Jun 13, 2024

The Real Market with Chris Rising – Ep. 91 Anthony Dilweg

Ep. 91 - Anthony Dilweg
Welcome to Episode 90 of The Real Market with Chris Rising! Join us as we dive into the evolving world of office leasing and workplace trends with Todd Doney, Vice Chairman of CBRE. With knowledge of both landlord and tenant perspectives, Todd offers invaluable insights into the current state and future of office spaces. Listen now to gain a comprehensive understanding of the commercial real estate market from one of the industry’s leading experts. Whether you’re a seasoned professional, new in the world of commercial real estate, or just passionate about understanding the post-pandemic office landscape, this episode offers rich insights and forward-looking perspectives.
Episode Transcript


Welcome to the real market with Chris Rising, the only podcast that brings the real estate conference panel to your headphones. You’ll hear from superstars from every realm of commercial real estate, the biggest brokers, the most well-known architects, the largest investors, and the most visionary developers to learn what they do, how they do it, and what drives their success. We’ll discuss the latest trends across regional markets, and capital flows, both national and global.


and we’ll explore technology’s role in shaping all of it. We’ll take a clear-eyed look at where we’ve been, where we are now, and what’s to come. Real conversations, real experts, real insights. This is the real market.


Welcome to the real market. I’m pleased to have a dear friend. I was thinking about this today. We’ve known each other since 1986, I think because I think I met you on my recruiting trip to Duke University. But Anthony Delwig, who’s chairman and CEO of Delwig companies based in the RDU area, Durham, North Carolina. Anthony and I have been friends. We played football together. We chose real estate careers together. We’ve been dear friends. Our families have been friends.


And we are reconnecting in this new world because Anthony and I both made the decision that owning class A office in CBDs where there were jobs was a good thing and it seemed that way up until about March of 2020 And now we’re fighting the battle. So Anthony, welcome to the real market. It’s a privilege to have you on Chris great to be on great to see you and still rather shocked. You actually came to Duke after your visit.


So you were a great asset. So it’s great to be connected. Well, you know, I came to Duke University on my recruiting trip, almost despite my father, because my father, when we got the invite, and I had to get rid of a PAC-10 school at the time for my five visits, I looked at him and I said, he goes, Chris, I think you’ll like Duke. I think it’ll be wonderful. You know, it’s a lot like Stanford and blah, blah, blah. And I said, Dad, you know, I’ll take this trip because you’re fortunate to, but I’ll never go to North Carolina ever again.


Turns out, I spent most of my life in and out of North Carolina. So amazing how wise he was. I’ll be brief here. So my fifth recruiting visit, I pretty much decided to stay on the East Coast, but I got a visit to USC. And it was early on, actually, they were recruiting. Then they came back to me and said, listen, we’re going to still offer you a chance to come out here, even though we got our quarterback. I’m like, huh? You know, and I wasn’t smart enough to realize that, wait a sec, USC free trip, whatever, I was just kind of worn out.


So you’ll enjoy this. The other quarterback was Rodney Pete. Kind of worked out well for Rodney. Yeah, he did fine. Yeah, so good stuff. Well, why don’t we give a little bit of the audience about what Dilweg is, you know, just kind of where you guys have evolved to as we sit here today. And then I want to spend a good amount of the beginning of this discussion just talking about your career path and how you got to where you are. But where are you today? What’s the size of Dilweg? What’s the geography?


What’s the focus? So we’re about four and a half million square feet of primarily office. We are pretty agnostic, Chris, early on in different sectors. We did self-storage, did some retail, just very opportunistic, and did a little multifamily. And then I got my roots in office. So we decided to pretty much align in actually 2013, 14 to really focus on office and then really just kind of raise the bar with partners.


So we landed Harvard, we landed Dumaq, and some institutional partners along those. Well, we had a mixed bag of family office and retail investors, a few hedge funds in there, mixed bag, as you know, most sponsors try to find the best deals so they’re jumping around quite a bit. So we wanted to be a little more disciplined. So we evolved out of those other spaces, got into office, and then really kind of grew the portfolio throughout the Southeast. So Raleigh, Durham, Charlotte, Atlanta, Tampa, Nashville, and then Dallas. And we were kind of in that, you know,


A little bit of the creative side, trying to make something unique, something compelling for tenants. We weren’t class A guys, we weren’t buying trophy properties, we’re just trying to find kind of B minus and trying to improve into a B plus with a little bit of edge to them, uniqueness to them in growth markets. So that’s where we’ve been really the last 10 years, over 10 years now. Now we did kick off an SDR business a couple of years ago called Carolina Experience. So really boutique towns, work from anywhere, we’re looking to grow that.


Got in a lot of trouble two, three years ago and bought a golf course in Eastern North Carolina. Still wrestling with it, but hospitality is something we’ve looked at. Golf courses made it nice to kind of come back here, the golfing community, but you know, we actually play golf. So a little bit of a diversity play because of office getting hammered here, obviously the last three, four years. Anything about your company, you’re in a lot of it that have you focused as a team? You know, are you guys coming to the office every day? Is your team and how big is it?


So we’ve got about 120 employees. We’re a bit hybrid. We’re spread out pretty good. We’ve got an office in Atlanta, and a one-man office in Nashville. The guy heads up our acquisitions, Zach Ashton. It’s an interesting tension point, right? Of being in the office, being office guys, supporting it, kind of seeing where things are going there. I’m really intrigued by this conversation, Chris, because we’re looking at the data. We’re looking at the headlines. We’re trying to do as much research.


Getting out of the hood a bunch. We just engaged, I don’t know, probably six months ago, Pacer AI, you know, tracking cell phone data, uh, to me, their methodology is pretty wonky. We’re trying to really determine, you know, trying to get a good sense of actually who’s in the office and how long, like per minute we’re looking at, you know, data from 2016 to 2018 and benchmarking that against kind of traditional, we thought like how many employees per thousand


what would you expect them to be in the office, then benchmark that data from Pacer AI from 2016 to 2018. These are 100% leased buildings through K-STAR. So like 259 buildings. We’re actually deep into it now. And then comparing the last trailing 12 months against that data to really, it’s one thing saying you’re in it, but the other thing is how long are you actually in there? What’s the quality? Anyway, so our findings are, I think they’re feel a little different than what we’re reading in the headlines as far as.


the utilization rate, but anyway, we’ve got a lot more work to do, but we’re pretty intrigued by it. Well, let’s start the conversation here, zeroing in on what the numbers are saying to you. I agree with you 100%. So may I lead with this statement that will be a question. I think there’s a bifurcation in the world that has become starker than I’ve ever seen it based on the size of a company. I think that the larger the company, whether it’s a JP Morgan in the banking industry, which


Thankfully, our federal regulators are forcing banks back into the office or the tech companies. These large companies are making a very definitive statement that people will be back in the office three, four, and sometimes five days a week. And that’s a big important thing for our office sector. The government is not there. And I would argue that if you want to look at the destruction of the DC office market, Chicago, San Francisco, LA, Houston, it’s 100% on the back of…


government not forcing employees back. I find it offensive, un-American, unpatriotic. The idea that you make a salary from taxpayer money, you draw a pension from taxpayer money, but somehow you get to act like you’re at a high-flying tech company and work from anywhere. But you take the government that ultimately, I think, will have to come back, and you take the big companies. I don’t even think that gets you to 50% of the office users. And that’s where I want to zero in on, and I think you were hinting at it.


