Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome Zac Goodman. Zac has over 15 years’ experience in the commercial real estate sector. He’s the co-found and director of TSP, a multi award winning and BCorp certified investment and asset management company that looks for opportunities to add value and leverage their operational capability. Zac is a natural entrepreneur, a dedicated mentor and six-time Countdown winner. So now we’re going to hear from Zac Goodman on his career path, what drove him to set up TSP and what he’s seeing in the market. So good afternoon Zac, first of all happy birthday as I think you’ve just hit a significant milestone?
Zac Goodman
I have, thank you very much. Very nice to be here Susan.
Susan Freeman
And are you going to tell our listeners what the significant milestone is?
Zac Goodman
I suppose I’ve got no choice now. I’ve turned the big 4 0. No longer a boy.
Susan Freeman
Congratulations and would you say that you are about where you aim to be at 40 when you started off on your career?
Zac Goodman
It’s a really interesting question, I was actually reflecting on that the other day and I realised that when you’re approaching sort of a milestone age you start to size up like what have you done, where are you going and actually you forget to say to yourself, who am I with, who have I got around me and what have you so what I’ll tell you is, I have surpassed my expectations of who I’m with in terms of my friends and family and my children and what I’ve got so I am choosing to measure it that way and I feel very, very wealthy.
Susan Freeman
And I would say things are going pretty well on the career front as well just as an objective observer. So, let’s start at the beginning. You were brought up in Manchester. What was it about your upbringing that made you do the things that for instance the Countdown, the TV game show, you were contestant on that and I think you won it six times – well not everybody goes you know off to do something like that?
Zac Goodman
I suppose growing up I had a brother that was a year and a half younger than me and we were always very competitive with each other and the easiest way of describing it is I had a mother that was in to words and I had a father that was into numbers. My father and my grandfather were both qualified accountants and so as a young boy I was always around numbers, if I went to the office or if dad bought work home he’d set up on his card table in the living room and, and my brother and I would probably sit with him and try to get involved one way or another and I think eventually we used to do a little bit of adding up and some ledgers you know, by hand and my mum was really into the liberal arts, really into reading, really into words and poetry and actually set a challenge for my brother and I every week when we were young, we used to go down to Coppice Avenue Library and we were each allowed to take out four books on our library card and the deal was that if we took out four books, read them in full and gave our mum a book review on the way to the library the next week, we’d get a McDonalds after school which she hated but knew it was deeply incentivising to us so by the time we were sort of teenagers we were very good at like mental arithmetic and we were very good, we had a good sort of register, a good vocabulary and the Countdown thing came about as a bit of a joke with my brother. He’d been on University Challenge when we were younger so he was a bit of a legend in the family and I used to play scrabble a lot when I was younger and I got really good at scoring lots of points because I’d look up the rule book and understand all the two letter word and he said, ‘you should do Countdown’ and as a joke we applied for it. Never heard anything for two years and then suddenly got a call one day and I was like, do you know what, let’s go do it and it will be fun. And it’s not become my sort of story of legend wherever I go so it’s as much as anything else, it’s valuable for that.
Susan Freeman
And do you use the same incentives with your children?
Zac Goodman
Yes we do, you know reading for me is the thing that I think I worry about the most with the next generation because everything’s been shortened and truncated to text language and I think reading obviously broadens your horizons, it takes you to another place but I think the other thing is as well is it massively increases your ability to retain information in your mind as well as amuse yourself and not need to look at screens and what have you so certainly young Lilly whose 6, is heavily incentivised to do her reading. Ava who’s 1½ we’re not there yet but give it some time.
Susan Freeman
So you could have two future Countdown winners there?
Zac Goodman
Quite possibly.
Susan Freeman
So, you didn’t start out in property you started I think as a foreign exchange trader at Goldman Sachs. What brought you to Goldman Sachs and what was it like working there?
