Power

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JASON BOOTH

Staff Reporter

The person many believe is the most powerful woman in L.A. real estate doesn’t even live here. She’s based in New York.

But as an associate director with Teachers Insurance and Annuity Association, Michelle Dowling Schafer controls more than half a billion dollars worth of commercial real estate in L.A. County. Most of it is grade-A, high-rise office space.

“When you deal with Teachers you deal with her,” said Tony Natsis, partner and co-chairman at Allen, Matkins, Leck, Gamble & Mallory LLP. “I can’t think of another woman who controls that many assets in Los Angeles.”

Her portfolio of high-profile L.A. buildings includes the 23-story tower at 6500 Wilshire Blvd. and Wilshire Bundy Plaza in West Los Angeles.

Howard Sadowsky, senior regional manager for Julien J. Studley Inc., agreed that controlling so much property has made Schafer a major player in L.A. “And she’s controlled it for a long time,” he said.

Indeed, Schafer has managed the L.A. assets of Teachers for more than seven years a veritable eternity in the fast-moving world of real estate asset management.

“Sometimes I am struck by the amount of responsibility I have,” she said during an interview from New York last week. “But I love what I do every day. It’s exhilarating.”

But she also recognizes the importance of “multi-tasking.” That means hiring and overseeing a property management team; formulating leasing strategy; participating in negotiations, evaluating the need for renovations and repairs; and helping evaluate the timing of a sale.

“You have to have an appetite for dealing with other people,” she said.

Bob Safai, principal at Madison Partners in Santa Monica, said Schafer knows how to walk a fine line between maximizing the value of Teachers’ property and keeping tenants happy.

“She is incredibly knowledgeable about real estate and understands not only how to get along with tenants but also what it takes to get a deal done,” he said.

Natsis noted that to satisfy Toyota America’s long- and short-term office needs, Schafer devised a creative leasing schedule allowing the company to occupy an additional 200,000 square feet of space in stages near its Torrance headquarters.

“Toyota wants to do it their way, they have an ego,” Natsis said. “She had to be accommodating.”

Drew Planting at Maguire Partners has dealt with Schafer from both sides of the bargaining table. “You have to figure out what your leverage points are ahead of time, otherwise you are not going to get anywhere,” he said.

When working for Teachers, an important step is gaining Schafer’s confidence. Planting tried doing that in 1996 when he went to her with news that Chubb Insurance was considering moving out of the building at 6500 Wilshire. He believed he had put together a deal that would convince them to stay, but Teachers balked, arguing that Planting could do better.

As he predicted, Chubb pulled out.

Three months later, Planting came back to Teachers with a similar deal to keep Dow Jones in the building. This time, Schafer was quick to sign off on the deal.

“We were ready to roll up our sleeves and do whatever was needed to keep them in the building,” Schafer said.

Said Planting: “Now they trust me. Since closing that deal, we’ve had a really good relationship.”

But when you’re the landlord, you can’t please everyone. And Schafer has her share of critics.

“She’s as tough as they come,” said one tenant broker. “From my perspective, she can be ridiculously impossible and arbitrary She’s not my favorite person to deal with because most of the time, you lose.”

She is especially tough on issues like credit and occupancy dates, this broker noted, because Teachers is using pension-fund money and wants to reduce its exposure to risk as much as possible.

Schafer doesn’t make any apologies. After all, she’s a landlord working for one of the nation’s biggest pension funds. As such, her priority is to protect her assets and make money.

“I have a daunting task,” she said. “Everyone has a perspective and my job is to find a balance. That and evaluate what is best for Teachers. And that is not necessarily what the tenants want.”

To some brokers, the fact that Schafer is considered the most prominent women real estate executive in Los Angeles highlights how the industry continues to be dominated by men. And even Schafer has her limits: While she oversees a large empire of property, she does not make the final decisions on what properties Teachers buys or sells in Los Angeles.

“She’s a manager, she not a decision-maker,” said one real estate broker. The same broker, however, acknowledged he could not identify another woman who had the same level of influence in the local real estate market.

So how do you manage a Los Angeles real estate empire when you live in New York? You become a “virtual” resident of this city, Schafer explained, by staying on the phone with people who live here and tracking L.A. media.

“Pretty much everyone I speak to every day is in Los Angeles,” Schafer said. “Sometimes I feel like I am in Los Angeles.”

Schafer travels to L.A. three or four times a year, but said she hasn’t moved here because Teachers prefers to centralize its management team.

Teachers has most recently shown its confidence in the Los Angeles real estate market by purchasing the Metroplex Wilshire building in the Mid-Wilshire district. Schafer said the property near Wilshire Boulevard and Normandie Avenue is the kind of project she enjoys handling because it’s in a neighborhood that has been depressed for years and is now starting to make an economic recovery.

Such properties are bought out of foreclosure and need plenty of upgrading. And prospective tenants are usually big companies looking for large-scale back-office facilities such as data and call centers, or small, entrepreneurial companies in search of reasonable rents. As such, negotiations can be interesting.

She said with rents surging on the Westside, business is starting to pick up in Mid-Wilshire.

Will Teachers be expanding its empire in L.A. in order to take advantage of that appreciation? “We would like to, but it is a matter of winning bids for property,” Schafer said. “Right now it is a seller’s market.”

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