MaryAnne Gilmartin:

I want to build a building in New York City that is a jewel box that represents the way people want to collaborate and the way people want to have collisions, deliberate and intentional collisions happen amongst like-minded people.

Nancy Lashine:

Hello and thanks for tuning to Real Estate Capital. I'm your host Nancy Lashine of Park Medicine Partners. Capital is a lifeblood of the real estate industry, but the decisions on where and how it's allocated are driven by people and personalities. Who are they? What motivates them? What can we learn from their experiences?

On this show, we introduce you to some of the real estate industry's most influential thought leaders and decision makers, and we talk about what is important to them, how they make critical decisions, who has influenced them, and a lot more.

Our guest on this episode is MaryAnne Gilmartin, founder and chief executive officer of real estate development company MAG Partners. As many of you in the real estate business know, female developers of big visible projects in major markets like New York are few and far between, and fewer still are brave enough to strike out on their own as entrepreneurs.

And so I have to tell you how excited I am to bring you this conversation. MaryAnne is one of the most intrepid individuals I have encountered in the real estate business. She's been a developer for much of her career and has worked on some of the most high profile and challenging real estate projects in New York City. As president and CEO of Forest City Ratner, she led the efforts to build Barclays Center, the New York Times Building, the Gehry building, and the Cornell Tech campus on Roosevelt Island.

In 2018, MaryAnne founded MAG Partners, which today is an active developer in New York and is also building a jaw dropping 177 acre master planned development on the Baltimore waterfront. We discuss all of these projects as well as MaryAnne's personal background, career path, investment philosophy, and much more. A fellow New Yorker, we begin our conversation with MaryAnne telling us about her upbringing in the Rockaway neighborhood of Queens.

So first of all, for our listeners, I would encourage our listeners to listen to some of the other podcasts and videos and YouTubes that you've done, because there's so much to your story, and I want to really use our time together to get beyond it and get to the next step. And not just have you repeat all of it, but there is so much that you have accomplished.

So having started my own business and thinking about what you've done, I just come away going, "You are so brave and you've been willing to take risks and do things that are a really rare." So tell me about the beginning. You grew up in New York City. Talk to us a little bit about your family and the very beginnings.

MaryAnne Gilmartin:

The way that I speak about family as it relates to who I am, obviously has a major influence on my DNA and how I tick. I think in some ways it made me a very good candidate to be a developer. It had to do with the fact that I was born in Rockaway, Queens. My father left when I was very young. My mother really struggled, and Rockaway is a very insular place. It was at the time, I should say, where everybody knew everybody's business, everybody was in everybody's stuff. And she made the determination that we had to get out of Rockaway before we frankly married somebody we were related to, because it just was such a kind of intertwined kind of a community where your business was everyone's business.

And so she picked us up, and she picked herself up by bootstraps and ended up moving us out of Rockaway. And we ultimately ended up in Woodstock. And I say that Woodstock is meaningful there because she was-

Nancy Lashine:

Woodstock, New York or Vermont?

MaryAnne Gilmartin:

Yes.

Nancy Lashine:

New York?

MaryAnne Gilmartin:

She went to Woodstock and she met her future husband, my stepfather. And they decided to go to Woodstock to relive their glory days as hippies. This would be around the time that she chained us to a chain link fence to protest nuclear power plants. She was really, in some ways, very progressive in her thinking. She was a badass in her own time. She didn't finish eighth grade. In her era of growing up Irish Catholic in America, it was you marry young or you go to the nunnery.

And so she married the cutest guy in the bar. Never a good idea. Tried to get out of that marriage rightfully and appropriately, and the church encouraged her to work it out.

So when she finally got the audacity to say, "I don't want to live this way, I don't want my children, my three daughters to live this way," the change really began for her. And I think she kind of took control of her life.

And I think they tell that story only because she probably made a lot more mistakes than hit things on the mark in terms of parenting and raising children. She would say this. But what she taught me and my sisters, probably the most important thing is you need to figure out your own way and you need to make your own way, find your own happiness. And if you can do that, the rest will follow.

And so I don't think I was ever of the mindset that somebody else was supposed to figure me out, or find my way, or make my way, or create my happiness. And maybe to a fall where I maybe took on responsibilities that weren't mine along the way. I think it was this idea that I was responsible. I was responsible for my own livelihood, my own career, making my way through the world.

And that kind of thing, I guess you run the risk of making you an island. But for me, I just felt like I was the steward of my own fortune. And so that gave me this kind of thing where I don't really suffer from fear. I know what it means to take on risk, and I do get scared at times. But I think that there's a need for bravery, certainly in our business, and a bit of boldness. And I think that I have many issues, but being timid and lacking in bravery is not my thing. And I don't say that in a braggadocious way. I just think that I don't really live in fear. I don't suffer from extreme anxiety.

And that's probably helped me enormously, because the only thing I knew when I was growing up, that change was going to happen. And we had a lot of uncertainty, a lot of tumult, and didn't really know where our lunch money was at the end of the month.

And that means that I probably deep inside of me have that baked into me, and that creates ambition. It creates a desire to move my own family up one wrong on that ladder, and make a dent in my own family history and legacy, and move everybody along a little bit, if that makes sense.

Nancy Lashine:

It totally makes sense. Wow. I'm just digesting that, because I think so many of us do have stories where we've had single moms or we've had parents where we've really struggled. But not everybody comes out with that sense of self-determination. What are your sisters up to, if I can ask today?

MaryAnne Gilmartin:

Yeah, I can tell you that. And I have two brothers from the second marriage, and I think there's definitely something about the three girls with the single mother thing that made us who we are. We all probably are out performers. We married for love, and continue to kind of salt the boat in the family and really create the possibilities, which it happens often with both parents. Sometimes, it's really one parent that takes more of the responsibility. And I think that in that category of we grew up very responsible. We were really good girls, but we had a lot of challenges.

