Atif Z. Qadir 00:03
Welcome to American building. I'm your host Atif Qadir. Join me as we explore the skylines and strip malls, the crosswalks and rail crossings, the balconies, the buildings and the boroughs shaping the next generation of real estate, let's build common ground.
Atif Z. Qadir 00:24
One thing I wanted to lean in on was you mentioned that your travels around the country were part of that influence, and that brought you to San Francisco for checking out the Transamerica tower is one of the guests on the podcast, Vishaan Chakrabarti from the practice for architecture and urbanism. His dad was also a chemist. He came from India, and with the budget that they had, they did road trips all across the country. And for him, those trips, whether it was the East Coast, the West Coast, or Europe or the Soviet Union, those were all the influences that led him to want to pursue a career in the built environment.
Atif Z. Qadir 01:00
So we talked about the challenges, the history, we talked about the inspiration, we talked about the financing. So now lay out your development strategy in terms of what you addressed initially and what you addressed later, and how you prioritize the spending of the I believe you spent how much money on the renovation
Michael Shvo 01:21
Around $250 million dollars so far. It's a $400 million budget, including building three trans America, which is the new building.
Atif Z. Qadir 01:27
Sure. So lay out the development strategy overall, what you're spending money on and when.
Michael Shvo 01:33
So we've completed basically everything but developing three trans America. It was a three year remastering that included different parts. I'll just walk you in very technical because, you know, you're an architect also, so Right? So you'll appreciate this. So first thing, as I said, the ground plane, we have a park and we have buildings around the park. There was the park in the middle and three buildings around the first thing that what I wanted to do is make sure that the it's not three buildings around the park. It's three buildings inside a park. So we expanded. First thing, we planted trees around the property. So now the park surrounds the building, not only in the center. And foster found the original landscape design done in 1972 and we completed the missing holes of that design, that was the ground plan was a major undertaking.
Michael Shvo 02:24
What we also did is we changed the facade on the ground floor at the time. William Perry is a brilliant architect, but he made a bunch of mistakes, unfortunately, and it's, I'm not trying to shoot him down by any case, it's designing most brilliant building. But his interior skills were not as good as his architectural skills. And you'd walk into the building and you had like a nine foot ceiling, but meanwhile, there was 17 feet ceiling available there. So foster blew up everything. They exposed the structure. So today, when you walk in the building, that amazing kind of grid of concrete goes from the outside to the inside to the ceiling, and it all looks as one. When you walk in there, you would be 100% certain that that's the way it was built in 1972 you wouldn't think that we did this now. So it's very interesting to see kind of how we change the ground planes make it so inviting, okay? Make it so inviting for people to come in there. And that was really about opening the space, creating light, creating an experience for people that, like I said, I want people to come in. It used to be very standoffish building. I used to say it looks like a building from the Russian, you know, Cold War time.
Atif Z. Qadir 03:35
A lot of concrete, brutalist, yeah.
Michael Shvo 03:39
But today it's full of green, full of glass, full of light, and so we the entire ground plane between that, the restaurants that we built there, the lawn, all the public spaces, the stage for performances. It's really a happening place. It's a place for people to congregate. It's a people it's a place for people to be together. That's at the ground plane on the upward floors, and we've elevated all the infrastructure of the building. Like I said, it operates like a brand new 2025 building, from the technology, the face recognition to the elevators to security, everything is brand new. We amenitize the building like like a hotel. We have, you know, full store, a full floor of wellness, probably the most spectacular gym that you'll ever see in an office building overlooking Coit Tower and the Golden Gate Bridge. We have a full floor of conferencing where Norman Foster designed conference rooms that, again, with ceilings that were personally designed by Norman Foster, which are all sculptural. We have our private bar on the 48th floor at the top, which is only building tenants. The most spectacular bar you'll ever see. It's at the top of the trans America pyramid. All this is for tenants. So the idea was, everything on the ground plane, we give back to the public. Everything from two and up, is exclusive for tenants. That's how we separated kind of that, that fine line between what's private and what's public.
