Here is the accepted history of New York City real estate: In 1626, Peter Minuit bought Manhattan Island for $24 in trinkets. Then came the developers. They bought and sold and built Manhattan, betting fortunes that tenants would materialize to live and work in their buildings.
In the 1980’s, developers threw up buildings willy-nilly. The economy crashed. Tenants failed to appear. Developers went bankrupt. And that was the end of speculative development in Manhatttan. Today, banks won’t lend for construction if a developer doesn’t have a big tenant signed up. The era of the brash, swashbucking speculative developer–a genetic line running from Fred F. French through Big Bill Zeckendorf to Donald Trump (version 1.0)–is gone forever.
Just don’t try telling that story to Douglas Durst.
Mr. Durst, the third-generation developer, is normally a taciturn fellow. But bring up the subject of speculative development–and the supposed verity that it can’t be done in New York today–and you’re likely to drive the man who built 4 Times Square crazy.
The New York Post learned the hard way. On Aug. 7, Steve Cuozzo’s real-estate column carried the following semi-correction: “Durst took polite exception to our assertion last week … that ‘no speculative office building … had been built’ in the city since the 1980s. Not so, says Durst: ‘4 Times Square was a speculative building.'”
The Observer sympathized with Mr. Cuozzo, having been through the same argument with Mr. Durst on a number of occasions. The most recent tussle came when we reported that fellow developer Edward J. Minskoff was attempting to build the city’s first large-scale speculative office building “in more than a decade.” That prompted a phone call and a spirited e-mail exchange in which Mr. Durst and this reporter argued what, precisely, the meaning of the word “speculative” is.
The distinction isn’t merely semantic in the world of New York commercial real estate, which operates according to hierarchies as sharply defined as the layers of a wedding-cake building. At the top are the developers, who judge each other by their bank accounts–and their daring.
Building a speculative skyscraper is the most manly feat of all. “The definition of an entrepreneur is a risk-taker,” Mr. Durst says, “and there isn’t any bigger risk you can take than starting a $500 million project without an anchor tenant.”
Mr. Durst agreed to an interview in the interest of setting the record straight once and for all. (“As long as I appear vain and silly,” he demanded.)
Here’s what he claims happened: In August 1996, he bought the rights to 4 Times Square with his own family’s money and announced a speculative development. Condé Nast only came along a month later. An examination of the historic record upholds Mr. Durst’s account–though it shows, too, that city officials said they would block the project unless Mr. Durst came up with an anchor tenant. Mr. Durst said he would have proceeded regardless.
“Douglas was going ahead with the building,” agreed Mary Ann Tighe, the Insignia-ESG vice chairman who did the Condé Nast deal.
But because the land deal and the lease signing happened almost simultaneously, people forgot that the building began as a speculative gambit, Mr. Durst said. So he’s taken to reminding the forgetful–especially reporters who repeat the “not since the 80’s” line.
Mr. Durst, one of the more approachable guys in the real-estate business, makes the calls more in sorrow than in anger. (Though on one occasion he did suggest that this reporter’s “speculative” definition “shows you do not understand real estate.” Good point.) Sometimes he gets a correction, sometimes not.
“It’s just something I’m sensitive about,” he said.
Dave Checketts Now Keeps Banker’s Hours
It’s been three months since Dave Checketts, Madison Square Garden’s cool corporate killer, took the fall for the financial morass that the Knicks and the Rangers have become. Apparently pushed out by the young, feeling-his-oats Jimmy Dolan (son of the M.S.G.-Cablevision chief), he quietly slipped out of the New York-Connecticut area, away from the influential friends and media scrutiny that came with the job of running one of the premier sports venues in the world.
That, of course, would not be the last of the 45-year-old Mr. Checketts. A small report on Aug. 7 in the Standard-Examiner of Ogden, Utah, suggests that Mr. Checketts may be putting what was surely a generous severance package to sound, righteous use. The man from Bountiful, Utah, was part of a four-man investment team that on Aug. 1 bought Republic Mortgage bank of Salt Lake City back from its out-of-state corporate parent, Michigan-based Old Kent Financial Corp.–itself recently acquired by a larger Ohio bank.
