NAME: James Grossmann
COMPANY: RISE Development + Construction
I grew up in a housing development in East Boston — Orient Heights. At the time, they were renovating it. And as part of that, because they were HUD-funded, they had to hire Section 3 workers. Section 3 is a category for low income housing. So as these federal dollars go into these low income housing developments, the idea is to create careers through the construction. When they started the project in our neighborhood, I was 17.
It’s really hard, especially in a union environment because those create great middle-class jobs, to find Section 3 workers. And where better to look than right in the neighborhood? The carpenters union was recruiting and I was lucky enough to get into the carpenters union and do everything from install rebar and concrete to cabinets on the job. That was my first venture into the construction business.
I had been on job sites for summer jobs before that, but nothing at that scale. It was incredibly interesting to me. I got to know the superintendent on the job really well. So that was my first partaking into this business — on the construction side, with the carpenters union.
I had family members — my mom, dad, grandparents, aunts, uncles were still in the neighborhood. And one of my uncles had gotten into the carpenters union early. I was still finishing up high school. I heard that you could work a second shift at night, and there’s really nothing more to it than that — I thought, “Oh, I can work after school.”
But then immediately, I got to know the superintendent really well, the gentleman running the project. I recognized quickly that it was all about business. Once you’re at any job site, you realize that it’s all about business. And that’s what hooked me.
It was the fact that you were on this job site with 150, 200 people every day, interacting, coordinating, talking, and being productive. That really grabbed me tightly.
Yeah, absolutely. I built my career on the ops side, and I think it started right when I was 18 years old, on that job site, being on the operational side of the business, understanding the prioritization of execution. Really understanding how these things got built was fun for me.
And knowing that while there’s a very engineering and technical aspect to these buildings, it still has to get built by people. That’s what drew me to the business.
This is probably what helped me in carpentry. I was really good with math, and so I had a high school guidance counselor say, “You should be an accountant.” And so I went to college for accounting, stayed in the carpenters union working nights, second shift at the airport. I grew up in East Boston, so that residency had priority at the airport.
What I realized by my senior year, though, was that accounting wasn’t for me. I probably knew that right away, but I kept convincing myself that because I was really good at math, I should stick with it, but it didn’t have enough interpersonal interaction, and I knew I wasn’t going to be able to build a career there. So coming out of college, I landed with a developer-builder and started to work in construction.
But yeah, before that, it was, “Hey, you’re really good at math. You did well on the math portion of your SATs. You should go to school for accounting.” And that’s how I picked my major at the time. Candidly, at the time, I didn’t know enough of the Wentworths of the world, these schools that had a construction management degree. I wish I had. Coming out of our neighborhood, there were only two or three of us out of, maybe 30, that were going to college. We didn’t know a lot about what was out there. That’s what drove me to the accounting degree. But to your point, I realized that it wasn’t for me, and I landed back in this business.
It was 881 East 1st Street in South Boston. It was an old factory that we were turning into condominiums, loft condominiums, right down by the power plant, toward the beach. It was before Southie really took off. This is ‘96, ‘97-ish. So before South Boston really took off from a real estate perspective, we were building condominiums down there.
And that role was very blended because that business was vertically-integrated — so you were the developer and the GC. Subcontractors were coming to us. We self-performed a lot of the framing and construction work ourselves. It was a fully-integrated job site. It was great to see both sides of it and understand the finance behind the business, and the requisition process, and how you kept money moving to keep progress moving on a job, along with understanding the execution part of it, which was kind of my background. It was a good mix for me, right at the beginning of my career.
Yeah, the organization I worked for, Blue Hawk Construction, was very entrepreneurial in spirt and hard work-based. It wasn’t well built out. There weren’t, you know, divisions with it. It was more like, “Hey Jimmy, you’re gonna go with Pat and you’re gonna run 881 East 1st Street, and we’ll see you at the ribbon-cutting. Make sure you don’t mess it up.”
So it was a lot of that, but looking back, it was fantastic because you had to learn fast. You had to use the resources around you, which happened to be subcontractors, trade folks, designers, engineers. And so you were getting an education from the people you were working with, and who better to learn from? And it turned into an endearing part of my career. Those are deep relationships I still hold today.