Zac Goodman
I mean I started working when I was probably 11 years old. I was the kid running round with the bucket and the sponge in the neighbourhood trying to earn some extra pocket money and then later I would work at… some of my parent’s friends had things like factories and warehouses in Manchester so I would go and work there. For summer jobs, paper rounds, filling up the drink fridges at the local newsagents and then when I got my national insurance card at 16, I got my first proper job, payroll job at WHSmiths in Altringham and I was a till boy there and then I moved from there to House of Fraser. So the main department store in town was called Kendall’s and I got a job in their business support department. So by the time I got to University I’d done all sorts of work and actually I’d always kind of had entrepreneurial exploits one way or another and at University we actually, with some friends, set up an events and marketing business called After Dark and it was quite successful. By the end of University we actually sold it on to another operator and I turned round to a lot of my friends at the time and just sort of said as you do in your last year of Uni, where’s everyone going next year, like what’s the plan? And up until that point I suppose I had no plan. I thought I was going to return to Manchester and work out life and you know I had this degree and we’ll see what I do and everyone was graduate scheme, graduate scheme, graduate scheme you know whether they were going to be lawyers, bankers, accountants, consultants, you name it and this had all really passed me by because growing up in Manchester it was slightly different to London you know, it wasn’t… there were solicitors, there were accountants and what have you but there were less big corporates in town and less sort of graduate schemes and certainly in the banking world you know, there was a few back offices but there was no proper investment banks there so rather banally I turned round to one of my friends and said, ‘well what’s the highest paid graduate job in London’ and the chap said to me, ‘Goldman Sachs but I wouldn’t bother applying there if I were you, not really for you’. And so I ended up going back to my University room thinking ‘well I’ll show him’, opened up the application form to the bank, didn’t understand a word that was on it, didn’t really understand what I wanted to do there and they had all these boxes that you could just type in and so I, I just, I remember typing into the boxes, ‘my friend has just told me not to even bother applying to you but my name is Zac Goodman, I’m about to finish my degree and I’d like to tell you the story of how I’ve come to today’ and I kind of talked about all my little entrepreneurial exploits and what my view of the world was and then, and then I got invited to an interview which lead to 22 interviews, which lead to a job, which lead to working in New York and living in India for a year, coming back to London and learning to work in a really, really large organisation in a chaotic time in the global economy. I kind of started in 2006 and drove all the way through the great financial crisis and afterwards and just a fascinating time in my life and it was just so not what I had ever planned for myself or ever thought I would be doing. I literally fell into it. There was no design whatsoever.
Susan Freeman
So your parents must have been thrilled?
Zac Goodman
They were, I mean Jewish parents so you know, either becoming a doctor, a solicitor or a banker equally as good. I think they were thrilled. I think I always used to joke to friends when I was at University, growing up in Manchester people’s parents either bought stuff, sold stuff or stole stuff you know. I never felt when I was growing up that friend’s parents like were particularly sophisticated and there wasn’t this kind of you know, professional class like there is in, in London so they were very, very proud but I think also equally as not really sure what I was doing, as I was not really sure what I was doing you know, but back then especially when I was in London I used to come back on a Friday night on the train to see my mum and have dinner in Manchester and sort of regale them of all my experiences in London and everywhere else and it was yeah, it was, it felt exotic at the time.
Susan Freeman
So what made you decide to leave?
Zac Goodman
I think as with anything like, like banking especially back then was really high octane in the sense that they cram you all in together you know, on a floor, screens, bells, live action, tickers, you really felt everything and you were out and you kind of, we all were living to the max like working hard, playing hard and I’d been there for four years, I was coming up to five years and I was doing really well, I was being given amazing assignments, I was going abroad, I was… but ultimately if you are of that entrepreneurial mind set there’s something inside your head which constantly feels like you are trying to get out of a prison cell and so when you’re in employment it just sort of starts to eat away at you and I think by that four year, five year point in time at any organisation they are and you are have to be starting to look at where am I taking this, am I going into management here, am I setting my sights on the next 10 years. Your goals start to sort of broaden out as you get to that age and every time I looked at it I came to the same conclusion, I’ve got to get out of here you know and trying to explain that to friends or parents at the time was utterly and completely impossible; but you’re safe, you’re secure, you’ve got a great salary, you are working for an amazing company. You sound like a lunatic to most people when you say it but there was one person in particular who, who is now one of the God parents to my children and he was, I met him in University and he was of a similar mind set to me and we actually owned the business at University together and he’d been through a similar thing, he’d gone from University into private equity working for someone else and was keen to move on but he sort of, he had moved on already and he came to my house one day and he could see I was kind of a bit miserable, I was a bit soulless and he brought me two books, one was the ‘One Minute Manager’ and one was ‘Who Moved My Cheese’ and he said to me, ‘read the two books, quit your job and get on with what you are meant to be doing’ and it sounds absolutely ridiculous to say but it is exactly what I did. It is exactly what I did and so I found myself at 25 years old like in relative standards, had a decent bit of money to kind of take a pause and really work out what I wanted to go and do next. I could pay rent for a couple of years, I could still have some level of lifestyle, I wasn’t, certainly wasn’t at any kind of retirement capability but I could go and really work out what I wanted to do and if the worst case scenario was that it wasn’t going to work out I felt quite confident that I could get into the finance world relatively easily.
Susan Freeman
And did you have a business idea at that point? Did you know what you wanted to do?
Zac Goodman
No, I mean I always had business ideas and I was even, when I was at Goldman’s I was doing things on the side but at the time one of my pals had been working for a company that went bust in the GFC in a real estate company. He had got married and he was also you know that, I think they call it the second jobbing phase, your mid-20’s you’re like what am I doing and we were at a party, we stood outside having a cigarette and he said, ‘I’m screwed, the company I am working for is going bust, I’m getting married, I want to start something, how about it?’ and without discussing a business plan I was like yeah I’m in, let’s do it. And then we worked out a business plan after that. I’d like to note at this stage if anyone young is listening, this is not a playbook that I am in endorsing, it’s just the way that my life turned out, you should probably put more thought into things beforehand.
Susan Freeman
So it was a spontaneous decision and what did the business turn out to be?
