Office Isn’t Dead: How Joshua Friedensohn Turns Distressed Office Into High-Demand Flex Space

Joshua Friedensohn (00:00)

And they call me and tell me that one of the buildings burnt down and Red Cross is there. And it’s basically calamity. Well, my wife was still in town. My wife’s not involved in the business, she has a job.

And I’m like, hey, can you go over to the building and see what the hell’s going on? So and again, we had not dealt with a fire before. This is our first one. So she runs over, she’s like, Yeah, there’s like two fire trucks. There’s people everywhere. There’s regular like I don’t know what to do here. I’m not, I can’t like hang around, but like it’s chaos. We and so we literally closed on a Friday and that Sunday one half of the asset burned down.

Issa Hanna (02:03)

Welcome back to another episode of the Real Estate Pro Show. I’m your host, Issa Hanna, and today I have Joshua Friedensohn with us. Joshua, welcome.

Joshua Friedensohn (02:09)

Thank you. Good to be on.

Issa Hanna (02:11)

Man, I’m super excited to have you. We were talking earlier. You change asset classes as the opportunities present themselves, as the market changes. So you’ve been in the whole circle of real estate. You’ve dipped your toe and you’ve actually probably mastered a lot of different markets and different aspects of real estate. So I think my viewers are gonna get a lot from you. But to start off, give me a day-to-day in Josh’s life and what are you focused on nowadays?

Joshua Friedensohn (02:35)

Well, day I have four kids. So my day starts off with trying to get to the gym and out of the gym before my kids start screaming. And then and then I usually walk in like the garage door, trying to be quiet, but by the time I get there, I’m climbing over all four of them, four sets of backpacks and four sets of lunches, kind of all kind of just globed in there together. Because everyone’s trying to get out the same door while I’m trying to get in. So that’s only how the day starts.

And I usually got like thirty minutes by myself for a minute to shower and get ready to office. I get to the office and it calms down a little bit. But no, from a day to day standpoint,

My focus, I have a business partner. We founded the business together in 2008. So it’s been 18 years together. He primarily focused on operations and really in and really the CEO, CFO type of work. I really focus on how do we grow the business and where where’s the next opportunity going to be? Whether it’s the opportunity that’s we’re currently hunting or a future opportunity that we’re not currently hunting, that we need to start building a pipeline for. So for example,

We we’ve been we one of our favorite asset classes to buy the last three or four years and currently is single-story office. A lot of the markets kind of write off office and they kind of throw the baby out with the bathwater, meaning that single-story office is very different asset class than high-rise downtown type of office. So we started heavily buying really distressed vacant call centers that were in single-story office really throughout the suburban, mostly Atlanta metro market.

We own all over the Southeast. We have over a hundred over a hundred buildings between multifamily mobile home parks, office buildings, industrial, et cetera. But the single-story office was really a unique buy because a lot of the call centers were either being pushed overseas or just being shut down completely with AI. And so we were we had the opportunity to buy really, discounted distressed buildings and then retrofit them into something that’s more in demand. So for example, in suburban Atlanta.

A single-story office usually comes with a lot of land and a lot of access to the building, meaning that the building I’m in right now is about a 65,000 square foot floor plan with just one long line. And it has parking lot that goes a full circle around the building. So what we did was we broke it down into smaller suites, five to ten thousand square foot suites, and put roll-up doors on each side of the building. So you can basically drive straight through the building.

What that provided was a new tenant demand that didn’t exist before. So traditional office, you only have people that are looking for traditional office, a plumber, an electrician, a painter, a pest control company, a gym, they’re not looking for a traditional office. And there’s a lot of them out there. So when traditional office kind of went the way of work from home or hybrid or remote work, whatever you want to call that, we started seeing that these service providers

Wanted needed space, needed a warehouse slash office component, and we started building it. And we called it white boxing, where you basically take a 5,000 square foot suite, turn about 1500, maybe 2,000 square feet of it into kind of call it three or four offices in a conference room with a bathroom and a small kitchen. And the rest of it’s just an open warehouse with a roll-up door. And it’s in very high demand. And so we were basically able to take a building that basically was out of its useful life, had no purpose

And repurpose it and fill it up. So we like doing that a lot. That’s kind of a thesis for everything we’ve done in our business, which is repurposing buildings that are out of their useful life. We started in single family, moved quickly into some student housing, moved into multifamily, then moved into mobile home parks, then office buildings and industrial buildings. We started doing even private debt because lenders started getting really soft and kind of went away for commercial for the commercial game. And so we started lending in the commercial game.