The stepfather I mentioned was the first libertarian that I really ever came to know. And he had a really good job, but he believed that the government was taxing him unfairly. And so I ended up finding out when I applied to college that my ex stepfather had put his motorcycle, his car, and the home that he owned in my name to try to avoid the federal government.

He ended up in prison, in federal prison. But as a quest to get financial aid to go to college. The reason I ended up at Fordham is I laughed and say I mortgaged myself up to the university that paid me the most money to go. But in actuality, what the Jesuits did was they took the time to understand this bizarre situation where all my financial aid was upended because I was showing up with assets that weren't mine.

And they listened to my story. And of course I was able to prove it, but it was my stepfather trying to get out of his own trouble, and it became a burden of mine. And again, this thing, I had to create all sorts of strategies and create problems that were far beyond my years, my very young years. But I did it and I did put myself through school. But it really was the Jesuits, the mercy of the Jesuits, and their interest in having me go to Fordham that really allowed me to get out of then Kingston, New York and go to college.

Nancy Lashine:

Adversity creating opportunity. Wow. Well, good for... As I said, girl crush just keeps getting deeper. So I'm going to skip a little bit, because I know on a lot of other podcasts, you've talked about how you got into real estate through your city job initially, and just finding the most air conditioning you could find that summer in New York City. And you ended up at Forest City and I think you're known as the accidental CEO. Why do you think Bruce Ratner gave you that shot?

MaryAnne Gilmartin:

I know the moment that I realized he wanted me to do it was after we closed Barclays. And again, we're talking about 2009 to 2010, literally the buzzer beater that was financing Barclays, which was financed with the kind of junk bonds that the Yankee Stadium Citi Field and the Jets and Giants stadium are financed. And there was a loophole in the tax law, the IRS tax law that allowed these stadiums to be financed a certain way. And these were bonds that were sold, but they were junk bonds.

But when Goldman would go out and sell them, you had to have a good story around the investment. But the economy was absolutely in shambles. And we went out to finance the arena, and Goldman was representing us and they said, "We don't think you're going to get the execution. We think the equity check is going to be much bigger." At this point, we're 10 years in this project, $500 million of investment in the dirt, not a single building to show for it, and the great financial crisis.

So we had this moment of truth where Bruce and I were terrified. We went on the road show. We used to say never let them see us sweat, but we would talk about it afterwards about, what if we didn't do it? And the it part was getting this arena in the ground, because if we did not get Barclays in the ground and financed, we couldn't build the larger project, which was the 606,430 units of housing.

So even though it seems like, "So the arena was having a difficult time," no, it was the $5 billion master plan that was hanging in the balance. And the opposition knew that if they could just litigate and delay through the end, between 2009, that loophole would close and we wouldn't be able to finance the building.

And so yes, we had an opposition individual living on center court. That was a problem, but the real problem was getting this building financed so that we could then take possession. And so there's 1,000 crazy stories around how we got it done, but I would say it was Herculean. It was everything from going to my Rolodex and finding somebody who was a general counsel at UPS that could open the facility in the middle of the night to find a lost package, that had the letter of credit that would allow us to close before the bond act closed at the end of the Christmas holiday.

So I was like, "Bruce, let me call this guy. I know he was the general counsel." Bruce was like, "What are you talking about?" I'm like, "Maybe he'll open up the facility in Maspeth, Queens." And I called the guy and he literally said, "This is Christmas month. Of the package you're looking for, there are at least 25,000 of them in that facility tonight." My point was, "Well, we need to find this package because the MTA will not close without actual letter of credit that got sent from Cleveland," on the night that all the Blackberries in America went down. And I know what had happened because nobody had the ability to track things.

So this crazy story where I stayed up all night, I called this guy. He actually opened up the UPS facility and sent someone in. And lo and behold, at some ungodly hour at 4:00 in the morning on December 22nd, we found this letter of credit.

And the reason I tell you this is because everybody went to bed. Everybody laughed at me and nobody thought it was possible, and everybody just kind of gave up. And even Bruce. And I think at that moment... Because again, hope against hope. I had a really good relationship. I invested in that relationship and this man saved us. And he saved us because the power of those [inaudible 00:13:01] connections.

And the reason I tell this is because I refused to give up. I stayed with it. They opened it up, they found the letter of credit. And it was shortly thereafter that Bruce looked at me and said, "You need to be the CEO of this company."

And at that point, to be honest, and I've said this to Bruce, every job in the place was better than being the CEO. Bruce did it really well. I was his wing man. I was his right hand. I was like, "Bruce, I have the better job. I don't want the job. I'd like to keep doing this thank you very much." And it took me a lot of soul-searching to realize he was trying to give me the job. And many women, I overthought it. I was trying to create the perfect setup where I was set up for success and Bruce was in a good position. And we spent two years transitioning into that senior role because I really was number one afraid, to be honest. I was afraid I didn't want to be a fake CEO, particularly as a woman. I wanted to be the real deal. I wanted to make sure that Bruce and I had clear lines delineating what he would do as the chairman and what I would do as the CEO. I wanted everything so ticked and tied that many people would've just taken the job and worried about all that later.

So it was hard fought, it was unanticipated, and it was in some ways presented to me. And then ultimately, I realized I am ready for this and I deserve this job. And stepping into Bruce Ratner's shoes was the scariest professional thing I had ever done. And I said to myself, "I need to do this." And I did it.

Nancy Lashine:

Wow. And how long were you CEO of Forest City?

