We spoke with John Hirschfeld about the future of Hirschfeld Ventures, LLC.
Can you tell us about what your firm does?
The vision of the firm is to acquire existing commercial real estate assets—including office buildings, industrial, retail, and potentially multi-family properties—and improve their engineering and environmental performance. The improvements will include things such as energy efficiency, on-site renewable energy, water conservation, indoor environmental quality, and green roofing. Generally, the tenant will already be in place. They may be an owner-occupant, and they would do a sell lease-back to us. So, we would do a green retrofit and then lease back the building. They could also already be a tenant of somebody else, and we would deal with them and the landlord to basically acquire the building or an interest in the building in connection with a green retrofit.
Do you do a lot of work with LEED?
There will certainly be a lot of attention paid to LEED. There may be situations in which—on a case by case basis—we go outside of LEED for certain specific fixes that make sense for a particular tenant or building. LEED certification will certainly be one of our goals in most cases.
What is your main focus?
We are focused primarily on single-tenant, net-lease projects, but will also look at some multi-tenant projects. The single-tenant, net-lease business is one that I have been quite active in over the last ten years, and there are many reasons for targeting that sector at this point in the market. When you have a single-tenant building, you're sort of removing one layer of complication because the person or entity that is really benefiting from the green fix is the one that you're dealing with. When you have a multi-tenant situation, the landlord can't always judge how much benefit is accruing to him and how much benefit is accruing to the tenants. So, while we think that we're going to be doing multi-tenant deals, the single-tenant market is a very fertile area, particularly given my background.
Our likely focus within the single-tenant area will be on office buildings. Energy savings applies to almost any kind of asset class. In an office building, however, there are so many employees that the non-energy savings components of the green retrofit are much more manifest. That includes things like indoor environmental quality and the internal and external branding considerations and so forth. Those things can actually be more important than the energy savings, although harder to measure.
Where do you see Hirschfeld Ventures going?
We have strong capital backing and we are hoping to execute significant volume over the next few years. We are expecting hundreds of millions of dollars of acquisitions and believe that our acquisition size per transaction will be anywhere between $15 million and $100 million. I think that in this market, it's helpful to have a value-added component to your investment strategy. Just betting on cap-rates could be somewhat of an elusive game.
What's your involvement with Green Order?
Green Order is my exclusive joint-venture partner and vice versa. Green Order is one of the most prominent green management consulting firms around. They advise companies like G.E., G.M., and so forth. My real estate, finance, and leasing expertise combined with their green expertise and implementation positions us very well to add value. Note that we're focusing on existing assets as opposed to new construction. You hear a lot about new construction in the green real estate circles but less about people who are dedicated exclusively to existing assets.
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