They kind of took me under their wing, probably out of pity, [laughter] like, “We feel bad for this guy, right out of school running this job, so let’s make sure we help him along in his career.” And it was great. You really had to learn fast and rely on others. That honestly created a great foundation as I built my career. Always fall back on that: building close relationships with people that you can rely on, and likewise for them, that they can rely on you, and that you can do what you’re committing to. That’s how my career was built.
I think that could sometimes be attributed to a little insecurity, being afraid to say that you don’t know. And from my perspective, jumping on a job site at 18, I didn’t know how a big job worked. I had pushed a broom on a renovation in the North End, but I had never done anything at that scale. Learning that way was natural to me.
And then coming out of college, working on a 40-unit condominium, and then a job out in Clinton, Mass., where I was converting an old school into assisted living. And those were smaller. To immediately after that, I started working for one of the area’s largest construction managers, Suffolk Construction, and I was doing a manufacturing facility at EMC in Franklin, making the leap from like, wood frame, renovating a school, to how they were making data storage units, and that was completely nuanced to me. And I had to rely on electricians who understood that business much more deeply than I did. So that was almost out of necessity and came natural.
And what I learned from controlling my own insecurities around that was the minute you ask, most people are actually there to help, because they understand that helping you is going to help them in the long run. It wasn’t strategic, it happened because it had to happen to me, but it was a great understanding to get early in my career.
I was an assistant project manager on that first project out in Franklin, Mass. for EMC. And it was a great learning experience. And then I came back to Boston and was an assistant project manager to an assistant superintendent out on the job sites. And at the time, the growth at Suffolk, leadership was transforming that company and it was growing fast, and we were getting much bigger work in Boston. My career was built on those bigger jobs.
The Manulife building in the Seaport, 601 Congress was a great one to be a part of. We joint ventured with Clark, so I saw another big company there. To the Mandarin, to the One Dalton, to the casinos. And all along the way, starting as an assistant project manager into an assistant superintendent, working my way up to a superintendent, to a general superintendent, and then let’s call it back to the business side as a project executive.
It was always about the bigger work, bigger teams, more people. The pressure of that was exciting for me. Relying on your ability to interact with people in a productive way is always helpful. But that was my career: assistant project manager out on EMC — and even when I was out on EMC, I think I connected with the superintendent and belonged in the field — and then when I came back to Boston, jumped on the field side and stayed on that for the next ten years before I moved to the executive side.
That’s a great question. When I think back to that early part of my career, the one thing that Suffolk Construction had, it had great people. I was surrounded by great people. Everyone on the project was surrounded by great people. There was always really talented, really smart people around you.
For me, it was never about ambition. It was about being part of a productive team. When I feel best in my career, it’s around being productive on a project in a business where we’re collaborating to a point — it doesn’t mean that it’s the greatest of times, because there will always be conflict in our business, but it’s more about working productively towards an end goal.
And so that, I would say, accelerated my career the most because I kind of learned around these very smart, very good people about how to make sure jobs landed successfully. With the right mix of technical expertise, knowing how the job gets built and put together, how does it still go together? How does the facade go on the building? How do you maintain quality and safety and all of the things that are important while also keeping a keen eye on the personal aspect of it, because inside all of that are still people. And I think that gets lost in our business a lot.
You know, we focus deeply on a technical side and a lot of times lose the people aspect, or other times, we’re trying to make people feel really good, and lose the technical side of it. And I think I learned early from great mentors at Suffolk that the right mix of those, with the appropriate amount of tension in the system, is what helped me move up. I think I got that, a little bit intuitively, again, because those insecurities didn’t exist from early in my career.
It was always natural for me to say — even today, here at RISE — when I hear an acronym come up on the development side that I don’t know, because I built my career on the construction side, I will stop a room with very high level people and say, “You gotta help me out. What do those three letters mean?”