So at the end of the day, we’re always looking to kind of go into where there’s opportunity.

Issa Hanna (06:15)

I love that, man. True visionary in the game, very knowledgeable. Just hearing you talk about it and breaking it down so finely and making me understand exactly what you do. I could see how you can identify these future opportunities. I mean, amazing, man. I mean, a lot of people I talk to, they look at these old office buildings or these old call centers and yeah, they’re like a blight in the neighborhood sometimes. They’ve been shut down forever. Everybody’s remote now.

But you found a way to repurpose them and create, or bring that demand right back to these areas, man. Truly genius. And it’s not the first time you did it. Like you said, you’ve pivoted multiple times. You’ve grown, so exponentially. But I mean I wouldn’t doubt it from somebody who’s been in the game since so wait. You got into it during two thousand eight. Was it pre crash or post?

Joshua Friedensohn (07:51)

I went to college in Texas, studied chemical engineering at UT Austin. Studied chemical engineering, came out to Atlanta first job out of college. And I graduated 06. And I never wanted to be a corporate guy. I also knew I never wanted to be a chemical engineer, but that’s I knew that would provide me a paycheck while I figured out what I wanted to do. So I just kind of

Put a belt in my teeth and bit down hard for about 10 years of my life. Five of that was in college and five of that was post-college. And I worked as a chemical engineer and I was always looking for unique opportunities to kind of get to basically start a business, get involved. And at the end of the day, what we found that was unique and was kind of a unique proposition was we’ve always been of the mindset of operations, lead with operations. Operations will take us to places.

That dollars that other approaches will not take you if we know how if we know the nuts and bolts of what we’re doing. Like when you walk into our office and you just kind of do a tour around, it tells our company story. One of the first pictures is a picture of me surrounded by like eight busted up hot water heaters that I just ripped out of a basement with my business partner. And I mean I was probably 26 years old, still had no gray hair yet. No kids.

And just like dripping in sweat with like these rusted like cans that we ripped out of this basement. And that was that was kind of the story we told. And what we realized was like the storytelling is like people didn’t necessarily care about the asset, people didn’t care about the returns, they cared about wanting to be part of the story. And so we were telling the story like, hey, well, we say yes to opportunity, and we’re willing to roll up our sleeves and do it ourselves. So

To really get to get out of that day job. By the way, this kind of I met my business partner 18 months after I started working my job, working as a chemical engineer. We didn’t leave our jobs until five years into our I would say day job career. And what we were doing on the side was just looking for anyone that we could say yes to. We we’d be talking to banks, we’d be talking to owners I mean, so to answer your question more directly, it was it was post-crash to solve the problem of the crash.

Atlanta was hit really, hard. And we found is that all the people were stuck in either A, they were stuck in a house that they couldn’t get out of because they were upside down, or B, they had investment property that were that the bank was going to take back. And we said, listen, we don’t want to be in the brokerage world. We are property managers. We are operators. We will help you solve this operational problem. And then when you’re ready to sell that house or ready to move on, go ahead and do that.

We’re not the guys for that. We are the operators. So what it allowed us to do is that we were not we were not competing with real estate brokers. So real estate brokers actually referred us a ton of clients. And when it came to sell that property, they most real estate brokers are pretty protective of their client, but they knew that we were pretty clear with them, we are not looking to transact the home. When you try to transact, they’re gonna call, we’re gonna tell them to call you again, because that’s just not our business model. Our business model is to take a house.

