We made a decision. Two things. One is, you know, the day I had to leave, you know, the two most important things to my wife were is can am I going to be home? Walking around in a robe. but Ruby provided me two years worth of, compensation facilities and offices. And when they let me hire a few people and they paid for everybody. So. And that was for an orderly transition of my client base, which was substantial at the time. and so that's how that started.

John Coe 00:21:39  That was in 89, 89 and 90.

Jeff Zell 00:21:41  The good news is I got all my money out of Rudolph because I own a substantial interest in it. and 12 months after I got my money, nobody else did because the entire market collapsed.

John Coe 00:21:53  Yeah.

Jeff Zell 00:21:54  So I actually my timing was reasonably impeccable because they valued my interest in shares.

John Coe 00:22:00  So how did you survive the early 90s then? If the early in the company construct.

Jeff Zell 00:22:05  Okay, so we formed a consulting, a consultancy company where we provided, pay by the hour services, for people that were having real estate issues RTC, RTC workouts, restructuring debt, working through corporate excess of space issues because people would just take leases and not worry about excess space, and all of a sudden they had to have their footprint. And the question is, how do you get rid of it when everybody else in the world is doing the same thing? I think it looks a little like now. I hate to say it, but things go around, come around right back to where they start. So getting rid of space when nobody wants it is, is a technique in itself. You have to figure out how to get that done. And we spent a lot of time working with people and they would pay us hourly to do it versus do it at risk.

John Coe 00:22:59  When you say they. When.

Jeff Zell 00:23:01  Morrison's timing.

John Coe 00:23:02  Companies.

Jeff Zell 00:23:03  Companies.

John Coe 00:23:04  Yeah. When they over overly say overly.

Jeff Zell 00:23:06  So instead of just taking a listing agreement, we'd have a consultancy agreement and a listing agreement Where? Because I said to him, look, I can't spend all this time working on getting rid of your space.

Jeff Zell 00:23:19  I need to pay rent. And I don't have a property management company, which I did not want to start because I believe property management. You need a lot of scale to make any money. it's kind of like the $30 million for restaurants. Yeah. You know, your margins don't start to look good until 16 to 20 million, and then you have to build it from there. But if you try and get it on a smaller basis, it takes a lot of time and energy and the rewards are low. So I refuse to to have any aspect of property and I'd rather hire it from CBRE, Cushman. JLL and let them do it. They do it. Well, then me do it because what I'm paying them, I feel is fair and I can't do it for less. Sure. There you go. Yeah. so we do that, and instead we this consultative services business Gives us an understanding of somebody's entire portfolio, and then we get to work through how to reorganize it for people so that they can effectively operate in a very efficient manner and cut their costs down simultaneously with with deleveraging their portfolios.

John Coe 00:24:30  So the roots of your company basically are dealing with workout clients at that time, struggling through and then, you know, trying to figure things out creatively in a market that is very difficult to work in.

Jeff Zell 00:24:44  Right. And remember, there's thousands of brokers trying to help people like this. So we had a lot of competition. So the market that we drifted to that needed the most help, but also the most money at the time that people didn't see. And candidly, they're back. So we're doing the same thing again. Is that 501 C3 not for profit interests? Yeah. So when when you look at those groups, there has been tremendous amount of capital donated to them over the years, where they have stored up substantial capital, but they didn't want to get into the real estate business at the price of it was over the last 15, 20 years because it had been escalating and we outpaced, the not for profits from being able to pay for space, number one. Number two is they used to be able to borrow money at about half the rate of for profit entities issuing tax exempt bonds, except over the last 8 or 9 years.

Jeff Zell 00:25:39  The differential between tax exempt and taxable was 100 basis points at most. And so it wasn't worth going through the entire cost and issuance.

John Coe 00:25:49  Bond.

Jeff Zell 00:25:49  Issuance. Yeah. Your net proceeds difference is like 30 basis points.

John Coe 00:25:53  That legal fees are just ridiculous.

Jeff Zell 00:25:54  Legal fees are terrible. Plus you're restricted on use, right. you can only do certain things. Whereas on a regular borrowing you can't. So when the when the gapping was wide, it made sense. And then it narrowed in. It went away. So we picked up at the time a lot of non-for-profit business that didn't have internal real estate people, but wanted to get certain facilities underway, and they would hire our firm to put together a real estate strategy for the board to be implemented. Now, currently, we're back to 50% of our businesses back to 501 C threes again. And we've if you look at who we've represented and I think I can or most of the and I won't name them specifically. But I think we've pretty much done 75% of transaction or project management business on the mall.

Jeff Zell 00:26:44  So the mall, all those five on C3 is ultimately utilizes for services. And they currently still are. Plus, you know, we had people like we redid the Phillips Museum, we did Shakespeare Theater across from the Smithsonian. We have. Yes, you have. And that's in a roundabout way. I have a we got to be a little careful, as to who we work for an hour for some of these. Some of these firms won't allow us to to say that we work for them because they don't want any disclosure of who's working for them or not working for them. And, and the good news that everybody is, we've had a 25 year relationship with the National Gallery of Art, which I can say. So, you know, and there's a whole bunch of others.

John Coe 00:27:30  So what would the National Gallery of Art need your services? Well, we what happened.

Jeff Zell 00:27:34  Was, well, we worked with an architectural firm over the years, and what they've done is and I think on the mall, there was a group that originally one of the buildings on the mall's closed.

Jeff Zell 00:27:46  And the reality for the malls is there's only one mall. There's only a certain amount of space on the mall, and a lot of the entities had a substantial amount of administrative space in the buildings. And the issue is, should it be should you have an administration space in the building, or should you use it for more exhibit space? And the answer is there's only one place for exhibit space. The administrative space can kind of go in a lot of different places. So there was a movement that we started with a couple of the institutions on the mall to say, maybe we should look at moving the administrative facilities out of the buildings, converting those to exhibits, allowing for a lot more exhibits so that the public can see a lot more of their of their.

John Coe 00:28:31  Items.

Jeff Zell 00:28:32  And the treasures, and so that people.

John Coe 00:28:33  Can have.

Jeff Zell 00:28:34  A look at it. So we started with one group there that kind of fell into and we moved them up to the Victor building up on where CBRE had their offices for a while.

Jeff Zell 00:28:47  Right. But they were in 300,000ft during that, opened up 300,000ft² on the mall for more exhibit space. National Gallery went through the same analysis, and we moved them across the street with administrative, then opening up another floor and a half of exhibit space so that sequentially is still happening and we're still doing it again as the museums close and relook at what they have done. They exhibit space, is very hard to replace administrators is very easy to replace, and especially in an environment where nobody's leasing space. Interesting.

John Coe 00:29:20  So let's let's talk a little bit about your company and kind of your core principles a little bit when establishing it. And originally, what core principles from your experience did you retain and what did you deliberately choose to do differently, differently? Oh.

Jeff Zell 00:29:36  The number one thing here is and the client is number one, we do whatever the client needs. This is not about a brokerage business where I'm worried about somebody making a 50 or 100,000 or $200,000 commission or whatever. This is about servicing the client.

Jeff Zell 00:29:53  So our number one situation here is we will do spend and putting the time and effort to make sure they are 100% satisfied with what we deliver. And because we don't have a brokerage mentality of having you kill with you what you eat, you have a broker that finds the tenant. He's the one that runs that deal. Our our aspect of it and looking at is that, wait a minute, is that person really the best person to have with that client for that need? Does he understand their business? So we approach everything as a company commitment not an individual commitment. Got it. And we we being a group of 3 or 4 of us that run this company will assign the right people to staff that assignment. So if it takes more people, more go on it. It's not controlled by who gets the fee when the fees come into the company. We pay salaries to everybody here. Bonuses are are generated by service to the client and by me as to how hard you work to get the client happy and get the deal done.