Zac Goodman
So the broad strokes idea was we wanted to be real estate investors and we both knew a little bit about real estate like for each of us our parents had been involved and certainly growing up in the north we’d seen people in real estate makes lots of money, in fact that was probably as opposed to kind of hedge fund managers and bankers growing up, the people that were driving round in flash cars and seemingly doing the best were real estate people and actually I should be honest it was real estate men, you didn’t really see many women doing it back then so we wanted to be investors and it was, we were in the ashes of the great financial crash, the credit crunch as it was known then and our view was everything’s really low, buy it and ride it back up. The only problem was nobody wanted to lend two 25 year olds with absolutely zero experience any money to do anything so we had to work out a way to just start making a bit of money and have a reason for kind of sitting in an office and it was actually my friend that said, ‘do you know charities have no real representation’ – he’d been working for a business that did leasing in shopping malls and out of town shopping centres and he’d seen this, the thing that actually charities were a really good tenant to have because they typically have no debts, they are quite ethically based, they are a good tenant, they are a good long-term tenant and he said, ‘we should set up a business specialising in advising charities, we’ll make some fees, once we’ve made enough fees we’ll use those fees to kind of seed an investment deal and then we’re away’ and again like being young, I was like this sounds reasonable so we did a little bit of research and it was like how many charities are there in the UK, 167,000 at the time – wow. Then we looked up like who specialises in representing them. Absolutely nobody and it was interesting because within charities you obviously had schools in education establishments that fell into it, you had the church, never mind the Oxfam’s of the world and the big retailers and then you had all of these other charities whether it be the cause charities, cancer research, Alzheimer’s, who had these huge offices and actually like it seemed to us they were pretty much the biggest occupier and/or freeholder in the UK. This wasn’t a bad place to go in and try and do something so we legitimately had discovered, well my partner had discovered a gap in the market and so we decided to go after it.
Susan Freeman
And you then shifted into mainstream real estate so what triggered that?
Zac Goodman
I wouldn’t say we shifted, I would say we drifted. So what had happened was we had started the businesses, what back in the day you would call then rent knockers which was there was an arbitrage, charities were really strong tenants and were financially quite strong, the market was absolutely horrendous. We would call up charities who had lease events coming up in the next few months and basically say, look we will act on a no win, no fee basis and we will leverage your landlord for a better deal for you and you can imagine like give an example of a charity shop on a high street where the high street is 30% vacant and we call up and we say to the landlord, we can go in ten other shops on the street or we can renew with you, what’s the deal? And that, that was basically that and the first major charity that instructed us, it was about nine months into the business was Barnardo’s and then once you get that brand recognition, that case study everything really opened up and before we knew it we were handling renewals in central London and we were handling asset sales, dilapidations, all various different problems the charities were having with real estate and so we started bumping into sort of commercial landlords in London and I think they at first were like who an earth are these two northern kids running around in their sort of crease proof Marks and Spencer suits like just negotiating their way through the world with no formal RICS training, nothing and I remember one of them called us in, a very, very well-known person who run a very large REIT and we sat with him and you know what I have always found with, with property leaders is they are quite good at listening to young people and wanting to create opportunity because in real estate you never know where an opportunity will come from and information is power and this individual basically said, ‘you guys are hungry and you know how to negotiate and you understand property in a different way. I’d like to give you a small property for you to asset manage for me’ and we were like, wow. This was beyond our wildest dreams we you know, so we went for it and at the same time we were really starting to make inroads in the charity space, we were headlining the charity property conference every year, we had won a big contract with a nationwide charity to run 90 properties, we were starting to form like a real, real advisory business and we had got the firm RICS accredited, we’d brought in our first chartered surveyor, we had plans to bring in APC’s and without really realising it, this kind of business that we’d designed to kind of just makes us fees in the meantime while we could do investments ended up becoming like a grown up business that took us from professional through to property manage and facilities manage and then asset management. At around that time we found our first deal. The property that we wanted to buy, the one that we you know, we were going to die in a ditch over if you like and we knew a really, really wealthy guy and we’d been saving up and approached at the right moment, the right time, the right building and this was it and we knew it in our guts that this was the deal and we went to him and we showed him and we did a presentation and all of the rest of it and we were putting our own money in and he looked at it and he goes, ‘I’ll tell you what I’ll do boys, I will send my property man to go and look at it and I’ll come back to you with an answer’ and he sent his man from Lambert Smith Hampton to look at it. The man went back to him and he called us in for a meeting and he literally sat us down and said, ‘my property man thinks you boys are mad, I’m not investing’ and crestfallen we picked ourselves up and we did what everyone does, the classic story. We ran around friends, family whoever would listen to us and we raised the money. We needed to raise 2.9 million in total, we raised it cash. There was no leverage in the deal. We got it, we bought it, we turned it around in nine months; we sold it nine months later for 4.5 million pounds and on the investment side we were away, that was it, we were in. We’d started, we’d made some people some money and within the next couple of years I think we’d done three, four more deals and you know, again at the same time the management and advisory business was growing alongside and we were really motoring.
