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David Kramer views Hudson Companies as a residential developer in all New York City boroughs for all income classes.
Indeed, Hudson has eight projects under construction — the most the firm has ever worked on at one time — and they range “from homeless shelters and public housing on one end of the spectrum, to selling $5 million condos on the other end of the spectrum, and everything in between,” Kramer, the president of Hudson Companies, told Commercial Observer during an interview in his Manhattan offices at 826 Broadway.
But Hudson has put a lot of focus on Brooklyn. Of the 81 projects the company has completed since its inception in 1986, approximately half are in the borough. Four of the eight projects under construction today are in Kings County. Plus, the firm is selling condominium units in two of its other Brooklyn developments, the 38-story One Clinton in Brooklyn Heights and the 33-story J Condominium in Dumbo, and leasing space at The Breeze, its office building in East Williamsburg.
The four Brooklyn projects in development include a homeless shelter, affordable housing, a ground-up market-rate rental and an affordable housing-shelter combination. The 328-unit, ground-up rental building at 975 Nostrand Avenue in Crown Heights, was at the center of controversy as the previous owner was planning to kick out the property’s longtime Associated supermarket. Hudson vowed upon purchase of the site in 2021 to keep the market on the premises for another 15 years.
Commercial Observer sat down with Kramer, 58, last week to talk about the Real Estate Board of New York’s new chair, constructing shelters, and his upcoming sabbatical.
This interview has been edited for length and clarity.
Commercial Observer: You got bumped up from president to CEO more than a year ago. How do the jobs differ?
David Kramer: I got bumped up to CEO, and I’ve bumped myself down to president again. I never liked the title “CEO,” but it was a way to give me another title so we could promote Aaron [Koffman] to president. Aaron recently left to go off on his own, and I decided I liked the president title better.
The last time we sat down together was eight and a half years ago, and your kids were all attending Saint Ann’s School. How old are they now?
25, 23 and 18.
What’s your life like now?
I’m an empty nester, which has led me to plan to take a sabbatical later in the year. I’ve been at Hudson 29 years this fall.
Having seen so many of my colleagues take three-month parental leaves when they had young kids — I think by the time I became president and instituted a formal policy it was after my kids were born, so I never took parental leave. My partner Sally Gilliland has also been here since 2001. She is also an empty nester. We’ve joked like, “When do we get our sabbatical? When do we get our three-month parental leave?” So, I just said, “I’m taking my version of parental leave,” which is a three-month sabbatical. Meanwhile, I wouldn’t have been able to do it before I was an empty nester anyway.
What is your plan?
My plan is to do a cardio-oriented sabbatical that emphasizes hiking and biking. A friend of mine just asked me to join him hiking Mount Kilimanjaro.
Exciting. Anything else you’d highlight on the personal side?
I have robust extracurricular activities, which involve everything from seeing every musical on Broadway to being the commissioner of two fantasy football leagues. In fact, the trophy you see there — that is not for me; that is for the champion of our fantasy football league, but as the commissioner I will bestow it upon him at the ceremonial lunch. I’m a big puzzler; I like crossword puzzles, Wordle and KenKen.
How about Spelling Bee?
Yes, Spelling Bee and Connections. I have a big puzzle competition going on, mostly with family members.
You have anything else interesting going on?
A good friend of mine is the dean at Bard College for immigrant students. Bard has made this tremendous commitment to give free tuition, room and board to at least 100 college kids from Afghanistan and Ukraine. I think it was a low moment for the students, and she reached out to me saying, “These kids could really use some distractions; they should come to New York City. How would you feel about hosting a bunch of kids to go see a Broadway musical?” And I was like, “You’ve come to the right place!” I have since hosted Ukrainian and Afghan kids to go see Broadway shows every other month.
We’ve actually registered our group with the State of New York so that we’re eligible for discount seats. We call it the Bard Cultural Initiative. I am running it along with my friend, the dean. First, we have lunch. Then we see the show, and then I take them to the Krispy Kreme doughnut factory in Times Square and buy them doughnuts to go.
In CO’s most recent annual survey of commercial real estate owners, you didn’t seriously answer the question of which presidential candidate you prefer. Wanna give us an answer now?
Anybody with a brain prefers Biden. It’s so obvious, that’s why I made a joke in the questionnaire. You couldn’t possibly want to support Trump.
What do you think of Jed Walentas as the new Real Estate Board of New York chair?
Jed is a really smart, detail-oriented real estate developer with an interest in our city and public policy. He is honest and eccentric. I think that’s going to be really refreshing leadership for REBNY.
Do you think having a Brooklyn developer as the chair will give Brooklyn an extra boost?
That’s a good question. When you think about things like 421a, that’s an issue that is certainly near and dear to Jed’s heart as somebody who is building ground-up construction in Brooklyn, as is Hudson Companies.