Jeff Zell 00:30:58  So over the last, I guess, 40 years. It's scary. I have distributed single handedly all the bonuses based on every employee in this company. Every year, one year we try to make a Democratic and it didn't work out where we we did it to a committee. It got too political. So I still allocate the bonuses based on performance. And the performance is based on service of the class.

John Coe 00:31:23  I think of the only other intermediary firm that I know of that does that. Is he still secured? Yeah, I think it's the only other one that I know.

Jeff Zell 00:31:30  I think you're right. I think you're right. And, so so that's what made me different. I did not want to be a commodity trader, okay. In the sense of deals in, deals out. We really want to work for long term operational value.

John Coe 00:31:46  So you wanted more than one deal for each client. That's what you're saying. We want to.

Jeff Zell 00:31:50  Be here forever.

John Coe 00:31:50  And we.

Jeff Zell 00:31:50  Want to be anywhere in the United States.

Jeff Zell 00:31:52  When people say full service real estate, they you know, their theory is retail. And then they go, we have offices in all those regions. We don't need offices. I can get into any market in this country in two days. And you know this from what you do, if they sent you into Los Angeles for 2 or 3 days, you'll you'd know everything about LA in 2 or 3 days. You don't really. Yeah. You and I'm part of a CRE group that I utilize. Right. that they give me the information and most of the time we'll bring them into the deal as well to make sure our client gets the best service and value what they're more interested in making sure our mentality of how we did their deal here happens out there. They want us to think through the lease the same way. They want us to understand how we formulate the utilization of the space. Our clients want to run their business. They don't want to get into the real estate business. So we've been very successful at taking operational understandings into markets.

Jeff Zell 00:32:47  And I think right now we have projects, and I say projects because it's not only the transaction, some are and some aren't, but it's also the project manage and build out and delivery of a facility for these people in probably 20 states right now. Yeah. And Canada and other and you know, we we were in and out of Mexico. But Canada we do a lot we do regional headquarters.

John Coe 00:33:11  So talk about how you built your national business. I mean, how did the reputation go beyond Washington?

Jeff Zell 00:33:17  Yeah. I mean, I'd like to know myself, I think I think what's happened is some of the companies here and some of the law firms here, and some people understand how we do our business. I when I was with Ru Bluff, I had national exposure. So like Time Inc and and Norfolk Southern Railroad and I can give it these are people I worked for. So when I started my own firm, they kind of that kind of we can go anywhere mentality stayed with them relative to it.

Jeff Zell 00:33:50  And they they just want to entrust the transaction to somebody that really wasn't just trying to take a fee. They wanted somebody that could sit in a boardroom and tell everybody why we did this. they also wanted all the bases covered. They wanted us to take it through an understanding of competitive bidding. you know, we do stuff for some agencies here, like National Galleries is a quasi government contractor. We run through the procurement process, like anybody else. But what's I think what's happened now is because of how successful we've been as a company, a lot of the board members of the 501 C3, not for profits that are huge in this city are members of companies that are all over the United States. so they see what we do. And because we have a we have a pretty good following now out of Los Angeles and a lot of that's occurring. We brought USC in from LA here to DC With their.

John Coe 00:34:50  Campus.

Jeff Zell 00:34:50  And everybody was like, how did you do that? And not only that, we built it out.

John Coe 00:34:54  In Pepperdine as a class thing.

Jeff Zell 00:34:56  Yeah, there's and we're doing we did the Reagan Institute on 16th Street, the people's House on 1700. These are all, believe it or not, a lot of West Coast influence and also a lot of Reagan and Republican influence.

John Coe 00:35:12  It's interesting.

Jeff Zell 00:35:14  yeah. Yeah. So I think because of the 503 organizations that we've represented,

John Coe 00:35:22  The word gets out.

Jeff Zell 00:35:23  The word gets out between them. All right. And, you know, we we had a wonderful relationship and we just built up the space for Don Graham, the Graham holdings.

John Coe 00:35:31  And and you.

Jeff Zell 00:35:32  Know, we do stuff for The Washington Post, for Jeff Bezos. And once you do some of those transactions of that size and and understand that these people are very good at what they do, and they're very good at allowing us to do our business and making sure that we're providing them high quality service. So.

John Coe 00:35:51  Got it. So what were the initial challenges you faced when introducing your innovative business model to the real estate consulting industry? What were your.

Jeff Zell 00:36:02  I think I think the hardest part was getting people to understand that it was even a business, because what happened was brokers would provide certain types of this information just as part of their right. aspect of getting things. So to get people to pay for an evaluation of what they need was, was hard. And especially in 1990, 91 when the market had collapsed. But we had a few 501 C3 and C4, which are some union groups that pretty much entrusted us with explaining to them the opportunities and how to do things. Yes, and a lot of those groups, like I think we represent almost ten. Yeah. No, we didn't do, you know, we we actually did like the plumbers and pipers. Yeah, sure. The bricklayers. we still represent all these firms, operating engineers. and there's a whole list of more the, Chargers employees Union.

John Coe 00:36:56  Electrical.

Jeff Zell 00:36:56  Workers. We have never done electrical. We've done a lot of the others. Okay, so. But but when you look at the the group, they understand how we do things and we make sure we cover all the bases and, and through a procurement process, they're very they're very much don't want anybody to challenge why they did anything.

Jeff Zell 00:37:19  So we cover all the bases and we make sure that, we get them what they need. But so we're word of mouth, you know, this whole business and the number of people have in the size project, it's all been done with pretty little, very small. Yeah. No marketing. Yeah, we just started. Now we're. And I'll explain to you what's happening going forward. Okay. But there's a huge change that's occurring right now. So here.

John Coe 00:37:46  okay.

Jeff Zell 00:37:47  and.

John Coe 00:37:47  we'll get into that. Yes, we were going. Trajectory.

Jeff Zell 00:37:50  Yes. I'm letting you. I'm letting you stay with your agenda, John.

John Coe 00:37:53  Thank you. can you elaborate how Zelle integrates the client's long term needs, financial objectives, and corporate culture into your real estate solutions?

Jeff Zell 00:38:04  Yeah, we try and keep it their corporate culture, not ours. But we can read it and understand it. the biggest, we learned this early on when we worked for a company called, Sanofi, which was a very large French drug company there, I think the fifth or sixth largest drug company in the world.

Jeff Zell 00:38:21  And back in the day, almost 30 years ago, I had with the president of the US operation Sanofi, came in one day and said, just understand one thing. We never know if we're buyers of more companies or we're going to sell. So you need to prepare whoever you do a lease with, with the right to terminate their lease. Okay. And you know, so we we have done almost 10,000,000ft² for Sanofi over the years. Wow. And all the leases all had 5 or 7 year termination rights, even though.

John Coe 00:38:55  There were ten year leases, typically.

Jeff Zell 00:38:56  Ten or some 15, depending on if they're if they're research facilities, like we did when when Amazon two was running around looking for a new headquarters and they ended up in Arlington and Crystal city, as we know. Right. Of course, that year when that was signed, that deal was worth $1.3 billion on a signature to JBG. What nobody realized is that we were in Cambridge, Massachusetts, and we signed a $2.3 billion deal with Sanofi for their corporate headquarters in Cambridge.

John Coe 00:39:32  Wow.

Jeff Zell 00:39:33  It was a 550,000 foot headquarters with a 600,000 foot research facility. Okay. So it was very funny because that was like the news for the world when that happened. Where are they going? What are the concessions? While they were doing all that we were sitting in Boston getting that deal done. so technically RDA was almost twice the size of the Amazon deal here, and I don't think anybody knew we did.

John Coe 00:40:00  It was the landlord.

Jeff Zell 00:40:01  it was Texas teacher. It was difficult with Texas teachers and counselors.

John Coe 00:40:06  Oh, okay. So is that your push to Boston Properties site there?

Jeff Zell 00:40:11  No. That's nearby. We left one nearby. Actually, Rei tried.

John Coe 00:40:14  Kendall, Kendall Square.