MaryAnne Gilmartin:

I became CEO. I went from 2012 until I left the company in the beginning of 2018.

Nancy Lashine:

Was it hard to leave?

MaryAnne Gilmartin:

No, it wasn't. And you'll appreciate this because of the work that you do. It's great to be a public company in 1964 when you're the Ratner family and you go to the markets for your capital. When you're not a REIT and everybody is a REIT. And now we're in 2012, and we're being told by all the analysts and investors that we need to get in that REIT box because our net debt to EBITDA is out of whack. We have way too much overhead.

Nancy Lashine:

You can never be a developer if you're a REIT. Your development's over.

MaryAnne Gilmartin:

You're right. And I came to that obvious conclusion that I had done so much in the public company, but that was when the stock was at 68. When the stock went to three bucks, the great financial crisis kicked in. Development was a dirty word. I said to myself, "My time here has ended."

So I said, "I will always be able to be here as an operator," but I wanted to operate the things we built. And so I came to the conclusion that if my first love was building, I needed to leave the public company format and go do it in the private side.

And that was really what drove me to leave because I had such an amazing run. Could you imagine Nancy, staying there and eking out a company that needed to figure out a strategic alternative, which ultimately resulted in selling itself, which was fine? But that would've been such a difficult end-

Nancy Lashine:

I think it was fine if you were in the Ratner.

MaryAnne Gilmartin:

Exactly. And frankly, after 23 years with the kind of run I was fortunate enough to have, I thought, "I want to get out while the going is good." It was so amicable with the board. They actually hired me back as an advisor, which was critical for them as they fought to go through this strategic alternative process. Somebody had to explain Pacific Park, Brooklyn, and it was so complicated. I had the keys to the kingdom in that way. So I ended up with this bankable two year contract where I said, "Even if you sell yourself, you have to keep me because I'm going to use these proceeds to start my own business and take 10 people with me." And that is what I did.

Nancy Lashine:

But why start your own business? I mean, we have so many folks coming to us all the time who are leaving a very successful career at a big place. And the question is, do you start de novo and have to spend all that money on systems, and procedures, and rent, or do you just go affiliate yourself with somebody who doesn't do what you do, doesn't have what you have, you have a good relationship with? You've been in business for a long time. I'm sure lots of people were happy to have you side by side. Why do it the way you did it?

MaryAnne Gilmartin:

It's a really good question. I came to a point where it was the only thing I wanted to do. And I should begin by saying as we talk about my career and my projects, I really lean into the complicated. And I typically don't take the easy road, even when sometimes I probably ought to. And for sure, there were jobs out there where I could have landed in another corporate environment.

I was super fatigued by the public markets. I was tired of the analysts who really didn't know the business of being developers asking, "What have you done from late quarter over quarter? What's your rent growth?" And so I had really had such an amazing run, that I felt like I was tired of the grind. And I said, "I know this is not going to be easy, but maybe I need to try to figure out how to take all this that I've learned and do it myself."

And the part that scared me really the most, the terrifying part was the balance sheet and the capital. Because everybody said to me, "You can raise the money. No problem. You're going to figure it out." And I think it's that lunch money thing and I brought it up. I need to know where my lunch went. And so this idea that to be a developer, you need a balance sheet. And I knew this of course, but Forest City always had the balance sheet. We always had the equity. And if we didn't want to use all of our equity, we took in a partner. I was obsessed with this idea that I needed to find a way to access the capital. And that starting a company and bringing 10 people over, and not having the solution, the capital solution, was not going to set me up in a way where I would be that kind of brave, forward-thinking, strategic developer that I wanted to be. I would be all wrapped up in this concern.

And that's why I chose to partner with L&L because I've thought to myself, if I can't access the capital, I should hang around with people that know how to find money, other people's money to do big things. And that is why I chose to partner with them. But in doing that, put a two-year ripcord in it and said, "If these guys are doing that which I can do on my own, I want to be able to jettison that partnership," because I had put the working capital forward.

And I think that was another thing I did, which was very smart because it didn't take long for me to realize that I was accessing the same relationships. I was able to raise the money. And I'm not saying it was easy, but the point is the part that I worried about the most, which I think was prudent when I was leaving Forest City, ended up not being as challenging as I thought it was going to be, but I really need to believe that for me to be successful.

So the idea of going out on my own, I think it was the fatigue of being in a large corporate behemoth. The amount of time you don't spend working on the dirt and the real estate, and the amount times you spend in a boardroom talking about a bunch of things that are nowhere near as exciting or exhilarating is what drove me to explore this. And the last thing I'll say is given my age, I knew that if I didn't do it in my early fifties, I was never going to do it.

Nancy Lashine:

I had that age in my head when I started business and I just said, "I have to do it now or I'm not going to do it." So I totally empathize with that. And having more years on you, I will tell you that's probably a good way to think, because it doesn't get easier in many ways. And the lessons that you learn when you have your own business, you get much better at running it. But you also come to appreciate the value of the time that you've had to learn those lessons.

MaryAnne Gilmartin:

I really appreciate what you're saying because I really do admire what you've done. I think part of me, this maybe just the over performer part of me. I got a lot of props for all my things do, Forest City. And you know and I know it takes many, many, many great minds to do great things.

But I also felt like I was using public money. I was running in some ways, as Sam Zell said to me, "You're really running a family business dressed up in a public company dress." And part of me wanted to probably prove to myself that without the large balance sheet, without the company and the family, that I could stand up my talent and my vision.

And again, that was probably inside. I want to create my own track record. I want to be able to distinguish between the large public company and my own abilities. And I wanted to break out and kind of prove that out to myself I think.