There’s a whole world like your company and my company that we’re national, you’re super regional. We don’t go to the office every day because people live in different cities all over. We are hybrid and we just are, and that’s what we are. We require people to be in two to three days a week. We ask people to go to a regional office every day if they can, but the work hours are different, obviously, the dress codes are different. And I think that has an impact. Is that reflective in some of the stuff that you’re seeing?


The short answer is yes, and then the long answer, which we’re going to have fun with, right? So I think that we look at this thing and go, okay, it’s one thing what we’re hearing, and then understanding people’s policy and then the behaviors matching the policy. And it’s actually this stuff getting enforced, appeal back to the office, return to the office, whatever. So you got that going on. And listen, I think we are deeply rooted in the world, in the camp where face time is extremely important.


developing relationships, mentoring, and all that tension you can build is great stuff. We’re athletes, we know the importance. You mentioned that athletic teams not being together all the time. Now we’re not talking about that type of engagement athletically, but we are talking about, you know, making a business kind of like a sport, right? But it’s just changed materially. So now I think you value your quality time that’s shorter with people, and hopefully, it’s more impactful. But I’ll be frank, I mean, all my relationships are established, so I can rip through texts or emails or quick call, hey, you wanna give me two minutes, you know.


It was hard in the beginning because a lot of our relationships, we got on a call, you’d talk more than you’d want to have an extended conversation. Now it’s a lot quicker. We just knock things out and the availability is there. Well, you know, we’ve got 20, 30 years under the belt in these relations being in the trenches. It’s the younger generation, the millennials and Gen Z’s. I think that you know, the Wall Street Journal had that article yesterday on loneliness, you know, that’s, that’s real. Here’s the thing, the genie’s out of the bottle. People like it enough. And you know, the inertia, like guys like us, never wanted to go to, well,


There are so many disciplines about everything we’ve done in our life that you didn’t want to do, but one thing you knew – it was important to do, you just had to do it. It’s that commitment. So I think, you know, six, four years into this, back to the data. I mean, we’re pulling data on these buildings that represent companies that say people need to be back to work. We’re going to push people back four to five. And we’re seeing data that substantially now takes time to get there, but it’s still materially less than it was pre-COVID.


And it’s kind of things have kind of flatlined out here a little bit. You know, the last year, it feels like 12, 18 months as far as people like, so we’re kind of sitting in this rhythm. And I go back to your comment. Is that a 40, 50% utilization rate? And I think we’d also agree to, Chris as, you know, if you really look about how efficiently office has been run pre-COVID, it was pretty poor. I mean, you look at what people were doing, no one is really doing it now. Now I think people are savvier. They’re more thoughtful.


I don’t know, it just feels like you’re gonna have demand in office. The question is, what does that look like and how long does it take to stabilize? And then give you a sense of going forward. I’ve put things out to our investors and some of our lenders that, you know, I took a little risk of kind of putting some stakes in the ground, but I said, listen, I know it’s fluid, but you know, this is what we’re sensing because the decisions we have to make, especially us, Chris when we look at recapitalizing or something in office building, I don’t want put good money after bad.


It’s the last thing I want to do. So, and then doing assumptions behind that is very, very difficult. We have got savvy investors asking all the right questions and you can’t answer, in my opinion, if you’re being honest, you can’t answer like 75, 80%, you’re just guessing as best you can with the knowledge you have. Well, I think that’s very true. And I think one of the things about the numbers we see out of a JLL or a C&W about where things are gonna go is throwing darts more than they are based on real hardcore analysis. And we all got it, we need to.


The Fed does it every day too. But let’s look at some of the sites. I really appreciate that you brought up the Wall Street Journal article. I said this to some of our team. I said, what I’m sad about as I get older, as I look at the work life, is there’s this connotation that somehow working in an office is a bad thing and it’s dehumanizing and the commutes are terrible. I’ll tell you what wasn’t a bad thing is I played on a team. I showed up every day.


worked with people, and developed some really strong friendships that have been lifelong friendships. Some of my fondest memories are a long day at work and then fun at a bar and then maybe going to a sporting event. And I see a world today where nobody ever wants to meet for breakfast anymore. You get five days in a work week, but Fridays are out, and probably one other day. So you’ve got three days to schedule a lunch meeting with somebody to develop a relationship with. And almost nobody wants dinner because everyone’s busy.


This generation is very focused on the parenting side, which is not wrong or bad. It’s just different. And you start to look at it and our human engagement time that used to be 60 to 80 hours a week, you start to look at it and it’s 20 hours a week if you’re lucky. And then in the office with people and maybe a couple of hours outside of that to try to drum up business, my partner Scott and I go to New York and I actually was just there and I had five meetings set up in a day and three of them got cancelled


And said it’d be easier to have a Zoom meeting. I’m like, I flew all the way to New York and I’m basically getting a lunch and an early dinner. And the three meetings where I was gonna go to their office got changed to Zoom. I mean, these are real changes and I don’t know if they’re sustainable, but they’re real. Yeah, you and I, you know, we’re deeply in line. I mean, I think back, you know, March of 2020, and you know, and then what I call them head fakes, you know, people said, well, you know, we’re returning to the office after Memorial Day.


Oh, then it was after Labor Day. Then it was after the new year. What deeply concerned me the most when I’m like, well, human nature over time, it’s just gonna start anchoring behaviors. And then it just kept dragging on more and more. And then it got celebrated for the free time. And I get it too. Chris, I’ve been a remote CEO for 15 years. I’ve lived it. I’ve been in the office for two or three days. I’m out meeting with people. But I was just, I was on the move. So I wasn’t present in the office, but I felt I was present around. So I feel like I got a pretty good experience of what worked and didn’t work.


And I just feel like this thing’s playing out in a way very slowly in the emotional construct of people and the relationships and camaraderie. That takes time because you can hear it and you can agree, intellectually agree, but until you experience and get into it. And it’s just easier to do, it feels very functional, being productive until there’s like another crisis hit or something like that. So it feels like, you know, after two years into this and then seeing back to, you know, that’s all I had at the time was Castle. Back, I’ll never forget. I was watching Castle and I’m like, all right.


In November of ‘22, it basically hit 50% and then stopped. And it’s been hovering around 50%. It jumped up here recently, and now it’s back down to 51, and just sitting there. So I started scratching my head. I’m going, it depends on what data you use. You’re like, well, if there’s 5 and 1 half billion square feet roughly, I’m just using numbers that we pull from separate things. And I’m like, the demand is rough math. Demand, if you’re saying vacancy typically, let’s say roughly 10% US and maybe 2% for sublet space. So


you’re at 88%. We call that equilibrium. Well, I’m looking at this thing going, we don’t need 4.84 billion square feet of office demand. We just don’t have that. And we got all these long leases and you got a lot of prime real estate owners. I look at Seelig up in Seattle, that guy owns half the city and he’s got so many class A properties. You look at New York and some of these bigger cities, look at Blackstone. Blackstone, according to the data I’ve seen, has 316 million square feet of office in the US. The US government is leasing.