Jeff Zell 00:40:15  And Kendall's here. They tried. It wasn't big enough for us. And, sure, the only other place MIT had a site that we were negotiating with, but Devco ended up getting the deal in Cambridge. It was, it was it was the largest deal I have ever done outside of for square footage. We did the patent and trade deal with Bill hard.

John Coe 00:40:36  So that deal did the penetrate deal?

Jeff Zell 00:40:38  Yeah, well, that's because that was Norfolk Southern and right we are. We represent Norfolk Southern. Carlisle in Alexandria went from the car company to us. and we represent Ray Richie. Still. He's the only one that told me the following. He said, Jeff, when I looked around and saw that you had the Carlisle site potentially. And you. And that's a story in itself. But he said, I realized you were the only one that's going to make money on this deal.

John Coe 00:41:10  That's what he told me.

Jeff Zell 00:41:11  Because I said, the race and you want me to help you. On trying to start, he said, no, you stay where you're going to make more money over there. So, so we did the plan and trade deal with Bill Howard. and it really started out is Bechtel Park Tower, with George Klein and Michael. I think it was Michael, bought for us. Can't remember Michael's name, but they we they tried to renegotiate the land at the table with myself in the Norfolk Southern, and we pulled the deal literally at the signing.

Jeff Zell 00:41:43  And then that was on a Friday. On Monday we signed Bill, Bill, bill, one firm and one day on the lease and move forward on the land sale and everything down. So we're still involved.

John Coe 00:41:54  The listeners, bill Howard was number six in my podcast.

Jeff Zell 00:41:57  Oh, I say okay, great. Elkhorn. He's awesome. Hi, Bill.

John Coe 00:42:00  He's retired.

Jeff Zell 00:42:01  Now. Yeah, I know he's he bill and I spent years together doing that deal. So I love Bill. Bill, bill and is is is wonderful. but we're still you know, we bought out the balance of Carlyle.

John Coe 00:42:14  From I know you're developing.

Jeff Zell 00:42:15  We're developing now. Yeah. So we bought that as well. And, so we've been there a long time. So that's, that's the that, you know, so when people look at us and they, you know, how did you do a $2.3 billion deal, what we did. And so and it's in Boston. So it's not Washington. So, you know, I can tell you, we've been in Montreal, we've been in LA.

Jeff Zell 00:42:38  We you know, we do deals. We were just we.

John Coe 00:42:40  Thought, if you get the son of Santa Fe.

Jeff Zell 00:42:43  through their legal counsel and Mark, Mark came out of Georgetown Law School and so did their general counsel and set up a meeting, and we pitched it. And, it was a 25 year love of, you know, love affair relative to getting older. And it was they it's the one company, you know, we give back rebates. I don't know if you you know, we give back part of our commission. That's part of the deal because they look, if somebody's going to pay me hourly for my services, I'm guaranteed money. So I'm okay. So now for anybody starting a business, this is what you got to do in this world, especially when there are no deals. But we've been doing it the whole ride. And so when we get into transactional business and do leases, we give back a substantial portion of that fee back to the company if we have a consultant screening.

Jeff Zell 00:43:35  Okay. I will tell you that I think Sanofi's rebates over the years have amounted into over $200 million.

John Coe 00:43:44  Wow.

Jeff Zell 00:43:46  Yeah, they made a lot of money. We were we were almost, a line item on their statements in the US relative to fee returns. I mean, it's crazy the amount. And we obviously we did very well as well. So, we have no complaints. It worked out great. And we're, you know, it. That's how a lot of our clients work with us. We want all their deals. We want a long term relationship, and we want to make sure we have high quality of service.

John Coe 00:44:12  So I met one of your associates probably 15 years ago, I'm going to say Louis Kruger. and he was marketing SAIC site in Tysons Corner. That's right. At that time, and I thought I had a client that might be interested at the time, and I talked to him about it, got the information, and I did chat with a few people, and I registered them with them, and we never got very far.

John Coe 00:44:44  But then I read that David and and Bruce made the deal with you.

Jeff Zell 00:44:50  Correct?

John Coe 00:44:51  Meridian, I'll say for the audience and, just for knowledge, I'm hoping to have Mr. Cheek on later this year on the podcast. I've asked him since the beginning. I've been doing it right. I financed or help financed four of his first five transactions as a company back in 1992 93, when they started and they left Riggs Bank, the two of them, they bought a building in Baltimore. And then after that I did, a business with them in, Rockville. We did the of the oil there. The great big the drug company that was there starts with a V I can't remember the beginning. on goody drive they bought those buildings.

Jeff Zell 00:45:38  Then with a B.

John Coe 00:45:39  I think it maybe.

Jeff Zell 00:45:40  Expected Dixon was in the back then.

John Coe 00:45:42  No it wasn't, it was, Oh, man, I actually it was the genetics firm that ended up buying the firm. Buying it, buying the from them. They bought it from Northwestern Mutual out of foreclosure.

John Coe 00:45:54  Got it. We helped them buy another this, and we brought Cargill to them as a joint venture partner at the time. So that's a little side story with with them getting to this. But I didn't realize that this was their kind of a cup of tea at the time or otherwise I would have brought it to or at least brought that idea up at the time. But that was quite an assignment. I remember Louis going through the complexity of that deal. That's one of the most complex deals I've seen.

Jeff Zell 00:46:21  Yeah, we all our stuff and people will tell you is is usually.

John Coe 00:46:26  Extremely.

Jeff Zell 00:46:27  Convoluted and a lot of different in a lot of different ways, in the sense of what the client's trying to achieve out of the sale, because sometimes it's not just money, it's performance. It's, you know, they stay in some of the buildings. Yeah. And Meridian actually got two buildings. They got the TTC building, which is the which was the data switch building, which had originally SAIC their, their data center and some of their computer works.

Jeff Zell 00:46:57  And then we got into the borough. It was the second deal, and which was all the land owned by SAIC, that was the towers. And. Right. And so we the way that all happened, was really a consulting assignment because we were brought in to divide the company between Leidos and SAIC. So the buildings had to be separated based on government contracts and different elements of the business, because they had separated two different types of businesses at the time. Like Lewis, right. And Lewis was kind of in charge of whether they go to Blue Team or they go to the white team because of what business. And then with it, what space does it take and what buildings do they take, and how long will they want to take them for?

John Coe 00:47:46  Do you have to re subdivide that site?

Jeff Zell 00:47:48  No, we didn't, but we had to restructure leases separately between the groups. I see okay. When we sold it.

John Coe 00:47:55  So the land stayed the way it was.

Jeff Zell 00:47:57  That's correct. But the lease has got changed to facilitate those that went to Leidos.

Jeff Zell 00:48:03  Those went to a big site. Right. And then we took a group out SAIC and to Reston, and we had to deal with them in Reston as well. So putting the deal together.

John Coe 00:48:14  That was with Ray.

Jeff Zell 00:48:15  That was with Ray. That's absolutely right. Called Dre one Saturday morning and he said, let's do this deal. That's okay. We can do this. It's absolutely true. And, but what we left behind for Meridien Dubai was a very intricate weaving of the two companies and different lease terms and different, credit obligations between the entities. and then.

John Coe 00:48:42  How many developers could figure that out? No, no, David and Bruce are smart guys.

Jeff Zell 00:48:46  They are very smart. And at that time they had Gary with them block as well.

John Coe 00:48:50  That's true.

Jeff Zell 00:48:51  Yeah. So Gary.

John Coe 00:48:52  Added.

Jeff Zell 00:48:52  A little horsepower to them. Sure. And we the reason why we went to them on this deal is we had done the TTC deal with SAIC. So they have they had some credibility with SAIC at the time, which was Eric Hazard was their head of real estate at the time.

Jeff Zell 00:49:07  So that's how that went on. And it wasn't just a sale of the facility. Right. So and we actually people twice the TTC deal went out with a different broker initially and didn't get the number that Eric wanted. And then he had us and we were able to get it for him. Like 120 days later, they got they got about 40% more than they had.