Nancy Lashine:

Well you have. I was sort of like the, "Oh my gosh, what's next?" But we won't go there quite yet. So let's talk a little bit more though about capital partners, because that's not something I've heard you talk that much about. How did you find those first capital partners? And obviously, clearly what you're doing in Baltimore, and I know I'm jumping to that, which is this massive visionary, 225 acres in this frankly unloved city. I mean my father was born in Baltimore. Very few people choose to go to Baltimore, to move to Baltimore, or to go back to Baltimore. And you have Goldman as a partner I believe there on the equity side.

But generally speaking, some of these you have what? Three residential projects now in New York City, an office building, and I'm sure many more things in the hopper. How do you think about finding equity? What's important to you? How do you choose your equity partner? And today when debt is so scarce, does the role of the equity partner really change for you?

MaryAnne Gilmartin:

Massively important question, particularly right now for me. Because I think after spinning out of L&L MAG, we put together a pipeline of projects. 2023 is really a standout year for us because we put these two residential buildings in the ground, after proving that we know how to position multifamily in a way that's going to be high performing with Ruby.

So the closings that we just completed in the latter part of 2023 were among the most challenging things I've ever done. And it shouldn't have been, because we know that multifamily, gifts that keeps on giving. Rents are always moving up. Vacancies are in the housing emergency level. The fundamentals are there. But what disappeared was the spread, and the interest rates doubled, and cap rates moved.

And so suddenly the model became very different. And it's interesting, I would say the debt was not as challenging as the equity because all the equity wanted some form of structure, which is to say everybody wanted to be a lender. Very few people wanted to be an L3 partner. And this is what with projects that had great returns, really beautiful horizons for rent growth, very little concerns about the neighborhood. We're talking about West Chelsea and the Upper East Side. And they were primed and all the risk of entitlement was gone. And we did have the 421-a expiration, but we had a good enough horizon to demonstrate to the lender and the capital that we would finish.

But I tell you that the equity really changed the business model because its fees promotes and the piece of the business that MAG Partners owned, and firmly everyone structure. And the alignment suddenly became all whacked.

So I think that that experience, which by the way we got it done. We ended up with great capital partners, and we ended up with MetLife on Eighth Avenue. We ended up with the Ofer Family Global Holdings on 50th Street, and they're true equity partners.

There are things about the deal that I'd say are different than what we would've had to do a year prior. But these are great partners. And I would say I probably wouldn't even have gotten Mike's attention in a prior cycle, because they were looking for little bite-sized opportunities. And I come along with this amazing building with my team and they were very interested in it.

So the nature of the equity changed, the terms of the loans changed, the pool of options narrowed. And it all brought it to the fore in a way that I sat with the team and said, "Now that we've closed these two buildings, we need to not do the building by building financings anymore. We have our strikes. We are ready to be unleashed. We have more opportunities than we know what to do with. We need a much more strategic, comprehensive, programmatic capital solution."

And I'm saying this to you, because you know full well that there's a time and a place to have that conversation. A conversation I'd love to have with you generally, because the company is mature, there are 30 of us. We have a pipeline and I want a more efficient capital solution.

So in 2025, my commitment to my team and myself is that we're going to come up with a capital solution that leverages these amazing partners we have. And maybe it will be one of them, or maybe it'll be a combination of folks we've already done business with and folks we don't know.

But I'm excited about this because the capital, I always laugh and say it doesn't matter what the question is, the answer is always the money. I was perfectly happy to do it the way I've been doing it, because I wanted to be in the best possible position to sit across from a capital partner that might be strategic and say, "Look, you don't have to rely on the Forest City pipeline and all the successes I had there. Yes, that definitely made me the pro that I am and allowed me to tap into the talent that we have here at MAG Partners. But now look at the company."

So seven years in, I have a really good story. I don't need other people's money to fund my working capital. I need strategic capital on the GP and LP level that's going to allow me to move at a pace that I don't lose deals, for example, because I'm not sure which capital partner is going to step up. These are the things I want to change. I'm being really open about it.

And so meeting [inaudible 00:26:34] as I did was because any of the good capital players that want to develop, they know who the good developers are. And I always say there's a lot more capital out there than there are really high quality builder and operators. So I find myself with no shortage of people who want to meet me and want to talk about development. Even if development's a little bit out of favor, the people who know development know that when development's risk on, it's when you want to start talking about doing something big and bold, because that cycle is going to move. And development is long lead, and it's strategic, and it's front loaded.

So I'm in a very interesting place now with the team, which is we're going to focus on a capital solution that really sets us up to sort of more than double the pipeline capacity that we have. I know I can scale the business too. Finding talented people that want to work at a purposeful company that was founded by a woman who believes that changing cities for the better is great work, and that you should look something like the cities you're changing. All of that makes a ton of sense for young people coming out of school who want to be developers.

So I feel like we're at a real inflection point in the business. I have a lot of gratitude for what we've accomplished, but I am gobsmacked by the possibilities of what we can do. And I think it starts with the capital.

Nancy Lashine:

Well, you know we'll have more conversations about that offline, but talk to us a little bit about returns. Because in my world with interest rates doubled essentially from where they were a few years ago, and with 421-a particularly in New York City, no longer available with Hochul. Has a plan, but it's not implemented yet. Developers are telling us it's impossible to build anything. And you're going to build resi, you're rarely going to build new office. Life sciences is kind of on hold. I know you did that gorgeous project on Roosevelt Island, it's beautiful. But what can you build today at returns that are going to be sufficiently attractive to equity investors?

MaryAnne Gilmartin:

I think there are three things that I'm focused on. The first is the public-private partnership. So when you think about Governor Hochul and the fact that she wants some really big wins and she can create programs that work on sites that the government controls. And she said this publicly.