Allow your client to move on that you can go earn a commission and buy another house with them and we’ll operate that get a tenant in there or operate that house for them. And that was really the ethos. And then just saying yes and looking for opportunity and looking to solve problems led us into multifamily, led us into mobile home parks and just kept leading us down, the story of our company.

Issa Hanna (10:57)

Yeah, and it and man, it’s a long road in real estate. You can grow and you can scale and you can get into so many different things. I love that story though. You guys were ripping out hot water tanks at twenty-six. You guys were, just you guys got your hands dirty right away. You built it from the ground up. And then yeah, this post-crash world, I was involved in myself. There were so many houses on the market, there were so many dilapidated homes, there was so much.

Upside down mortgages. It was just problems everywhere, fires everywhere. The fact that you got in during that time, unbelievable because it did teach guys like us how to like put fires out before they start, deal with crazy, stuff. And then the business has changed so much since then, it’s just pivoted so many different ways. So I love that just like our game, you’re flexible, man. You you’ll bend, you’ll

Go wherever the opportunities take you. And you’re at the point now where you can identify the opportunities years before others do. I mean great I mean what you’re doing right now, just totally genius, man. Totally.

Joshua Friedensohn (12:01)

We normally do is when we go into an asset class like, we had a nice run in multi multifamily, I would say from 2009 is when we started buying until 2015 when really the entire market invaded. And so it was a that was a pretty solid run. We were we bought 70 apartment complexes in that timeframe. And in it really in that time frame, we were honestly like we were the only buyer.

Of the asset class we were buying. We were buying fifty to hundred unit apartment complexes and we were buying them really mostly in Atlanta, but really throughout the Southeast. And there wasn’t a whole lot of competition. There might have been two or three other guys at the time. And we kind of tipped our hats to each other because the it was they were so distressed and so much work. Most of our apartment complexes were eighty percent down that we were buying. And they were on the north side of town of Atlanta. They were in good neighborhoods. They w this wasn’t like we were going to really rough areas. They just

Had been neglected for so long that it really provided us that opportunity to get involved. And that led us in and once apartments started drying up, it led us into mobile home parks. It was very adjacent to what we were already doing. And we had a nice little two year run. We bought 25 mobile home parks in two in two years. And that l that gave us kind of a head start of the market and then we started selling into the market. The same thing, w when we moved into office, there’s this huge arbitrage on we could buy

Long-term leased stable office buildings, meaning that like we have the first big office building we bought was in Chattanooga. It’s a hundred and ten thousand square foot building. We bought it for twenty million dollars. And it was an eight and a half cap in place with a 10-year lease to the state of Tennessee. So

Issa Hanna (13:34)

Mm-hmm.

Joshua Friedensohn (13:34)

At that time, eight and a half cap good, we were able to put three and a half percent debt on it for 10 years. So you’re talking about the spread to interest rate to cap rate being 500 basis points.

It’s a tremendous arbitrage on rate-to-yield returns. So we did a we did about a 30 building run of playing that arbitrage of cap rate to interest rate. And then from there we really kind of went back to the kind of the distress world and went and started buying the single-story office like I was talking about earlier.

Issa Hanna (14:00)

Amazing man. Like I said, dude, the way you’re able to identify these future opportunities. Somebody like me, I’ve been in the game almost fifteen years now. Hundreds of deals closed. Never once did I think to repurpose these old buildings. I drive by them all the time and I’m like, Hey, this thing looks horrible. Somebody should do something. Here you are doing something, right? So yeah, man, I love it. I love it. But I do want to get your real estate nightmare story. So

We all have one and there’s always that one that sticks out in our minds. So which one do you have for us?

Joshua Friedensohn (15:13)

Whew, there’s way more than one of them. And I mean, some you currently live, some that haven’t gone away yet, some of our distant memory, you can laugh at them. But I think the first one that pops to my mind, I’ll stick with that one. I it was a 16 unit apartment building, it was our third deal to buy. It was an eight unit building, eight unit building with a little grassy knoll in the middle. And if you know Atlanta was on Buford Highway on Beverly Hills Drive, right by the CDC.