And if I think back to what helped that pace of acceleration, it wasn’t ambition. It was the ability to say, hey, I don’t know, but I’m willing to expose myself a bit to collaborate and get through this together. I think that’s incredibly important in our business.
That’s exactly right. That is the key. What I, and I imagine you, know in the real estate development, construction business — we’re so inwardly focused. We think our business is the only business around. I’m sure every business comes down to people, but I think from the perspective of, “How do you get 300 workers on a job to collaborate in-sync?” it’s really all about interpersonal relationships. And having great people, seeing how they did it, at the start of my career at Suffolk, was just invaluable. You can’t learn that lesson until you see it happen in front of you.
I had a great mentor in pre-construction at Suffolk. At the time, you’re trying to make a budget. So here was always this tension on the design team’s side, on quality of delivery and specification versus the budget. And I had a great mentor who taught me that the best outcomes come out of that tension. Almost embrace it. Respect the other side’s ambition. Yes, we have a budget to hit, but respect that the other side is being really protective of the vision for the job in a way that isn’t dismissive of the construction team. They know that there’s a budget problem. But when you can live in that tension in a way where you don’t personalize it and it becomes about getting the best for the client, that’s what I think gets lost a lot of times.
Whether it’s a change on a job, or a scheduling conflict, or whatever volatility that exists in our business, when you embrace it instead of one, ignore it, because it never ages well, or two, respond to it defensively, like, “Well I didn’t do that,” it just creates a bad tone and you can never get to the productive nature. But when you embrace the tension in a way that’s productive, you get the best outcomes.
I truly believe that when you have a challenge on a job, the right client service is to bring it up, right? We have a scheduling conflict or a subcontractor is having challenges on a project. Bring it up, talk it over with ownership, talk it over internally if it’s one of our own development projects. And when you identify the challenge and bring it up, good people will come to the support of instead of embedding against. And that’s what my mentor meant about embracing the tension. I’ve lived my career by that.
That’s where a little of my own insecurity started to manifest. I was really good — or I feel like I was really good! — out on a job site, interacting with people every day, being productive, and getting it done. And then, I knew as my career elevated, it had to be much more strategic, while also getting down into the details. And that was completely new for me. I was surrounded by incredibly smart people who graduated from really prestigious places. And I felt under-prepared, and that’s probably on myself, right? I felt that insecurity, and I started to dive into learning again.
I really latched onto HBS’s continuing education. I went there, and I’ve taken 13 of their classes now, including some of their comprehensive courses, which match up to the MBA program a bit. I took the GMP, the General Management Program, which really helped me understand both the macro and micro in the business. And without that experience at HBS over those ten years, I would not have had some of the success I had without that backup. Those teachers there, the format of learning, definitely helped me get that anxiety and insecurity in check and helped me build my career. But it started from a place of, “Wow, look at all these smart people doing really great things.”
Absolutely. It’s a great format in that they have week-long classes. I dod some real estate and then authentic leadership classes. And then GMP was 12 weeks long. I tallied it up the other day — I think I have over 800 hours of course time on that campus.
And it’s great, because now they have owners, principals, managers format. So I recently signed up for that. It’s a four week format, where you’re back on campus once a year. I really love it. I had great professors — Clay Christensen, when you talk about strategy and disruption, that’s just a great course. That was Building and Sustaining a Successful Enterprise. It helped me really think strategically about business.
It started personally. I have three sons and — by the way — none of them, at this point, want to get in the business, but maybe some day. I have 20 year-old twins in college. They’re taking aviation engineering. They love flight, love space, love engineering. And my youngest is in high school. But I started to think about having a business or a pathway if they ever wanted to step into some equity.
I started to think about real estate as an investment at first. So, could I maintain my career at Suffolk while investing in real estate. I had some early successes as a passive investor. And then that started to grow into something that I felt like could become a business and started a very early dialogue with the owner of the organization, letting him know where I see my future. It was a great conversation over about 12 months.