So there are a couple of big sites out there that ESD and various agencies are focused on, and we will play very well in that pursuit. And these are important projects in important neighborhoods. So that's number one, because you can reverse engineer the economics and solve it on the land, and make sure that it works. And she probably will have to mirror the current 485X program, but you can back things out of the government taxes, the ground rent, and things like that.

So I think there's a way when the government's involved. I'm going to call it the government intervention, on a scale that's attracted, on a product type that's needed to solve an issue that everybody acknowledges needs to be addressed, which is the housing crisis. So that's one area that we're focused on and we've got real traction on some real opportunities.

The second is that I have done really well in that hairy space of ground leases, not like Safehold where we're in the ground lease position, but where people own sites that are amazing sites. They want to own those sites for a very, very long time, but they don't want to be a developer.

And who the partner is super important. So take MRH over on Eighth Avenue, that's a co-op that was founded during the Kennedy era.

Nancy Lashine:

What is MRH? Sorry.

MaryAnne Gilmartin:

MRH is the group of cooperators that own the land between 26th and 29th Street and West Chelsea, where the tennis bubble was, where we're building our building. That land is all owned by a cooperative, and there are over 3,000 cooperators. They all have their housing locked in at a level that's affordable in perpetuity, and those buildings... And they look like contextual brick buildings. Back when Chelsea was a very different place, Kennedy put in place a program that allowed them to be certain they would never be pushed out of their homes, and that their affordability would be preserved in perpetuity.

So it's an amazing little gem on Eighth Avenue and Ninth Avenue in West Chelsea. They came to us and they came to other developers to say, "We have this parcel, that tennis bubble, that we want to basically have a developer build because we need the proceeds from the ground rent to take care of our physical plan." Because the city said at some point in time, "You're on your own, you got to take care of your buildings," and blah, blah, blah.

So we competed for this site, which was a delicious site right around the corner from Ruby. And we won in large part because we know the kinds of things that the 3,500 cooperators obsess over. What's the noise going to be like? Are you going to hurt the trees I love? Are you going to rebuild the playground for the kid? And is the building going to look like it belongs here?

And so yes, there's the economics of the deal, but there's all these other things, these softer touch things that we're really good at. So when we negotiated that deal, we were able to put certain provisions in there that allowed me to protect the spread between the financing and the returns. And the reason I say that that's important is okay, the construction loan ended up being more expensive, but we're taking a long view here. And when cap rates do settle back down and we put the permanent loan in place on that building, it's going to be an object of beauty.

And so ground leases are places where the landowner has different considerations. Those considerations are places where I can with my team do very well, because it's not just the highest number. So that's a second area of business.

And then you said something about office, but I am mildly obsessed with the office building in the future. I spend a lot of time thinking about the way we want to work. And we are going to continue to work in the office, we're just going to do it on different terms. So I want to build a building in New York City that is a jewel box that represents the way people want to collaborate and the way people want to have collisions, deliberate and intentional collisions happen amongst like-minded people.

So I imagine that there's a tale of two asset classes in the office market. It's the high performing new stuff and it's everything else. And there isn't enough of that brand new stuff. And I jokingly say Hudson Yards was not successful because it was easy to get to. It's because it's a lot of really high performing modern masterpieces, where efficiency rules, light abounds, and the quality of existence inside those buildings is far superior to many B and C experiences in the office space.

And so I think with the average age of a New York City office building being over 85 years of age, there's an opportunity for us not just to deal with, what are we going to do with all these buildings? And that's a bigger conversation which I'd love to have about big ideas. It's a conversation that says certain locations could actually benefit from brand new, maybe even a smaller jewel box of a single user building. And I would love to build one of those buildings. So we're in some conversations about... And maybe it's contrarian, but I do believe that those who are able to build brand new office buildings in New York City will benefit from the fact that we just simply do not have enough of them.

Nancy Lashine:

Well as we speak, I'm also staring at this new... I think it's 70 story JP Morgan building, which we've watched go up under construction since we've been in this office. Literally the steel went up one floor a week for the first year, and now they're putting the glass curtain wall on it, which I think they built a whole factory related to do that curtain wall. And it's going to be unbelievable.

MaryAnne Gilmartin:

It's a juggernaut. It's an economic development juggernaut.

Nancy Lashine:

Yeah, but there's no question that it'd be great to have those buildings. And not necessarily a massive building like that, but new office buildings. There is definitely a tale of two cities. This also would be great to not have to go to Hudson Yards to find it.

MaryAnne Gilmartin:

I'm with you. I want to say, why are we saying let's knock down a bunch of these older arcane buildings? Give me an incentive both on the land and the building so I can build like modern, world-class, global cities have done. New York City is behind the times that way. We need to upgrade our... And I think if you build it, they will come.

by the way, we're going to come back in a hybrid way. We're not coming back five days a week. I think that's more than okay. But it's 450 million square feet. We got to figure it out. So I think we should be talking about more than just conversions. We should be talking about public policy meeting demand and giving us programs that encourage even demolition of some of these buildings that their time has passed.

Nancy Lashine:

There's no question. And the city is full of midblock buildings that certainly would be open to that. There's a lot of other issues in there. But I want to talk about Baltimore, because I do think that when I think about the risk, the vision, just the leap of faith to start this project that you now call Baltimore Peninsula, I've heard you talk a little bit about Kevin Plank and being the great convener. Would the project have happened for you without a Kevin Plank?

MaryAnne Gilmartin:

Absolutely not. I am in Baltimore because of Kevin Plank. And it's not just that whatever Kevin Plank is selling, you're probably buying. It's that he will say, "I sell shoes and shirts." And of course he does a lot more than that.

