Alicia Glen

Alicia Glen (0:00 - 0:29)

My resume compared to anybody else, if I were a boy, it would have been completely different. And I will stick by that till the end of my days. And I think that I always tell women and people who are not in the club that you're not going crazy and it's real.

And so you really do have to think, what are my values? Like, am I prepared to really struggle? And not just me, but am I able to find a team who's prepared to struggle?

Nancy Lashine (0:31 - 2:52)

Hello, and thanks for tuning in to Real Estate Capital. I'm your host, Nancy Lashine of Park Madison Partners. Capital is the 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. Today, I'm thrilled to welcome back one of my favorite guests, Alicia Glenn, the founder and managing partner of MSquared, a real estate impact platform focused on creating mixed income, mixed use projects that promote affordability, sustainability, and diversity.

We first sat down with Alicia in 2024, when she was in the middle of raising her first fund. A lot has happened since then. Two funds later, the firm has developed 14 projects in nine states and growing.

Prior to MSquared, Alicia spent three decades rotating between government and the private sector. She began her career as a lawyer representing low income tenants at Brooklyn Legal Services, then joined the New York City Department of Housing Preservation and Development to run its housing finance group. In 2002, she went to Goldman Sachs, where she led the urban investment group squaring over $5 billion of mixed use development.

She returned to government in 2014 as Deputy Mayor for Housing and Economic Development under Mayor de Blasio, overseeing the largest municipal affordable housing plan in the country. Alicia has seen housing from nearly every seat at the table as a tenant lawyer, a regulator, a banker, and now an investor. Few people know as well as Alicia what it takes to get housing built.

In our conversation, we catch up on MSquared's growth, rising rates, construction costs, and what she's learned from running her own firm. We also get her take on Mayor Mamdani's housing agenda and how the current federal administration is affecting housing. For those of you who are listening, we have Alicia Glenn, who is just one of the most wonderful people I know and a very good friend.

And when you started your own business, how many years ago is it now at MSquared? 

Alicia Glen (2:52 - 2:53)

Six years ago. 

Nancy Lashine (2:53 - 2:54)

It's been six years.

Alicia Glen (2:54 - 2:55)

Six years. Yeah.

Nancy Lashine (2:55 - 2:57)

And I kind of thought you were crazy.

Alicia Glen (2:59 - 3:01)

That's a fair characterization of our lunches.

Nancy Lashine (3:03 - 3:46)

Given that you, as I think I said then, and you could have written your ticket to do almost anything you wanted in the public or private sector and the real estate business. And, I guess there's a lot of things that you didn't do that in retrospect look pretty smart, but you've just surpassed, of course, my expectations, which I shouldn't be surprised about that. But when I look at what you've done at MSquared, it's really very cool.

So for those listeners who haven't scrolled back and listened to the podcast from 2024 and don't know you, give us a quick summary on what is MSquared? What's the business that you started and why is it unique? 

Alicia Glen (3:47 - 6:36)

Sure. So MSquared is essentially a real estate investment platform. We also have a small development company that was formed specifically to invest in the development of mixed income housing, which is still a term I think people can be confused by and not exactly understand that. I'm sure we can talk a little bit about what that means, but it was really sort of the culmination of a lot of my life's work around thinking about what makes really healthy cities and communities that prosper both economically but also socially so that, again, we can think long term about how we can continue to grow and improve the quality of life for people in the United States.

And it's a very niche thing to do. It is about both wanting to develop new buildings, which generally, as we've talked a lot about this. People are very skittish around sort of the risk return profile and the complexities of development.

And so sort of going out with a business that was laser focused on development, necessarily, as many people advise, made the smartest way to get out of bed every morning because there are lots of other things you can do in the space. But I felt it was really important to say this is a part of the big, large scale housing problem that the United States is increasingly recognizing. And somebody's got to go out and say, yeah, I'm going to do the hard work.

Also, the corollary to that, as I always say to people, when you get out of bed in the morning and you walk around the city, there are a lot of buildings. So it can't be that hard. Somebody built a building.

People build a lot of buildings. So the sort of notion that it's inherently crazy and risky, it's not as risky as trying to build a rocket ship. I mean, we do know how to do it.

And the people who came to work here really had that sensibility and that desire and that passion to say not only do we want to build new housing, we want to build new models of housing that are sort of disrupting the status quo of how we think about what it means to live in cities where we have market rate housing and we have low income and affordable housing. And we know that that has created a lot of challenges and left a lot of people out of the equation, but also has really had long term negative externalities for cities when whole populations have been segregated and it winds up creating a whole set of other challenges for cities that I'm sure we can talk about. So we want to do it differently.

We want to say we want to build mixed income housing and we want to build it because somebody's got to build it. So let's go.

Nancy Lashine (6:37 - 7:11)

So for people who are listening, who are inspired by the idea of building and making a difference in the affordable housing crisis in this country, how has your experience coming to work every day at MSquared as a developer and trying to find projects, finance them and build them been different than say going to work as the deputy mayor for housing in New York, where you were at a very broad way trying to make sure more got built and was financeable and all the things that you did there.

Alicia Glen (7:12 - 8:36)

Well, the first difference is every morning I get up, I have to walk to the subway and get on the subway. That's why I was deputy mayor. I had a car and driver. So that was a lot better. So let's just start with that. But the serious answer is when you're in a senior role at a city level with a huge amount of tools in your toolbox, you're really on a day to day way thinking about wholesale changes, right, that you can make to change the blueprint.

Right. And you look at what those tools are in your toolbox and they can be land use and zoning powers. It can be taxation policy. It can be looking at all the assets that a city has on its own balance sheet. And what are we going to do with those assets? It can be a whole series of tools that you have at your disposal.

And when I was deputy mayor, we really looked holistically at what those different levers and tools were so that we could change the game in terms of both producing more housing, but serving more people who are struggling with affordability and the different ways in which we could do that legislatively and through our own actions. And also a city like New York, which has a huge capital budget and capital commitment, tens of billions of dollars. Imagine being a banker and being able to charge 1% for your money, for your equity. And so the toolbox was extraordinary.

