Week went by very fat in NYC. The third week was definitely the most colorful, not only because it was primarily green but also because of the great variety of corporations focusing mainly at real estate, marketing, green energy, research, education and an NGO focusing onto creating a greener city. There was one common feature of all of the presenters, passion for what they were doing and the ability to figure out how to make living from it.
The presentations which I found most interesting concerned real estates which I will write about more broadly here. I will also briefly mention other presentations which have challenged my views on certain industries or provided me with greater insight.
The presentation I was interested in most was the presentation of Rudin management, a privately owned company with great real estate portfolio for leas and sale. However, there was one presentation with optional attendance a day earlier which concerned real estates in NY and helped me better understand Rudin management´s business and the situation on the real estate market in general.
In her presentation, Ilona has showed how Manhattan has developed, explained the specifics of certain parts of Manhattan and picked out the main differences between the ownership and lease of different types of real estates. I was surprised by the complexity of real estate ownership and leas in Manhattan. Ilona´s presentation helped me better understand the city and introduced me an interesting model for control over who will can become a neighbor. She has explained that there are two main types of ownership of residential premises- coops and condos. Condos are individually owned apartments. The owners of other apartments have no control over who can buy an apartment in their house, there is however one limitation. They may buy the apartment for sale for fair market price, which is the price the owner wanted to sell his apartment for to a third person. This way, the owners can exercise their control over the price of the real estate and prevent their real estate from depreciating. This applies regardless of any family relationship, e.g. even if a parent wants to sell his apartment to his child. An even more interesting ownership concept was the coop, which showed some similarities with the coops in the former socialist countries. In a coop, the individual is not the owner of a particular apartment but a shareholder and thus a co-owner of the whole house which authorize the shareholder to use a specific apartment. A share in the coop (and thus the right to use an apartment) has to be transferred under similar conditions as securities of corporations. A prospectus has to be made. The board is authorized to examine the financial statement of the buyer and may refuse to grant its approval. The board may not reject the transfer on basis of race, nationality etc. but the reason for refusal does not have to be stated, therefore it is hard to challenge it. E.g. even Madonna was denied consent, probably in order to prevent artists to become neighbors. Renting a coop is also much more difficult, permission to rent the apartment is typically granted only for a limited time. The flexibility allowed by condos vis- a -vis coops justifies their higher price. Other interesting legal solutions and market conditions were also introduced in the presentation. An interesting solution was e.g. that a development plan may become legally effective only if 15% of the properties in it are sold.
Ilona´s presentation about Manhattan real estates was definitely one of the most interesting ones and I believe that it would be a good candidate for becoming a mandatory presentation in the next NY module.
The next very interesting presentation about real estates was Rudin management´s. This family owned firm is the 3rd largest owner of real estate in NYC. It owns numerous buildings in the best locations of Manhattan. They have both residential and business real estate, most of it for lease some for sale. The most interesting observation for me was how the fact that a firm is privately owned changes the business of a corporation. Rudin management concentrates on long term goals, meaning over 10 year goals. This is very hard to sell to shareholders in a publicly owned company. Furthermore, wealth maximization is not always the primary purpose. The company invests a lot in order to have satisfied customers. They stress the importance of very good customer service and constantly improve the quality of their real estates even when it is not necessary. Furthermore, charging the highest possible price is not a priority. They are not worried about leaving dollar on the table if they can get satisfied customers in return. They said that they have many long term customers. Another difference compared to publicly owned companies is that they are not pressured to make investments as soon as they have the resources, they can leave a building lay idle until they decide what to do with it. This would be unimaginable in a publicly held company where the shareholders would demand maximization of returns. The family prioritizes renting of buildings over selling the units in them. However when justified by the initial large investment, they prefer to sell in order to have faster return of the investment.
The private character of the company allows more flexibility. Due to the scale of the business it was viable for the company to invest into systems making energy use more efficient. This invention is commercialized and may become a very important part of the family´s business.
The mayor topic of the week was sustainability. One of the presentations concerning this topic was held in the 2nd week. This presentation held by Monty Graham has shown that successful change in career is possible also in middle age if one is passionate about the topic. Monty went back to school after nearly 30 years, he complemented his engineering knowledge at NYU Poly and set up a successful venture devoted to energy efficient measures. Monty has given us many entrepreneurial ideas for efficient energy ventures.
Green Map systems has explained us the development of the Lower East Side of manhattan, introduced the interesting idea of community gardens, and introduced some of their undertakings to make the city cleaner and more energy efficient. One of the surprises for me was, that it is still possible to acquire ownership in NYC buy occupying a building for a longer period of time and fulfilling other legal requirements.
Daniel Pianko, the managing director of University venture funds challenged the current model of education in the US. He is of the opinion that education will shift from universities to other cheaper institutions providing education. I agree that the current expensive model will have to be changed but I also think that many features of the current higher education will remain. I believe that institutions providing possibility to improve certain skills or update knowledge will be more and more relevant in the future and further education will become a must even in latter age.
Brooklyn grunge visit has proven that when passion is present one can set up a business which may at first sight seem as a crazy idea. Gardening on rooftops in NYC. This model of entrepreneurship is unfortunately only viable in big cities where the supply of fresh fruit is far away from the city. I think it is a pity, as green rooftops have many other benefits (isolation, more green space in the city, prevention from overwarming of the city), but may hardy be implemented without being commercially viable.
To sum up, the third week helped us better understand the entrepreneurial environment in NYC, its real estate market, provided us with interesting comparisons and also inspirations for starting up our own venture. The NYC Module has definitely fulfilled its goal of introducing us many faces of an entrepreneurial city what would be of great help in our further career.