What he is, is Baltimore's greatest flag flyer. And in the same way that Dan Gilbert did it for Detroit, Kevin Plank chose to put his company there. And when you listen to him talk about Baltimore and his love for it, I thought with a vision like his and the kind of intention that he has to change the city for the better, I was drawn in. I wasn't convinced, but I was drawn and I was thought without someone like Kevin Plank, I don't think I would've done it.

And then the scale alone, 235 acres around the country. Where do you find that kind of critical mass in a city? In a city. Not in a cornfield, but in a city. And then I went there to give him advice, and I fell in love with the fact that it's on the south side of 95, so it's not stuck in the inner harbor where there's crime, and congestion, and vintage '80s buildings that need tending to. This is a brand new neighborhood.

And then I look at the fundamentals. It's DC's front porch. It's a train right away for New York, for Philly, for DC. And I thought to myself, this city gets a bad rap. Of course it has its issues. But Nancy, let's talk. You and I live in New York, it's a tough city to live in. We have crime, we have quality of life issues.

So I think Baltimore has gotten short tripped. I think Baltimoreans have a great love for their city, but they also have a little of inferiority complex. They're so open to having somebody come along and give them some love, guidance, insight, some of their big ideas.

So unlike New York, and I've been quoted as saying you call New York the city of no. Is that unfair to the mayor? And I'm like, absolutely not. That's why the mayor had to create the city of yes, because you are the city of no. Look at our zoning, 1961. Are you kidding me? I laugh and say we have things in our zoning law that don't make any sense at all. You go to Baltimore and it's not a question of if, it's how.

And that kind of feeling in New York, which again '80s, '90s, I've been around a long time. It's not that communities didn't want to understand what was in it for them as they should. It's just that the instinct is to push back and say, "No, we don't want the change. No, we don't like this."

In Baltimore, I will tell you, this is the city that wants more love, that wants positive change, and is just crying out for it. And then their love for their city, their sports team, and their flag is like none that I've ever seen.

So I am up, but one time I said to Kevin Plank, "I just need you to tell me, what is it with the state of Maryland flag and the sports teams?" It's infectious, but it's obsessive. People are just so hometown team, comeback story, the grit thing, which I love because I'm in Brooklyn. But the teams and the flag really struck me.

I don't know about you, but if I had to pick out New York state's flag, I know I could do it, but it might be buy a hair. And Kevin Plank looked to me, he said, "Well, you have the Empire State Building, you have the Chrysler Building. We have our teams and we have our flag." And I thought, you know what, how amazing is that? We take advantage of some of our great assets. In Baltimore, they're counting their assets every day and they want to celebrate them.

Nancy Lashine:

Do you think you'll be able to bring a lot of people from outside of Baltimore, whether it's from Washington or New York, for retail tenants, for office tenants? Or do you see people who are there now upgrading into this new space?

MaryAnne Gilmartin:

Such a great question, because the thesis was that the dirt is very, very well priced. The buildings we're building are beautiful and the location is proximate. So if we could just rebrand the city and the peninsula that we had a conversation we could be having nationally.

I will tell you with the office market the way it is, what I've come to appreciate is that very few companies are thinking about picking up and moving to other places. If they're doing anything at all, they're trying to restack and maybe figure themselves out. So there's obviously a lot of gridlock in the system right now for corporate headquarters.

So we've retweaked our short term vision, which is to say there are a lot of people who love Baltimore. There are a lot of companies that already call Baltimore home. And what's amazing about that, you don't have to upsell Baltimore. You just say, out of all of your options, look at this brand new sparkly community we're building.

So we've had a lot of luck, like CFG Bank, 100,000 square foot lease. That's a big lease in this market. We signed that lease because Jack Dwyer is Baltimore born and bred, and a big, big, big heart for Baltimore. And at this point in his life, wants to help the city, and also needed a brand new headquarters and made it happen. And that kind of love and commitment to the city is what I'm marketing into.

So most of my conversations are suburban Maryland, DC. And inside of the city of Baltimore itself, their office stock is nothing to write home about. So I'm playing to our strengths, which is we have the best buildings in the submarket today from a commercial point of view.

And residentially speaking, it's a young city, it's an educated city, it's a diverse city. And we have these beautiful apartments where you can live on the waterfront in Baltimore, in a way that's a fraction of the cost that you can live in DC or New York.

So residential is going to be fine because it's a beds and med city, all of young people that are there to become doctors, and healthcare professionals, and academia. So I think the residential is strong. The office is going to take time, but we only built a half a million square feet, and we're a third of the way through.

Nancy Lashine:

Wow.

MaryAnne Gilmartin:

And if you bring people to live and work there, the retailers all want to be there. So restaurants and all of that. We are leasing to both local and national operations on the retail, because there's only 100,000 square feet of retail in this 1.1 million square foot chapter.

So I'd say the challenge is going to be the office, but everybody knows that. And I think just lease by lease, I'm doing a prebuilt program because the best way to lease space today, I don't care what market you're in, is to build it. Don't ask the tenant to take on the capital constraints, and tell them it's plug and play. People love that.

So to get through the next three to five years, I'm doing prebuilt, I'm doing built to suits, and I'm stretching and reaching to make it as easy for the user. So they just can't resist coming and checking this out.

So it's been a lot of fun, and it's cathartic. Now, I don't know if you travel for your business, but here's what I learned. I used to say, "Make our money at home. We're a boots on the ground business. We're not exporting our talent." Well, Baltimore was a bit of an exception, but it was easy to get to by train. I knew I could get there and back with the team in a day if I needed to. And it was like an aqua hire. There were 20 people in Baltimore that we inherited. So I had boots on the ground there.