Susan Freeman
So what was it you saw that the other property guys didn’t see in this property?
Zac Goodman
I think there’s… Gerald Kaye once said to me, ‘property is about harnessing imperfect information’ and so actually being in the right place at the right time having some weird information about something can really help you. We had been advising a charity round the corner from the building that we’d seen and the gig for the charity, I think it was the Physiological Society, we bought them a building in Farringdon and they wanted us to renovate the building, get rid of two or three other buildings from their portfolio and the idea with the renovation was they would occupy about 50% of the building and then the balance of the building they wanted to lease out to tenants of the Peter Paid Paul if you like so they could exist in a sustainable way in this building. It was exactly the kind of project that we would do so we carried out this refurbishment and then it came to leasing down these two floor plates and I remember at the time thinking that the rents in the area were about £20 to £25 a square foot and we put it on the market and it was like, woof, you know suddenly this huge queue of people coming to look at it so actually we ended up getting about £40 a foot and this was at a time when everyone was rubbing the sleep out of their eyes from the credit crunch, it was sort of 2012/2013 and things were starting to, I won’t say motor but were getting going again and London was an exciting time, it was start-up mania and this building came up round the corner, it was on with the Receivers and it was £250 a foot and the agent representing the building is still a very good friend of mine – I’m meeting him later – his name was Alex Kim who went on to work at The Crown Estate and has been running space for them and he had called us up and said, ‘I’ve got a deal for you here, I think this is a really good building’ and we went to look at it and we could just, you just had the vision like it was hard work, it was quite small for a lot of people, it was about 8,000 square foot but we knew we could get about £40 on the rent but the rest of the market probably thought you could get £25/£30 on the rent and so for us we were like there’s a lot of fat in this deal if we can just get in and get it done. We had a little bit of help with the market during the nine months that we had refurbished the project the market only went in our way as well so you know, it’s all about timing and so we were buying in an up market within perfect information it was valuable and we got it done and we got it away.
Susan Freeman
It’s interesting, I was at the EG Awards dinner, I think it was 2022 and this name TSP came up and TSP seemed to be winning a lot of awards at that dinner and I was thinking I don’t know who TSP is. How did you suddenly sort of appear you know, on the stage and win three awards?
Zac Goodman
It wasn’t magic, I think it was down to the fact that we’d never done any marketing so we would do business developments and we would have people inside of our business that were looking at data, making phone calls, writing letters. We would be networking and building our business by referral but we were never very good at marketing ourselves and the original name of the charity business was Third Sector Property, third sector being the charity sector and that very quickly became TSP because it was just too long to say on the phone and it was certainly too long to spell in an email address. By 2022 life had changed for me. During the pandemic I had bought out the shares of my business partner, he was going off in a different direction. We’d been together for 12 years and I had a decision to make about how I would market myself as a property investor and also as a property manager and advisor and I finally came to the conclusion that I was sick and tired of running different brands, it was too confusing and actually having done some research in America my format of business which is being an investor, pulling together investments, managing investments on behalf of others as well as doing the property management is a very, very common sort of format but in the UK it’s not. You are kind of an investment manager and asset manager or you are a property manager. There are a couple of firms that do what we do and so I decided right I am going to ram everything together into TSP, it’s only me owning the business now, I need it to be simple, I need to have one brand. I spoke to the management team about it, they all agreed and then we sort of decided post-pandemic, okay we want to grow everything, we need to start marketing because up until that point we’d built our business purely on word of mouth, the usual blood, sweat and tears we would find different opportunities through having, we used to have business development roles where we’d literally have people just calling up, cold calling, soliciting you name it, to try and find opportunities, going to conferences and I sort of realised post-pandemic like, we need to get a bit more digital, we need to get a little bit more savvy about how we engage with our audience. I wasn’t on LinkedIn and so we went on this big project to learn about digital marketing, to learn about social media, to learn about PR and we brought in a new market head count with a new remit and one of the things we’d said to them is, well they had actually said to us, ‘my god you’re doing all these beautiful projects, like look at all these photographs you have of these and look at the rents you’re achieving, you don’t tell anyone what you’re doing, you only tell the bank and you tell your investors. This is insane’ and we’d been doing some really like you know, forward looking projects and getting brilliant results and we were always trying you know, new things and so she decided basically to enter all of it for awards and it was the first time we’d ever really entered awards and low and behold we sort of ended up having a clean sweep and it was quite fun because it was nice walking through the room and everyone was like, who the hell is this, who are these people who ruined our party and so that’s kind of like, we kind of just switched the marketing the machine on a couple of years ago and, and we haven’t looked back since like it’s, I wish I’d done this so, so many years ago, it’s, it’s been brilliant.
Susan Freeman
Well maybe now is the right time. So since, you know, people didn’t know about TSP, do you want to tell our listeners a little bit about TSP as it is now, the projects that you’re working on and you’ve had a couple of buildings that have actually opened just in the course of the last few weeks so tell us about it?