363 million square feet. I’m going, and I’m looking at the data on Blackstone, what they’re saying is one thing, and I look at the stuff, their four and five-star properties are approaching 30% vacancy. So Chris, I’m looking at this stuff going, I just, you know, we’re out there, we just sold one of our buildings to D.R. Horton, they’re going to scrape it. We’re trying to get super creative on how we go get out of some of these things, we’re giving keys back. But I do look at this information and go, if there’s 4.84 billion in demand,


I mean, I just throw this out. I said, if I had to do a base case today, which I did with our investors recently, I’d say 60% demand. And then, you know, how does that play out the next two or three years in this small game? Downside cases, 45% upside 75%. It’s a huge range in there. I totally get it. But you start making different decisions. And like you said, Chris, I knew your portfolio fairly well. You probably know some of my stuff. I gave a property back to HIG and Dorn and Capital out of California because there was a huge disconnect on a restructuring in downtown Charlotte.


And downtown Charlotte right now for, you know, kind of B plus B, B plus property is approaching 55% vacancy availability rate. And there’s people are fleeing to the south end. That’s the kind of stuff going on. I got stuff in downtown Atlanta. So it’s not about being doom and gloom. It’s like, listen, given that with the information you have, how do you reinvent yourself? You know, who moved my cheese? The book my father-in-law gave me years ago, I read that. I said it to all my employees a year and a half ago. I’m like,


We just have got to think differently. The challenge is we’re in a slow-moving business. It’s really hard. So we’re trying to best serve our investors or stakeholders with the existing portfolio, but then what are we doing going forward? All that stuff coming together is just a lot of moving parts for guys like us. I hate to even give this, the guy I’m about to mention any credit because he made a billion dollars plus while other people lost a lot. But I’m telling you what Newman came up with with WeWork seems to be the new reality that people want flexibility.


They want stream amenitization. You know, I could foresee a day where Office moves to like the Tokyo model. Most people don’t know this, but they don’t sign anything longer than a year lease in Tokyo. They signed them for 25 years straight, but the interesting thing is what will the financing world look like? And as you said, it’s slow-moving. I mean, you said something that resonates with me. I say this a lot. Look.


The Los Angeles Lakers, everybody could practice on their own. They can all afford their own coach. They could all have that coach come to their house, and be their trainer. They could meet on Zoom and then just show up on a game day, but they don’t because they’re on a team. I think companies will continue towards that. Hey, we have a place. We have a regional office. We have an HQ office that is a place for you to come whenever you want. We would monetize and we made great, but the reality is, you know, you’re going to come in for periods of time to do some private work.


but most of it’s collaborative work. And then we’ll see on game day for different meetings in different cities. And I think that’s just where we’re headed. Well, CEOs, Chris, you know, listen, we have an extraordinary opportunity to deeply commit ourselves to revisit culture and what it takes to engage folks, you know, and back to having, even like amenitizing properties, you know, making it compelling, unique, you know, engaging. Now,


I made the argument, I said, listen, I think HBR, Harvard Business Review had a study on this a couple of years ago. It was a pretty intriguing study. It talked about engagement. It talked about passion. You know, passion being thrown around at the time. Everybody wants passion. They want to love what they do 100% of the time. He goes, that’s the worst thing you can do to young people is tell them that because that’s not real. That’s not the way it works. And the way they study, and I can’t tell you their methodologies, but there was this kind of flexion point that they hit. And I think it was about…


20, 25% if their day was deeply rewarding, fulfilling, then they could deal with all the crap. And the challenge with companies were doing was they were feeding into that 20, 25% and keep trying to drive it further to like 30, 40%. And what they’re saying is it’s a diminishing point of return which you turned the employee into is it’s all about them.


and it’s all about serving. If you give them too much, it becomes very self-serving. You’ve got to know the difference. And we kept giving like, oh, let’s do all this unique stuff in the office. Let’s take care of this. Let’s have the personal days. Well, guess what happens? They said they just want more and more and you never win. You can’t win that battle. You have to know when to draw the line and say, you know what, guess what? This stuff you love, let’s focus on it. But the other 75% is basically shit. Let’s go get fired through this thing and work hard. It is what it is. And they actually found it more fulfilling and rewarding. And I think that’s one of the mistakes. I mean, listen.


Chris, your office is, you know, we get tenants coming to us going, make this place really compelling so people can come back. And I get that. And one of the studies I’ve done is looking at these really creative, cool, funky places that opened up in 20 and 21 and looked at their occupancy. Chris, they’re not that high. Yeah, our former partner, Jim Jacobson, and then Chris Chi was the Blackstone partner back under Cukoril and Gray and all of those. And it’s called Redcar. I had brought them down the leasing side. It’s called Industry Partners.


They helped us lease Pac Mutual from 2012 to 2015, which was an absolute home run. And then Jimmy and Chris, I think it was an interesting thesis. They raised a lot of money to find class, see industrial kind of office-y things in these cool hip markets. And they built them out and they’ve had some success. But I think just like anybody else, you can’t really do much when a loan comes up and the loan was underwritten at a five cap and now they’re using a 12 cap. So, ]they’re a good group.


Great respect for them. And they’re probably, you know, they’re just like you and I, we’re trying to figure out what do you do in a world when you don’t have file cabinets anymore? Well, and so I listened to a, I don’t know, it wasn’t a podcast, but anyway, you had a related group on there in New York. They’ve done well, and had some yard. And then the gentleman who did in Brooklyn did the Domino’s Sugar Factory and redeveloped it. It is, man, it’s everything we talked about. Like if you can’t get tenants, and I know it’s in Brooklyn, but if you can’t get tenants there, a group of tenants there to lease that space, and he’s…


was very frank, it’s very difficult. It’s been open a while, he’s not getting any traction. I mean, that’s the space that we gravitate to, but they’re sitting it with high vacancies. What’s happening, like you said, Chris, is you’re looking at your operating expenses, they’ve come up a bit, your TI costs are more expensive, you’re doing a lot more concessions, so your net effective rents are going down, and you’ve got interest right now, you’re sitting now double, in some cases, triple what you had before, and you don’t have time, the time to absorb that. So it’s just a, I don’t know, there’s gonna be a huge, well, I’m built where


Yeah, destruction, we’re getting the crap, we’re on the front lines, Chris. There’s going to be this, we’re real estate guys. So it’s going to be some kind of opportunities. I’m like, we’ve got to build a bridge to get to the other side and do the best we can with our stakeholders and it’s going to take longer than we probably like. But I think there’s going to be tremendous opportunities on rethinking and redefining what real estate looks like and how it’s used. Well, I think going on to how it’s used and some I want to go in real quick. I remember we have raised commitments on a $750 million CBD office focus fund in January of 2020.