John Coe 00:49:29  And your angle must have been different than the previous brokers.

Jeff Zell 00:49:32  We don't auction properties, we don't hold bidding. We don't put like, oh, by April 24th, for if you come in with the bids and then we go to we do not do that. What we do is we target who he thinks the best 2 or 3 buyers. Interesting. And we sit him in a room and say this. We try and explain. Look, when I sold all of her car and Oliver will tell you, you have Oliver on this yet? Twice. Twice. I love all the. Oliver's my buddy. Yeah. Okay, so the same thing happened at the Freddie Mac deal down here.

Jeff Zell 00:50:02  on 15 of Fannie Mae or Fannie Mae. I'm sorry. I'm losing my mind. Yeah. Fannie Mae, what happened was we represented the Washington Post at the time. Yeah. And it was a very, again, crazy deal, because, we had a site that was the corner. That acreage had a 20 year lease still on and had been traded multiple times. And then we had the building behind it, which was the plant, the original old facility in plant. And when they went out to bid this, they used one of the other firms to bid it. I think it was $700 million. and I'm giving you factual information that people know about. So it's not anything that anybody doesn't know. And Don Graham said that's I'm not accepting that. And Jeff, you know, how much would I need to do to make this building work? And I said, I understand that. I said, but I'm not selling the building. It's another group of people. So then John called me and said, then you go do the building.

Jeff Zell 00:51:04  You go figure it out. So I called Oliver and I said to Oliver, let me show you why the bid that you made wasn't correct. And we have a development team here that scaled the building, showed them the density and showed them how this all worked. And Oliver came back and said, look, you're right, I missed some of the density. You guys really picked it up. And so the deal closed and it's recorded so you can look it up. It closed out at 162 million. and that happened four months after the first bit of sub 100. Okay. And it was because we had drawings. We've walked him through it, he understood it. And he was happy that he was able to control it. And then the second part of the deal came in when he bid the Fannie deal, and when he bid it, he lost the bid. I don't know if you know that whole story. Oh, yeah. Did he include me or not? I didn't hear Christmas Eve.

John Coe 00:51:58  I think our New Year's Eve. Yeah, I think he lost the deal.

Jeff Zell 00:52:00  He did on Friday. Yeah. And I'm mad because what happened was we put him in the deal and I'll tell you how. We had a lease that didn't have us leaving the building for two years.

John Coe 00:52:13  Yeah.

Jeff Zell 00:52:14  And he couldn't bid that deal unless we agreed. This is the Washington Post to vacate early, right? By, like 8 or 9 months. So we had to accelerate, our delivery, at 13 01K.

John Coe 00:52:31  The premise building.

Jeff Zell 00:52:32  So all over. And I came to terms with the amount of money for us to do all of this and to incentivize the post to do it at the time. So, that all went well. And, you know, I had allocated some of the money for furniture budget for the post. So when Oliver called me on Friday night, I was like, you didn't lose it? I said, Oliver, we got to talk. So I met him for coffee at the Starbucks on MacArthur Boulevard.

Jeff Zell 00:53:00  And I said to Oliver, you know, if I was you, I dropped the price a couple bucks and see what they do make 49.99 instead of 5150. I mean, come on, Oliver. And Ella's like, why are you. So I said, you have our money, you're going to lose it. We need that money for furniture. I need you to do this deal. He said, yeah, but they already chose down the street on, you know, 12th Street. They've already announced it. It's in the papers. I said, I don't really care. I think you need to make an unsolicited revised offer. And he said, really? I said, please, please do it. And he said, okay, I'll do it. I said, look, what are they going to say? No. Right. That's the worst. They already told you though, so he doesn't. Monday afternoon he calls me. He said they took the deal.

John Coe 00:53:52  So you help them make that.

Jeff Zell 00:53:54  So I push. Well, we had our money, you know, it was a lot of money, by the way. Yeah, because it was a bonus because I and I had set up the move. We were ready to go. I was like, you can't, you can't. Now back out of this. We, you know, because I had sold that we were going to get this extra money and it helped pay for a lot of the furniture and the moved to 31. So that's how that.

John Coe 00:54:13  But we told this before, but I got a long relationship with Mr. Car started his company actually.

Jeff Zell 00:54:21  The best I mean I he knows that he we talk all the time. So he's and I'll see him again at this DC live event. but the bottom line is it's that extra step that we understand. And the only reason I was I mean, I was pushing to begin because we were selling the site to him. But the second piece that wasn't the real important thing was we got involved in the actual mechanics of the deal, and he got involved with my mechanics.

Jeff Zell 00:54:50  And Ed Lashley was as head of development. Time ended up overseeing us because they gave us a lot of money to go to move, and they reimburse us for a lot. we all became friends. In fact, we're still using his.

John Coe 00:55:05  He's not your landlord. So. Oliver. Yes.

Jeff Zell 00:55:08  Well, you know, this deal was too good to trade to.

John Coe 00:55:12  To the Abrams. Got you.

Jeff Zell 00:55:14  Yeah. This work. This work just works fine for me. So, So, no, that's, you know, that's that's a good way of how we do our business. It just wasn't a deal or a situation. So on and so forth. So, and that's why people keep coming back.

John Coe 00:55:31  So how was your client base evolved since founding and what factors have driven these changes?

Jeff Zell 00:55:38  Well, I think there was a trust issue of size that we were, potentially too small to handle some of this stuff. And so, you know, public companies would presume to be skeptical of our size of anything went wrong.

Jeff Zell 00:55:54  What do they how do they tell how does Norfolk Southern tell their board? How does you know, Sanofi tell people that we don't.

John Coe 00:56:01  You're not CBRE.

Jeff Zell 00:56:02  Right, right. And we've had issues where CBRE come in and say, these guys are too small, they can't perform. And then we do things like, well, we'll give you a half $1 million in deposit. If we don't perform, you can keep the money. We'll draft an agreement, I said, but do me a favor. I'm only putting it up. If CBRE will put up the half a million under the same terms. And you know what happens when you ask CBRE for the half a million? The answer is absolutely no way. And we don't even want to consider it. So then that was the Department of Agriculture came to us and said, okay, you guys have the deal to us. So I just said, you know, we can respond to things that others can't. But now that we, you know, fast forward to 2025 and the number, as I said to you, you know, $2.4 billion deals down to $2 million deals, we can do the whole thing.

Jeff Zell 00:56:48  It doesn't matter. And we have the staff and the and the seniority and the knowledge and the to deliver this. And people trust us with some very large big assets. They want us, that are typically extremely complicated, like you just mentioned, both the post deal, SAIC those are extremely complicated deals. Extremely complicated deals.

John Coe 00:57:11  So yeah. So how has the post-pandemic environment changed your clients real estate needs and priorities, particularly in the DC market.

Jeff Zell 00:57:21  In the.

John Coe 00:57:22  DC.

Jeff Zell 00:57:22  Market? Okay. Well, you know, where I think zoom teams and whoever else is in the Google has created the ability of having meetings without space. You can do it from anywhere. I think there's a large group of people in this market, specifically lawyers, who don't really interact with people within their own office to begin with. Most of them work at specific assignments relative to what they're asked to do, and they can research it, do it, do a paper, and then they would just pass it around on the computer, and then they would hold a zoom call and go through the editing of the document and then submit it to courts or do whatever they have to do.

Jeff Zell 00:58:05  So I think the biggest issue we have in DC is that law firms are all going to shrink by 50%, because they just don't need.

John Coe 00:58:13  Them.

Jeff Zell 00:58:13  Already. Yeah, right. It's already happened. And it's actually there could get worse. So that's number one. And number two.

John Coe 00:58:22  You don't you didn't you haven't mentioned one law firm yet. So you have law firms as clients.