Nancy Lashine (8:37 - 8:38)

I'd like to imagine that, by the way.

Alicia Glen (8:38 - 9:43)

Yeah. Wouldn't that be great? I'd love some 1% free money right now.

And so now all of that comes with the challenges of the politics of that, right, and competing interests and stakeholders. But it's very macro and wholesale, right, which is very different when I come to MSquared every day. And I'm like on the phone with some crazy person who works in the Department of Transportation in the state of Washington, who's like, we've never even heard of a building that has poor people and rich people in it.

And no, we're not going to give you a zoning variance for that. It's much more retail, right, in the sense of trying to address a particular project. What do we need to do with the government, right? Because all buildings, as you know, have some government piece of it. And then who's going to lend us money to do this? And how much money are we going to put in?

And can we make any money? And that could be for a 80-unit building. It could be for a 700-unit building. But that's small potatoes, right, compared to the hundreds of thousands of units that I was dealing with in city government.

Nancy Lashine (9:43 - 9:47)

Okay, so I have to ask you, Alicia, which is a harder job?

Alicia Glen (9:49 - 10:43)

Man, that's tough. At the end of the day, I think it's a harder job to try to be a really effective policymaker and change agent, particularly in a city where, as boy, do people have opinions. And boy, does everybody like to kvetch.

And boy, does everybody think they have the right to everything they have a right to, as opposed to working with a set of people around a particular project where there is at least a common goal that we're trying to get this building built, right? Not everything is about some referendum on the future of the world and democratic socialism. It's like, are we going to build the building?

And what's the treasury at today? Like, what are we doing? So I do think it's harder, but it's also incredibly important and incredibly satisfying. And the long-term impact you make is obviously, I think, quite extraordinary when I walk around and I see what we and other people in my role have had.

Nancy Lashine (10:44 - 11:13)

So give us a sense, maybe let's talk a little bit about what you've done at MSquared. You have done a bunch of projects, really, I mean, one of the striking things is they're not in New York. I mean, there are some in New York, but they're in Dallas, and they're in the state of Washington, and they're in Newark, and then you did something in Connecticut.

And so tell us how you expanded geographically and the nature of the projects that you've worked on.

Alicia Glen (11:13 - 13:19)

Yeah, I mean, I think when people sort of list those places, it sounds a little schizophrenic, like what is the connective tissue between all of that, right? Because most firms have a tighter geographic focus and are so big that they can have national presence. For us, it's really about finding the markets and the places where two things are true.

One is that on the ground, right, in terms of just the people who, on the public side of the equation, are necessary to get any development project done, they are interested in and open to doing something different, right? That they understand that trying to build a building with, let's say, a 50% market rate and 50% affordable is not only not crazy, but it's something that they should be trying to facilitate, and if they can find a capital provider and a development team that wants to do it, they are excited about that, right? Because if you run into a town where that would never work, we shouldn't be in that town, right?

And those towns and those places have been actually very interesting when you look geographically where our projects are. And so, again, it's not like people who do this sort of macro analysis of the 10 biggest markets or what are the innovation centers. There is a lot of that work that goes into our ultimate decision-making about to do a deal or not to do a deal, but at the end of the day, if you don't have a willing counterparty on the public side of the equation, there's plenty of other places to go.

So, Connecticut is a very interesting place where they've actually spent a lot of time trying to think about how do we develop models where we can serve middle-income and moderate income people in a state that is incredibly wealthy and now is losing its workforce and we're going to do something about it, right? They also had some interesting litigation around that, that we were able to get our hands around and really work with them to get these deals done. It's not that like I think I woke up one day and thought, oh, let's go to Connecticut.

Nancy Lashine (13:19 - 13:19)

Right.

Alicia Glen (13:19 - 15:02)

When we looked at those market fundamentals of, wow, it's impossible to build multifamily housing in Connecticut, period, end of discussion, particularly in high-income cities like Westport. They've had zero multifamily rental. What an opportunity to have like regular people and families get to live in rental housing in Westport and send their kids to the best schools in the country.

That to me is incredibly meaningful work and that the state of Connecticut wanted to be our partner in that was really exciting, right? Because normally I don't think of suburban development as something I get really excited about, but think about the positive externalities of that. And then going to a place like Indiana, a deeply, deeply red state where you would think, why would anybody even want to contemplate doing anything like this?

You can be as red as you want to be, but at the end of the day, if you're the mayor of a city in Indiana, all these issues are local, right? And in a city like Fort Wayne, Indiana, where they're trying to figure out what it means to be a city that has a workforce and has rental housing options for people who want to sell their houses, where they have like a really interesting new approach to modern manufacturing, it doesn't even matter whether you're a Republican or Democrat, you need to say, wow, we need to kind of do things a little differently because if we put all the poor people on the other side of town, this is causing us lots of problems, right? This is not great.

So it's really about trying to find that counterparty who wants to be part of the solution and then making sure that actually the math works, right? Because at the end of the day, we're in the real estate business and we're fiduciaries. And if we can't either generate the revenue from the market rate units or figure out how to get enough to deal with the NOI on the affordable side, then we can't do the deal.

Nancy Lashine (15:02 - 15:29)

So what have you learned about making the math work? Because obviously we see so little development across the board in multifamily these days with interest rates now around 5% for the 10-year. Inflation has just, wage inflation, construction cost inflation has made development really uneconomic for most market rate developers.

Affordable has got to be even tougher. So how have you made it work?

Alicia Glen (15:29 - 16:06)

Yes and no. I mean, everything you say is true that those sort of basics of the math have gotten increasingly challenging. But with that, the value of what the public sector has to put on the table, and it's not just the public sector, it's also the GSEs, it's also Fannie, it's Freddie, it's a whole series of other players in the residential real estate space where beginning to layer those types of either actual pieces of capital or ways in which you can reduce your operating expenses to increase NOI, become more and more valuable.