Atif Z. Qadir 04:59
So the experience of lightening up and opening up the tower has a lot of do with the strategy of what you're removing, for example, the lower ceilings from the property, but also has lots to do with the finishes that you chose. So as a tenant is walking through the entrance doors of the building, through the security and up to their floor. Talk about the finishes and the look and the feel that you wanted that tenant to have, and the materials that you chose in that process.
Michael Shvo 05:26
So I think it was really important for us that the building feels like everything that you see there feels like it was built like that in 1972 I did not want it to look like we took an old building and we modernized it. And now here's all this contemporary furniture and contemporary materials it needed to feel and look of its era, because that's the beauty of it. And this is where non repositories is a genius. You know, these light Woods furniture that was, you know, designed in the late 60s and early 70s. It kind of all works, right? It all works together, and very much taking into consideration, because of the amount of light, how material bounce, how light bounces from the inside to the outside. I can't tell you how many hours I've spent obsessing over, you know, 30 different types of stone with, you know, 1% more grain, half a percent less grain, in order to get it perfect. And I had to look at it in the morning, at night, in the afternoon, like from different angles. It's an obsession, but that's what we do.
Michael Shvo 06:26
And I have this obsession at every project we do, because that's the attention to detail. And it's something that, again, I appreciate the question, because you've lived that world, you understand that. But the idea, the result I want is not for people to say, Oh, wow, he picked the right materials. Or he No, the result is what I want people to take away, which is noticing nothing, meaning you walked in there and just feels like it's always been like that, and it's perfect. That's great design, not oh wow, he did a beautiful ceiling. Or, or he No, back to it means that to now point these things where people have to look at that it's not natural. The idea was to create a natural experience, something that feels like it's been there, and we did not intervene with the uniqueness of this building. That's probably, as I'm sure you'd appreciate, a lot more difficult than just to come and do something brand new and contemporary that just looks great
Atif Z. Qadir 07:22
Totally. And I think in particular, when you look across your portfolio of projects, there's many of them that are historic and iconic properties that require that attention to detail. And specifically with the Transamerica tower, the outside of the building is crushed quartz, so there's already a stone element. So I would imagine that choosing something correct for the interior requires coordination. Yeah, there's a lot of subset processing depending on the light. It can look completely different.
Michael Shvo 07:48
Is that correct percent and the building looks different, and they, you know, depending on the time of day. What's amazing about the building? You appreciate it. The windows are massive. For a building in 1970 this huge window.
Atif Z. Qadir 07:59
It's about 3000 windows, I think.
Michael Shvo 08:03
Yeah, but also they're pinned in the middle, so turn right and left on a pivot so you can clean them. How brilliant is that? Because you know what it is to go try to hang from the building. But think about this, 1972 today. Okay, we can think about everything nine. This building was built in 1972 the only other place that I'm amazed by stuff like that when I go to Disney World that was also built in the same era. And like, you know, Walt Disney was a genius. I mean, he thought about things that were so ahead of its time. And you think, who would have thought about these things at that time, and that they still are relevant today, even though they renovated and they don't work, it still feels like it's it was always there.
Atif Z. Qadir 08:38
Yeah, I think that that idea of permanence of design, and being able to allow or designing in such a way that the experience is the primary thing and the actual elements of it can melt in the background, is such an important part of being a successful developer, and that's something that I learned when I started my career at Rafael Vignoles firm as an architect. That's where I interned first. Definitely can appreciate that.
Michael Shvo 09:03
Rafael was a very, very close friend of mine. We used to give all together a lot. We spent a lot of time together. I mean, it's one guy that I miss very, very dearly.
Atif Z. Qadir 09:13
I could imagine the there is probably very amazing conversations that you had given his background as a pianist and then an architect, and your interest in fashion, and then your turn into.
Michael Shvo 09:23
I play piano also, but you did. I'm not, I'm not Raphael Vignoli, but yes.
Atif Z. Qadir 09:29
Amazing. I definitely can appreciate how important the relationship is between architects and developers and he, you worked with him on one on a project, correct?