But I'll say this to you. Going to another city that's pro development, going to another city that appreciates your moxie, your know-how, your experience coming out of New York, again, if you are a very good student and you know how to listen, it is a thing to behold, because it has really invigorated my team. For all the hard knocks, all the nos, all the challenges, all the trials and tribulations of doing what we do in New York, which we accept as part of the business. But it's got joy and possibility associated with it when you go someplace else. And it's been fun.

Nancy Lashine:

It's refreshing. It is refreshing. And hopefully you'll see real growth there, because that's been a challenge for people developing or owning in Baltimore. How are you thinking about owning the equity, again, the capital side of this?

So you have 225 or 235 acres. You have a million square feet and it's maybe a 10th of your total build down, maybe less. So who's the landowner? Are they patient? Are they going to be there for all this time? Because that's such a long period of time, and normally you think about a family or somebody investing in that. How are you doing it?

MaryAnne Gilmartin:

Another great question. Kevin Plank is building a beautiful, massive, all timber headquarters building right there. And the only reason it's not considered part of our footprint is he's a public company, and his family office is invested in this project, but they are adjacent to each other. So he's in many ways a physical anchor to Baltimore Peninsula, and he's leading by example. So that's amazing.

So he's in it for the long haul. It's got more to do with just making an investment in real estate. It's building his company. And now as you know, he is CEO again, he's back in the seat, and he's building and he's ambitious, and wants it all to happen at Baltimore Peninsula. That's a really good partner. He's part of the land partnership.

Goldman Sachs is their urban investment group, and they are also the land developer. So the idea is that the land has been ready through a tiff for development through Kevin Plank's investment, Goldman Sachs investment, our investment. And then the vertical building of all of that master plan will come with me as the developer and new capital.

So Goldman Sachs, it doesn't want to continue to invest in verticals. They want to be taken out of the land, and Kevin Plank should go and run Under Armour. That's his first love and that's what he should be doing. So my job is to entice capital and bring in the vertical capital. And is this easy? No, 14 million square feet is the size of the central business district in Baltimore today. So we're building a brand new business district that is the size of the business district in Baltimore.

But this master plan, which I've seen many master plans in my career, is so permissive, is not time-based. So a lot of times if the government gives you a benefit like a tiff, they say it has to be fulfilled in 10 years.

So we have time, it's a very decent basis, and we have such flexible entitlement. That is to say if a major league sports team wants to come and build an arena, you can do it here. You don't have to go through a two-year process.

If suddenly logistics, off the water, data centers, life science comes back, whatever it is that is of the moment, we're able to seize it, because I have never seen such a flexible and permissive entitlement. So there's value there, Nancy. And yes, it means time and like a fine wine, it'll come into its own. But I guess what I'm saying is we can build-

Nancy Lashine:

Baltimore and fine wine in the same sentence maybe the very first time we've heard that-

MaryAnne Gilmartin:

Well, you can say that because your dad, but you know what? They love their culture, their food, and their experiences. It's a fun city. So the point of the matter is we're able to build what we want, when we want, where we want. And there's no other master plan I've ever seen that allows for that. So if you believe in the fundamentals of the city and you believe that you can take the time without extreme penalty to figure it out, square foot by square foot, building by building, we're going to do the very best we can to deliver on that master plan. But if that master plan has to change, we're able to make those changes. And those changes do not bring us back to square one. We're able to make the change and preserve the 14 million square feet, which is extraordinary.

Nancy Lashine:

Sounds like Baltimore should bid on the next Olympics, or something like that as an opportunity to get some more public money. That would be exciting.

MaryAnne Gilmartin:

I like the way you're thinking.

Nancy Lashine:

I had chills thinking about how long it would take to build this out. Would that be a way for you to say, "Okay, I've done it." I don't know how many decades in. But it's just an incredible vision. So kudos to you.

I want to kind of finish up talking a little bit about women and the business. And you named one of your projects Ruby after Ruby Bailey, who was a beader. So talk to us a little bit about... Well, your thoughts about that. I understand you've endowed a scholarship at FIT in her honor. How are you thinking about, what's the impact of acknowledging these incredible women on names of buildings, and how do you hope that that vision will change how things are done?

MaryAnne Gilmartin:

You said it so beautifully. So yes, I'm building buildings, and yes, I'm building a company. I think what I really believe I'm building is a new way of thinking about placemaking in a city like New York. It's everything from who's doing it, how we're doing it, how we talk about it.

Because I'll be really frank, the word developer, it's a complicated thing for me. I don't self-identify as a developer, when I look at certain characteristics of the industry. I always want a role model to look to, and I do have them in the business, but I self-identify more as a placemaker and a civic developer.

And that means I don't just want to build forgettable buildings and make money. I really don't. And because of that, starting the company allowed us to say on what terms do we want to try to create this mission? And the mission is to build beauty, and demonstrate that you can build beauty and deliver value for investors, for partners, and for the communities in which you build.

And that sounds so simple, but that's not what people do. Not everyone. And it's not historically how the game has been played. And so it starts with building beauty and making sure that we're not compromising, because buildings are around for a really long time. And it's a perfect way to screw up a city when you land an awful building that wasn't thought through, either on the ground plane or the sky plane. We've all seen them. Okay? I don't want my fingerprints on any of that.

So building beauty, building with a diverse group of people that know what communities and cities need, because they are part of and they are invested in the communities in which we build. Super important. That's a really big part of our mission. And then to do it in a way that elevates the conversation.

So I don't want to name buildings after my children. My children are fine. How about we take... Because that's what developers do. And I'm not saying there's anything wrong with it, but I told my children like, "All bets are off. That's not happening. We're going to do something better than that. We're going to find unsung heroes and I want them to be mostly women, and I want to celebrate people who haven't been celebrated properly through the built environ."