The good thing is that we’d actually had everybody fund. We would be sitting on the same money and they’d be mad at us because we wouldn’t have bought anything. But I remember Scott and I talking about how we thought it was kind of rude and presumptuous that our young people would come into our team meetings, open up a computer, and type notes as we went. We were like, isn’t that what that journal is for? You take those notes. And I laugh at ourselves at how we missed what was happening because now every meeting we have as a team.


somebody’s on Zoom somewhere, so everybody’s computers are open, and everybody’s looking at a screen. And so when we talk about how you use things, I say to our team a lot, you know, we adopted, just like if you worked at JP Morgan, look, we give you a computer, you just have to know, you get followed everywhere. And it’s not because we’re trying to be ‘Big Brother’, it’s because you can’t work at our company with paper anymore. We don’t put together books where you could be a young person and do the manual labor and read and learn. Our accounting team is in Yardi. Our leasing team is in BTS.


Our acquisition team is in DealPath. We use Google Workplace as our backbone, which means now with AI, we are going to do a total move to Drive so that Gemini gets all of that information. So the reality is, obviously, there’s no law libraries. Everybody understands that. But when you would design a space, you’d have to have all those file cabinets because that’s where nobody has that. They don’t even have a stapler anymore in these offices. And I don’t think people who make decisions who are 50 and older


have necessarily changed the way they worked. I still have some people on our team who would like to print out paper and I get so mad. But the people that are driving the business are under 50. And they look at us and they say, what? I don’t work that way. And why would you expect me to work that way? I don’t think it’s been figured out. I don’t think Google’s figured out. I don’t think Apple’s figured it out. How people are working in the non-engineering jobs of those, like the business people, the people who buy advertising.


I personally feel like since we struggle every day to make sure we’re trying to figure it out, how does a huge company figure it out? I don’t know. What do you think? Am I off base? Well, I suspect it’s going to take certainly a lot of time. We’re tapping into areas of psychology and areas that people, how they behave. I go back to how adaptive they are, how agile they are. You do have an older generation that’s, I get it, a fixed mindset of trying to be more thoughtful and creative and get ahead of things. The challenge I have is…


You know, trying to be more pragmatic and open-minded and more Socratic in our thinking, less dogmatic, you know, just shattering this stuff. In the meantime, we’re in the trenches every day fighting our ass off. We’re getting a body blow and watching our flank and trying to make good decisions for our investors. And the challenge with the investment side and the lender side is we’re making decisions based on what we believe is going to happen to, you know, a year from now, 18 months, 24 months. And it’s like there’s guideposts out there within some amount of reason, but really it’s just


very, very difficult to make investment decisions on that. Then you overlay like AI on stuff on that. I mean, you know, you make an argument that AI very shortly is going to make better decisions than we are as operators because they’re going to have all this data and going, well, you should have done over here. And we’re all thinking, no, no, no, no, no, we need to go over here. And I get the human element needs to be in combination but I’m not going to say one is better than the other. It takes time to get there. But I just look at, you know, a generation that certainly is very nimble and they understand the technology side. But I go back to the, how do you build


the strength in the relationship to overcome adversity or crisis or do I trust you, Chris? Am I looking you in the eye? I don’t see that. I think that’s the greatest thing at risk. It’s up here. Like, how do you develop that? I mean, I told my team, I’m like, that’s your biggest challenge. You have to accelerate in some way a relationship that the person on the other side trusts you and believes what you’re saying. So you got to find a way to do it. I don’t know what that looks like. Maybe you’re grabbing beer someplace or you’re just being thoughtful or whatever it takes.


You just have to do it with a different frame because I think you’re going to have very little loyalty. People are going to skip around. You know, I’ll work for Chris for six months and then I’ll get a better gig and I’m in Australia. We’ve got people probably like you. I got a person in Australia. I got people in the Midwest and you know, we try to build enough connection there that hopefully they’re going to stick with us, especially if things get crappy. And this is probably not fair, but I’m going to say it anyway. It’s like who are the guys going to gut it out? And I feel like some of the old schools.


used to getting out and now if you’re young and vibing you’re like, well, why did you bang your head against the wall? Shouldn’t you have been pitted over here? Well, probably both right. You got to know when to adjust, but when am I going to know if you’re going to be with me or not through the hard time? Or is it all about, oh, it’s tough. Now I’m going to jump to the easy thing. What I perceive is easy. That’s just crazy because you’re going to be chasing something that doesn’t really exist. To do something great, it’s all difficult. How do we use this environment? And how as leaders, I mean, I’m not sure how long Chris is going to be doing this. You get


teach them and mentor them. Well, let me agree with you on that. I think that it’s a good segue into this. There are some green shoots out there as doom and gloom as it sounds. I look at Century City, California, where it’s 100% lease, the highest rents in the state of California and people are active almost five days a week. I’d say the same thing about the Manhattan Beach, El Segundo corridor here in Southern California, Cherry Creek in Denver, absolutely packed. People show up every day.


you mentioned outside of Charlotte. I know a few other areas around the country. And why is that? I say to myself, well, look, those markets never relied on government occupancy. So these are suburban office markets that were built as Class A because they were catering to wealthy executives who wanted their office close to where they live. They have nice high-end amenities. They feel safe. Those people are bringing their people back every day, I think, number one, because they’re saying, look,


at five-minute drive to the office. That’s easy. I’ll go do that. Number two, smaller companies’ face time with a CEO matters. It’s not like going to a company that’s got thousands and thousands of people. So what I’m curious about is at what point those markets are going to fill up and they’re going to be full. And all of a sudden, a partner in a mid-sized law firm is like going, well, if I go to a CBD, my rent just got cut in half. That seems to be how these things happen. I think it’s just going to be slower as people work.


older way of doing things found itself in a newer way. So I do have hope. I just think your numbers are hard to get away from about how much of the office space is just obsolete and location, location, location is still going to matter. But you can have the best location. But if it’s not a great building, people aren’t going to want to be in it. They don’t want to wait for elevators to do this or, you know, that does, you know, they have to take out card keys that take forever to get through. So I don’t know. I see some green shoots, but I think they’re slow-moving.


Well, I’m going to anchor on the word you used being curious. I think we just got to be super curious and very intentional about, for example, you mentioned all those areas as ethos that were built that are thriving, some good stuff going on, people are engaged, it’s compelling. Well, I’m not in the business of reinventing the wheel. I want to see what works. So I would go around and look at all these areas. What’s the kind of winning formula? Because if we sit down and go, it’s not 5 billion square feet of less than 5 billion square of demand. It’s going to be feathered back to 2.5 billion, 3 billion.


That’s still a lot of square footage. It’s going to be used differently. And then you’re going to compliment with the right kind of bespoke retail or, you know, some, you know, kind of residential component or pop-up retail or something that’s going to make it really interesting. You know, you’re probably going to have some kind of entertainment venue. That stuff is doing well. And how do you create it? I’ve seen back to the green shoots. I’ve seen these developments that are probably two-thirds or half completed. They’re working in that direction. It’s slow. It’s just very slow and uncertain and you know, and.


