Colorado Real Estate Journal - July 1, 2015
Grant Barnhill didn’t realize it at the time, but everything in his Denver real estate career led him to create Shift Workspaces. Shift Workspaces is part of the “collaborative office” craze that provides an alternative to traditional office space. Collaborative, or shared, office space incorporates such things as open floors, flexible workstations, shared amenities (like conference rooms), open space, hightech connections and amenities such as exercise rooms. Indeed, the true roots of Shift Workspaces go back long before the 50-year-old Barnhill was born. He traces the genesis of the concept to before the Industrial Revolution took hold in the U.S., from about the 1790s to the 1830s. “Before people started commuting to factories, there wasn’t this big separation between your work and play,” he said. Also, people increasingly define themselves through their work and measure their worth by their net worth, he said. Barnhill, who recently announced a $30 million expansion of Shift Workspaces, which will more than quadruple the space, said the “greed is good” ethos posed by Michael Douglas, who played Gordon Gekko in the movie “Wall Street,” no longer is the driving force in the economy, especially with young professionals. Millennials want more of a balance in life, he said, opening the door to the collaborative workspace concept. “A lot of people think I call it ‘Shift’ for work shifts,” Barnhill said. But really there is a paradigm shift in the way people, especially millenials, look at work, he said. However, he didn’t come to this revelation regarding the workplace until 2012, after a career that included office brokerage, and starting and selling Boutique Apartments, a groundbreaking urban apartment portfolio in which apartment buildings were branded with their own theme. Also, an autoimmune illness led him on a physical and spiritual journey to reinvigorate and reinvent himself, convincing him there was more to life than simply work. He started his real estate career in 1985, when he needed office space for a janitorial service he started while in college. Greg Morris, then an office leasing broker at Fuller and Co. (Morris is now the managing principal of DTZ) leased him space. “The janitorial business was not a great lifestyle for a guy in his early 20s,” Barnhill recalled. Rather than continue down the janitorial service path, in 1987, he joined Fuller and Co., first representing landlords, such as the Resolution Trust Corp., which was created by the U.S. government to take over the assets of failed savings and loans. “Greg had about a million square feet of space to lease in southeast Denver,” Barnhill said. “His clients included the RTC and pension funds and institutional owners of distressed properties,” he said. “That was a great experience, because I did a lot of little leases of 200 square feet to 1,500 square feet.” He stayed with Fuller for four years, where he also began focusing on representing tenants. He then launched Liberty Partners, a tenant rep firm, with Bruce Johnson and Rich Wham. “I really enjoyed being a tenant advocate,” Barnhill said. One thing he and his team would do was act as consultant for large firms such as RR Donnelley and CH2M Hill and help them use their office space more efficiently and save them money by streamlining their office needs. In 1993, he started buying apartments as investments. “Brokerage was really great in that it provided fee income, but I was looking for recurring cash flow,” Barnhill said. He started buying apartments in Congress Park, when it was still a tough Denver neighborhood, Governor’s Park and Capitol Hill. “It was a pretty scary time,” Barnhill said. “It was a train wreck. But a lot of people made a lot of money by risking their money in inner-city Denver neighborhoods.” In the mid-1990s, he decided it was time to leave brokerage and concentrate on his real estate investment and development business. He raised money from investors for 15 apartment buildings, a parcel of land and one office building between 1994 and 2002. All of the properties were renovated, repositioned and re-leased, before they were sold for handsome profits. Barnill Capital Inc., later renamed as Portus, returned an average of 60.5 percent per year to investors, net of fees. They paid $15.9 million for all of the properties, selling them for a total of more than $26 million, for a gross profit of more than $7.8 million. “I was working like crazy, probably too hard,” Barnhill said. “I ended up getting sick in late 1998 and 1999,” he said. He realized something was terribly wrong when he was balancing his checkbook and couldn’t remember how to do it. He was diagnosed with celiac intolerance, an autoimmune condition that is often treated with a gluten-free diet. Stress, however, is really the most debilitating part of the illness, he learned. He sold his investments and traveled around much of the world for eight months with the mother of his child. He came back to Denver around 2002 and was introduced to his future partner at Boutique Apartments, Zvi Rudawsky. They hit it off immediately and they both sing each other’s praises. “Zvi is a great guy,” Barnhill said. “I sold him my share of Boutique Apartments last year,” Barnhill said. “Some people think when you split up with a partner, it means there is bad blood between you. But there is absolutely no ill will between Zvi and myself.” In fact, Rudawsky is the biggest investor in the buildings that house the Shift Workspaces, after himself, Barnhill said. “We sold 14 Boutique Apartments last year for $52 million and we rolled much of our share into the Shift Workspace buildings,” he said. Boutique Apartments and its sister company, Wheelhouse Apartments, now are largely property management companies. Barnhill and Rudawsky bought their first apartment together in the Uptown neighborhood in 2002, before it was trendy. “We hired these guys to renovate it and it was like a scene out of ‘Cheech and Chong,’” Barnhill said, with clouds of marijuana smoke billowing out of their van. They hired new contractors and went to work. Barnhill covered the walls with photos he had taken during his travels and decided to name the building Aperture. All of the buildings in the Boutique Apartment portfolio ended up with themes. Rudawsky quickly leased Aperture units at rents 45 percent higher than the top rents in the area, Barnhill said. Many of the renters were young, single women with dogs, who felt safe in what was still a sketchy neighborhood. “Grant is very good at seeing trends before anyone else,” Rudawsky said. “I’m a numbers guy: Give me a spreadsheet and I am happy. Ask me if we should paint that wall red and I don’t have a clue,” he said. Their strengths complemented each other. “Grant likes to start companies, build them up, sell them and start something new,” Rudawsky said. Barnhill’s word is his bond, Rudawsky said. “Grant and I have done some pretty complicated real estate deals on nothing but a handshake,” he said. “That is very important to me,” he said, The first Shift Workspace building at 303 Corona St. was supposed to be Boutique’s headquarters, Barnhill said. “We went out to our whole team and asked them to give us a list of what would make an ideal workplace,” he said. “I think they came back with 52 unique things like having a lot of light, a room for yoga, a community kitchen, “ he said. Almost every idea was incorporated into the building. Barnhill decided that rather than continuing to run Boutique Apartments with Rudawsky, he would build on the idea of a collaborative environment in a workplace. He is growing Shift Workspaces by expanding the original building and buying a 117-year-old building at 1001 Bannock St. and renovating the former Cathedral High School at 1840 Grant St. “All of our buildings are very green,” Barnhill said. “Just like at Boutique, we have a very strong sustainability mission at Shift Workspaces,” he said. Not only will the buildings have such things as solar power and recycled materials, but also he is planning tower gardens to grow herbs and vegetables indoors. “But not marijuana,” he quipped. He plans to expand the Shift Workspaces concept into other walkable neighborhoods in Denver and probably eventually open Shift Workspaces in other states. Barnhill lives blocks from 303 Corona St. and often walks to work. But he makes sure his life is about more than work. “I just came back from Moab, where I went dune buggying with my 12-yearold son and my girlfriend. And we’re getting ready to leave for a European vacation.”