Brian narration: This is Built, a new podcast series where you’ll meet the people behind some of the biggest transactions and investments in commercial real estate, and hear how they got to where they are today.

I’m your host Brian Maughan, chief marketing officer with Fidelity National Financial.

Those of us in this business, we know the buildings...but how many of us know the stories of the people behind those structures?

Today, we meet Andy Gloor. Andy is CEO of Sterling Bay, the hugely successful Chicago real estate developer. Sterling Bay built a reputation for turning old industrial buildings into sleek, modern office space that companies like Google, Sara Lee, and McDonalds quickly move into. Today, Sterling Bay is expanding throughout the country.

Andy started out as a broker before joining Sterling Bay in the early two thousands. 

Brian Maughan: You grew up in the Chicago area and you have built Sterling Bay to be this incredible Chicago-based company. But what initially got you interested in commercial real estate?

Andy Gloor: Well, I think I was first introduced to real estate by my grandfather, Al Gloor. And I had a very close relationship with my grandfather... being around him and learning from him, being exposed to it and looking up to him was probably a major contributing factor as to why I wanted to get into commercial real estate myself.

Brian Maughan: So when you joined Sterling Bay it's 2002...walk me through what Sterling Bay looked like at that time. How many employees? What kind of deals were you doing?

Andy Gloor: Yeah, obviously a lot smaller. I think five or six employees, some small resi-deals up in Wrigleyville, some industrial deals, two really savvy guys. And I think most of the deals they did were not traditional office. There were kind of flex office. Very creative. Craig Golden, one of the principles, is one of the most creative guys I've ever come across. And so I think they were, you know, playing in that kind of end of the game. And so when I came there...office buildings tend to be larger, right? So if you're in a city, kind of the scope of the project’s increased a little bit. We started focusing on more urban, creative office, adaptive reuse, probably 2003, 2004, and that's kind of what we've been doing ever since.

Brian Maughan: Nice. Just for context, give us a little bit of flavor as to Sterling Bay, how many employees today? Y Tell us a little bit about the profile of Sterling Bay today.

Andy Gloor: Yeah, so we have about 220 people. We're totally vertically integrated, which means that we like to touch every aspect of the transaction. So we have lawyers in-house, we have designers in-house, we have architects, we lease our own buildings. We manage our own buildings. You know, we're a little bit of control freaks when it comes to executing on our business. And we think it makes us better at doing that. So 220 people, we just opened an office in California, in Orange County. And I think, you know, the biggest change over the last four or five years is most of what we're doing right now is a national expansion as opposed to in Chicago.

Brian Maughan: So tell me about that progression then, 2002 to 2021, you take in this smaller office that was focused in industrial and other things and resi deals, and you pushed it forward to be this vertically integrated, complete national player. Walk me through what it took to do that, because that's not a small task and it requires a lot of vision on your part.

Andy Gloor: Well I think, I mean, if you look at the additional deals that we bought and owned, you know, we thought there was a need in the market for these creative office buildings. People, not everyone wanted to be in a traditional glass and steel, eight and a half foot drop ceilings, kind of like old, you know, where your parents used to work. And so we recognized that, you know, people wanted to be in these live, work, play environments. People wanted to walk outside their office building and be able to go to a restaurant. And so we did, you know, we kind of stepped into that trend.

And I think kind of archaic thinking or legacy thinking is, you go to work, it's not supposed to be any fun. There's not supposed to be any amenities. You're not supposed to have natural light. I'm exaggerating. But, you know, it wasn't supposed to be any fun. And we kind of went on to say, listen, you spend so much time working. Let's create this environment that people actually want to be in.

Brian Maughan: When you look back into your broker world you got to know the city really well. Is that what let you see the trends that were happening? Is that why you can look at Sterling Bay and say we need to be moving more towards this kind of fresh take on the office building? Or what was it gave you that vision?

Andy Gloor: It's kind of like what we wanted. And as I said, there's nothing wrong with traditional office buildings. There's always going to be a place for them. We did the first outdoor deck ever in an office building in Chicago, and now they're decks everywhere. But at the time, everyone's like, you don't need an outdoor deck on an office building. What are you doing? And so we did that. And now all of our buildings have decks. And, you know, we have an office building that had a pool on it. So I think we just recognized that there was a need for it.