We got election year coming up, and the rates. Let’s just say you and I sat around and go, let’s say rates, the Fed. And I could see, there’s a side to me that as much as people want to go back and forth, and I’m probably like you, I listen to a lot of podcasts, I read a lot on this. And I’m like, rates hire longer to get all this money out of the system because we’ve been flushed. It’s been like a casino with all this money flushing around. I mean, look at this, Chris. When I look at the data of household net worth, in 2000, in the US, we were at $42 trillion. Today, we’re close to $160 trillion.


Okay, and the government, a lot of free money in there. And here’s another thing that terrifies me, but if I were the beneficiary, I wouldn’t be terrified, is now you’re talking about a transfer of wealth to millennials in Gen Z that could be close to 80 trillion. I’m like, are you kidding me? Now, it never works that way. You’re talking about undermining a whole two generations of working hard. Now there’s a group of hard workers who are gonna kick some ass that are millennials in Gen Z, no doubt. But if you knew your parents were gonna give you five million, six million or something, and I get the parents, but…


And the way I’m shaking my head going, no, don’t do it is they want to enjoy their kids enjoying this, you know, giving them money or whatever, because they’re when they’re alive. And in the meantime, you’re probably undermining my oldest daughter, Peyton. I’ve had a fight. She went to Duke and a lot of her friends and parents are paying for rent. And we’re like, no, we’re the bad guys. We’re like financial independence is one of the greatest things you can ever have as a kid or growing up. And I think we’re doing a poor job there. So all those are coming together. So rates higher, you know, longer.


It’s painful to me, but I’m like, you know what? We got to flush the system out. And MMT is dangerous to me personally. I think it’s wild, but I don’t know. There’s a lot going on there, but we’re real estate guys. So we’re, it’s slow moving. Go back really quick on MMT, just so everyone knows what you’re talking about. Can you go back and change modern monetary theory? Yeah, it’s pretty money. No, I know it is. It’s a novel theory only done by academics who’ve never had to turn a penny. Kind of like the technical definition, better than mine, because-


I get the concept, but you’re an attorney, so you know the technical definition. Well, I don’t know about the attorney doing it. All I know is it sounds like somebody was sitting in a library going, let’s come up with a way where nobody really has to work. Well, I’ve been going off for a while too. I mean, you had to start, but it got easier. But Chris, we’re sitting there going, okay, rates higher. You know, you’re underwriting a whole industry that for a number of years and all the costs you’ve got up.


And you touch something that I think is quite real. I don’t think this Fed wants to be accused of doing anything to influence this election, which is going to be so decisive. And really, you’re talking November. So you could still have a rate. Nobody says you have to do it by 25 bips, but you could do it in December if Powell wanted to and meet a 50-bip change, which he’s been predicting to the market. It doesn’t have to happen in September. And I agree with you that the amount of money in this system, where people aren’t really paying attention to it.


and this drives my anger at government employees not showing up – there is a ton of money sitting in state, federal, and municipal budgets that has to be used. Whereas the number one thing that would change the economy locally is if they showed up every day in the sandwich shop got patrons again and the dry cleaner got a patron, they’re not doing that. They’re going to disperse it from home off a computer very inefficiently. There’s a lot of projects yet to go, you know, and then every politician is going to take credit, whatever their bias is about.


big government, small government, pay that bridge that’s getting planned, and it’s going to be late because we don’t have it in the office approving plans, they’re going to take credit for it. So I think there’s a really strong argument that you don’t see rates move until after the election, just because nobody wants to be accused of it. There’s discussion about the government. I mean, look at DC. That is a trend. I mean, but I’ve heard nothing. You know, TREP’s got a lot of… There’s multi… 80% is government. Yeah. Multi-sectors are having problems. You know, retail, multi-family in DC. And then there’s a study that came out…


I think in the spring from the building reform board, Obama traded it to things more efficient. So I read the report and it seems like them and the GSA, they’re going like this. They couldn’t get the data from them to know how much they were utilizing these buildings. So they used cell phone data. The numbers are outrageous. I mean, literally like eight people are coming into a building that supports 1600. And like you said, I mean, I grew up in the DC area, I got family there, and no,


people don’t go down. I hear about the restaurants that were there and how many have closed and there were some articles written about it’s like, it’s just a dead zone. And then, you know, properties certainly are getting hit pretty hard on the value side. Well, I met with a County Supervisor here in LA who I like and she was just reelected, only Republican, it’s not a question of party, but only Republican on the LA County Supervisors. And you know, our discussion was, and she didn’t have a statement either way, but I’ll say, I don’t believe it. Can you believe the data coming from within the County?


Because people by their very nature, not that they’re bad people who want to lie, but they also understand what’s in their benefit if they don’t want to go to the office and if there is. So, you know, is it a third-party report that our government has to do so that people know that it’s real data? Hey, but as I’m looking at it, we’re having this great conversation, but we haven’t touched on anything about how you got into the business. A lot of my audience are Gen Z and millennials who want to hear about a path. And…


Yours is quite unique and I was fortunate to be able to play football with you and watch you as a quarterback and there was nobody like you. You were as good as I’ve ever seen running a huddle about making things fun for people. You know, most people don’t know that before Brett Favre, there was Anthony Delwig as the starting quarterback for the Green Bay Packers. And my favorite about your entrepreneurialism was when you were with the Raiders and you hired a plane to go around in the preseason to tell Mr. Davis to put you into the game. That one didn’t work out that well, I don’t think. But…


You started with this great personality, you’re a dedicated athlete and you’re a leader. How did you go from a pro career and then get into real estate to get to where the Delaware companies are today? Well, first of all, thank you for those words. And certainly, Chris, I know you deeply appreciate this, you know, the athletic background, you know, you don’t want to isolate it just to athletics because you can get in other areas, but we just happen to be around some very strong personalities and people drove us to greatness.


you know, at Duke and then profession a little bit. I think that one of the hardest things for most athletes is to make the transition to whatever, you know, moves them. You know, I looked at working for Canterford, Fitzgerald, and New York. I looked at booking for the Chicago Board of Trade. And then I met my wife at Duke, Jamie, who you know, she’s from South Florida. And we thought we would be a great place to raise our kids. And so we moved back to the Carolinas. It was, that was one is we liked the area a lot, quality of schools, the healthcare. But the other thing was, you know, I was always intrigued by real estate.


and how I got my interest in real estate. Jamie’s father was in real estate, but he was more in commercial brokerage. I was probably more intrigued by the ownership side. So when I was with the Packers, I’ll never forget those late 19 commercials from Carlton Sheets, who was like this, no money down, buying real estate. So that was my intro to it. I’m like, huh, how does that work? That looks interesting. And now, of course, you get it under the hood. It’s all different. Well.


It can work for some people. A lot of people it doesn’t work because they don’t realize how hard it is to really go make money in the space. So I was just, you know, I started looking around coming after leaving the Packers and the Raiders and then it hit my press spots, you know, as far as, you know, like to see taking assets and being more tangible, see it, feel it, touch it, create value. So one of the first things I did when I moved back to the area, I picked up eight duplexes.


from all folks, it was Coach K’s partnership. This is where they had the tax back in ‘87. I picked up in ‘93, they’re all, the tax laws went against them. So I thought it was dying. Yeah, the passive is active. Yeah, my dad still, my dad till his dying day said he thought that was one of the worst things that ever happened in the real estate business. Yes, but well, there’s a lot of fallout. So I picked up eight duplexes and I just self-managed, went and cut the lawns. I’m like, huh, Lambeau field to cutting grass in North Durham.