At the conclusion of that conversation, I had another 24 months or so work-out out of the organization. At the time, we had a lot going on. The casino in Boston, some really big high rises, two casinos down in Florida that were huge, so there was a lot happening there. I thought, you know, a couple years was a really good way to push my way out. And then as I started to think about working for a very large organization, there are a ton of benefits for that scale, but I started to notice too that specifically in Boston, there was a desire for something a little bit smaller.
Yeah. They wanted something that fit the middle market. Our market in Boston grew moreso than any market around the US. Having that view to see Los Angeles, New York City, Florida, San Francisco, Dallas, to see all those markets kind of boom, but not from a percentage perspective — while all were much bigger than Boston’s market, from a percentage perspective, didn’t grow as big as Boston’s — when Boston’s grew, all the CMs and developers had to go up-market, and it left this kind of middle open.
And so as my partners, Herby, Brian, and I started to think about where we wanted to focus, we focused primarily on that middle. So I bring that up now to say that it was a great learning experience at Suffolk. Deep relationships and thoughtful — you know, John Fish was incredibly thoughtful to me and my family during that transition time. And without that experience, I wouldn’t have seen that opportunity in Boston. And then COVID hit—
I had just exited and was still, we’ll call it consulting on a few of the projects that had some challenges. But at that time, during that four month period, I went to assist the City of Boston with Boston Hope.
Mayor Walsh had created a COVID task force and a coalition around mostly city of Boston employees and some consultants to help respond to what was a rapidly-changing environment. And so, in the world of needing real estate help, that manifested a few ways.
Homeless was a big challenge and having access to healthcare for the homeless, because COVID was spreading disproportionately in that community. So we built a shelter hospital on some of the City of Boston land, and did it in just a couple days. So it was about building a facility to help homeless people, one, be sheltered, and two, receive medical treatment.
And it started very small, 48 beds. And then the challenge kept growing and growing, and the then-mayor and governor had this great idea of creating a thousand beds in one room to help assist the healthcare facilities because they were just getting overrun in Boston by these cases. So they looked to the convention center. We took the South Boston Convention Center and built a thousand bed hospital in there in two of the three exhibition spaces. Oxygen, beds, rehabilitation center, all inside these spaces. We did it 24/7 for six days and turned the hospital over.
The most proud. It was night five, we were all sitting there, there were about twenty of us on the management side. I remember looking at my watch and checking out the mileage I had walked, and I hadn’t done it previously. I just looked and the steps number pops up. We all looked, and we were all walking 18 to 20 miles a day, just in that facility. We were there, you know, 20, 22 hours or so a piece, so the mileage everyone was putting in was crazy.
$30-$80 million is the sweet spot. And that looks something like, you know, 30 to 50 units, probably 50 to 150 units on the multi-unit res. side, really focusing deep on those opportunities.
For us, it was about learning that market because in my career, I had mostly done large commercial. So I wanted to understand the construction risk. And so we created our construction company first and focused on third-party work. This is really where the market was needing the most help, on the construction management side. We focused deeply on third-party work for the first year and built what was, at the time, a $70 million a year construction company, and quickly felt like we had a good handle on those risks, and then started to source all of our real estate development off-market.
Finding deals in the market through acquisitions and relationships and knocking on doors and finding under-utilized land and taking entitlement risk. And that’s how we built out the company, to truly understand those risks, since 80% of the cost is on the construction side, and bring that expertise into the development side.
We were thinking, let’s come in where others don’t want to play, because it was a little risky and a little under-capitalized. We wanted to build a business around efficiency first and figure out if we could make that challenging environment efficient. But to be honest with you, there wasn’t a lot of complexity that we found. It was professionalizing it, doing a good job at planning, which, there wasn’t a lot of investment in that world, so there wasn’t a lot of planning happening.
So we dove deeply into that, and then side, “Okay, now let’s go move to the upper end of the market, which is the development side, and build that business out.” That was kind of strategic, purposeful, jumping into it that way.
There’s myself, Brian Anderson — Brian had a family office, always involved in real estate, more on the small scale, six units, ten units, but scaling that business to multiple hundreds of units. And so built a really good book of business around that. He also had a lending business, so he did construction lending of $50 million to $100 million a year of construction lending through private equity. So he knew underwriting, knew risks, and what is the riskiest market.