Nancy Lashine (16:06 - 16:10)

So give us an example of the capital stack of a deal that you were able to make work. 

Alicia Glen (16:11 - 17:32)

Yeah. I mean, again, very simple. I mean, we closed a deal in our second fund, our second project in Dallas, which is not atypical of a more simplistic approach where the city is using their tools to get this done. So what the city did in Dallas was say, okay, in return for you having 50% of the units be for workforce and lower income families, we will give you a 35, oh, God, no, 75 year, essentially close to full tax, real estate tax exemption.

Okay. And that is an incredibly valuable thing in Texas where property taxes are a huge portion of your OPEX budget.

And so that was the fundamental piece of the puzzle that helped us drive the mix of units and the mix of incomes. And we bought it at a very good basis, a partner, because we then deal one and fund one. So just back to real estate basics, I said, do not let those guys around the corner by the side, across the street if we're the market maker here.

And so we bought the land, right? A lot of people don't like to see fund managers buy land, but we bought the land and it was at a significant discount to what Related and some other bigger guys are paying around town. And we had proof of concept and we were building the market. So, it's also just doing good real estate deals.

Nancy Lashine (17:32 - 18:02)

Right. Sure. How have you found the– how have you been able to raise the equity?

I know you've, you've raised a couple of funds. People call us almost every day. Help. How do I raise equity for my startup business? And there is no magic bullet by any means, but you've managed to do it. So what would you like to share on the podcast with how you've managed to raise equity either in your initial funds or at the corporate level, however you'd like to share it?

Alicia Glen (18:02 - 18:23)

Well, I mean, at the corporate level, we didn't raise any equity. I mean, I basically, chicken wire, bubble gum, took my savings from my couple of good years at Goldman and just threw it at this and just, Thelma and Louise did, as I like to say, I knew early on as– 

Nancy Lashine (18:23 - 18:27)

We will not end up like Thelma and Louise. 

Alicia Glen (18:28 - 19:32)

We don't know what happened. There could be a sequel, which is called Thelma and Louise meet MSquared on the other side of the divide. Right.

Let's hope I took really seriously because part of the reason why I also chose to do what I did, as opposed to, as you said, I did have other opportunities was because I also wanted to build a firm that was really structured differently, that was really owned and run by women and really treated the people who work at the firm in a different way as sort of real stakeholders in the business itself, in the platform itself.

And that was important to me. And so the idea of getting staked, which unfortunately, Nancy's, generally when you're out trying to look for somebody to stake your business, it's a guy or guys. And so it was really important to me that I try to structure differently and that meant, taking my own money and putting my money where my mouth is.

It has proven to be, I would say the right decision because I, this is a truly women owned business and I don't spend a lot of time worrying about equity at the corporate level. Raising money for funds or deals as is, it's totally bananas. Like it's, it's totally bananas.

Nancy Lashine (19:32 - 19:34)

But you, you raised two GP funds, right? A hundred.

Alicia Glen (19:35 - 20:52)

Well, they're not GP funds. So our funds are very flexible because of what we do. And particularly because we focus on development, there could be a really good opportunity set to, to go into the GP or, or if it's a project that we ourselves are the developer in.

But we also are allocators to other developers, particularly because we are acting, we are acting nationally and we don't have boots on the ground to do a deal in Fort Wayne, Indiana. And so we have a mix of GP and LP positions as well as some preferred equity slugs that we do when the markets are moving the way they're moving. And we found that in fund one, when it became much tighter in terms of LTC, that we found a very good place to play in the preferred equity sort of mezzanine space because as sponsors, we're having more trouble putting together such a large piece of the equity, which is part of the cost gap, which is like, help, help, help.

How I raise money when I have to come up with 40% of the capital stack instead of 75% of the capital stack. So we've also been, our money is not just discretionary, it's specifically very flexible to try to meet the problem that the sponsor, if it's not ourselves, is trying to solve.

Nancy Lashine (20:53 - 21:02)

And are your investors mostly impact investors? Are they economic investors? How would you characterize them? Why did they invest with you?

Alicia Glen (21:02 - 23:06)

I would say it's a real mush, which is probably not a technical term. It's a mush in its change. And in fund one, we had a larger share of banks who, I guess you could categorize them as sort of impact slash, regular, required to do this at some level.

That said, very few banks had ever invested in development. They tend to go into these acquisition funds and affordable housing funds that obviously are very popular on the street and have long track records. So I think it was really important and hard to get, marquee institutions like Chase and Citibank and Goldman Sachs, well it shouldn't have been that hard, Goldman Sachs for me, but, to do things that really generally they don't do in their required space.

And then there was a bunch of high net worth family offices and some foundations who, as many foundations do try to use some portion of their capital to advance their mission. They're still looking for returns, but they want mission alignment. And so what's been interesting in fundraising for fund two has been that we've actually been able to diversify our investor base even more, which I think is really going to be the secret to our future success, where in addition to really expanding the number of financial institutions, we got our first very sizable investment from an insurance fund, a very large investment from a very significant family office, the kind of people that people run around saying, how do you find these people, right? And, a whole series of other sort of smaller, but this is becoming increasingly, as a source of capital, sort of outsourced CIOs, right?

For advising multiple families or multiple foundations or endowments. And that has also resonated very well. So, having only been out on the street for 13 months or 14 months, we've almost hit our, or we're close to hitting our hard cap.

Nancy Lashine (23:06 - 23:09)

Whoa, good for you. 

Alicia Glen (23:09 - 23:40)

A weird conversation of, is there an opportunity to sort of pull this out a little further? Because it's going to be a tough environment for the next couple of years.

And so if we can raise enough capital so that we're continuing to do really smart, good deals and not just get money out so that you go back out, I think that's also really resonated with people who come back in and double down with us. Even when things were really crappy in 23, 20, sort of the– it was bad.

Nancy Lashine (23:40 - 23:43)

Like the last few years. You don't have to remind me. 

