Jeff Gural, Chairman of GFP Real Estate, joined us for an interview. We discussed his real estate philosophy, a potential casino in New York City, the political environment, and other interesting topics.
Daily Beat: What are your general thoughts about New York City?
Jeff Gural: I’m nervous. I think the Mayor understands how important it is to make the city safe, but I’m not sure everybody else gets it. My granddaughter called me to see if I could buy her pepper spray because there was recently a robbery at knifepoint two doors away from her apartment in Greenwich Village.
Criminals need to be incarcerated. There must be a fear that if someone acts against the law, they will end up in Rikers Island. Prior to the pandemic, the city was safe and that perception has unfortunately changed.
Daily Beat: Are you taking advantage of any distressed opportunities within the office sector?
Jeff Gural: I leave acquisitions to my nephew and son – I’m turning 80 and am too old for that! I just focus on leasing the vacant space in our buildings that I bought over the last 30 to 40 years. We’ve recently done some industrial deals and sold a project at 7 Hanover for a large profit. Our team has been very happy with the results.
Daily Beat: What made you decide to sell 7 Hanover?
Jeff Gural: When you partner up with Wall Street, the likelihood is they’re going to be interested in selling. Over my career, I’ve kept roughly 85% of properties that I’ve bought and have regretted the few that I’ve sold.
Daily Beat: What’s the most important trait of great real estate investors?
Jeff Gural: The most successful people in the industry never sell. Obviously, you also have to watch how much debt you put on. We’ve all been through downturns and every time there’s been one, the market has recovered and reached new heights.
Just look around at Glenwood, Durst, Rudin, Rose Associates, and Fisher Brothers. That’s my philosophy. I never understood the logic of selling and paying capital gains. I was telling my nephew and son that I’ve sold a few buildings and if you added them all up, they’re worth a billion dollars more than what I sold them for.
Daily Beat: You recently donated a substantial sum to Governor Kathy Hochul’s campaign. Will she be able to govern as a centrist?
Jeff Gural: The first step is obviously for Kathy to win the primary. You have two candidates: Jumaane Williams who’s very progressive and is just getting his name out there. And then there’s my good friend Tom Suozzi. I would have told him not to run if he asked me, but his sole issue will be crime.
Lee Zeldin, the likely Republican nominee, will also heavily focus on keeping the city safe and if the Democrats don’t make some changes, I think he might have a chance.
Daily Beat: What are your thoughts on legalized mobile sports betting in New York?
Jeff Gural: New York is going to dominate because of its sheer size, but the 51% sports betting tax rate is foolish and not sustainable. These new online gambling platforms are all losing a fortune. Granted, my grandkids love it, but they’re betting with promos and have signed up for five accounts. I would expect it to slow down now that the football season’s over and that the free money is starting to disappear.
As long as they continue to operate at that tax rate, the companies will not be profitable and that obviously won’t go on forever. I think New York is a great market and a lot of fun, but I hope the kids aren’t getting addicted. The house always wins.
Daily Beat: You’ve been mentioned as someone who might build a casino in New York City? Do you think a casino will ultimately be built in Manhattan?
Jeff Gural: Governor Hochul correctly pushed for New York to accelerate the process of giving out the downstate licenses. I think Aqueduct and Yonkers will get two of them, allowing them to easily convert from a racing casino to a casino. They can do it quickly and there will be no opposition.
The big question is where the third license goes. No matter where they want to place it, there will be opposition. I don’t think politicians want to see it in New York City because it would compete with the theater and the restaurants. They also don’t want it to be in proximity to where people could cash their paycheck and walk into a casino and lose money before they even get home.
I think there will be a reluctance to put one in the heart of the city. There’s been a lot of talk about Brooklyn or near the Citi Field, which seems to be a logical place with a lot of auto repair shops.
Additionally, there are a lot of Asians there and they love to gamble. There’s no group of people who love to gamble more than Asians — it’s cultural. I’m very supportive of it because each license would easily net $500 million each.
Daily Beat: Do you have any updates on the Flatiron building and the recent dispute with Nathan Royce Silverstein?
Jeff Gural: We are in the process of renovating it – the building previously only had one set of stairs. I always felt it was unsafe and I was glad when the building became vacant because the interior had not been renovated in any significant way for around 40 years.
The first thing that we’re doing is putting in two stairways, upgrading the elevators, and completing the facade alterations with local 11. Our ownership group will then see how we can resolve the dispute with Nathan, but that might be impossible.
Daily Beat: With your background at Newmark, how do you envision the future of brokerage?
Jeff Gural: Brokers are here to stay. They’ve done very well because the commission structure was originally established when rents were $25 per square foot. We’re using the same commission structure even with rents at $100 per foot. I don’t see somebody signing a lease based on looking at a video of the space. It was helpful during COVID, but tenants need to see it in person.
Daily Beat: Are you concerned with the flight to quality to newer Class A buildings? What does this mean for your older building stock?
Jeff Gural: My philosophy is that there’s a flight to quality, but also a flight to cool. If you look at our SoHo and Tribeca buildings, those neighborhoods are sought after. You can’t duplicate cool in Hudson Yards. Well-located buildings with a cool lobby, high ceilings, concrete floors, and exposed ductwork are poised to do well.
Daily Beat: Are the changes in the office sector permanent?
Jeff Gural: Everybody’s assumption is that it’s temporary, but don’t think it’ll ever be the same. I think we’re kidding ourselves if we’re going to wake up and it’s going to be the same. We’re in a supply and demand business. Owners who understand that will be fine.
Daily Beat: Sounds like the luxury condo market and Vornado’s 220 CPS!
Jeff Gural: I can’t imagine buying an apartment for $25 million, but my old partner Barry Gosin did and it’s beautiful.
Daily Beat: What are you watching or reading?
Jeff Gural: Truthfully, this is the hardest I’ve ever worked in my life. I typically don’t read books, but I do watch Netflix, Amazon Prime, and Apple TV. I’m currently watching Yellowstone and really enjoy it. My reading primarily consists of real estate publications like yours. I’m up until midnight reading on my iPad.
Daily Beat: I heard you’re getting a cameo in season four!
Jeff Gural: Oddly enough, one of the companies that produced Yellowstone — Studio One — ended up being a tenant of mine in Soho. Unfortunately the company was sold and they are moving out in a couple months.
*The interview has been edited and condensed for clarity.