Just to kind of paint a little paint a bit a little bit more of a picture. And I we were we’re all excited was our third deal to buy. We bought, I think the first one was eight units, the next one was like four units, next one was 11 units, and then we’re buying a 16 unit, we’re like stepping our way up. By the way, the fifth deal was 66 and the sixth deal was 110 units. So we quickly went on from there, but the 16 unit deal we closed on a Friday. Remember, it was very much like community bank relationship loan.

And we close on a Friday. I hopped on a plane that night to surprise my mom for Mother’s Day weekend. And so no, sorry. I we closed on a Friday. I went over there Friday night, to kind of just say hi to the tenants. I was, I was the active property manager. We didn’t have enough units that we hired anyone yet. Saturday I went over there again just I’m just so proud of my, our new purchase. And then Sunday I hop a plane Sunday morning to go have dinner with my mom in Texas. So it’s, call it a two and a half hour flight from Atlanta to Texas or Dallas. And

I get off the plane, I had, I think it was like something like 12 voicemails and like a dozen texts. I’m like, what the fuck? What is going on? So I start going through everything. I’m like, so I call one of them and I just met the residents. The residents barely had my phone number, right? And they call me and tell me that one of the buildings burnt down and Red Cross is there. And it’s basically calamity. Well, my wife was still in town. My wife’s not involved in the business, she has a job.

And I’m like, hey, can you go over to the building and see what the hell’s going on? So and again, we had not dealt with a fire before. This is our first one. So she runs over, she’s like, Yeah, there’s like two fire trucks. There’s people everywhere. There’s regular like I don’t know what to do here. I’m not, I can’t like hang around, but like it’s chaos. We and so we literally closed on a Friday and that Sunday one half of the asset burned down.

All right, so we didn’t even know we had insurance yet. Obviously, you do, but like we were terrified that like, did we actually have insurance? Like, did we lose just did we just lose everyone’s money? And so fast forward kind of a week or two later, things the dust is setting a little settling a little bit. And I drive by there, it was just kind of on my way, and I was still working, so it was kind of on my way from the house to work. So I just drive by it a lot. And I see just like water.

Billowing out of the basement. So this the building had burnt down, like had burnt. So the whole thing was crisp. And then all of a sudden there’s just water billowing out of the basement. I’m like, what the hell is going on? So I get out the car. I’m like, there’s just I it’s literally like the basements call it four or five feet deep, and there’s just water pouring out of the crawl space little vents. I’m like, so I call like the water department, I call the police department, I’m like, what the hell is going on here? They’re all like, someone stole your water main.

Issa Hanna (18:00)

Mm-hmm.

Joshua Friedensohn (18:01)

I was livid. I was like, how like how many times did this building explode, right? So I I don’t I’ll never forget. I looked at the cop, I go, man, if and I this is I I drove around with a lot of armory in my car. I’m like, man, if I if I knew who stole that water, maybe put a hole in his head. And the cop looks at me laughing, he goes, Listen, as long as he drowned first, it’s good by me.

So that was that added some comedy to it. But so fast forward kind of thirty days later, we got a check for we bought both buildings for five hundred thousand dollars, sixteen units, five hundred thousand dollars, lost one of them. Insurance gave us a check for five hundred thousand dollars, and we still had the land and the other building operating. Fast forward, call it eight years later, we sold the other building for five hundred thousand dollars. So the investment worked out pretty well.

But it was absolute chaos in the middle of it.