And our other partner is Herby Duverné. Herby was an immigrant from Haiti, went to Northeastern, worked for Massport on the security side for a while, and then became an entrepreneur, started his own security business, and had some great success. And as he started to build this well-operating business, took some of his investment and moved it to the real estate side. And so in Seaport with John Hines, was in the convention center hotel as part of that team and that capital stack as an investor, so had always invested, and wanted to get in real estate. He jumped on with us on the real estate side. RISE is a registered M.B.E. because Herby owns the majority of the company.
And we all fit different roles — we have Herby’s great vision, Brian’s natural underwriting and understanding of risky, and then hopefully, I’m like, the doofus with the hammer who can help on the construction site. [Laughter] So that’s the makeup. And early, we wanted to build out the senior team, so we over-hired on the senior leadership side. We’re going deep on our construction ops side, on our head of development, on our CFO — all well-seasoned industry veterans — to be ready for the growth period that we felt was coming.
We built out the senior leadership so that everyone had this full year into the business before we try to scale the business up. We wouldn’t have had our early success without having done that.
And in my time with the City of Boston, the McChrystal Group was a consultant to Mayor Walsh. General McChrystal created this consultancy after his career in the military. He ran JSOC for a very long time and wrote a great book, “Team of Teams,” and had this consultancy built around that. So for the first ten months of our existence, there were three McChrystal Group folks embedded with us, and they were like three extra employees that we had that first year helping us build out the organization. And without them, we wouldn’t be here today.
The growth has been built around learning what was important in that middle market and definitely to get more institutional investment into that middle market. We realized real quick, check sizes at a single project level weren’t big enough for the institutional investors. You could have a great investment, but if you only need $10 million in equity, they say, “It’s not big enough.” Even if it returns at 3x. That was shocking to me to hear that. And so what we learned quickly was that we had to aggregate investments.
So that was our model. It was don’t just do 75 units in East Boston — it was go find off-market deals and entitle them and build them up to 350, so it looked institutional. It might be three or four buildings, but could now be packaged as an institutional-grade investment. We have a programmatic JV with an LP that just reinvests in that right now.
And at the same time, what you could see in the marketplace, the entire development world was focused on lab because that’s what was getting built during the time of COVID. And it, was candidly, best use for land, because the values were just going through the roof. All the big sites were getting pursued by all this big money — these 15,000 square foot, 20,000 square foot sites that could be a lab were left untouched. So, some of that is luck. We realize quickly that we have to build out our portfolio to make it institutional-grade, and at the same time, those prime multi-unit res. sites were essentially getting ignored because the lab boom that was happening.
And so, some learning, and definitely some luck with the market not focusing on it, and we were able to pull together what is today, 1,800 units of pipeline.
We have a strict go, no-go. Algorithm is too strong a word, but we have a go, no-go where we test fit that’s all in-house, we do our own design, test-fit, see it right away. Geometry leads you there. Especially with multi-unit res., if you don’t have that bar depth, if you don’t have that right geometry on the site, you’ll never be cost-efficient. You just can’t compete with bad geometry.
Our go, no-go is built around geometry first, then density — what’s the appropriate density for that neighborhood and what could you get? And that leads are go, no-go. Then we go deep. What we do with the go, no-go is take it to our limited partner and have a very simple sort of investment committee meeting where they approve immediately and we can move fast.
And so that gives us the ability to take down land really fast and move quickly in our business.
I didn’t understand this coming from the construction side — in the world of capital markets, capital raising, and definitely either securing or selling a property, the brokerage world brings a ton of credibility to the organization here and/or the marketplace.
The men and women who run those businesses are incredibly important to your credibility in the marketplace. We found that early, I didn’t quite understand that. I think having deep relationships with numerous folks and keeping it cordial and having the ability to move fast helps when they’re trying to sell us land.