Alicia Glen (23:43 - 23:58)

I mean, we're really honest with our investors. We're like, we're going to exercise our one year extension because we're not just going to try to get money out and get back on the street.

And I think that's what I hope, we're building, we're trying to build a business that's based on quality and trust and transparency.

Nancy Lashine (23:58 - 24:05)

Are your investors, do you think they're looking to do well by doing good? Some of them pure impact investing?

Alicia Glen (24:05 - 24:42)

It's so funny because obviously now impact's a big dirty word, right? Like in 21, when we started the company, it was all still groovy and righteous and ESG and let's help women and minorities. And, the zeitgeist has dramatically changed.

I think also there have been some uneven returns in funds that were sort of more focused on addressing those immediate, sort of concerns around inequality and how messed up our business is for women and people of color, all of which are a hundred percent true.

Nancy Lashine (24:42 - 24:47)

But you're saying there are some uneven returns. People didn't always have good results.

Alicia Glen (24:47 - 24:52)

I think that's right. And I mean, again, a lot of people 

Nancy Lashine (24:53 - 24:56)

Often don't have good results for lots of reasons. Yeah.They attribute it to that. 

Alicia Glen (24:56 - 25:15)

Of course. I mean, this is the history of the world. You don't have to be Gloria Steinem to wake up every morning and realize that if a woman has a s***** deal, then there's something wrong with her. But if a regular guy has a couple of s***** deals, that's just business and it's a cycle.

Right. So, there is such a double standard in terms of how people are evaluated.

Nancy Lashine (25:16 - 25:25)

Anything else you'd like to share with how the reversal of DEI, to call it what it is, over the last few years has impacted MSquared?

Alicia Glen (25:26 - 26:21)

We talk about this a lot because we're trying to figure out whether or not the quote reversal has impacted us directly. Again, very hard to figure out because I think what's actually happened is because of the challenges in real estate writ large, there have been on a positive side, more interest in sort of weird niche strategies. And so it's a little hard to pull apart. So what we may have lost in the, oh, we better invest in a woman owned fund kind of thing or else we're going to get–. We may have picked up on the fact that our business in and of itself is not only a niche strategy and people are wanting to cook capital right into sort of weird niche things, but managers who actually do that for a living as opposed to just tagging onto their platform.

Nancy Lashine (26:21 - 26:52)

Right. So you made a comment just a few minutes ago. I wanted to double back on.

So you said it's going to continue to be tough the next couple of years. Obviously, all the factors that we've just talked about, rising interest rates, construction costs, future inflation, or if anything, exacerbated, but doesn't that also create some opportunity for you on the financing side or the med side or to go into deals that are in trouble, can't get capitalized, otherwise wouldn't get done and come in and figure it out for the help.

Alicia Glen (26:53 - 27:36)

I think that's right. I think there's, I think there's a figuring out thing. I think there's a subset of what I guess traditional investors would call distressed where obviously cities in particular are very concerned and we do some limited acquisition.

We try to do acquisition that's a little bit funkier, meaning it really can be a truly mixed income product and or we can develop a building as part of the deal. Increasingly, as cities do find themselves having more distressed residential or just lack of, they're very nervous as they should be. That the quality of life for tenants and the ability of anybody to get anything done is really.

Nancy Lashine (27:36 - 27:39)

You're saying at the government level, they're really thinking about that.

Alicia Glen (27:39 - 28:35)

Because at the end of the day, right, if you have massive distress in your multifamily portfolio and or nothing is being built and you have a housing crisis, that comes home to roost to the city, right? Those are the people who wind up in your shelters. Those are the people who wind up in your emergency rooms.

Those are the people who are no longer applying for jobs to be a teacher's aide because they're screwed. I think that what we're going to see is an increasing opportunity for governments to work with folks like us to see if there are ways to take things that are distressed and try to make a little bit of lemonade out of lemons. There are many tools that cities have.

A lot of these institutional lenders, they're taking big write downs and they haven't. And that can be good news for people who then want to take a property or a piece of land and do something interesting with it.

Nancy Lashine (28:35 - 28:44)

Right. Are there cities that you want to call out that you think are particularly interesting places that you'd like to be working in over the next year or so?

Alicia Glen (28:45 - 30:09)

Well, I mean, I think, as a contrarian, but also the lifelong New Yorker, I think that people, again, are broadly misunderstanding the opportunities set in New York. I think also all the data over the past year has shown that New York is like off the hizzle. I mean, it's crazy.

And the fact that large scale investors and institutions sort of just like write off New York because, they think some socialist maniac is running the city is to me just mystifying. It's sort of naive. And so to me, that's great because if you don't want to come here and do it, it's great for me.

Largest rent growth year over year. Prices through the roof. Unemployment dropping.

Everybody in the civilized world wants, if you want to live in America, you want to live in New York City. To me, I think New York is filled with opportunity. I also think that there's been some really positive movements in California after real struggles there in terms of years and years and years of work to sort of get more general consensus in California that density is good. Urbanism is good. Building is good. Right.

And that's been like years and years of work in California. And when we started the company, I was like, we can't do business in California. Nothing ever gets built.

It's just a mess. Politics are terrible. It's really expensive. And it got better. 

Nancy Lashine (30:09 - 30:11)

You think it is better? Really?

Alicia Glen (30:12 - 31:25)

We have a deal in L.A. I think L.A. is actually sort of more the poster child for this than some other cities, because, again, I think that the municipality of L.A. And again, this is like after decades of work is really put together a program that also really relies on and understands the value of mass transit. And so, it's happening. I mean, we all roll our eyes because we don't know anybody in L.A. who would ever get on public transit. But these things are generational, Nancy. Right. So, people are actually like getting on the subway in L.A. and people are riding their bikes and dedicated bike lanes. And they've actually created some really interesting, fast track, sort of deregulating the environment to encourage affordable fixed income housing. And the fundamentals are strong. And I think after the fires, even more interest in trying to break onto multifamily and sort of move away from where the environmental issues are and densify, we think of as more traditional L.A..