It’s like, hmm, you know, so very humbling. But I wanted to do it because I thought it was important to understand what it took to manage the property. So I brought in a good friend of mine, Thane Richie, he had a hedge fund, and he was my partner, I put my commission in as sweat equity, 50-50 partners and I managed them and I fixed them up, increased the rent. I did all the maintenance, cut the lawns, I did that, enough to say, huh, I’m not gonna be able to grow this thing if I’m doing all this work. So I ended up creating a little bit of a managing company. And then…


basically as one of my first deals and raised the NOI probably by about 25% and then improved them enough that I got the cap rate down a little bit and I flipped out of them in two, three years. In the meantime, I was doing brokerage, I wanted to learn the commercial side because I was very intrigued by the commercial side. Certainly Sam Zell, what he did, and some of these bigger, larger, these real estate guys, someone gave me the book called The Daisy Chain, which is about the SNL crisis, which is probably not the best book to give a young guy. He’s like, huh?


How did they get a 10% financing on this thing? So because what I did, Chris, which you’ll laugh at this is, never forget I was looking for capital. So I signed up for 16 credit cards. I’ve actually spoken at the business school about this. And every time, Professor, I tell the story, like, hey, just a disclaimer, when you hear this story, this is not the way to approach real estate. Anyway, so I signed up for 16 credit cards. They had $200,000 in credit card debt. I used it.


I would say constructively, I went in there and tried to fix properties up, flipped them, and then started raising capital. A lot in there, when I was learning on the move, I had a guy named Chip Chess, who was a mentor of mine growing up. So I tried to find a good mentor. So I’m always like, if you’re young, find a really good mentor. Find somebody who’s been through the good and the bad, in my opinion. Like the space, find not just one, but find two or three. Here’s my thing – that it’s a risk tolerance. When you want to roll up your sleeves and get into it and actually take the risk and go get your nose bloody.


get beaten up, try to make good decisions. I mean, if you’re gonna fail, fail early and often, because later in life it’s a lot more difficult. So always wanna encourage that. So I feel like I did a lot of failing, often early, learned quickly that way. And then they basically learned brokerage, did office leasing, was a tenant rep, and then did a couple of small condo sales. The first one I did was $65,000. So I’ve got a small commission, but I really liked the commercial space and I was in it for three years. Then…


did residential over here to learn it from the investment side and then flipped over in about 1997 to start getting the commercial side and then started learning the investment side. And that’s what I just kind of came alive. It was an unbelievable experience. Loved it. Just having the impact and then growing a company and leading people and also having the challenges of growing a company all came together and then just kind of grew from there


It was probably late 1999. So in 2000, I started really growing the company on the commercial side. Through the ups and the downs, because you and I have been through quite a few, at least I’ve been through three, I think you have too, just dating ourselves three real bad downturns, this being the longest and the hardest. I think it equates more to the late 80s than any other time because there’s so much lack of


predictability about where the government’s gonna go, just like it was after the S&L crisis. But can you point to and think about whether it’s through high school or college, a coach or some experience that you had as an athlete that parallels to your, you know, I’m never gonna quit attitude today? I mean, I gotta tell you, part of what I’m dealing with investors is that they’re so quick to just give up and take the loss. Not that we shouldn’t sometimes because the math sometimes does show that, but trying to teach them that grit.


to say if we just push through, there may be something on the other side. I can’t promise you there will be, but it can’t always be just, I quit. And I think a lot of the world falls to, I quit. Any examples in your career that you can apply today about not quitting or leadership or anything, coaches? Yeah, Chris, it’s a fascinating topic. This fine line between being perceived or thinking you quit to really making a better decision to pivot and reinvent and recreate, it’s very, very difficult, especially when you have a…


a ton of stakeholders and you personally, listen, we’re, you know, fighters want to fight too much and they, you know, regroup. That’s why you, to me, it’s having really strong men and women around you challenging you, encouraging you. Maybe you think differently. Maybe you got to approach it because back to my comment earlier about being dogmatic, let’s be pragmatic. I suffer from that because I get like, I get locked in. I don’t like it, but I know the benefit of fighting and fighting well and hanging in the grit. So back to your question. So I would say it was, you know, Steve Spurr playing for him at Duke that, you know,


sat on the bench for four years, kept fighting to get a chance to play, was probably known more as a punter at the time. And that was like an insult to me. So that’s just more fire. Sitting on the bench for four years and playing my fit. Now that’s different today because people are hitting the portal all the time. And I probably would have been no different. But there’s something about fighting through that and learning more about yourself. And it’s not to say the fight at all costs.


you know, because that to me can be insane. It’s finding this, what it takes to get there. Because if you never experienced it to get to the other side, that I think you’re just missing a huge component of life. And it’s not all, and listen, we’re all very self-serving and I don’t have a problem with people being self-serving. At the end of the day, we’re about self-preservation. Totally get that. So once you understand, when I think about C.S. Lewis and some of the stuff he’s written, think about human nature, I’m like, okay, given that.


You want the good people and you’re going to trust people as you go along in the trenches. And there’s going to be a lot of adversity back to the grit thing. My institutional partners have basically written everything down to zero. And they’re like, we’re red lighting. We’re moving on. The retail guys are still in denial. Like what can I at least get my money out of the a hundred percent? I’m like, no, no, no, you’re not listening. So, and I do believe because of the way people behave during this, every one of our assets has a chance to be repositioned, recapitalized, restructured.


because people are going to behave and may get out, and we may have an opportunity. Also, I’ve been on the other side when I thought there was going to be great opportunity, and I misread it, and I got stuck, and I caught a falling knife. So I’ve been on both sides of that, trying to do a lot less of this. This downturn deeply concerns me. I mean, we’re fighting every day. I’m hoping in a healthy way, because there’s just a ton of uncertainty out there, and we’re now in the crosshairs with the great financial crisis.


the tech wreck or whatever, you know, it was housing during the great financial crisis and we were on the edge and we got impacted. But structurally, office is broken and it’s going to take years to play out. And that’s, you know, if I’m an observer looking in and I’m one of, you know, Anthony Dilweg or Chris Rising’s partners, I’m going to go, you know, you guys are operators, you’ve done some great jobs. So I’m not sure, you know, you’re under a lot of pressure and the stress and you’re battling every day. I want to make sure you’re making good decisions because the best decision could be cut it


And I’ve given five properties back and they were very difficult, Chris. I mean, I wanted to fight, I wanted to litigate. I was gonna go, let’s throw it into Chapter 11. Guys like, whoa, whoa, whoa, wait a sec. Let’s talk through this. Is that really the, is this thing really gonna be worth? Can you really peg value? And I got to a point where I’m like, I don’t even know at this value that I would have thought was a home run, which is you can’t think in the past that I have no idea if that value makes sense. It may be lower. And I passed on, I’m glad I look back on it. I’m like.