Zac Goodman
Sure, TSP is a property investment company and a real estate manager. We invest in property with resources from our balance sheet alongside high net worth’s, family offices and institutions in a variety of different structures. On the real estate management side we take on asset management mandates, we take on straight forward property management mandates, we manage in total about 1.2 billion pounds worth of commercial real estate in the UK. We have a pretty deep sector competence in, in offices and flex offices. We are a sustainable organisation, we were one of the first property companies in the UK to be accredited as a BCorp and really I think the thing, the most innovative thing that I think we have become known for is we were one of the very first people to start pushing managed space in the office sector and we were looking at this pre-pandemic and have continued to push and push to do that, not only on our own investment stock but also for our clientele. I think most importantly for us, we still retain our third sector advisory so we are still to this day advising charities, albeit it’s typically larger projects that we are doing now because that’s sort of how we have to allocate our resource but we look still operating in the charity space. We actually last year with Great Portland Estates carried out a really, really great collaboration where GP very kindly wanted to give a certain percentage of their stock to charities on a very, very low cost basis and so we, we still keep our foot in that space.
Susan Freeman
And you mentioned the BCorp accreditation and I think for a property company it is quite a difficult, you know, it’s a challenge. What made you go that route, why did you want that accreditation?
Zac Goodman
So I think sustainability was something that we were probably growing with from the mid-teens, we had started to see some really interesting businesses sort of come through some of the properties that we owned and managed that you know, you just got a sense people were starting to ask about this stuff and we were like, ooh that’s interesting and this was at the time when sort of veganism and the sort of secular trend in fast moving goods was sort of moving with it and I think we just felt this is imperfect information, this is going to be something, this is going to affect the way people not only shop for clothes and food but shop for cars, shop for electrical goods and shop for space and there’s an awful statistic that’s bandied around and it’s incredibly boring but it’s very true which is real estate accounts for 40% of global emissions. I hate using that statistic because it is literally on every single property company’s website in the universe but it’s very, very true and so we started getting into it and then during the pandemic it was obviously time to pause and think and strategise and BCorp was gaining traction. One of my friends who still runs a vegan business was one of the earliest BCorps in the UK and I went to University with him and I remember speaking to him about it and wanting to do it but never having the time to really allocate the resource. The pandemic was the perfect time and so I tasked our managing director, Jonathan Vanstone Walker to do it. It was very, very hard, it was very humbling and we just about scraped it. It is not easy for a property company to do it but yeah in July 2021 we were accredited and what as interesting was that it was only two years ago, two and a half years ago no one really knew what it was when we did it and now two and a half years later, it is very, very well-known so it’s, it’s felt like we got into that one quite early.
Susan Freeman
And is it something that you’re occupiers are interested in because they are obviously interested in sustainability and do they ask you about it or does it make any difference to them?
Zac Goodman
Absolutely, absolutely I mean, I think now you know alongside location, price, specification and amenity, sustainability credentials are enormous especially with sort of a lot of the kind of younger more sort of Gen X, Millennial lead businesses that we cater for in our portfolio you know, they have their own internal sustainability policies. They are interested in this stuff. They feel invested in this so yeah, we do get asked about that a lot. We also really promote it so we are big fans of Tony’s chocoloneley at TSP so the likelihood is if you work in a TSP managed building you know, we will have dropped in some chocolates, whether it’s the Tony’s advent calendar at Christmas or the Easter eggs at Easter which is a BCorp and at Christmas we’ll send our clients a BCorp bottle of champagne or a BCorp you know, we really live it and what’s interesting about BCorp is from the moment we became one they all, all the other BCorp’s say welcome to the family and you get calls from people saying, hey we’re a BCorp, we’re doing this, we’re doing that and it’s like being in a club and you want to help those businesses that little bit more and you also get companies calling up saying, we want to apply to be a BCorp could you give us advice so it’s really been a net positive thing for us to do and I think it’s a form of accountability, it’s at the back of your mind whenever you are doing anything in the business.
Susan Freeman
It’s interesting you are talking about your younger led businesses; a lot of the buildings that you refurbish and repurpose are actually older buildings. I mean is that deliberate, do you particularly like working with older buildings?
Zac Goodman
I love working with older buildings, I think they are better looking frankly. I think the Victorians, the Edwardians and the Georgians really knew what they were doing and I suppose we’ve probably got into older buildings because of the areas within London that we typically target are quite rich with that stock, especially the city fringes, you know, being ex-industrial space. I also think those buildings represent a more involved challenge that a lot of our competitors perhaps didn’t want to take on like some of the funds but I think one of my earliest inspirations obviously the likes of Derwent London and what they did with disused warehouse space in London and I just loved it. I am a Northerner so maybe I lean into the industrial aesthetic a little bit more than others but as much as anything else I think 70% of all building stock in London was built before the year 2020, not quite sure what the percentage is say before 1930/1940 but you’ve only to look around to see that actually most stuff is older but yeah, I do, I love mid-twentieth century furniture, I love old cars, I love old watches, I love old buildings. They built with a different mind set back then. They build with a more visionary mind set, they built the buildings to last far longer and I also think you know, they were far more generous you know it’s much hard to justify doing big ceiling heights in a new development now when actually the architect turns around and say you can have four metre ceilings the whole way up but you can have three extra floors and unfortunately nowadays in the way in which you know capital works in the world, we tend to make these compromises that make financial sense but are kind of sad in the long run.