I think L.A. is really interesting. I think San Francisco is turning a corner. I think that the cost issues are incredibly hard to deal with. But I think that we're finding metro L.A. to be pretty interesting right now. 

Nancy Lashine (31:25 - 31:26)

And how about in red states?

Alicia Glen (31:27 - 32:35)

I think that the challenges in red states right now, part of it is political and part of there is some pushback in Texas in particular from sort of red. Texas is a state where state government has a huge amount of power, way more so than localities. And so, even cities like Dallas and Houston and obviously Austin that are trying to do cool things, often when they do something to help the housing crisis, state will like pass a law the next day to overturn it. And so there's been a lot of, I think, concern around how much can lenders and investors rely on framework staying in a way that would give you comfort that you understand the politics. And I think there's a lot of understandably- I think there was a little overbuilding, particularly in places like Austin.

And that's just a market thing. Like it be anywhere else. But at the end of the day, people do want to live in Texas and I'm interested to see how politics over the next couple of years changes to see whether or not some of that fear for what people like we do can be.

Nancy Lashine (32:36 - 32:42)

Is there any place you've done a project, I think you've done 14 to date, where you wouldn't go back to that locality?

Alicia Glen (32:44 - 32:53)

Yeah, there's a place I wouldn't go back to. But if I said it, that person would probably come over. And like, I don't know, spray paint my name.

Nancy Lashine (32:54 - 32:58)

I know, as I asked that question, I just figured I gotta go there. But that's okay.

Alicia Glen (32:59 - 33:20)

Sometimes being old is really good, because you realize like, as much as you try and you want to help these people, you just can't do it. These people cannot get out of their own way. And it's just too messed up for even me to help.

and luckily, there's enough places that we can do good work that I don't have to go back and bang my head against the wall again and again and again.

Nancy Lashine (33:22 - 33:38)

So since we talked, you talked about New York, let's talk about New York a little bit. And Mamdani, there's so many places to start. When you ran housing and economic development for New York City, you built 125,000 affordable units.

Alicia Glen (33:40 - 33:42)

That sounds about right. And God knows how many regular market.

Nancy Lashine (33:42 - 34:31)

Yeah. Mamdani has this 200,000 affordable unit goal and 200,000 renovations or preserving homes. I mean, it's like super trying to fast track all of this and is not really– doesn't talk at all about the things that you've talked about using private financing and bringing developers into the process.

The idea of how do you get it done doesn't tend to come into the conversation, at least not the public discourse very much. Now, that may just be his rhetoric and the way he wants to be presented. But that's my long winded way of saying, what do you think of his housing proposal?

Do you think that the administration will be able to achieve it in this administration and how will it shape New York?

Alicia Glen (34:32 - 35:39)

Yeah, I mean, I think look at every administration puts out housing plans and they're more generally a sort of a statement about what are their housing priorities and how to be aggressive and move the needle. And there always tend to be deliberately a little vague on the details. Right.

Because so much of what goes into any of this happening is not 100 percent within your control. Right. So whether it's particularly New York, as you know you have to go get stuff done in Albany.

Now, that in and of itself is 16 podcasts worth of torture stories of what it means to go get something done in Albany. And then there's the reality of interest rates and all the other things, right, that no mayor can control. Right.

So there's more there were a statement of sort of values, for example, like does any particular administration care more about new construction versus preserving the existing stock?

Nancy Lashine (35:39 - 35:39)

Right.

Alicia Glen (35:40 - 37:13)

Does an administration care more about serving the lowest income people and really honing in on that population, our most vulnerable population versus what we talked about as a more comprehensive approach to the housing crisis and really thinking about how stretched people are way beyond what people have traditionally thought about affordable housing. And so I think about these documents as sort of living, breathing documents as sort of what at a given time is a set of value statements. And so his is not much different than anybody else's.

And I also don't think that there is really any threat about not being engaged with the private sector because I've spent enough time with him and obviously many of the people who are senior in the administration worked for me or with me. And that ship sailed a long time ago. There's no world in which, whether it's on the preservation side or on the development side, that the public sector is not relying on the private sector. That ship sailed in the 70s, in the 80s. Federal government got out of the business. Yeah.

Right. And so what's happened is like people are sort of using words, I think, in a way that is not really true. Every single building that gets financed or developed in New York City is either developed by a for-profit developer or a non-profit developer.

The city of New York does not own and operate housing. So, you can talk about democratic socialism, public house, come home, but that doesn't mean anything. 

Nancy Lashine (37:13 - 37:15)

Well, public housing would be–

Alicia Glen (37:15 - 38:42)

Public housing, it's against the law to build. Public housing in America since the Fair Cloth Amendment. And in fact, the number of public housing units has dramatically decreased. And the work that we did to adopt this sort of proposal that is still being implemented by the Housing Authority now is we're in close to year 10 of slowly but surely transforming buildings that were owned and managed and operated by the Housing Authority into private ownership with regulatory oversight by the Housing Authority. So that is policy. 

Nancy Lashine (37:49 - 37:49)

That's interesting. Yeah.

Alicia Glen (37:49 - 38:42)

And people don't understand that there, I think, everybody gets all riled up and everybody's using words. But at the end of the day, it is an enormous, enormous public-private partnership. And the difference is what does the public sector expect to get from the private sector?

And what does the private sector really need from the public sector? And that has some political overtones to it and some resetting. I mean, when I came in, I, quote, unquote, gave developers a much worse deal than my predecessor had in the Bloomberg administration.

But lo and behold, I had twice the number of deals done. So these things can be very complex and they get wrapped up in a lot of, sort of heightened. There's New York, everybody's complaining about everything.

Nancy Lashine (38:42 - 38:50)

So let me ask you a different way. What is the Mamdani administration getting right? And what are they getting done?

Alicia Glen (38:50 - 40:27)

Well, I think it's way too early to see that they're getting anything done in housing. And I'm probably going to get criticized for saying that. I mean, look, we're in month eight.

