To round out the 2015-2016 academic year, Cornell’s Center for Real Estate and Finance and The Baker Program in Real Estate presented for students, alumni, and affiliates the “Titans of New York” on Friday, May 6 in New York City. With Richard Baker ’88, Governor of Hudson’s Bay Company, moderating and serving as host, the discussion panel of William Mack, Harry Macklowe, and Larry Silverstein provided insights into their dynamic careers and transformative projects. Each member of the panel has brought to market numerous projects over decades-long careers, each of which began in brokerage. Throughout the exchange of ideas and visions for current and past projects, several overriding themes emerged: common personality characteristics, creative talent, and even the shared value of teamwork within marriage.
Personality Characteristics
Through anecdotes and first-hand experiences, the Titans panel discussed the characteristics they felt have allowed them to continuously bring to market projects that have influenced the evolution of Manhattan’s skyline. Having a background in sales, overwhelming optimism, and strategic thinking were the traits they identified and commended each other on as being the most essential to their success.
As each Titan shared their career experiences, Bill Mack, Founder and Chairman of Mack Real Estate Group, discussed his strategic vision of diversifying his company’s portfolio from solely warehouse, which are rarely built on speculation, to office buildings.
Mack’s first office project was located in Fort Lee, New Jersey. Indeed, the impetus to build there came from Bill Mack himself – he sensed a change in where companies were locating on his daily commute from Great Neck, New York on Long Island to his company’s office in Northern New Jersey. Closer to home, he observed fellow developers in Nassau county building office space, and quickly realized that the profit margin on rent in new office developments was at least double that of industrial warehouses on a dollar per square foot basis. Although his knowledge of the office market was limited, he saw trends. First, the transition of the New York City area’s economy from manufacturing to service employment. Second, the development of suburban office buildings, which would allow more individuals to work and live in closer proximity. From this forward vision, the company began building office buildings on speculation, laying what would be its strategic path for growth several decades into the future.
Creativity
As moderator Richard Baker succinctly transitioned the round table, he discussed his own vision of using his family’s perfected strategy of developing retail centers via option, and applied it to his purchases of the Saks Fifth Avenue and Lord & Taylor department store chains. It was at this time that the Titans began to discuss their own innovative development strategies regarding the financing, design, and construction of real estate.
Harry Macklowe, Chairman of Macklowe Properties, highlighted this section by discussing his current project at 432 Park Avenue. As the condo market in New York City shifted during 432 Park Avenue’s construction in 2013-14, the project began to suffer from slowing sales based on the price point requirements of potential buyers, along with a diminishing need for full-floor apartments. Rather than lowering the price per square foot, Harry Macklowe saw an opportunity that would enable himself and his partners of the CIM Group to maximize profit. Through Harry’s forward vision, the 91st through 95th floors of the building were each split into two units, one 4,400 square feet and the other 3,600 square feet.
Importance of Teammates in Marriage
As the round table discussion concluded, Richard Baker highlighted that the three Titans have been married collectively for over 180 years. All of the Titans discussed how their spouses have assisted and provided essential feedback, support, and most of all a healthy drive for their projects and careers.
Larry Silverstein, Chairman of Silverstein Properties, successfully secured the management rights to the World Trade Center in July of 2001. Eight weeks later, he witnessed the fateful day that terrorism touched American shores with the destruction of 9/11. Prior to that date, Silverstein had committed to his wife that he would allow her to make the decisions regarding how they would spend the rest of their years. Prior to 9/11 Mrs. Silverstein had planned a lengthy yacht trip around the Mediterranean Sea, which was to take place shortly after that date. Larry, being a man of his word, decided to continue with the plan.
However, Mrs. Silverstein was, like her husband, heartbroken over the destruction of human life and of the towers that her husband had finally acquired. She was also determined to press forward with reconstruction, demanding that they undertake the task of rebuilding the World Trade Center for New York City and the world as a whole. Being equal partners in marriage and teammates, the Silversteins moved forward to remember the lives that were lost, and to bring the significance of the World Trade Center back to Manhattan skyline.
Conclusion
Aside from the personal and career insights previously mentioned, the Titans made sure to impress what they felt was an essential aspect of each real estate transaction and project: financing should be non-recourse, and one should never use their own personal funds.
In closing, they impressed upon the audience that one’s personal passion can always enable them to overcome obstacles. It is in that passion where a denial of failure surfaces, that which enables one to get up off the proverbial mat when ‘temporarily’ knocked down. Through the presence of these three real estate innovators, William Mack, Harry Macklowe, and Larry Silverstein, the Cornell real estate community received an exclusive and enlightening morning that is slated to become an annual event.