You have some new projects outside New York City. Is that because you think there is a dearth of opportunity in the Big Apple?
The problem is that there’s no tax-exemption program that allows new rental construction to be financially feasible, because as an asset class, multifamily is severely overtaxed, and the only way you can justify doing a new building is with a tax-exemption program.
Unfortunately, the state legislature let the program expire because they characterize it as a handout to fat-cat developers. As a result, if you look at the number of permits being issued for new rental housing, the numbers have fallen off a cliff. And it’s really discouraging. Those of us who are in the rental housing business have to think outside of New York City if we want to keep doing what we’re doing.
What’s the solution?
The state legislature has to come to grips with understanding housing economics and why nobody’s building new rental housing, and acknowledge that there has to be some tax-emption program to allow rental construction to continue because, for the last year and a half, that program no longer exists. It’s a ginormous failure on the part of the legislature.
The governor is doing the best she can to try and get a new program approved, but it requires the legislature. The concern of many legislators is high rents, which is a concern for all of us. But shrinking supply only exacerbates the situation. The legislators who are concerned about high rents are only making the situation worse by not enabling new rental construction to occur.
Do you think housing is the biggest issue in New York City now?
Rents have been going up ever since the COVID recovery and people started coming back to the city. Since 2021, rents are up, vacancies are down. That’s great if you’re a New York City landlord; it’s not so great if you’re the parents of young kids who are trying to rent an apartment, or you’re dealing with elected officials who think you’re the bad guy because rents are high.
Usually, if you look at the 2019 housing legislation, that is going to do more to create huge problems for New York City housing stock than any productive things they could have done. A high-rent environment is not healthy for a living, growing city. Those of us on the development side who are looking to do the next project, high rents can lead to high land costs, which makes it challenging to figure out that next project. I guess what the state legislature is saying is, “We’re OK if the only things being built are high-end condos and subsidized housing,” because nothing in between is getting built.
If you were mayor and could do one thing for Brooklyn, what would that be?
Figure out a way to have transit between Downtown Brooklyn and Williamsburg. I’d put in a high-speed train so you could go from Borough Hall to Bedford in five minutes. I think that transit link is missing.
In Brooklyn, will office vacancies benefit housing, like with conversions?
Conversions are tricky. A lot of conversions have already happened where you had a building that was vacant that was easily convertible because the floor plates were a good candidate for residential use, where you have to worry about having enough exposure, and having the right bedroom layouts. A lot of commercial buildings aren’t good candidates for conversions. So that’s number one.
Number two is that then you have to have a building that’s either completely vacant or mostly vacant, or you can buy out the other tenants. If you think about an office building, there’s usually staggered leases. And then the few tenants who are the holdouts have tremendous leverage if you want to buy them out. Our acquisitions group has looked at a few office-to-resi conversions and haven’t yet found anything even remotely a good candidate for what we’re doing.
I also believe that rumors of the death of office are greatly exaggerated, and that eventually the hypothesis for having Brooklyn office will re-emerge as a strong investment. Going back in time, there used to be very little office space in Brooklyn, other than, let’s say, some in Downtown Brooklyn Metro Tech. But you have so much of the workforce who were commuting to Manhattan from Brooklyn, and that was the reason we did The Breeze in East Williamsburg, thinking that in these residential communities they could use more office locations, and that a lot of the decision-makers at companies would begin to pivot to picking Brooklyn locations so that they, as the head of the company, might have an easier commute, but, more importantly, so that their employees would be excited to work in Brooklyn. I think you’re seeing that concept play out.
I don’t think that there’s the same ideology anymore that everybody has to work in Manhattan, particularly because of the work-from-home concept. If you’re already working from home a little bit, if your office is in, you know, Williamsburg or Downtown Brooklyn, I don’t think anybody blinks a bit at that anymore.
What do you think of Mayor Adams’s “City of Yes” initiative, which in part aims to create affordable housing through zoning changes?
I’m bullish on so much of what the mayor and the governor propose. Mayor Adams is very bullish on going back to work and occupying our city and our Midtown and building housing. Both the mayor and the governor are coming up with different strategies to figure out how to try and develop housing if the City Council or the legislature won’t go along. I think their initiatives are terrific.
You build shelters in the city like the two under construction in Brooklyn and one you’re building on West 59th Street in Manhattan. What’s the most difficult part of building one?
Making a deal with the city, because there’s no shelter without city approval. The location of shelters is far dicier than the location of affordable housing because the city is worried about neighbors freaking out. So it’s very difficult to put a shelter deal together if it takes awhile to hear from the city about whether they want to have a shelter there.
Would you live next to one?
If I knew that the design and the operator were first class, I wouldn’t have an issue with it. I live a block and a half from the House of Detention, the Brooklyn jail. I’m not sure how occupied it is right now, but I’ve lived there for 20 years and it’s been an active jail for a lot of the time.
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