Michael Shvo 09:37
Yes, I did. I did. I worked on a project with him at 125 Greenwich. I ended up being bought out by I saw my interest in my partners at the time, but I Yes, I worked with him on the design of that project. It was a lot of fun.
Atif Z. Qadir 09:54
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Atif Z. Qadir 10:52
So a big part of any type of project, whether it's a Transamerica Pyramid or other historic or iconic properties, is the entitlements. So entitlements are often a major contributor to schedule delays and in turn, costs for real estate projects. And as you mentioned earlier, the approvals process was slow and involved protests, including Dianne Feinstein, former senator in controversies when the trans America pyramid was first built in the 1969 to 1972 period. So that was obviously way before you acquired the property, but you were familiar with that opposition when you purchased it. So as you were developing your strategy and getting the approvals for it, talk to us about your experience in the entitlements process.
Michael Shvo 11:41
So it's interesting. You know, when I came to San Francisco, as I said, we didn't really know everybody there. We've hired kind of the best lawyers, the best lobbyists, the best consultant and, you know, no one and I wanted to do certain things, like changing the facade of the pyramid at the ground floor, like building a very specific building at three trans America. And I remember sitting with Norman at a meeting, and we're told by all these consultant you'll never get this approved. You're going to waste six months, eight months a year, and you're wasting your time. I asked why, and they explained to us why. And I look at Norman, Norman looks at me and said, guys, you know what? I hear you. I respect you, but this is what we're submitting, and they're looking at me like but you don't understand it doesn't work like this in San Francisco. I said I got it. I don't know how San Francisco works, but logic and good design works everywhere. No, it doesn't
Michael Shvo 12:33
Okay. Long story short, we submit these papers and then there's a time to do presentation to the planning committee. Norman flies himself for a few hours just to do the presentation, because he's so vested in this project. Not only that, they approve the project, they put it on a fast track, on the entitlement. And it's funny, because, again, everybody thought We're never getting approved these things. But the reality is, and I've heard a lot about this in San Francisco, people ask me, Is it difficult to get things approved and all these issues there? I said, No, San Francisco, for me was the city couldn't have been greater. The mayor couldn't have been greater. The current mayor is amazing. He's a dear friend, somebody that I think is doing a phenomenal job also in San Francisco. So again, it tells you that if you do the right thing with the right intentions, entitlement is something that, again, same thing with the Raleigh by the way, in Miami, we changed the zoning for entire Miami Beach strip there that started this whole area called the billionaires Beach, which we transformed that whole neighborhood. Also, again, I was told it can never be done.
Michael Shvo 13:40
Yes, it took time, but the reality is that that billionaires beach day is the central Miami Beach. So like I said, when you have a vision that's not in the box of what everybody thinks it should be, okay, you always have people that will that are naysayers. It's no different. As I said, that there were protests against the building, okay? There were people that told me we can't get this done or that done, but thank God we got it done. And of course, today, everybody said it was the best decision. So I think that, like I said, you don't need to be distracted by the noise, right? You need to do what you believe in. And if you have the conviction and you know what you're doing is right, go ahead. Do it. Move on, and things will fall into place, at least that's my experience.
Atif Z. Qadir 14:22
So Michael, you mentioned the current Mayor of San Francisco. That is Dan Lurie, who took over for London breed, and he's credited for the transformation, step by step of San Francisco. And in particular, you talked about the approvals process. And many of our listeners are familiar from previous episodes about the expression not in my backyard so NIMBY as a challenge for developers to actually get projects across the finish line. I'm a city planning commissioner in Hoboken, and I can definitely imagine a much larger version of that is the experience that probably existed for a very long time in San Francisco of saying no. Many times before actually saying yes. So you mentioned Norman Foster coming in, flying in for the presentation. Talk to us about a few of the characteristics of how you approach those interactions that you think allowed you to be successful for the entitlements for the renovation of the pyramid, as well as the new construction property you mentioned, which is three a trans market.