And I think the catalyst deal for us is when we did Sara Lee's headquarters and, you know, Sara Lee was coming in from the suburbs, have since been bought by Tyson Foods. But Sara Lee at the time was a very traditional company, a multibillion dollar company. They were in a suburban office park. And the new CEO came in and said, listen, I need to go where the talent is and I need to go where, you know, the kids want to be. And that's an urban setting. And then I also, I want my own building. I want to be able to control the brand, the security, the culture, everything. And it's hard to do that if you have, let's say, three floors of a much larger building. It's hard to put your stamp on it. And so, but if you have your own building, you can control every aspect of it. It kind of is an extension of your marketing and brand. And so when we were able to get Sara Lee to take the whole building, that was an eye opener for us because the building we were competing against happened to be the Sears Tower, but we were more expensive than Sears Tower. Sears Towers obviously established on Wacker. And the CEO basically said, no, I don't want that. I want to go here where I can create this unbelievable environment and change the culture of my company. And so there was a light bulb that went off with that deal because that was a very traditional, very large company who was going to a nontraditional location and nontraditional buildings. I think that was a big moment.

Brian Maughan: That led you to, if I understand my history of Sterling Bay a little bit, that led you forward to looking at another building, the Fulton Street cold storage building, right? Tell me about that, because I've heard some stories or rumors or lore about what that building was when you first saw it and when you first walked through it.

Andy Gloor: Well, that was definitely the scariest deal I've ever done. I mean, that the building was literally a frozen block of ice. And so yeah, it had this ammonia cooling system that the old owner, Ameet Haziq, didn't want to shut down because he thought if he would shut it down it actually would never start up again. And so, you know, 80 percent of that building was like frozen blocks of ice. We thought we'd find Jimmy Hoffa in there in some corner. And so, you know, we liked it because it had big floor plates. We liked it because it was a block from the first new L stop Chicago has built in 40 years, but structural engineers told us if we thaw the building, it might actually fall down. And so we went ahead and bought it on spec. We had no tenant. And it took about a year and a half to thaw it out, which is crazy. And actually the ice ended up keeping the structural integrity of the building sound. 

Brian narration: This work paid off. Google was interested in renting the space. To tour Google’s real estate director around the property, Andy wanted the time to be just right.  The building is in the Chicago meatpacking district...

Andy Gloor: I wanted to do that tour at the end of the day, because all the meatpackers were gone, because it's a total zoo in the morning. And he wanted to do at 8:00 a.m. and I thought, oh, my God, this is never going to work. So we did it 8:00 a.m. He loved it. We quickly worked out a deal. And he said, ‘Andy, do me a favor. Don't over sanitize it. Don't make it too clean, too neat. Don't make the streets perfect. Keep the authenticity there, because that's what people are looking for.’ And, you know, that was another light bulb that went off.

Brian Maughan: That’s awesome. I think everybody wants that little piece of character, that Chicago feel or whatever it is. They want to feel like they're doing something that has a little deeper meaning or history behind it.

Andy Gloor: For sure. Chicago has got so much history in the meat-packing and, you know, there's a restaurant now in the bottom of Google, Swift and Sons where the bar is where the trucks used to back up, and you could kind of feel the history of it. And so it's a great history. And I'm glad we embraced it with that building.

Brian narration: Sterling Bay has been incredibly successful. I wondered though, is it tougher to be an entrepreneur in real estate today...is that a harder hill to climb?

Andy Gloor: There's absolutely an opportunity for entrepreneurs to get into real estate, you know, and there's always a niche that's not being effectively addressed. And everyone's trying to see where the puck is going. I mean, life science is a huge part of our business now. It wasn't there five years ago. And so there is a critical need in the U.S. for new lab space in all markets. And, you know, obviously it started in Boston and the Bay Area, just like the dotcom boom. But now every single city has a need for high end quality lab space. If you look at Chicago, Chicago is a million feet of lab space. It should have 20 million feet. And so that's playing out all over the country. And I think that it's just what's the next niche? What's the next thing that is not being addressed by some of the institutional capital partners? So it's such a good business for entrepreneurs because you can always find a way into an opportunity.

Brian narration: So tell me about a current project, Lincoln Yards. It's a giant space, fifty three acres. It's right next to the Chicago River. And you’re transforming it into a combination of business, residential, parks...how does a project like that even get started, how does it go from being an industrial island...to this totally new space?