Jeff Zell 00:58:26  Yes. Lee is there a client? We just did Lowenstein over at Res building. Okay. Another floor. So we do. We? Yeah, we we kind of people that we use usually use us too, because we use a lot of law firms for larger transactional business. and we have others. I mean, we have a list, but those are two that I can give you right? Right away. Okay. and, and I think when you look at other groups, lobbying firms, we did the original Jerry Cassidy, law firm here, which at one point, Jerry Gerry Cassidy and him. Jim Fabiani owned the lobbying market here in D.C. you know, he was like the dean of lobbying, and he was dean of earmarks, which is kind of going by the way of the government going.

Jeff Zell 00:59:13  so but those firms now are shrinking in size, and a lot of these people are coming in and doing their business by just showing up for three days in town. They'll do their bidding with people on the hill and then they'll leave. So they're not really spending a whole lot of time. We're not seeing any growth in that, in a sense. And in fact, they're shrinking. And a lot of the law firms who were dealing in the lobbying efforts are now getting concerned because, as you know, our current president has singled out some law firms for being on the wrong side of his situation, which then stops people from lobbying because they need those firms to take those positions.

John Coe 00:59:52  There's a lot of change.

Jeff Zell 00:59:53  And there's a lot of things going on. Right. So I think this is in for a still more contraction. I think the need of any new office buildings is zero. You know, and I said, I do believe the market you will see is those buildings will be replaced by 500 and C3, not for profits.

Jeff Zell 01:00:11  Who will come in, which will be universities, colleges, certain groups of people that are trying to, accommodate not for profit, not like, like, nurses Association, AMC people.

John Coe 01:00:32  Health care.

Jeff Zell 01:00:32  Health care, very big on the healthcare. And we did a AMC's headquarters down on New York Avenue, which was a great building. We we did that with, Gerald Hines. and I'll tell you, the other the other group here watch for even like, k through 12 schools show up in some of these buildings. there seems to be a big charter, charter, charter and private schools. That's interesting. And private schools, you know, we we're now doing work for the lab school. We're doing work for, GDS. We're doing work for the River school. We just did the dinner school.

John Coe 01:01:05  So would they come into a downtown office building you think.

Jeff Zell 01:01:08  They're looking at it? Isn't that is an option, right.

John Coe 01:01:12  That's really.

Jeff Zell 01:01:13  You know, the British school took an office building. Yeah.

Jeff Zell 01:01:15  In Wisconsin. So. And they're, you know, they took their 107,000ft. You're going to see the question is, can people afford those schools going forward if they're unemployed or don't have they lose their job at the government or they're ripped in some way. Ripple effects. Yeah. Right. So that's well, as I'm saying to everybody, and I'm telling the people we have a cascading effect of, of, of government that is now working. It's like a waterfall that's washing everything down, filled out, and everybody's looking at the top jobs, but it's all the peripheral that's getting knocked out with it. And I don't think we've even started to understand to what extent that waterfall's going to hit everybody? That'll happen. We'll see more of that in June, July, August, September, when this speed of these programs start moving through and this drain the swamp concept in April that the president has deemed a response from all his, different cabinet members and agencies as to what you're moving out of the DC area.

Jeff Zell 01:02:20  I think I think that's a problem. And then the last thing and I'll move on from the district is I think, and I said this from the get go, a bunch of things. I think everything here in the district is in trouble, including our mayor. And I think we're going to see a control board.

John Coe 01:02:32  I think home, home schools going away.

Jeff Zell 01:02:34  Yeah. We're going to go back to Congress running the District of Columbia through a control board. I think she's going to have to ask for everything. We're a billion behind. I think, and I said this when it happened, everybody thought I was crazy. But I heard it last night. Somebody else said it, that they don't want to fund the cap center deal that was signed there saying we're not doing it. So that means RFK for the football teams. Now, who's.

John Coe 01:03:00  Going to administer the city government? If you know they're going to have to set up a new Congress.

Jeff Zell 01:03:06  It's.

John Coe 01:03:06  Possible Elon, Elon Musk is not going to administer Washington DC, but they're going to have to put.

Speaker 4 01:03:10  That right. They're going to have to put a small group together.

Jeff Zell 01:03:14  And, you know, it just means nothing will get done. We're going to be stuck.

John Coe 01:03:18  We are going to get any zoning, any land use issues.

Jeff Zell 01:03:21  Okay. So now you you you now you want to get.

John Coe 01:03:24  Me.

Jeff Zell 01:03:24  Started.

John Coe 01:03:25  On opening Pandora's.

Jeff Zell 01:03:26  Well, real fast problem with zoning in this city. Even if you get a zoning change for something you want, it can be appealed numerous times. And what you think can take two years could take 5 to 7 and you can't stop. We have this issue with the River school. We're now five and a half years into it and it's being appealed.

John Coe 01:03:46  Well, if home Rule goes away, what happens? What how is that all get accomplished? I mean, you know, at one point, this city never had, you didn't even have lot and blocks and a lot of areas of the city. That's correct.

Jeff Zell 01:04:01  No, no. You're right. No, no.

Jeff Zell 01:04:03  In my house, when I went to settle on. Yeah, I didn't have. I didn't have a lot for my house. Yeah. I had to go back and and find out how that's done. I agree, when I moved here. Can I take a minute break? Sure. So sorry to do that for you.

John Coe 01:04:19  So, Jeff, with the rise of the hybrid and remote work models, how are you advising clients on office space optimization and portfolio management? We talked a little bit about this.

Jeff Zell 01:04:29  Yeah. The triggers have flexibility and the plan and flexibility in your lease. Whether you give back space or you take more space, we have a go. But we have when we do deals, we do both directions where we have the ability to expand. We also have ability to give back during certain periods. And the Givebacks have been, have been a very wise thing and a lot of my clients are using them. And the biggest one was the termination right that The Washington Post had that they had to, that Hines had to renegotiate the deal over because it could have been terminated.

John Coe 01:05:02  How are your clients leveraging technology in their real estate operations, and how does Jamsil help them navigate these technological transitions?

Jeff Zell 01:05:11  Yeah, I mean, everything's plug and play, everything we do, I mean, all the spaces have become much more almost like lab benches. and that's the easiest way to explain it. So they have to be interchangeable. You have to have more than one person be able to sit there in a sense of dual space utilization. you have to be, you know, the Wi-Fi is not an issue. I mean, it's everywhere. So it's not an issue anymore relative to bandwidth. We can pretty much do everything we can within a space. but reconfiguration without substantial capital expenditure has been the key. And we've lately we've added a lot more single offices back again versus. So it's now a mix. We for a while we were going through 80% open and 20% perimeter office. Right. And I would say right now we're probably 60% office, 40%, open space.

John Coe 01:06:11  What about conference rooms? I mean, those have to be important, aren't they?

Jeff Zell 01:06:14  Yeah they are.

Jeff Zell 01:06:16  although a lot of people try not to have meetings and conference rooms, it's interesting because some companies don't want them. and because they think it's a waste of time and way too many people. The Mars the Mars, company is anti conference. Anti conference. So. But, you know, I think there's a need for it. I still do face to face negotiate. I don't zoom when I do a deal. It's all in person. I don't think I've ever negotiated a deal.

John Coe 01:06:43  Tell me why that makes. It means something to you?

Jeff Zell 01:06:45  Because I got to look at how people were reacting. To what I'm telling them in the room.

John Coe 01:06:49  You can't do that. I can't.

Jeff Zell 01:06:50  You cannot see that. And I can't see the full. We've been working with new technology. Now Cisco has the best system where it actually goes. You even in a room, on a conference table, the person talking, it actually zeroes in on you and leaves you, the other people in the background. So I can at least have a better look.

Jeff Zell 01:07:06  But it's still not the same because there could be a CFO or somebody else that's reacting negatively to it. I'd like to see it. And the fact that I don't write anything down and I don't, I'm constantly people see this locking in on the visual expressions in the body, movement in the room constantly.

John Coe 01:07:24  So nonverbal is important to you?