For the blond, blue-eyed Mormon father of six, investments do not come more down-home and apple-pie than this. “Helping with your American Dream” reads the bank’s motto on its Web site. The bank has just 12 offices in the state, including one in Bountiful. The acquisition price was not disclosed.
But for a man who ran Madison Square Garden, calls National Basketball Association commissioner David Stern his mentor, flirted with being the baseball commissioner and has long been rumored to be the chief candidate to run the Salt Lake City-based 2002 Winter Olympics, being a passive investor in his hometown mortgage bank would seem to be small beer, to say the least.
Officials at Republic Mortgage did not return calls for comment, and Mr. Checketts could not be reached by deadline.
–Landon Thomas Jr.
Merrill Lynch: Bullish on All-Stars
At a time when many of the bulge-bracket Wall Street firms have cut back on ads and promotional spending, the decision to stitch “Merrill Lynch” across the backs of a group of youngsters’ red jerseys may be that firm’s best investment so far this year.
Merrill Lynch is getting a nice little boost thanks to the exploits of the Rolando Paulino Little League All-Stars, the South Bronx squad that made it all the way to the Little League World Series in Williamsport, Penn. With each swing of the bat, each run home, each perfect pitch, millions of American Little League fans are getting an eyeful of the Merrill Lynch name.
The relationship started a year ago, when chairman and chief executive David Komansky read in The New York Times that the Paulino All-Stars were getting by with just a few bats. The South Bronx native and diehard Yankee fan put in a call to his global-philanthropy department, which then donated $50,000 to the league for new equipment, uniforms and help with entrance fees.
That investment led to a larger one: $500,000 to create a Merrill Lynch Field of Dreams at South Bronx High School, in association with Take the Field, an organization committed to refurbishing city athletic fields.
“Our focus is underserved youth and education,” said Selena Morris Disusco, a Merrill Lynch spokeswoman. “This cause fit very nicely [with] our philanthropic giving mission. People are excited.” And while Mr. Komansky has certainly been following the team’s progress every day in the papers, so has the rest of the firm–Merrill Lynch has been highlighting and updating the team’s march to the top on its internal Web site.
Want to Make Money? Borrow a Kid
If, on Friday, Aug. 3, you had dug into your pocket and put $90 down on two shares of AOL Time Warner stock, you’d be poorer by $11 today. If, however, you had held onto the money for a couple more days, and on Aug. 5 taken yourself and, say, five children age 14 or under up to Yankee Stadium to watch the Bombers play Anaheim’s Angels–you, friend, could have been up a good $400.
Forget the stock market. Stagnant at best, deeply troubled when it comes to anything reeking of tech, it can only bring heartache these days. But a new Beanie Baby is virtually money in the bank.
Specifically, the Bronx Bomber Beanie Boppers, monkey-faced dolls dressed in pinstripes and cap, are grabbing as much as $150 a piece on eBay these days–just two weeks after a mere 18,000 of them were handed out to children who attended the Aug. 5 game at the stadium.
More than 100 of the dolls have been sold so far on eBay, drawing as much as $150 apiece through the online auction. Their mere listing as a Yankee promotion drew some 49,000 fans to the game that day–far above the season’s average of 40,000.
And, needless to say, many of those who attended just happened to be children age 14 or less, the criteria for the giveaway. Suddenly, large families were springing up all around River Avenue.
One woman from New Jersey took 10 of her friends’ children to the game. “These kids want to go the game, so I buy them tickets,” she said. “They don’t really want the dolls, so they give them to me.” She gave a couple of the dolls to her friends, kept one for herself and auctioned the rest off, earning about $99 on each. She claimed that her behavior was nothing compared to the people who brought “busloads” of children to the game.
Those who couldn’t round up kids managed to find other ways to snag the dolls. “After the game, I heard some teenagers debating whether or not to sell their Boppers for 20 bucks to the guys in the parking lot,” said Louis Garcia, who brought his 8-year-old niece, Emily Dust, to the game. Emily’s day ended in tragedy when her Bopper was stolen while she washed her hands in the women’s bathroom. “She was devastated,” said her mother, Rosie Dust, who placed a $100 bid on eBay, hoping to get her another one.
Beanie Boppers, one of many lines of Ty’s Beanie products, sell for $9.99 in stores. But the Bronx Bombers can’t be bought retail. Sort of like the team they represent.