Susan Freeman
And a lot of buildings you are refurbishing are as offices which is a sector which is out of favour, so secondary offices and tertiary offices seem to be sort of out of favour so are you, you finding opportunities there because other people aren’t interested?
Zac Goodman
Most certainly now like now has been I mean, interesting actually there’s lots and lots of stuff to look at and buy but pricing has been an issue because I think that there’s been a huge amount of illiquidity in the market and I think that one of the issues over the last couple of years is that buyers and sellers really haven’t been able to meet in the middle and I think that’s beginning to change. We’ve certainly unlocked a couple of opportunities but there can be no doubt that for the last I would say, four years since the pandemic, offices have been like kryptonite in the investment world and we have held true to our belief that they are going absolutely nowhere. It’s just that the structure and the way that we will value these offices moving forward has changed and you know, we are all hearing these words bifurcation of the office market, flight to equality, flex, there’s all these confusing words but in really, really simple terms before the pandemic you could get away with not investing very much in an office but if it was in a good location ultimately someone would come along, take a lease off you and you’d be fine and your capital value would be protected and you might even be able to get that tenant to invest into your office space. That is no longer true. In order, whether you are well located or not you have to be offering an experience that is akin to going into a boutique hotel. It has to look right from the street, it has to feel right inside, it has to have that kind of what I call the German Car Door sensibilities to it, it has to feel solid, it has to have great end of journey facilities, it’s got to earn the commute and this is a transition which is incredibly scary to everyone that’s been in offices for the last 20/30 years. Let’s face it 20/30 years ago you bought an office, someone took a 15 year lease from you, paid for all the maintenance in the building, invested in the building for you and you just picked up a cheque once a quarter. Now landlords are being told you’ve got to invest more, you’ve got to furnish it, the people coming to stay with you are only going to be coming for 3 years and then they might leave, you’ve got to be sustainable and you’ve got to keep all of the technology up to date and put nice showers in and give them bubbly soaps. It’s almost like the traditional landlord owning office owning class cannot get their heads around the fact that it’s like night and day and so you’ve got around the world this huge transition of the people that used to own offices probably no longer wanting to own offices and running off to own industrial or something like that and you’ve got this new kind of generation of operators who are quite excited because okay hotels in work space, I get that, how do we make it work and we are in this transitory phase. All the while the guys with the red books valuing this stuff have got no idea what’s going on because there’s been a lot of illiquidity, these things haven’t traded, we don’t have all of the data that we want yet but I think that the point I am trying to make here is that throughout all of this confusion one thing remains true, people go and work in offices, great businesses bring their people together in the same air to work. They may have flexibility and agility where people work from home, some of them may have job roles that they work on the other side of the world but the best companies have people come and meet in physical spaces whether it’s for two or three days a week or five days a week and they like to do it in city centres like London where they have access to international airports, incredible transport, unbelievable amenity and also be able to pull in talent from you know, Universities that surround the city and so yes, we have remained positive on offices. We accept all the changes that are going on and in all of that mess there will be huge, huge opportunities for the people that kind of really work out what actually is going on here, where does the tyre hit the tarmac, where is demand occurring and that’s where we’re trying to buy.
Susan Freeman
And things must be moving sort of pretty fast in terms of what your occupiers want from their boutique hotel office I mean, are you seeing anything new? I mean after lockdown people were talking about sort of Zoom meeting booths and things because people didn’t want to be in open areas. What, what do you see?
Zac Goodman
Yeah it’s funny, in a funny sort of way I feel like we’ve gone back in time like when you watch like a TV show like Madmen and you see people sat in their own more private, cellulerised offices with ball pens and really nicely furnished you know, carpet up the walls, big bathrooms and all that you know, someone doffing their hat at the front door of the building, I actually feel like we are harking back to those days where we’re not cramming people in like hamsters anymore, we’re kind of giving people back dignity and how do you do that? Allow people to have some private space, allow people to not be crammed in you know, as many of them into an open plan as we used to and of course the end of journey facilities is like the definition of dignity, people want to be able to clean themselves and wash themselves after a commute in and you know, not in some sort of crud ridden basement shower with one of those electric handles that’s half hanging off the wall and a smell of damp so I don’t think it’s that fast moving. I think there’s some other underpins that matter which are at the moment biophilia and planting is really popular, again another throw back from the 70s when there was rubber plants everywhere. Fibre infrastructure is a big one. I don’t see that as fast moving, we’ve needed to be putting fibre dedicated fibre into buildings for 10/15 years, we knew that and then the rest of it is kind of just trend you know, at the moment it’s very popular to have small phone booths, that may be the case for the next 10/15 years but I mean let’s go back 20 years when all of this started and I think the terminology of the modern office was actually Google you know and when they started they in order to attract talent away from Microsoft they put in kitchens full of food and snacks, they put in slides and beanbags and they had bicycles on their campus and it was all about Google trying to grown their company and in order to grow they needed to attract people away from the dominant force at the time which was Microsoft and so they did it with novelty and they did it with perks at the office and it worked. And then WeWork came along and effectively commoditised the Google approach to offices and rolled it out and then traditional landlords saw what WeWork were doing and kind of took that and, and it is just an iterative thing. I think people see it as fast moving. I think what’s been fast moving is the way that the market has changed their opinion of how to value these, these assets and, and there’s been some real volatility in that.