Jeff Zell 01:07:26  Very. Oh, you're kidding me. It's I will tell you this right now. You're the only one knows this. I built a conference room brand new over there, and I'm tearing it apart. Where? Redoing it because I had a negotiation in it and I could not get comfortable in how I felt while looking at the people negotiating with them. I came out of the room saying, this is all gone. We're changing the entire way this looks, and I'll show it to you and I'll tell you why. But it's just I do everything. So that's why some people write and take notes. I'm constantly just looking at the person I'm trying to deal with in the room.

John Coe 01:07:59  So to read them. Yes. As opposed to understanding. Correct what they're saying per se.

Jeff Zell 01:08:05  Yeah. And I think if you talk to Ray and others, they'll tell you the same thing about me. They've never seen me with paper in my life or write anything down.

John Coe 01:08:13  So has any client come in and you met with them, said, aren't you going to take notes at this meeting?

Jeff Zell 01:08:19  Always. They always say that. And I go, no, don't worry, I won't do. I won't get back to you. But, you know, Mark or somebody as far as dates and all those things.

John Coe 01:08:29  Yeah. No we're going to meet that. You remember all those dates?

Jeff Zell 01:08:33  I do, I do, but I also usually have one person with me and that's their job.

John Coe 01:08:36  Scribe oh okay. Yeah. All right.

Jeff Zell 01:08:39  There's usually one person with me in the room.

John Coe 01:08:41  Once in a while, you might make a mistake, you know?

Jeff Zell 01:08:43  Yeah. I don't think I've ever. I don't think I'd admit to it, but I don't remember.

Jeff Zell 01:08:48  But we're doing so far so good. I try, I'll try not to.

John Coe 01:08:52  Okay, I get it. what trends are you seeing in adaptive reuse of existing properties? And how are these opportunities reshaping your clients portfolio?

Jeff Zell 01:09:01  I mean, the problem with this Office Terra's concept is the footprints of the buildings do not work in many cases. And yeah, you're talking 80%. It's just the dynamics of the operational aspects of an office building are substantially different than residential, even if you cut it into a whole bunch of different parts. so that's one. Use the second use. I mean, we've done everything. Some people try to change them into grow houses for marijuana in office buildings. And that didn't work either because of the power consumption and humidity levels.

John Coe 01:09:34  Data center. It's hard.

Jeff Zell 01:09:35  To do. Can't do that either, right? So the bottom line is, the most valuable part of downtown real estate right now are the garages.

John Coe 01:09:46  Interesting.

Jeff Zell 01:09:46  Yeah, and they're expensive garages now. Per space, you're looking at over 110,000 of space.

Jeff Zell 01:09:53  You know, when I started this business, they were like 2530.

John Coe 01:09:57  So what's interesting, just last week we toured, Georgetown Park with the Jamestown and the asset managers. There's one of my community members. Right. They are under contract to sell their garage there. but it is for the use of parking. Correct. Because that is the biggest parking garage in Georgetown. That's right. And of course, there's no metro there. So, you know, it's used and it's very profitable. Apparently it.

Jeff Zell 01:10:27  Is.

John Coe 01:10:28  It is. They're selling it for about a six cap rate, a garage.

Jeff Zell 01:10:32  It's not replaceable down there. Yeah. Absolutely true. And you know well the people. George, I live in Georgetown. The fact that the Metro never made it there is just mind boggling. because they don't have parking. So, yes. Parking garages. Yeah. Very valuable. But in any building, you know, the garage. I'm doing a deal in New York. Same thing in New York.

Jeff Zell 01:10:56  The garage spaces are worth more than than the office space.

John Coe 01:10:59  Isn't that because people are saying you don't even need garages because of autonomous driving coming, right?

Jeff Zell 01:11:04  Right. You're going to need them.

John Coe 01:11:05  So when Waymo hits the market here and that's probably coming. Yeah. Well parents in San Francisco already big time. what's that going to do to drive driving in the cities. You know, not easy. Yeah, yeah I agree.

Jeff Zell 01:11:19  And we have all the service road issues. So that's a whole other situation. But we too don't have a lot of off street parking in this even in the CBD, you know.

John Coe 01:11:28  So you may not need it though if you have Waymo do you. I guess that's the question.

Jeff Zell 01:11:34  I think it depends on volume of traffic, you know. Like right now, the city, even though everybody's supposed to be back to work, it's still, it's still not. It's still very quiet. And Mondays and Fridays, you can shoot a cannon through here. Not hit anybody I know.

Jeff Zell 01:11:48  So Tuesday, Wednesday, Thursday is getting better, but it's still not going to happen. And now with the federal government, you know, they sent them all back to work.

John Coe 01:11:56  And so the client base is mostly users, not landlords.

Jeff Zell 01:12:00  That is correct. That is.

John Coe 01:12:01  Correct. So you're not sitting with landlords saying, so what are we going to do here? That's correct. Too much.

Jeff Zell 01:12:06  It's great. I sit with people that say, can we buy a building and change it to our need and do what we have to do in it. And so we look like for the building we bought for USC, the whole first floor is conferencing, and then they're putting in a studio, for broadcasting, different purpose, different use. But some buildings can do and some buildings can't do it. So, I think we're going to see we're going to see a lot of buildings torn down. There's a lot of bad buildings in the District of Columbia. Architecturally and structurally.

John Coe 01:12:40  The brutalist buildings particularly.

Jeff Zell 01:12:43  Yeah, you're going to see them all go.

Jeff Zell 01:12:45  That's what's going to go.

John Coe 01:12:46  I agree. we've already mentioned it with the new administration's disruptions. Are you seeing both challenges and opportunities?

Jeff Zell 01:12:55  Perhaps I don't see any opportunity. Yeah, because, well, to make things work in the district, we need a mayor that can give people incentives and to try and make this work. The problem is, she's now going to be knocked out of any ability to give money to anybody. So that's going to be a problem. our administration that's on the hill, that's running this country right now, good, bad or indifferent, is not, really a a friend or somebody that really likes the District of Columbia. Never has and never will. So he likes it as the federal government center, of the universe of this country. So that says to me it's everything from Pennsylvania Avenue to the river. and, you know, from Pennsylvania, I mean, the river is not a whole lot of, office space. It's pretty much open green. It's museums and it's federal agencies.

Jeff Zell 01:13:50  The ones that survive will be here. obviously, the Smithsonian and all the museums will stay because they're they don't need to move. And even though they receive federal funds, where are you going to go with the museum? That's not.

John Coe 01:14:04  Here. So where do you see with the old federal office space going, what happens to that space?

Jeff Zell 01:14:08  Well, I think what happens to that space. You know, I was looking at the Veterans Administration building the other day, drove by it and went, wow, beautiful building. location is great. And I think some people will start to creatively try and figure out how to put mixed use in that building. So you may get some combination deals, you may get some region dependent South.

John Coe 01:14:31  Southeast. Southwest.

Jeff Zell 01:14:32  I just don't know. I think you're going to. The only hope is residential. It really is. But you need some retail core with it. So, because people that are going to live there need general ability to dry cleaning and go grocery shopping.

John Coe 01:14:47  So the wharf, of course, is just about to trade. Yeah. And it was. And it's more or less a forced trade. It's not voluntary trade. Yes. So that is the largest mixed use development in Washington. Right. Right, right. And you've got everything there. You've got theater, you've got hotel, you've got office, you've got residential. You have both for sale retail, and you got everything except industrial there. Right. Just about.

Jeff Zell 01:15:13  But but they also they got the, the reason why that's trading the way it is and why it's failing. If you really look at the core problem of it is that it was built at the low mark of interest rates.

John Coe 01:15:31  Yes.

Jeff Zell 01:15:32  Okay. No Covid.

John Coe 01:15:35  Yeah.

Jeff Zell 01:15:36  And then you fast forward you add 300 basis points to your loans. You have your retail component. Half of them didn't pay rent for 2 to 3 years or marginal rent. Right. And when you take that all into consideration and now you're still up until last week it changed a little, but you're still at the high water mark of refinancing rates right now.