And this is kind of a very simple thing, but it's quite beautiful, it's something we're very proud of. And the best part of putting buildings together is sitting around, and we don't do it until the building's taking shape, and we can actually look at it, study the area. In the Silk Stocking District, the Upper East Side, we're going to find a whole collection of stories of New Yorkers and women, and we're going to debate what name we want to bestow upon the building on 50th Street.

Nancy Lashine:

That's fun. Very fun.

MaryAnne Gilmartin:

It's super fun, and super important because these are the kinds of things that if people know what this building represents, it has its own message, and it's powerful. And that power hopefully will move from generation to generation. So when my daughter is choosing whatever profession she wants, she shouldn't be so lonely like it is for you and I in the business.

I'm not particularly proud of the fact that we can't find another woman founded ground up development company in New York that's doing projects of scale. I want to be in the company of women that are doing this. I want to build a building that's built by women, top to bottom, beginning to end, because you and I know what can happen.

So these are the things that I'm committed to. And maybe it's just a little dent in the universe, but it's a dent I want to make because I can now. I can start dictate those things. Where when I was an up and coming project manager, I just wanted to do my job and do it well. Now I can kind of create more rules and more parameters around what doing right and doing well means, and I'm going to hold myself to account for that as well as to my team.

Nancy Lashine:

Well MaryAnne, from where I sit, you're making a heck of a lot more than a little dent in the universe. Really, you're just taking a sledgehammer to it and making a huge difference.

I want to take a minute selfishly a bit to do a shout out to ULI and a program that ULI is starting for female entrepreneurs, and we're trying to start more of a mentorship program. And I'd love for you to be a part of that as well. It's just taking shape now, but I want people to be aware of it and to certainly go to the ULI website as a source of inspiration and information for how do you become an entrepreneur and how do you find the support?

MaryAnne Gilmartin:

Well, you can count me in for that. I love ULI. I always say it's a Rorschach for intelligence in real estate, because its fellowship is the most, I don't know, just thoughtful and capable group of professionals that I've come across in a single organization. So you can count on that.

And there's only one ask they have of you, because there's no such thing as a free lunch or a free podcast. And that is that you take the time. I know you will, but I really want to come and see you, and I'd like to have time to tap your brain because you're doing something that's super important to someone like me, and value your opinion and your guidance. And so I'd really love to come and see you. And that's the only thing that I ask out of this conversation, because I've had you on my radar, on my list, and this is part of the reason that it was so easy for me to say yes to you is because of ULI and the fact that I've wanted to meet you for some time.

Nancy Lashine:

Well, I can hopefully do one better than that, which is to put the resources of our team at your disposal too. Because groups think in many different ways and can certainly be very, hopefully interesting and creative, because you've got to be. So that's our pleasure. Thank you.

You mentioned that you have had some inspirations, or mentors, or people who you follow. And so I maybe like to end just by asking you if there's anybody you want to name on the podcast.

MaryAnne Gilmartin:

There are two people that I would like to pay tribute to, but there were many along the way. The first is Bruce Ratner, because first and foremost, he's a developer. And so when you work for someone that teaches you as he can teach and does what I ended up doing, there is no better master. So my masterclass in real estate every day was with Bruce Ratner as my teacher.

And we had a lot of fun together. We had many challenges together. And what's amazing about mentoring is that he's now a really dear friend of mine. So that is the best gift of all. But he gave me a lot along the way.

And what's amazing is about Bruce is he says the same thing about me, and it's hard for me to imagine that I could have made outsized contributions to his life, but he has to mine.

And then Marianne... I'll quickly tell you that I met her because I told Bruce we had to go talk to the top brokers in New York City, and I set up lunch at the Four Seasons with different brokers. And Bruce was really upset with me. He was like, "This is ridiculous. This is stupid. It's not going to amount to anything. Who do you think you are?" This is the early Bruce Ratner, where everything was wrong and it was just really hard to work for him.

So I end up at the Four Seasons, I think Marianne because she has the role. She always returns phone calls, and returned little old Marianne [inaudible 00:55:01] phone call at the time. That was my maiden name. And so I end up sitting across from her in beginning what becomes this blossoming relationship where we share a name.

But she saw in me, Nancy, something that I didn't see in myself. And that happens a lot where I see it in young people now, and I do call it out. And I don't do it in a kind of gratuitous way. Marianne [inaudible 00:55:24] believed in me as a real estate pro before I ever believed in myself. And that is why she called me and said, "Do you want to compete for the New York Times Commission to be a developer and a partner?" And it started at that lunch, and I ran into Bruce Ratner's office and he said, "You're crazy. We're never going to win. There's no way they're picking us."

And I convinced him to let me, but she gave me the idea that I had, that it was a level playing field. And I actually had a shot at winning if I convinced the company to do it, that we could do it. I would never have had the courage to think that we could win. And she planted that seed in my mind, and she saw something that I didn't necessarily at that time see.

Nancy Lashine:

That is such a great lesson for all of us. We don't know the power that we hold.

MaryAnne Gilmartin:

That's right. Exactly.

Nancy Lashine:

So thank you for sharing that. All right. Sorry, but my girl crush just got deeper. I'm all in, babe.

MaryAnne Gilmartin:

Well, I'm going to see you in person sometime very soon, and thank you for your invitation to go on the podcast. Thank you for doing what you're doing. Thank you to your commitment to ULI, because it's really important, and the women's part of ULI ever more important. And so in ways that I can actually show up and contribute as I can, I want you to know that that's a very important priority of mine at this point in my life.

Nancy Lashine:

Amazing. Thank you.

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