Thank goodness 18 months ago, we didn’t stick with this deal or that deal because we could have put good money after bad. We really shut down raising capital two years ago and we’re now leaning on the lenders and going, listen, we want to be good stewards. We want to work through this. If you want to put money back in, we’ll happily be an asset manager for you. We’ll make good decisions. We’ll help whatever it takes. We want to stay in the game with you, but we’re not. Our investors are deeply uncomfortable putting another dollar in this deal. And I can’t even recommend it. And so far, we’ve had a couple of lenders who say,


fine, we’ll work through it. I’ve had some debt funds that said, nope, we’re done. We’re cutting you off. You can’t bring money to the table. We’re gonna take it back. And if you look at their stocks right now and some of these debt funds, they’re suffering pretty. They’ve got their own problems. Lenders have their hands full. I mean, we haven’t talked about it, but community banks and regional banks, if you mark them to market, there’s probably a major part of them that are insolvent right now. And I’m negotiating with the lenders right now. I agree 100%. Yeah. That is something that may force the fed’s hand because I think the regional banks


are much worse positioned than they were. I mean, you get outside of the top five, and the JP Morgans and all that stuff, they make their money on lending to real estate, whether it’s a construction loan, whether it’s permanent financing on an apartment building that had a floating rate to it. Now that guy’s in trouble. It’s a real problem out there that is not being talked about. I wanted to ask because you’re a unique person I can ask this to about Coach Spurrier, because his influence on your life, I think, has been gigantic, mine too.


Last time I saw a coach and his wife, Jerry, Jerry and I were talking, and I was like, you know, I just don’t think I could ever pay him back for some of the lessons he taught me. And she literally questioned, she goes, Chris, you were a linebacker. What, I mean, what did he teach you? And I said, you know, I didn’t appreciate it in my twenties or thirties, but what he taught me was the importance of self-confidence. I’ve never been around a guy who had more confidence in his ability to get through things.


And that’s what I look to all the time when I talk about Coach Spurrier was, hey, look, I wasn’t a quarterback. I didn’t play on the opposite side of the ball. But I watched a guy who, when the chips were down, bet on himself over and over again. And I’ve had to do that the last couple of years and had some big shocks, just like you giving back properties and going through the idea that did I fail? Did I hurt people? Did I, you know, I’ve come to the belief now I’m not a guarantor. So you make your risk, you make your risk. But I also come to believe that I’ve got a lot of experience.


I’m a good person. I try hard for fairness and I’m going to make the best decision I can make and ship it where they may. And I said, look back, that was kind of what Coach Spurrier was teaching us every day. I don’t know if you agree with that, but that’s one of my fond memories of him. Well, you’re nailing some of the very greatest qualities with Spurrier was, I would say, instilling confidence in other folks when you’re around them. And especially, I think one of my fondest memories, you know, was my junior year when the starting quarterback, a good friend of mine, Steve Slayton.


got kind of benched and I got a chance to play and we had to go play in Death Valley down in Clemson and I’m like, all right, trying to get thrown to the Lions, we’re 35-point underdogs. But here was the beauty that I’ll never forget being on the bus right over to the game and he came and sat next to me and I’ll never remember looking at all the crowds and then those paw prints on the road, you know, like, I’m like, oh, we are definitely, but I’m like, there was a level of calmness even for, you know.


I was excited because I got a chance to play and plan on a big venue. I’m like, I have nothing to lose. I’ve been frustrated and had Spurrier next to me that had me so believing that we’re going to win that game. We’re 35-point underdogs. Uh, did it again, my senior year against Tennessee. We did beat Tennessee. We didn’t beat Clemson, but we did something very special, at least for me, that he instilled that confidence. I didn’t experience that before with my other coach in any situation.


He was so skilled and an incredible game-time quarterback that he knew how to make adjustments. If you do this, do that. Says, we can out, you guys are bright guys. You gotta use all this ammo I’m gonna give you because you’re not athletic enough to compete with them, but we can beat them. I believe that. Here it is, 10-10 in the fourth quarter. You know, when I did, I was also the punter, did a quick kick and they were on the three yard line. And then, punts just happened to dry the life of the field. We lost 17-10, but my point is, that was an incredible game and.


The next year, you guys beat Clemson, Billy Ray, those five interceptions, and you still beat Clemson at home, and you guys, they were top 10 in the country. So anyway, that’s the stuff that when you’re around that leadership, that aura, that competitive side, it’s probably general patent-headed. Like you just know you come alive, and that’s what my biggest hope for anybody is around, just that strong leader that can inspire that greatness, inspire that will.


inspire that strength and that confidence in a good way, in a healthy way to allow you to compete. And that’s why I feel like back to your comment about the gritty and getting through it, there’s some young generation, there’s millennials and gents, you absolutely have it in their blood and they find it, but they’re craving for that kind of leadership. And I’ll be frank, I don’t think they’re getting it that much. And that’s a real downer. I think you get this loneliness and this disconnect and they need that tension. You know, to me, I always say, give me this very constructive.


healthy tension in all relationships. If you show me healthy tension in all relationships that’s uncomfortable at times, that can create greatness. And we naturally shy away from it when we need to be leaning into it, as we learned early and we see the value. I think there’s a good full circle because I’ve come to the conclusion, my partner Scott and I, that the way out of all of this, the way to success is we have to treat ourselves like we’re a professional sports franchise. And that means we need to have


headquarters where people can come anytime they want to get their workout, to get their treatment, to have the banter. But we’ve got to make meetings just like when you’re playing a professional sport or college sport where those coaches come with the motivational statements and they come with an agenda and we’re going to get these things done. We’re going to make it worth the time for our employees. And if they miss that in person, they know that they really miss something. And being a national company, we are moving towards


We run on a fiscal year, but starting July 1, we’re going to have monthly meetups in different cities. We’ve totally reduced our office headquarters footprint so we can repurpose that money to this kind of idea that you meet in person once a month, you have a quarterly on that third month with a two-day and then we have an annual and we’re going to make it like we’re a pro sports team. We know what people are working all the time. I think that’s going to be the future of anybody who runs a company about how they use their office. It’s going to take more of management.