Jeff Zell 01:16:05  That 250 basis point 300 swing of additional interest, you're dead. It's just not going to happen. And so the retail sunk that project. the hotel sunk that project. They're not doing anywhere near. There was four years of nothingness. Yeah. we were involved.

John Coe 01:16:29  We built the cannoli there. I mean, you got some big law firms in that.

Jeff Zell 01:16:33  Those buildings will be fine because they have long term set leases, and I don't know if they have termination options. I don't know who did the deals. I don't know what they were planning. We built the yacht club there, but that's on a 99 year ground lease from the district and it's separate from that whole deal. but it's that they're a function of a loss due to high interest rates. Yeah. Even though construction costs have gone up 30% during that same period, it still hasn't transitioned into the rent. Rent rents haven't gone up appropriately to deal with it. And they're not because we have job loss. Rents go down. So they got whipsawed.

Jeff Zell 01:17:13  It's you know, the project. Great project. I'm not there's nothing wrong with it. Shows were timing And in potentially a natural disaster like Covid can basically wipe you out if you happen to be in the middle of it.

John Coe 01:17:29  Well, I think of every major mixed use development in Washington, D.C. has gone through basically major surgery. Yeah, I mean, the first project that I worked on when I moved here and I was involved in servicing alone was National Harbor or National Place. National place, yeah. Which at the time was by far the largest mixed use development in Washington. And that deal was financed in 1980. Yeah. And interest rates on that deal. I don't know if you know what the rates were. They were in the 14 to 15% first mortgage and then 12% for a second mortgage. And this deal had two structures that had a ground lease. And so Bob Gladstone used all of his intellectual capital to put that deal together.

Jeff Zell 01:18:16  Yeah.

John Coe 01:18:16  No, I.

Speaker 5 01:18:16  Would say.

Jeff Zell 01:18:17  Yeah, it was a tough time.

Jeff Zell 01:18:19  It was. But those when you refinance out. The cash flow just came cascading into you. I mean, you know, we have the reverse scenario occurring now, everybody. And the biggest threat to all this right now is I don't know if you're aware and you're you understand the debt market. There's all kinds of new products, debt products coming out.

John Coe 01:18:39  Of debt.

Jeff Zell 01:18:40  Bonds. We're going to get in trouble. It's they're coming up with all kinds of.

John Coe 01:18:44  It's like early CMBS.

Jeff Zell 01:18:45  It is, it is. It's not it's not good. It's going to create another problem.

John Coe 01:18:50  Yeah. I, I don't think Lehman and Nomura is out there. But you know, because I don't think they have that capital base to do what they did. I mean they were doing it was insane what they I.

Jeff Zell 01:19:00  Agree.

John Coe 01:19:00  But I thought it was like the essentials were in the, in the late 80s too. Yeah.

Jeff Zell 01:19:04  Yeah. And I think you got a I think we're having that happen right now. There's repackaging.

Jeff Zell 01:19:08  I mean look at the fact that they tried to get Elon's, x out. I mean, a lot of these guys hit, you know, $38 billion worth of his debt, and they're saying it's not worth more than 14, 15 billion total. you know, so they got some of they repackaged it. They're coming up with interesting ways.

John Coe 01:19:25  Yeah, well, if cryptocurrency does what it's going to do, that's going to be strange. Anyway, how how a public private partnerships evolved in the district market. And how do you see them shaping the future development, if if at all?

Jeff Zell 01:19:39  I don't think you'll see them. As I said to you, I think we're in a pause for probably five years. And I think it's because the federal government is going to I don't think she'll I don't think Bowser will have the ability to to create public. We're doing food and friends over by Catholic University. and we're having issues over there relative to the district. they're working with us to try and get it going, but it's it's been difficult.

John Coe 01:20:04  What do you consider your most significant contribution to to evolving how real estate consulting services serves clients?

Jeff Zell 01:20:12  I think we lead the industry in this, Higher for advice, concept and then execution of our plans. I mean, I go back in time. The first one we did, the biggest one we did was Blue Cross Blue Shield down in southwest, the twin buildings that were just underneath. We did that for for Dan Glazer and the Blue Cross group. And you know, we put together like a hundred page. How do you how do you reposition these buildings and how do we move people in and out. And Jim Davis was involved in moving the air conditioning, all the different things of keeping it operational while we were dealing with it. And just as we were getting ready to started, they try to get somebody else to implement it and it failed. And then they said, your plan didn't work. And I said, give it back to me and put me there. We'll make it work. And they did and we did.

Jeff Zell 01:20:59  So, you know, it's not only putting a plan together. We what we say we can do. We make sure it can be done. There are others that can't execute a very complicated plan. And, you know, so for us I think what we've done is basically gave corporations five seats, the ability to outsource to us, and now we're handling it like part of them. They're a company. I tell people we're part of your family now, right? So we're not going to make a decision that hurts other parts of the family. We have to make sure that this works, for for the universe that you're operating in. And, and so we're very good. And what we've changed is we pay attention, as you said earlier, the culture of that company, making sure we don't change it, making sure that we can deliver on time and on budget. We're not like a project management firm that keeps getting adds to the construction budget. We keep making more money. We handle like a developer.

Jeff Zell 01:21:55  You have X amount of our equity and we're going to protect the house. So when we go after and we deal with things for our.

John Coe 01:22:02  Interests are aligned.

Jeff Zell 01:22:03  Yeah, yeah, yeah. We protect the house and there's a house and we just make sure that we don't. We're not in it just for collection of fees is we really do care and and I will tell you. Of the 501 C3 is 95 is not 100% of everyone we dealt with. We have made donations that have been substantial at the end of the projects to those entities, because we care that much about them. Yeah, yeah, we really do.

John Coe 01:22:28  So what advice would you give to professionals currently working at established firms who are contemplating starting their own ventures?

Jeff Zell 01:22:36  You have to be, you know, you have to be well-rounded. You can't be just a broker. You can't just broker space. I really think that's a bad way to get in this. I think you need to be a student of real estate. A student in real estate understands how it functions.

Jeff Zell 01:22:50  The debt portion of it, you know, real estate can get you in so many ways that you just don't understand if you don't pay attention to things. But contraction flexibility, debt. How long debt? How's the replacement debt? You know, credit. One thing that always got me in this businesses and you've been doing it a long time. Like me combined the two of us. One was the other than a very large triple net lease deal. If I rented space in this building or one across the street and took a floor 20,000ft, they look at my balance sheet and that's about it. But IBM would take two floors and they pay the same price that I pay. It's the most bizarre thing I've ever seen. Credit has been never really looked at in a multi-tenant building or in a multi complex the way it should have, unless it's a single user building. I don't understand it, but I think you need to understand what kind of building you're moving into. Who's the builder? Maintenance, long term obligation, capital expenditures, all that.

Jeff Zell 01:24:01  You know we have people in here. I'll walk you through for a minute, but whose disciplines? There's probably 30 disciplines in this office. And if I tell any of the young guys that we bring on in, the smart ones want to be in an office to learn from these people, you got to learn from all of them. They all have a piece of this puzzle that you don't need to be an expert in, but you need to understand why it's important and know where to get help. So anybody trying to start a firm needs to understand that. but that's expensive because you need people to understand that we do everything in-house because I couldn't afford to hire, you know, to hire Covington or Sidley or anybody to be my lawyer.

John Coe 01:24:39  You have an internal attorney? Yeah, absolutely.

Jeff Zell 01:24:41  You do? Yeah. He came. Yeah. He came from Simpson. Thatcher. He was at Sidley. He's been with me since the beginning. Is my original partner. The amount of document procurement documents we go through.

John Coe 01:24:51  Well, that's right. You don't like to write, so.

Speaker 6 01:24:53  So that that's good. But but but you know, like to.

Jeff Zell 01:24:58  Get procurement from USC or get procurement from the National Gallery of Art or procurement from any.