Susan Freeman
You were talking biophilia and I was having a look at you know, what you were saying about, is it Ironmonger one of the buildings that you’ve opened recently and it has hanging seaweed and I came across a word I haven’t come across before, I mean what is salotentric design?
Zac Goodman
Salutogenic, salutogenic. So we commissioned with Ironmonger we wanted to, we bought in 2021 and we wanted to reimagine what work had looked like and actually when we were talking about it, it was this merging of home office and work office and what did that mean. You know, your home is a little bit more comfortable, it’s warm and we tried to get down the middle of like what was best about the home and what was best about the office. What’s best about the office is its structured, it’s got air conditioning, it’s got lighting that’s designed to keep you alert, it’s got spaces for you to collaborate but in offices of old they also could become quite depressing places that kind of made you feel rubbish you know, yellow light, dark windows, blue nylon carpets all of that kind of thing and so we commissioned, Louisa Grey from House of Grey who was a designer that had actually more specialised in kind of the hotels and residential scene and we said, ‘build us a resi-mercial office, build us an office that when you walk in you know it’s an office but it feels like home and vice versa’ and House of Grey specialise in this concept of salutogenic design and salutogenic design is the actual physical tangible environment of the space is designed to make you feel well and so they do that through the aesthetic appeal of things but they also do that through the selection of materials so I didn’t realise this but things like you know, traditionally we’ve used MDF in a lot of buildings in the property industry. You know, MDF well certainly used to and I think to some degree still has, has formaldehyde in it so these things give off gases. The old nylon carpet you know, they give off these particles which were effectively inhaling and ingesting into our bodies so they paid specific attention to the types of paints that we made, that we used, we used low VOC paints, they are really into using sustainable produce so we bought in reclaimed terracotta tiles, we reinstated a 100 year old floor instead of ripping it out, we commissioned rugs from Bangladesh that were made under Fair Trade rules and yes we hung algae as a partition behind the reception desk. They also commissioned pieces of furniture that were made out of crushed and mulched up plasterboard that had been dragged off other sites. So salutogenic is basically the full circle of factors within a space designed to make you feel well.
Susan Freeman
That’s brilliant I have learnt something. So you mentioned at the beginning that the real estate people that you saw in Manchester were mainly men, not many women and I think that you have quite a few women working on, on your team. Have you chosen it that way or they are just the best candidates?
Zac Goodman
I think a bit of both, like I think that you know you’ve got to be careful in the modern world for not discriminating or positively discriminating but my way and my style of doing business and the way I like to have sort of conversations with people like quite frank, quite candid, quite matter of fact, quite honest I suppose would be the word like I’ve noticed that over time a lot of the sort of the, the women that work in, in the industry do have that sort of kind of tamber when it comes to dealing with property and I really like it and I think certainly we’ve got guys that work for us as well and this is not an attribute that is exclusive to men or women but it has turned out in our business that at any given time we’ve probably been about 70/80% women. I think the other thing as well is like there’s some phenomenal talent if you go looking for it with women in property and break through talent and you’ve got to create an organisation that is attractive for women to come and work in and I think this is also something that I realised that as I was building the business, when we were much smaller it’s quite hard to get people to come to the business and certainly when I started the business you know, agents and the like were quite ego driven men you know, it was all about you know, trying to get the cool car and wear the flash suit, they probably weren’t interested in coming to work for me and my business and coming and help out charities but we offered a good work/life balance, we offered a different approach to how we would manage people and how we would get you to manage yourself and we showed willing in investing in people, yeah we started attracting more diverse base of talent into our business and I actually think at one stage our entire property management department was women. It’s not anymore, we’ve, we’ve hired a couple of guys in to there but yeah, I think women in property is a really interesting subject matter because I have two daughters and I still turn up to the charity do’s and you know the big functions and all the rest of it and it’s 2024 and it’s still you go to those do’s, it’s still 90% men in the room and interestingly design wise you know, the Ironmonger project you were talking about, the designer on the contractor side and our interior designer, House of Grey they were all women and actually how many, how many commercial offices in London have really got that female sort of design you know, running through them. There is the law of machismo in design so yeah it’s an interesting sort of diversity for us.
Susan Freeman
And when you’re recruiting, are you recruiting, especially if your managed office spaces, do you recruit from the property sector or do you recruit from the hospitality sector?