We also realized early that we were non-traditional, right? This aggregation model, this middle market was not what they were used to. And so it took getting to know a few brokerages really deeply, like New Mark and Colliers, and letting them know when you’re out in the capital markets for us, or you’re talking to potential sellers for us, you have to buy into the aggregation model and the business. Because the “why invest” or “why to sell to someone who’s non-traditional” is hard to overcome. And if the face of your company is that brokerage, you want them to know it, understand it, and buy into it.
And the first month or so, both of those relationships were sitting down and saying, here’s how we source it. Here’s what it looks like. Here’s how we deal with risk. We’re not asking for people to come in pre-development. We have family offices who will support us on that. We’re trying to focus on ease-of-use for the investment world, and we want to be ease-of-use for the brokerage world, too.
It took a while for them to understand — we don’t want to tell you what we want, then you take it, send it out, and negotiate on our behalf. There’s a mix of what we want. You have to understand the model first so that you can translate what investing in us looks like.
That was probably the deepest part of building those relationships, getting to know one another as firms. And, like we started this conversation — you meet really good, smart people. They have such a pulse on where the market’s heading. Their data infrastructure has been incredibly useful for us. So it’s been a great, symbiotic relationship, not just having them represent us, but also helping us learn in our own business along the way.
I’m a believer in picking up the tone of the market by reading multiple newspapers and magazines, so I try to do that every morning. Headlines are either great or scary, which is the best way to say it. I try to not focus so much on the headlines but to really understand over time where the tone is going. I try to take the first hour of every morning to try to understand, say, the Wall Street Journal, the Globe, the Herald, The Economist is a big one for me. So that’s the first part of the day.
And I do love interacting on both sides of the house. I’m out on the job sites. I love visiting the people, doing the work. That is natural to me. I love problem-solving with those teams. There are a lot of project-level meetings that I still love to participate in.
And then on the capital raising and development side, definitely a lot of talking — like, we have a community meeting in Everett tonight. We have a pre-meeting, in-house. What’s that community looking for? What have we heard? What are we learning? What do the municipalities want? What’s the BPDA’s agenda? What did we learn in the prior meetings and what are we saying tonight? I love all that.
We’re not on Zoom so much. We’re a startup, and so everyone who comes by the office is like, “Oh my god, look at all the people here,” and I tell them that we were a startup — we had no choice! So I have a great opportunity to interact every day with people. It’s what I love about the business.
Because of my background, my passion is career creation. We do have a few big projects, one of them being Sullivan Square. And again, well find a capital partner who will step in and take the vast majority of that capital stack. But when you create jobs, both on the construction side and permanent, that excites the heck out of me.
Part of our community benefits is creating pathways for careers through some of the lab buildings that will get built there. We’re in a partnership with Cambridge College to develop a workplace curriculum. And we think it helps tenancy — we think it’s not only a community benefit, but a marketing benefit to the tenant. And so we’re investing in that. Helping people get into pre-apprentice programs, getting into the building trades and building their career, that’s what makes me most excited. If I’m having a tough day and some tough conversations, I’ll go try to help someone find a job because it makes me feel better.
I think it’s the commuter rail lines. I think the commuter rail will act more like the Red Line and the Orange Line. Obviously, we have a lot along the orange line and we believe strongly in adding in Medford and Malden and where we’re heading now. We think the same will come true, especially on the housing side, on the commuter rail, because there’s only so much in land mass in this little section, and we think that growth eventually has to make it that way.
Oh, that's a great question. Being in that national position, it was great to see different cities. I think the Carolinas, the triangle of life science down in that area is really well thought-out. Tampa has always been great.
For me, if I had to start the business again, I have an affinity for the D.C. and greater D.C. area. I would love to start a middle market down in that area. Maybe someday, grow our business down there. I think that’s a really great long-term investment, considering the investments around it in infrastructure and business. We really like that area.
Like everyone, I thought I was going to be a hockey player. [Laughter] And then by the time you get to high school, you’re like, “Wow, there are a lot of other good hockey players other than myself…”
I actually had family friends who were police officers. I always thought I was going to grow up and be a police officer. But for getting that job in carpentry, I think I would’ve been pursuing that career. I have a tremendous amount of respect for that line of work and always thought it was a great career.
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