John Coe 01:25:03  You need a scribe.

Jeff Zell 01:25:04  Yeah. These are two, 300 Page.

John Coe 01:25:07  Yeah.

Jeff Zell 01:25:08  Documents of performance.

John Coe 01:25:09  So what's interesting is that and we didn't talk about it yet as I. Yeah I is changing the legal profession. Yes. Dramatically.

Jeff Zell 01:25:17  Yeah. But you still need to understand it. You can't you can't really you can rely on it to.

John Coe 01:25:24  Draft.

Jeff Zell 01:25:24  To draft in the bones. We'll say it'll put the bones together. But you need to make sure it's doing.

John Coe 01:25:30  You could tell I you can give them seven terms on the lease and draft a DC lease that you could start negotiating right now. That's right.

Jeff Zell 01:25:40  That's absolutely right. So I think it will change. But you still need to understand what goes in it, right? You'll also still need to put in things that are relative to your client.

Jeff Zell 01:25:50  And that's that. You have to spend time with the client to find out what they're trying to actually do. and it can't be just, oh, these are five year leases. These are ten year leases. You know, we're seeing we're seeing a whole lot of different.

John Coe 01:26:04  Are you seeing change happen so quickly today that today people know what they're doing, but tomorrow they have no clue.

Jeff Zell 01:26:14  That's a that's a great question. And some of my clients actually understand that. But so it comes to flexibility okay. I have a client right now that needs to rent a couple hundred thousand square feet of space. But if things go right, they're going to need another couple hundred thousand feet of space. And what we give them is not going to be big enough. On the other hand, if it doesn't go right, they don't. They need to shrink by two thirds, all within a three year span. Right. So you sit there. So what do you do? Oh my God. The good news is, because there's so much space around that, if you take the bigger piece and give back the lesser piece.

Jeff Zell 01:26:52  Are they on? Yeah. But.

Speaker 6 01:26:55  Okay. Remind us. Yes. Thank you.

Jeff Zell 01:26:58  that people will, Give us what we need because they don't have anybody else there. So if I say to somebody, I'll take 200, I'll give you back 100 if it doesn't work, but I'll take the other building within three years if it does work, because there's so much empty space. So we pick to position them in a business park or in some area that has like five buildings. So we'll take one. We'll either give part back and then we'll have a second one that will have an option to take.

John Coe 01:27:29  So you build flexibility and.

Jeff Zell 01:27:30  You have to everything is flexible. And they're telling us and then they're saying if worse comes to worse you have to put a termination option in. We'll write a check for 30 million, and then we'll go up the street and rent 1,000,000ft² if we if what we're doing this, these are true conversations. We may need 1,000,000ft² and we'll just get rid of what we have.

Jeff Zell 01:27:51  Okay? But we'd rather have a termination option because we know we can just write a check and be done. We don't have to go through the bloodletting of a subleasing. So. Wow. Yeah.

John Coe 01:28:02  That's incredible. So what advice would you give your 25 year old self today?

Jeff Zell 01:28:07  I still do.

John Coe 01:28:08  This.

Jeff Zell 01:28:08  And I start this company. And the best part, which you then I'll tell you right now is, you know, I'm, I'm probably going to probably I will be handing over this company to my son who's sitting in an office over there, probably within the next three months.

John Coe 01:28:23  Really? That's.

Jeff Zell 01:28:24  Well, yeah.

John Coe 01:28:25  But I'm just one song right.

Jeff Zell 01:28:27  Here. Yeah. So? So CEO, president and chairman. I'll be he'll be president. And I'll gradually, over the next couple of years, let him run it. I'll be here every day, though.

John Coe 01:28:37  I'm not going to buy a vineyard.

Jeff Zell 01:28:39  I did already once. And it's not it's not fun. And to drink your own wine every night, it gets tiring because it's the same thing.

Jeff Zell 01:28:48  So my advice is, you know, buy bottles, don't. Do you know? Don't worry, it's not fun.

John Coe 01:28:56  Trust your son is going to buy it. He's buying 100 acres to build an apple.

Jeff Zell 01:29:00  Oh that's okay. Apple sound much more fun than wine. Yeah, that sounds.

John Coe 01:29:04  Much.

Jeff Zell 01:29:05  Better.

John Coe 01:29:05  Yeah. So talk about your life priorities. You already said you give back 20% of your time and money to to charity. Yeah, I.

Jeff Zell 01:29:13  Got.

John Coe 01:29:14  Family, work and giving back.

Jeff Zell 01:29:15  Yeah. Grandchildren giving back. And I have a house in Bethany Beach, Delaware that I plan on seeing all of them out during any time they can come visit us. That's nice. So. But I'll be here for a while. I'm not going anywhere. And I'm enjoying working with you today, John. And as I said, I think about on July, panel next week and I'm giving more time to talk about what I think's going to happen because we lived through it. Candidly, this looks a whole lot like 1990.

John Coe 01:29:44  I was thinking the same thing.

Jeff Zell 01:29:45  Yeah, it looks a whole lot. People say it's a 2002 thousand, 2000 or 2008. And the answer is now it's 1999.

John Coe 01:29:51  So I worked for Frank Saul in 1989 from 85 to 92.

Jeff Zell 01:29:56  82. Okay.

John Coe 01:29:57  Okay. So in December of 1991, he was three days away from handing over the keys to Chevy Chase Bank to RTC.

Jeff Zell 01:30:08  Yeah.

John Coe 01:30:09  So Mike Busch of Giant Food and Izzy Cohen bought two shopping centers from Basil Company. And, at the end of the year. And that saved the bank.

Jeff Zell 01:30:21  Yeah. And then they split it off, right, to cap one. And they still have the trust company, which is a big, big winner. I know he's done well.

John Coe 01:30:30  No question. So if you could place a billboard on the Capitol Beltway for millions to see, what would it say? Jeff?

Jeff Zell 01:30:39  the Washington is a great city. I really do, I think people people, the open space, the fact that you can walk your grandchildren and your kids on the mall and see museums.

John Coe 01:30:49  I think it will stay.

Jeff Zell 01:30:50  It will. That portion will not change. And in fact, we may see more of it. That's what I'm hoping my. My hope is that the people that come in open more museums, more institutions that are more educational by nature and that whether the federal agency here or not, the Phillips Museum is not going anywhere. you know, the National Gallery is not going anywhere.

John Coe 01:31:13  None of.

Jeff Zell 01:31:13  The monuments. And so my point is, what other city in the world, other than maybe Paris, can give us that type of enjoyment and walking. Yeah, yeah, yeah, I agree, but, you know, that'll never go away. It is a wonderful city to be in. And sometimes people need to just slow down, take a deep breath. One of the reasons I love being here. is because of all of that. And the other portion is you. I can I live in Georgetown. I could be at the airport in 15 minutes. in and out.

Jeff Zell 01:31:49  And there's no other city that I know that has that type of transportation that close to to where you live.

John Coe 01:31:55  As long as helicopters aren't hitting airplanes. Yeah, it's.

Jeff Zell 01:31:57  All very unfortunate situation. And, but, you know, the river, I mean, it's Boston has really kind of nice common areas too. But that's the beauty of this city. And and it's also low in scale. Some people say it's been the, it's been a nuisance to the city for getting retail and more dynamics of people here. But what it's made it it's quaint and that quaintness is what makes it special. I love the city. I really have to tell you, I think people that don't spend time here and really understand what's here are missing out on some treasures that are hidden in lots of buildings around here, and you just got to kind of make your way around the city.

John Coe 01:32:36  Well, Jeff, we may have to do another, sit down because there's a lot more to talk about it. I know you're busy, so thank you very much for your time today.

John Coe 01:32:46  I really appreciate it, John.

Jeff Zell 01:32:47  It was great. I would do this anytime with you.

John Coe 01:32:49  Okay. Thank you sir. All right. Appreciate it. All right.

Jeff Zell 01:32:51  Thank.