Michael Shvo 15:21
I think it's really important to bring both the community and the planning board into the process and not just say, this is what we want to do, right? Have them feel like they're part of the process. Have them feel like they're part of the decision process, part of the ideation. And like I said, I think that if you have the right people on the planning board, right? If you have the right people on the planning board, fantastic. Then even if things don't fall in the box, good design and good reasoning prevails. Now sometimes you're dealing with planning boards that just, you know, are naysayers. It doesn't matter what you will do, but I can tell you that even in this such situation, I remember with the Raleigh, different project was a major undertaking. We ended up getting everything approved by the planning boards, but one person was very much against us, and I remember his closing statement.
Michael Shvo 16:11
He said, while I cannot vote for this project because of this guy thought there should be zero development ever, and everything should just look old and fall apart. But you know, Michael show deserves a medal for the restoration work he's doing at the Raleigh and for Miami Beach even the next day, or is at some point cancer, when you do the right thing, when you restore the building, when you're a purist, like I'm a purist, I believe the building should be restored to the way they were designed, right, unless there's some bad design, but that's what the Raleigh were restoring to the original design of L Murray Dixon in the 1940s the Art Deco design. If you do that, you're going to get the support of even the naysayers, because they have nothing to say. Now they might not support you at the end with a vote, but if you do the right thing, and again, you cooperate with the neighbors, you cooperate with the community, which is something that we always do, you will have the support.
Atif Z. Qadir 17:04
And I think the what that really brings to light is the way that we started the conversation about being able to match tenants to their properties, the financing providers to the financing opportunities, the projects you're working on, in this case, bringing people together around that common ground sounds like a very similar, similar idea. So tell me what's currently going on with the property. Is lease up complete is there? Are there still available parts of the building?
Michael Shvo 17:31
So lease up here. We've done tremendous amount of Lisa part of the business plan was, in essence, to replace some of the tenants, because the rents have doubled and tripled in the building, and some of the profile of the tenants were not, you know, the profile of the tenants that that could sustain those rents, or were part of the new trans America pyramid, right? There was a building that was old and with a very specific esthetic and very specific rents. Today, the rents, as I said, are two to three times what they were when we before covid When we bought the building. So we will continue having role in the building for probably another 18 months.
Michael Shvo 18:08
We signed a massive lease with Morgan Lewis for their headquarters. They moved from one market to our building. We're about we've signed multiple leases, as I said, almost at $300 a foot, and leasing is moving very quickly, with deals that we have in the pipeline, I think we're just under 90% 90% lease, but some inventory will come back, as I said, when all leases are expiring and we're going to replace those tenants. Part of what we do is we do a turnkey solution. So we will provide you a fully fitted Norman Foster office, if that's what you want. If you want, you could build yourself also. But the idea is to create a service, leasing as a service, not leasing just as a commodity.
Atif Z. Qadir 18:50
And for the lease up process going forward, for those that next 18 months, are you handling that internally with schwart? Do you have a third party that's taking care of that?
Michael Shvo 19:00
No, we use JLL. We have our own team on the ground, obviously, but we use JLL as a third party as well.
Atif Z. Qadir 19:05
Excellent. So we'll include the link to that in the show notes for anyone that might be interested in finding out more. So that brings us to the end of our interview. So I'll be making a donation to that amazing nonprofit that Michael mentioned, pyramid dreams, and we'll include a link to that in the show notes as well. So encourage listeners to take a look at that organization, and I appreciate your time today, Michael and so thank you for being here with us.
Michael Shvo 19:30
Thank you so much. It was a pleasure. You brought me a lot of good memories.
Atif Z. Qadir 19:38
I'm Atif Qadir, and thanks for joining me on American Building. If you enjoyed this episode, be sure to subscribe on your favorite listing app and leave a rating and review. America's housing crisis is one of our greatest challenges. But what are the real solutions? Hear from the developers and other industry experts. Arts driving meaningful change. Get our exclusive guide housing in America, eight ways we can solve our way out of a crisis at americanbuilding podcast.com