Issa Hanna (18:48)

Man, I somebody who’s dealt with property burning burning down and having to replace it. Thank goodness it was brick. Yeah, man, it’s the most stressful thing seeing your property just on fire, the fire trucks like that, and then man, the water breaking, I mean, my properties are in Cleveland, Ohio. So I’ve had a few of those where the water main got ripped out and it’s just, middle of winter and next thing it’s like an ice skating rink in the basement. So

And then people don’t know when you do have a property, if it’s salvageable, if you are gonna repair it, everything has to be up to the new code. You’ve got to rewire everything, you’ve got new water lines. I mean, it’s like basically building out the whole house from the inside. You’ve just got the outside if the outside’s salvageable. So

Joshua Friedensohn (19:28)

And frankly, that’s a really good point because we we’ve had a lot of fires over the years. And we would have just ripped out the fire and put the old back in. And cleaner version of the old. The problem is current building code is it it’s it’s not functionally like it it’s too expensive to go back and bring it all the way up to code. And a lot of cities, the older units, the nineteen sixties, nineteen seventies units, aren’t to code for square footage.

So, like a lot of our two-bedroom units are say 700 square feet. Well, current building codes minimum is a thousand. So you’re actually not allowed to build the unit back. You have to rebuild the unit in a bigger footprint. And so if you can even get around that, you still have to wire the whole building for smoke hardwire for smoke detectors and sprinklers, which didn’t exist back then, but they’re making you go back with it now? And

It it’s just it yeah, it and it I think it’s driving part of the inflation problem, right? It’s like you constantly have to upgrade these buildings, you can’t kind of just maintain them as is. So it’s a good point.

Issa Hanna (20:30)

One hundred percent, man. I think all my properties are sixty to a hundred years old out in Cleveland, Ohio. So I’m constantly having to update and definitely I mean, great point you just brought up about that because hardwiring smoke detectors, all these houses aren’t built for that. So you gotta rip out walls. You gotta, like you said, you gotta make the house a bigger footprint. I wanna add some future now. Five years down the line. Enough of the nightmare stuff. Let’s talk some cool stuff.

Where am I gonna see you when I look you up in five years, Josh?

Joshua Friedensohn (20:58)

Yeah, I mean, so I turn 44 next week. So five years is actually a very meaningful date. You know, when you start when you start getting close to fifty, you start kind of thinking of things a little bit differently. Risk tolerance, lifestyle, where we’re kind of just where things are going. And as I assume we all know, is that real estate deals don’t happen overnight. So like if I buy a deal today.

Best case, I’m probably gonna be out of that deal and call it, give or take, a five-year window. Right? It’s like I can’t get in and out of like a commercial deal. You can’t be like a year, blink an eye, a year goes by and it’s like, we just fixed one problem. In year two, we’ll fix another problem in commercial buildings, because lease cycles in commercial buildings are real things. So for example, if I have a tenant like, hey, the business plan is in three years, we’re gonna raise that tenant’s rent or we’re gonna move them out and replace them with a tenant with higher rent, right?

I have to wait three years to get there for the discussion. Number one, number two, if we replace them, I probably have a year of downtime to replace them. And again, all inside the five-year kind of commitment to investors that this is going to work, but that’s a whole five years. So as we sign up new deals right now, like I’m looking at, I’m probably 50 years old by the time like we’re out of this deal. And by the way, all these other deals.

That we’re in right now, what are we doing with them? Like we just sold a deal last week that we had for 11 and a half years. We just went under contract on another deal we’ve had for 12, and we’re looking at potentially selling a deal we’ve had for 14 years. Wow. So like if you look at that line of life cycle, five years is like a blink of an eye. Like, so I mean, I think I I’ll I’ll talk more for the company for on behalf of the company. It’s really our vision is to continue to expand our platform.

Look for other—look for opportunities, double down on other prior opportunities that come back that we like and honestly bring on junior partners and bring on more partners to kind of help continue the continuity of leadership for my business partner and I. We have a phenomenal team. We have a we have a great we have a great leadership in our in our company and we’re just we’re really working on kind of grooming them to be partner level over time.

Issa Hanna (22:55)

I love that. Promoting from within, man. And then truly one of the most knowledgeable guys and best guys I’ve talked to in the country on being able to identify that next opportunity. So yeah, this platform, this company that you have, man, investors, guys here at Investor Fuel, if you guys want to get involved with Josh, make sure to call him and if they wanted to call you or they wanted to get in touch with you and they wanted to invest with you, where could they reach you?