Zac Goodman
Interesting question, a little bit of both. We find that we are putting together a job title at the moment and it’s, we’re really only interested in people coming in from the hospitality sector but we do recruit from the property sector as well because fundamentally what we are offering our clientele is a, is a traditional institutional management approach with the additions of our sustainability capability, our hospitality capability, our communications and community capability so we are recruiting across hospitality and property still and will continue to do so. There are some brilliant people in the property industry.
Susan Freeman
Interesting. I was at a round table last week flexible offices and somebody said, ‘oh we don’t want to recruit boring property people, we want to you know, recruit people from other backgrounds’ and it just did make me think you know, are our property people boring?
Zac Goodman
No, it’s a property thing to say, it’s a generalisation. Frankly speaking like you know, is any wide large group of people boring, absolutely not you know, it’s, are you stimulating people to be excitable, to be challenged, to want to innovate, to want to engage with people. Are you training people how to engage, like one of the things we’ve noticed is one of the things we do at our business and we’ve been doing it in the last three months is we actually have a company from the hospitality sector that comes in and trains our people, myself included, how to handle conflict, how to interface with clients, how to create distinctive and luxury experiences and what have you and what you start to realise actually is that people just haven’t had the training. They haven’t had the training and we do these kind of interactive exercises and what’s really fun about it is people come out of their shell, they get it because actually everybody’s experienced really good service and client service you know, whether you’ve gone into coffee shop, whether you’ve been on holiday, a really good hotel, whether you’ve been in your favourite Italian restaurant where the guy’s been running for 40 years and he just knows how to make you feel like you know, the singularly most important person in the world so no, property people are not boring at all, you know, no group of people is homogenous. Companies can be boring though, companies can be guilty of being boring, of stagnant, unstimulating, unwilling to move, unwilling to innovate, unwilling to change you know, unwilling to, to lead and, and think and move forward and therefore unwilling to invest and develop the people that work for them so people aren’t boring but companies can be.
Susan Freeman
Okay, I’m not going to ask you to name names, but what I am going to ask you is, what sort of advice do you give, I mean I now you mentor a lot, what sort of advice do you give to the like younger generation coming into real estate now?
Zac Goodman
Use your resources, use your resources. I am a brash northerner and I make no bones about it. If I know someone that can help me, I’ll ask for help. If I’ve got a contact somewhere that I’ve got through a social engagement but it could really help me do something, I go to them and I try and exploit it and use it you know, I think people are scared to ask, I think people feel, I met someone a few weeks ago that was sat in front of me and was coming for careers advice and this person happened to be a person from great privilege and I said, have you spoken to any of your parent’s friends about you know, getting some work experience there and he goes, ‘no I can’t do that, it’s not fair, it’s not this and all that’. So I was like, so what you are saying to me is because you know these people through your parents and there could be an opportunity there, you are unwilling to take it because you don’t think it’s fair? I said the next person will take it and you’ll lose and so I find it really interesting and, and likewise I think a lot of young people come into businesses with an incredible knowledge and skill sets of social media, marketing trends and they don’t put their opinion forward enough and the older people, you know, I’m 40 years old now as you mentioned at the beginning and I’m definitively now at the age where it’s like wow people are doing that are they, like I feel like when I was younger I was surprising people with what was cool and what was the trends and I absolutely love, you know, listening to young people in the business. Something we did in another development we’ve just done, 79 Clerkenwell was we’ve got this vanity room so you, you have your showers and then you come out and we’ve got this room with like hairdryers and hair straighteners and one of the ladies in the office was saying, ‘Zac, by the way, no one ever gets it right with the lighting like it’s always rubbish you are in one of these basements and you’ve had your shower and you want to put your make up on and there isn’t the right light, there’s only ever top light, there’s never side light’ and it’s like that kind of thing you just, you can only hear that from someone who’s really willing to put it forward, you are not going to pick that up in a, in a design meeting with an architect or something so I think young people are probably too scared to push hard, use their resources, I just think they are too polite frankly and if you want it, you’ve got to go take it and be aggressive about it and be unashamed about it. Be moral, be ethical but be unashamed.
Susan Freeman
And I know you’ve never been shy about approaching people that you think are interesting, I always wondered if it had ever backfired?
Zac Goodman
No, no it doesn’t backfire. The worst thing that someone can say to you is no thank you and listen there’s been people that have been really rude to me when I’ve done it and patronising and what have you, more fool them, more fool them I would say. Go for it, for any young person, just go for it, have conviction, stop being scared, stop worrying about trying to time things right or feel you are inadequate or you don’t have the right knowledge and what have you. If you get rejected, you get rejected and move on to the next one, it’s as simple as that.
Susan Freeman
I think that’s really good advice Zac so thank you very much.
Zac Goodman
A pleasure.
Susan Freeman
Thank you Zac. It was great to celebrate your 40th birthday with an in depth conversation about for your real estate career and thank you for your advice to our younger listeners not to be afraid of rejection.
So, that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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