It really doesn’t work to have the CEO in the corner office, never around. I don’t think those companies will have a life going forward. I think if you’re a partner in a law firm, they’re starting to get it. I have to train somebody who I can sell this business to. Otherwise, I just got a bunch of mercenaries who leave all the time and I won’t ever have any equity if I don’t take this. So I think we’re still too, I said on our phone call this morning with our investors across the globe, which is pretty amazing that you can meet with one group in Tel Aviv, one group in Abu Dhabi.


one group in Miami, one in New York, and we’re in LA. And it’s all, so you have to acknowledge that that’s a different office world that you can do that. But leadership is gonna define our country, quite frankly, too, over the next four to eight years. I don’t know who it is, and it may not be those two guys running, but I have great faith that people will find good leadership for companies to survive and the office sector to thrive. Leadership has to be the fundamental thing that drives it. I really just believe that.


you know, this leadership of inspiring greatness. I’ve heard this said differently. When I was with the Raiders, Al Davis said, great coaching is not inspiring greatness in others, it’s inspiring the will to be great in others. So that will of greatness in there. I don’t know if I said that right, but it’s just the will. And I think that, you know, when you’re around that and great leader, it’s contagious. So back to your comment, it’s like, in a way it’s been good, but I think now we’re so gifted as a culture to take a good idea and make it bad. And I think we’re very good at


We’re not very good at reacting, but we’re really good at overreacting sometimes. So we got to find that middle ground. So, and I think we’ve been very thoughtful of the needs of our employees, which, you know, servant leadership, that’s important, but if it goes to the extreme, they’re going to eat you alive. So there’s this area that sometimes it’s mandating. You don’t have a choice. Like leadership to me is people doing great things when they don’t want to do it. And that’s like a lot of people. If you give them enough of that, you got to be very careful of, you know, how you distinguish between the troops, because at the end of the day, what we would love is


Hey guys, we have seven meetings during the week and they do not wanna miss it. They’re so inspired. Well, you know, that is a really unique and complex formula that takes an incredible leadership and manage it to get done, especially in this environment when people aren’t around. And we’ve probably let people off the hook by letting people do their own things so much now, and now it’s all, they’ve become very independent. So I just look at like, okay, it is what it is. Let’s kind of level set this thing as leaders.


Just got to figure out where we’re heading with this thing, get the right people around you and start rebuilding for something real special. Cause you, I would believe we’re very aligned here. I think we have most extraordinary opportunity in our lifetime going forward in real estate. I’ve never been more excited. And I’m not, I’m using the word just to say there’s a side to this. I’m not really terrified, but in a way I’m like, yeah. I mean, cause we’re getting the crap out. I don’t know how this plays out, but the more we get the crap out, the more I think there’s going to be extraordinary opportunities. That’s what I’m excited about, Chris. I think it’s like, I’ve never seen this


I’ve been doing this long enough. We’ve been through some downturns. I think it’s gonna be extraordinary. I agree with you. I wanna just add onto that. I think what’s really different about any other downturn is we always knew that they were gonna work the same way because we worked the same way as our fathers and mothers, paper, books. They worked the same way as their fathers and mothers, paper, books. So we had multiple generations and when we go through a downturn, it was almost always an oversupply. I mean, it always was an oversupply issue. This is not an oversupply issue.


This is a fundamental change in how human beings interact and work and a fundamental change in technology. It’s the Industrial Revolution on multiple steroids. And I’m really excited because AI is going to play a role for better for worse. What the human nature of things are, I think it’s going to be leadership of human beings, it’s going to be leadership out of our cultural, and there’s going to be some great television show like Friends was in the 90s that makes it cool to be in an office. That’s all coming.


And it’s going to redefine it since nobody knows there’s lots of opportunity. And I really believe in that. I hate to give Adam Newman a lot of credit for anything, but I think he hit on a few things that are going to play out about how office buildings work. And so we will see. Well, you’re like me, Chris, you’re doing it now. You’re going, who are my warriors? I need my warrior mindsets, my enterprise mindset. We’re going to build this team. Who am I dependable, reliable capital sources?


We’re going to find those folks. There won’t be a shortage of ideas. There’ll be plenty of ideas and then who can execute and you’ve got a team that can execute, I’ve got a team that can execute. Then it’s going to about find the right capital sources. To me, that’s laying that groundwork is going to obviously be very important, but we’re doing that now probably like you, because the deals are going to come. In the meantime, we have a bunch of stuff we’re dealing with and we want to do the best thing, we want to serve our investors well and do the best thing possible. And then eventually something’s going to happen to that. But then what’s over here is a tremendous upside.


It’s going to be very interesting. That’s a great way to end it. Well, the only other thing I want to add to ending it is we got to do this in a year from now. I don’t want any predictions about presidential or anything like that. But I do want to seek one prediction from you. When you look at where we’re going to be a year from now, are we closer to figuring out the role that Office plays with companies or are we further away because AI has brought more uncertainty to how a company will use Office space?


That’s a powerful question. So what I think about it is I actually believe we’re farther away. And here’s why I say that, you know, being in the real estate business, things are I think about my thoughts from two years ago or three years, I look at some of my letters and how this thing’s playing out and looking at the markers and the information we have. Now, there’s going to be some very accelerated kind of violent hits here along the way, whatever that looks like. You said something really important to me.


Our world has been so much about supply and demand. It gets oversupplied. It’s just very straightforward in a way. And then you had people panic on the financial side that either dump stuff and get out and then gossip would come in and go, there’s structure, there’s nothing wrong. We just need a year or two to play it back out. I look at that pie and that was like the main slice of the pie years ago. Now I see multiple slices of that pie, whether it’s AI or politically we’re stand or culturally we stand, behaviorally we’re strength. And I would also say,


Even talking about like, are we in recession or not? I said, it’s gotten so complicated now. You got to know what sector you’re in. Some are thriving and doing great. Some are getting hammered. We’re in a bloodbath. The office is in a depression bloodbath. I can talk to somebody else. They’re doing great. I think there’s such a disconnect that I think it’s hard for the mind. It’s complex with all these moving parts. I love this quote by Oliver Wendell Holmes. It’s about, I wouldn’t give a fig for simplicity, this side of complexity, but I give my life for simplicity, the other side of complexity.


My point being is there’s a lot of moving parts here and there’s a lot going on here. So back to your question, I think that we’re still gonna be in discovery for a while, that we need to be patient. I think we need to start making as best decisions we can, shift our mindset to how do we serve our investors well? And our investors don’t wanna put money in deals and we wouldn’t require it. It’s how do I work with lenders? Well, on the front line with lenders, what do you wanna do? Do you want us to manage the property, take backers? And I’d be very frank with them. I got a lender right now that says, you’re my best buyer at the end of the day and working through something and he’s about to probably come back to me.


on this deal if I want to buy it or not at a very low discount. And I have to have the honest, frank conversation with my team. Is it the price we think it worth today? Does that really make sense? Is it worth the double down now or do we let things play out? And I’ve gotten people I want to take care of. I’ve got really good employees. We got overhead. We got payroll challenges. I’ve got lenders. You know, in the waterfall, we’re the last to get paid. You know, we’re the ones fighting and scrapping for every one of our fees right now. Like it’s hard enough and I’ve got to fight for our fees so I can be sure our employees are getting paid. It’s a crazy time.


Anyway, I think it’s gonna take some time, but I like good people around me and hopefully, you know, good information that you can make even better decisions behind. Well, I agree with you. I don’t think it’s what I asked you and what you came back with. I don’t know if we’re going to know anything in a year. I think you’ve got the biggest players in the world, the very Sternlichs with the S3, Blackstone with the B-rate, Brookfield. They don’t know where we’re going to be in a year in this sector. But I think the best thing is you show up every day, bring the best effort you can. And but we’re going to have another conversation a year from now to see how this all worked out. Keep showing up.


Amen, brother. It’s great. Good to be with you. Thanks for being on the real market, Anthony. We really appreciate it. Thanks, Chris.

Where you can find us

Rising Realty Partners

601 W 5th Street, Suite 215, Los Angeles, CA 90071