Joshua Friedensohn (23:20)

Yeah, so our website is greenleafmgmt.com, MGMT dot com.

And you can always reach us at invest@greenleafmgmt.com. I’m on LinkedIn. You know, my email is Josh at the website. Feel free to reach out, love to hear from you. We’re always looking at kind of where can we find new opportunities to invest in. We’re also looking for anyone that wants to invest along with us, we provide lots of opportunities a year. We try to buy about a dozen buildings a year, so about one a month, give or take, or do about a dozen fundraises one way or another. And so and they’re usually a variety.

Variety of deals from heavily distressed, like, hey, hold on tight, it’s gonna be a five year story, but at the end we’ll have a big pop, to hey, invest in our private debt, you get a monthly distribution, generally speaking, 1% a month. Or some of our some of our cash-flowing deals will distribute every quarter. And then at the end of like three or four years, when we renew that lease, there’ll be a nice big pop on the back end. So we have a nice variety of kind of investment opportunities that we’ve done a lot of and we will continue to do and offer to investors.

Issa Hanna (24:18)

All my investors at home. Greenleaf, make sure to check him out. Make sure to check Josh out. Like I said, one of the most knowledgeable guys at being able to find that next big thing in the real estate market. Just this conversation alone. We’ve received so much knowledge from him. I’m truly grateful. Josh, I want I want to leave on one piece of advice I want you to give my viewers. For the ones that just started, the new realtors, the new professionals, or even the new investors.

Growing your network, building these business relationships, a huge thing in our business. So if you had to give them one piece of advice on how to start growing that network, where would you tell them to start?

Joshua Friedensohn (24:54)

Well, I think the short answer is start. Don’t wait. Don’t think about, I need these tools. I need to wait till this. I’m I need to go get back an MBA. I need to go get an MBA in order to do this. I’ve never taken business course in my entire life. All I do is talk business every single day. So number one, just start. Do one thing today to get started. And number two, I think you got to you have to figure out your pitch or your story on a personal level, right? Like I

When someone asked me about me, we dove into business right away. But when if your first question is like, Josh, tell me about yourself, I start with one thing and I have I have it down to a T. I start every single time the same way. I started dating my wife at twelve years old. We’ve been together since. We both set goals in growing up. Her first goal when we were twelve, she told me we were gonna get married. I told her she was full of shit, but she accomplished that goal. When we were 16, I told her I wanted four boys if we were gonna get married.

She told me I was full of shit. Well, we ended up with four boys. So being incredibly intentional, setting goals, waking up every day knowing what goals you want to set, knowing what your story is, inspiring and kind of telling others and bleeding that energy. And it’s not going to be for everyone. And that’s cool. I think the more the you can’t turn someone on unless you’re also turning someone else off. Right? So I think you need to be convicted in your beliefs and what you’re doing.

And people and people are attracted to that.

Issa Hanna (26:13)

Man, I talk to a lot of people on the show. And I get the, what can you, don’t ask what they can do for you, what you could do for them, which is the classic. We all know that. That is just such a unique, valuable piece of life advice that Josh just gave us on the show, guys. Unbelievable, man. I mean, truly, I mean, next level stuff right there. Know your story.

Believe it, manifest it, write those goals down, walk down that road, and work for it. And you’re gonna get it, man. What a crazy story, too. Twelve years old you’ve been with your wife. A true love story, man. Four beautiful boys. I know you’re just a proud dad. You’re beaming every time you talk about your family. It shines through the camera, man. So truly an inspirational guy, Josh. It was a pleasure having you on the show, man.

True honor and I wanna invite you back on the show for a later date if you’ll have us.

Joshua Friedensohn (27:05)

Anytime, you let me know.

Issa Hanna (27:07)

Thank you. And man, I really enjoyed our conversation. And to our viewers at home, if you enjoyed my conversation with Josh and want to see more like it, make sure to hit like and subscribe. I talk to people every day that can bring us different knowledge on every aspect of the real estate industry. Until next time. The Real Estate Pros are out.