I don't think they have rolled out anything particularly different or innovative. It's pretty much a business as usual, which isn't per se bad. But I would say that we have not seen any dramatic proposals in terms of actually how they might want to do things a little bit differently.

So the agencies are operating under the old rule book, more or less. And you see that in some of the largest transactions that have happened. So I don't think we've seen anything yet other than the rent freeze, which is just politics. And that's a one year thing. So I think the jury is out. On the other hand, a lot of people, including myself, have spent a lot of time thinking about what the city needs at this moment in time and really trying to continue to advance different models, mixed income housing, really focusing on preserving the stock we have, because it's not just about the numbers.

It's about the human beings in those neighborhoods. And as you know given the cost of building, why wouldn't you spend more money and resources on saving a fantastic building from the 1940s and 50s and greening it and making that neighborhood and the people who actually live there have a sense of housing security rather than focus on building a gazillion skyscrapers, right? I think there's a lot of work that's being done and that it's going to take some time to roll out.

And then, by the way, when interest rates go up by 200 bps, it makes a big difference because we leverage a lot of private money. The city leverages a lot of private money.

Nancy Lashine (40:28 - 40:28)

Sure.

Alicia Glen (40:28 - 40:43)

And so you're going to have to duck and dive. And it doesn't help that Donald Trump is not generally, notwithstanding the bromance that you see on TV, there aren't a lot of resources coming from the federal government to advance New York City's housing crisis.

Nancy Lashine (40:43 - 41:04)

Are you seeing developers continue at the same level of interest in building in New York City? Because you read and you hear so much about wealthy people moving to Florida and then you see what Related is doing in Florida. There's a lot of movement that's written about. What's it feel like from the inside?

Alicia Glen (41:04 - 42:05)

From the inside, I think that, again, it's like two badly researched stories drive a narrative that are crazy. Home prices, condo prices, transactions, luxury sales are at their all-time high by magnitudes you can't even believe. So the idea that rich people are living New York is utter crap.

Three people who decide to move to Florida go with God. Nobody cares. It doesn't move the needle. The number of new millionaires and billionaires who are moving to New York and want to make their companies and their life in New York far exceeds any net loss. So that's just bad press and narrative. That, I think, is completely separate from a legitimate problem, which is the math that developers are looking at now.

The traditional developers around interest rates, construction costs, the very challenging change to 421A that is now 485X has caused is a real thing. 

Nancy Lashine (42:05 - 42:06)

I'm sorry. What is for four-

Alicia Glen (42:07 - 42:30)

485X is the new tax exemption for multi-family construction in New York. And no rental buildings in New York City, maybe two, over the past 35 years have been developed without that tax exemption.

It's a way in which the state corrects for how messed up our property tax system is. 

Nancy Lashine (42:30 - 42:33)

Is it dependent upon having some affordable units? 

Alicia Glen (42:33 - 43:15)

Yes. Now, yes it is. Yes. But there were some changes made to the law that have been very challenging for developers with respect to, not so much, they didn't really increase the amount of affordability, but there were some challenges around wages that are required to be paid in these projects of certain sizes that have really created, in fact, I think the data, and I want to get this right for you, is I think only three buildings have been started larger than 99 units in New York City since the law passed, which is insane by any standard.

Nancy Lashine (43:15 - 43:18)

Because of the high labor wages?

Alicia Glen (42:18 - 43:53)

When you get above 99 units, it triggers various kinds of, and it escalates depending on where you are and all these other things, but it's the first time there's ever been sort of this very clear delineation of this building is going to cost a lot more to build.

And as you know right now, because of all the work in infrastructure, the trades are in a very good place. People seem to forget that trades also work on things that are non-residential.

And as a chairman of Gateway, the biggest construction project in America, I can tell you I've got a lot of trades working on my $32 billion project. 

Nancy Lashine (43:53 - 43:56)

So how is that going, by the way? Let's touch on that for a sec.

Alicia Glen (43:57 - 44:07)

Pretty good. I mean, considering Trump stopped the project, we won in court. It is a very challenging environment to run a mega project under constant threat.

Nancy Lashine (44:08 - 44:11)

Did you go to the circuit court or where did you have to go?

Alicia Glen (44:11 - 44:28)

There are two separate cases. One is won by the states, because we have standing because the states are parties and they're funding partners. And then directly challenging the administration's decision to stop funding us because we were engaging in DEI activity. Can you imagine?

Nancy Lashine (44:28 - 44:29)

Seriously? Oh, my gosh

Alicia Glen (44:29 - 44:46)

We were engaging in DEI. That goes to the federal court of claims and we won that one. But there's no way to run a mega project. We had to pause. And, like if you drive on the West Side Highway, sometimes the guys are working to drill a tunnel and sometimes they're not.

Nancy Lashine (44:47 - 44:50)

So this project is going to drill new tunnels under the Hudson River? 

Alicia Glen (44:50 - 44:59)

Two new tunnels. Ultimately, we'll have four tunnels so we can actually be a modern city where, like, if you want to get on Amtrak, it might actually leave on time. There's a shocking idea. 

Nancy Lashine (45:00 - 45:03)

How long is that? Is your tenure on that project?

Alicia Glen (45:04 - 45:26)

Well, I think like in Yiddish they say pui, pui, pui. I would say we're supposed to be done with the new tunnel and then retrofitting the existing tunnel, which was built in 1914, which is why you often are stuck in 2032, 2034, depending.

Nancy Lashine (45:27 - 45:31)

Oh, wow. Oh, yeah. Are you appointed by Schumer? Is that how that works? 

Alicia Glen (45:31 - 45:32)

I'm appointed by the governor. 

Nancy Lashine (45:32 - 45:42)

By the governor. OK, OK. So speaking of politics, do you expect the midterm elections to change anything in your world potentially?

Alicia Glen (45:43 - 47:28)

It's funny. We've been talking a lot about that. On one hand, should there be a dramatic shift, it would have to be in both the Senate and the House because of the way appropriations work.