Andy Gloor: The truth is, once an area gentrifies, it's very difficult for an industrial business to operate effectively.

And so we recognized that Lincoln Yards, that's between Bucktown and Lincoln Park, Lakeview, Wicker Park, was no longer a good area for industrial businesses and that's... industrial businesses would agree. It's hard to operate these heavy industrial businesses next to residential. And so we recognized that that would change. And that kind of piqued our interest. I also happen to live a couple of blocks from Lincoln Yards. So realized that Finkl Steel was not going to be there forever. So it was really good real estate. It was artificially protected by this archaic zoning that was put in place in 1988. And so we recognized that through the gentrification it could be so much more, and that's why we focused on it.

Brian Maughan: How much ahead of the game were you in terms of, were you involved in some of that re-zoning conversation? Did you help paint that picture similarly to how you painted the picture for Sara Lee?

Andy Gloor: Yeah, no, we did. And, you know, its business is...It's all about attracting and retaining the top talent and being able to you know, we think old company towns are coming back, a newer version of that. Like, you know, people don't want to commute 45 minutes to work. They want to walk. They want to, like, live in the neighborhood where they're at. And so we, very rarely can you put together 53 acres. That's kind of like the hole in the donut. Usually you have to pioneer and go to a location that's so far out of the way that sometimes it's attractive, sometimes it's not. Lincoln Yards is literally in between a lot of the most desirable areas in Chicago to live. But you still have to tell the story. I mean, you still have to explain what your vision is. You still have to create this authentic neighborhood and feel, and that's a challenge when you have a blank canvas. And so that's something that we've spent the last five years, what we think is a very, very good plan. And we actually break ground on Lincoln Yards next week.

Brian narration: And despite the pandemic, despite the fact so many people have abandoned offices for their kitchens or living rooms since Covid struck...Andy says desirable modern office space will not be mothballed for long. He predicts offices like the ones Sterling Bay develops, with a lot of light, good airflow, and decks...these will be what lure workers back to their desks.

Brian Maughan: If you had a chance to speak to, you know, early members of the real estate community or folks that are wanting to enter the business, any advice for them? How do they build a successful career?

Andy Gloor: You know, we always joke the world is small and round. And I think that, you know, how you conduct yourself should not be transactional. You know, we pride ourselves on being a handshake company. You just got to tell the truth, always be honest. And I think that if you look at our market, if you look at Chicago, there's under 10 brokers who represent businesses that control maybe 80 percent of the business. And so it's really, really important to always do what you say you're going to do. And I know it sounds simple and something you tell your kids, but I think that if you do that long enough, you're going to have opportunities in business and whatever business you're in. And I think people who take a very short sighted transactional approach, it's going to be a lot harder for them.

Brian narration: And he says there’s one more thing: trust your instincts. When he was a young broker he recognized that his tenants wanted something more than the typical, low-ceiling, fluorescent-lit office space everyone else had...

Andy Gloor: But there's always a little insecurity when you're the young person in the room with only a few years under your belt and the traditional real estate folks are all doing it another way. And I think you've got to break through that because no one knows the market better than the people who are so close to it. And so, you know, I was in the street every day with all these different users hearing exactly what they wanted. And I'll tell you, obviously, there are people that are brokers right now representing users that know the market better than I do because they're in it every single day with particular aspects of it. So I just think you have to trust your instincts and realize that you probably are seeing something, you know, you're probably seeing a need in the market. You should listen to that. And just because a lot of other people are going one way doesn't mean you shouldn't go the other.

Brian Maughan: It’s a pleasure talking with you, I applaud your efforts and certainly am excited for the future of Sterling Bay.

Andy Gloor: Thank you Brian, I appreciate it.

Brian narration: Thanks for listening to this episode of BUILT, we hope you enjoyed it. We’d love to hear your feedback - email us at built@fnf.com. We’ll be back in a couple of weeks with another show.

Built is a co-production of Fidelity National Financial and PRX Productions. From FNF, our project is run by Annie Bardelas. At PRX, our team is producer Ashley Milne-Tyte, Senior Producer Genevieve Sponsler, production assistant Courtney Fleurantin and intern Claire Carlander. Audio mastering by Rebecca Seidel.

The Executive Producer of PRX Productions is Jocelyn Gonzales.

I’m Brian Maughan.

Every story is unique, every property is individual, but we’re all part of this BUILT world.