But on one hand, if that were to happen, and we're obviously watching these races very closely, there should be, more not just resources available for the kinds of work we do, but, a general interest in thinking again about how the federal government can help, build interesting cities through infrastructure and housing and provide support and what Congress can do for that. On the other hand, we often think, well, given the sort of ratcheting up of divisiveness, we could get a lot worse also, because, when the White House is not happy with what's going on in the Hill, they can use the agencies in a very specific way to, which is what happened in Gateway, to like, make some arbitrary decisions.

And it actually happened to us on a project in Pennsylvania, where we had a very pretty buttoned up infrastructure grant from USDOT to help us connect this former public housing site to the grid of Philadelphia and to sort of redo a big septicite and sort of all the things that everybody wants to do to create a better, and tear down this old horrible public housing project. And, three months after the election, USDOT just canceled our grant. So, it's a very tough thing.

It's like there's a lot of power that the administration can wield and we'll have to wait and see. I'm not a prognosticator, but we're certainly looking at it because it can go both ways. 

Nancy Lashine (47:29 - 47:35)

How about at the governor level? If you think, there's a contest there. 

Alicia Glen (45:43 - 48:56)

Well, I don't think there's a contest. I mean, that's terrible. I shouldn't say that. They probably say, yes, there is. We need to keep campaigning and raising money.

But I think, look, I think that the Hochul administration has been very, very consistently taking actions that are part of a broader plan to do everything in the state's power to increase multifamily housing production in the state. And that is a real shift. And it's funny, she didn't come into office, as you would think of as like a pro-housing, pro-urbanist, but her team and herself, and we've obviously talked about this, has really understood why having a really healthy multifamily sector and having workforce and affordable housing is fundamental to the state's economic success.

And she really has articulated a very clear path towards those things. And that's a series of actions. And you don't always win every one and you got to keep going back.

But I really credit her and some strong members of the legislature to keep coming back to do stuff that's not sexy, like amend state environmental laws so that projects are exempted so they can just go, right? Time is money. So if you don't have to do nine months of like running around doing a dumb EIS, that helps. 

Nancy Lashine (48:56 - 48:58)

What's an EIS? 

Alicia Glen (48:58 - 48:56)

An environmental impact statement, which most development projects have to go through. And that costs a lot of time and money. And in those nine months, interest rates could change by 200 bts.

Nancy Lashine (49:08 - 49:09)

Hopefully to the bedroom, but yes.

Alicia Glen (49:10 - 49:28)

But so I think I give her a lot of credit. I think they have a very clear path of progress to use the tools that the state has in their toolbox to really help address the housing crisis statewide. And it is a statewide crisis. This isn't just New York anymore, right? It's real.

Nancy Lashine (49:28 - 49:33)

It's a New York state national, absolutely.

Alicia Glen (49:33 - 49:33)

It's everywhere.

Nancy Lashine (49:35 - 49:52)

I have a really random question. When I think about mixed use projects, I think about mixed use, which means there's usually retail in the base. So in your mixed income, mixed use projects, what have you found is the best retail to put in the base of these projects?

Alicia Glen (49:52 - 49:55)

Man, you can ask a hard question. 

Nancy Lashine (49:55 - 50:11)

Sorry. Well, I was just thinking if I was doing a project, do you really need another CVS? Do you put a grocery store in there? Because you can't make any money as the developer with a grocery store in there. You don't want a high end dress shop in there. What makes sense?

Alicia Glen (50:11 - 52:05)

Yeah. So you've hit on all the buttons, right? There's what makes sense for the neighborhood, so that the building is not just about the people who live in it, but become a piece of what I think of as social infrastructure or community infrastructure.

And so what is the best thing for the neighborhood versus also what's cool in the base that could drive rents, right? If you have a great retail program at the base of your building, obviously you can drive rents, but those people are never credit tenants and it's a mess and it's very hard. I mean, there are some great success stories, but generally retail is really challenging, particularly with not credit tenants.

So what I would say is we haven't figured it out. We don't have the magic answer. We have had pretty good success in working with sort of well-capitalized or longstanding, more institutional, what now has become Medtel or other kinds of services.

Yeah. And again, that's the one thing you can't get on the internet. Somebody has to go take your temperature. And so I think that thinking about healthcare, obviously the huge focus on childcare in New York, which can be not just great for the residents of the building, but also for the neighborhood. And obviously the grocery retail thing is a challenge. It's a tough business.

And so I don't think we've come up with any magic solutions. And I think that tension is always going to exist between like, of course you want to like put this amazing woman who you met who makes the most amazing empanadas who's from the neighborhood, but like she doesn't have a pot to piss in. And then you're like, well, what am I doing?

And so I think we try to just be really honest and open with ourselves about the trade-offs. And sometimes the product is big enough that, you know what, if she has a thousand square feet, it's not going to make or break, or it's like 10 bps. So let's do it. Cause that's why we're MSquared or else we're just like everybody else.

Nancy Lashine (52:05 - 52:27)

Right. But yeah, no. Well, okay.

It's a hard business. There's a lot of hard things to figure out. So let's just talk about the business for the last moments that we have together.

Okay. If you knew then what, now back in 2019, when you started MSquared, what might you have done differently in forming the business?

Alicia Glen (52:29 - 52:32)

Wow. That's like such one of those classic questions. 

Nancy Lashine (52:32 - 52:35)

And it's an interview question, right?

Alicia Glen (52:35 - 52:37)

I know.

Nancy Lashine (52:37 - 53:41)

Well, but, but but why I'm asking you Alicia, just to be fair, because people come to us almost every day, either having started a business early stage in their business, they need capital, they need capital, either at the project level, they need to recap some assets, maybe they need it at the corporate level. And some, some folks, came with a good base of income because they were property managers or, or they had some income from their construction activities, for example. And then some folks really kind of started more as a pure play investment management firm had $100 million fund, or more or less, which is kind of what you guys had initially.

And then they find that they just don't have the asset base to grow and compete in an environment where you need to spend more on technology, and everything has just gotten so much more expensive. So, the last five, six years have been such a dramatic shift in how we all operate, right? You started just before COVID. Think about all the ways we've changed.

Alicia Glen (53:41 - 53:47)

We started in COVID, and we really, we didn't start until 2020. So in some ways, certainly in retrospect, I wouldn't have necessarily started my business.

Nancy Lashine (53:48 - 54:02)

Right. There's that. But also during COVID, and just after we kind of thought cities might be more dead than they obviously appear to be. So much has shifted. And then of course, the advent of AI and what all that's going to mean.

Alicia Glen (54:02 - 56:48)

I mean, I think that, again, there's no magic recipe either for how would you do it differently, or what did you do right? Other than a few like lessons that I've learned in all of these things, which is number one, you do have to be prepared to make some personal sacrifices. The notion that you're just going to start a business and the money is going to rain down upon you because you're so smart, and all your friends and family are of course, you're smarter than everybody else, you're going to raise money.

First of all, everything takes way longer than you think, right? I mean, I really thought naively, with my resume and my background, even during COVID, I would be able to raise a ton of money really quickly. And I completely underestimated how hard it would be and how hard it is if you're not a white man who's in the club.

Like 100% and I always tell people, you're not going crazy, it is true. My resume compared to anybody else, if I were a boy, it would have been completely different. And I will stick by that till the end of my days.

And I think that I always tell women and people who are not in the club that you're not going crazy and it's real. And so you really do have to think, what are my values? Like, am I prepared to really struggle?

And not just me, but am I able to find a team who's prepared to struggle? Because if you start thinking traditionally, and I think that that's part of what is a challenge is like, well, I have to hire this person and a CFO person and I need technology. Well, not really. I think we've proved that we didn't have any of that. We had a bunch of people who were really willing to hold hands. And I was smart enough to tell them from the beginning.

In return for that, you're going to own a piece of this company and this is going to be a different place. So I do think that in retrospect, would it have been easier to say, I want to go do like an affordable housing thing and attach myself to an existing platform? Sure.

But we wouldn't have fundamentally been sort of challenging the status quo and hopefully building a different widget. I think you just have to be somebody who is willing. I don't want to suffer like in a Baudelaire kind of way.

I don't mean this is like, but existential. Yeah. But, like, you have a Subaru, you have a place to live, you have a good time, and you really need to be prepared to not be a big shot.

And I think that's really hard for people. Because I went from being a big shot to being a real small potato pretty quickly.

Nancy Lashine (56:48 - 56:52)

So interesting. So that's something you probably couldn't have understood or learned.

Alicia Glen (56:52 - 57:38)

I didn't realize how, no. I had no idea like, but I left Goldman, I was like a big shot at Goldman, I became a really big shot. Suddenly, I was having lunch with Jamie Dimon, and I wasn't having lunch with Lloyd, but I wasn't having lunch with Jamie Dimon. Like I was in the mix.

I was at the UN, I was here, I was there. And then suddenly, I'm like getting on the subway. And I'm literally in a windowless office in my friend's like craphole in Brooklyn, whiteboarding what I'm doing, and I was a nobody.

And I think that a lot of people who start businesses, right, especially if they come from other places, as you say, they came from a bigger business, they want to start their own firm. The shock of going from something to nothing is takes, I'm not recommending it.

Nancy Lashine (57:40 - 57:49)

But what do you think it takes to persevere? Because many people quit after a short period of time.

Alicia Glen (57:49 - 58:37)

Look, I say two things. Sense of humor. If you don't have a sense of humor, do not try to start your own business.

And the second thing is, you persevere if you actually fundamentally believe that you are doing something different than everybody else. If you don't believe that, then you might as well just stop and go back and do it someplace else. Why would you go through all that?

But every job I've ever done, everything I've ever done is I'm fundamentally trying to do something different. And doing something different is hard. And it takes a certain kind of person who has a sense of humor and drinks too much and like does all this stuff to be able to do that.

And that's not for everybody. But if you just did it to do it, but you're not doing anything fundamentally different, I can see why people would just like pull the plug and say, Why am I making my life so hard?

Nancy Lashine (58:38 - 58:55)

Yeah. I don't know that you have to only do it because you think you're doing something different. I think that you have to have a MO a motivation. That is your motivation.

Other people can have a different motivation there. But that allows them to stick to it. But there has to be a reason.

Alicia Glen (58:56 - 58:57)

There has to be a reason. Otherwise, you'd be sort of nuts. 

Nancy Lashine (58:57 - 59:10)

Well, you may be sort of nuts too. But as you say, Yeah, no, that's it's so well put. So well put. What is MSquared have to do to for you to feel like it's a real success?

Alicia Glen (59:11 - 59:26)

MSquared has to not only exist in another four years, like I sort of think of 10 years is like a really nice way to think about that. It wasn't just a fluke.

Nancy Lashine (59:26 - 59:28)

It's a business, not a deal.

Alicia Glen (59:28 - 1:00:25)

Yeah, it's a business. It's not a deal. And more importantly, that's not all that me.

Because I think the other challenge is that so many small shops, are by definition, often rely upon their founder to be able to keep the whole thing going. And so for me in 10 years, the fact of existence, that will be hopefully well beyond a billion right now we're at over 500 and that the cadre of people who I have brought in, not only can step up, but that the outside world is excited about them stepping up, right? It's not the Alicia show.

It's the MSquared show, which is why I also didn't name it after myself. A lot of people name their firms, some their initials or whatever it is. It's not about me. It's about the work. And it's about trying to do it differently. And that has to be Alicia proof.

Nancy Lashine (1:00:25 - 1:00:43)

I love that. Alicia, you're so generous with your time. And you know I I love you. So thank you for doing this. More good things to come over the coming month or two. So look forward to putting this on the air. Great.

Alicia Glen (1:00:43 - 1:00:44)

Thank you Nancy.

Nancy Lashine (1:00:44 - 1:01:18)

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