“Last night, I went dancing for the first time in 60 days,” said Bill May, the co-chairman of the 138-year-old William B. May real-estate family brokerage. He was sitting at an outdoor café off Madison Avenue as most of New York prepared to shuttle off to the Hamptons for the July 4 holiday weekend. Mr. May, wearing sand-colored chinos hanging from navy blue suspenders, alternated between sips from his latte and a freshly lit Dunhill Superior Mild perched in his right hand. His respite came hours after he had reached a deal with William Lie Zeckendorf, the co-chairman of Terra Holdings, for control of the nearly two-centuries-old May family brokerage, New York’s oldest real-estate firm.
After a fortnight of negotiations and a flurry of commutes between New York and the May family compound in Chestertown, Md., Mr. May and Mr. Zeckendorf pulled their companies from the brink of dueling lawsuits; now, the two have forged a final accord to settle the internecine imbroglio that ignited when Mr. May’s brother-in-law, Peter Marra, sold his 12 percent stake in the May company to Terra Holdings and decamped to Brown Harris Stevens in April. In the long process, Mr. May and Mr. Zeckendorf find themselves unlikely business partners.
“This has been a long, circuitous path to get us to this point,” Mr. May said as he lit another cigarette. He gazed out at the passing traffic through the rose-tinted frames of his tortoise-hued Ray-Bans. “But it’s a good day for everyone. The way Will and I were introduced wasn’t elegant, but we realized, through this process, that we have more in common than we have apart. The pieces of the puzzle fell into place, and now we may likely do deals together, of our choosing.”
Mr. Zeckendorf held an equally positive assessment of the recent rapprochement between the parties.
“We left with very good relations with the May family. Compliments to Bill May to how he handled it,” Mr. Zeckendorf told The Observer . “I always felt this would be the outcome. We needed a stronger Brooklyn presence, and now we have it.”
Under the terms of the accord reached on July 1, Terra Holdings purchased the shares of the two William B. May branches in Brooklyn-in Park Slope and Brooklyn Heights-which will now be incorporated under the Brown Harris Stevens brand, one of the nine real-estate firms owned by Terra Holdings, New York’s largest real-estate concern, with more than $3.1 billion in closed sales recorded in 2002. Along with the initial payout, Mr. May said Terra will pay installments over 11 years to the May family for full ownership of the Brooklyn business, as well as to repair wounds to the May family name following Mr. Marra’s decampment. In the wake of the conflagration, Mr. May says his family company-though private and therefore not required to disclose its financial position-is profitable, remains debt-free, and last year posted $25 million in commissions.
Both parties declined to discuss the financial terms of the agreement, though a source familiar with the proceedings said that Mr. Marra’s shares were valued at roughly $2.5 million.
Indeed, the settlement between the two parties marks the conclusion of a uniquely New York saga, where family real-estate dynasties have shaped the limestone canyons carved out of the Upper East Side. Boutique brokerages and family-run real-estate firms, once the arbiters of an entrée into the Upper East Side elite, today have succumbed to the mass-market commercialization that has reshaped New York’s economy to mirror red-state America.
Now, with the Brooklyn business sold, Mr. May, 43, has trained his eye on repairing the smoldering ruins of his storied family business, which traces its roots to the time of Oliver Cromwell and, since its founding in New York in 1866, has sold Upper East Side real estate to old-line families including the Carnegies, Fricks and Vanderbilts. It was following an April 29 article in the New York Post that Mr. May, a real-estate developer from Wilmington, Del. who is building the state’s tallest skyscraper, first learned that his brother-in-law Peter Marra, who is married to his sister Leslie May Marra, had abruptly sold his shares in the May family business and joined rival Brown Harris Stevens as executive-vice president in charge of their new office at 1121 Madison Avenue. Mr. Marra took 22 brokers with him to his new employer, and the feud that exploded led Mr. May’s parents to sever all ties with their daughter and Mr. Marra and cut them out of the family inheritance, with skipping trusts set up for their grandchildren.
Mr. May now says the family fracture has started to heal.
“There was a blood bath, but now things have calmed down. People move forward. We all move forward,” Mr. May said. On June 22, he re-established contact with Mr. Marra for the first time since the debacle erupted, and the two have remained on speaking terms since.
“I’ve spoken to both Peter and Leslie. I think by Thanksgiving, we’ll be able to have a nice gathering in Chestertown,” Mr. May said of plans to reunite the family at the seat of the May empire in rural Maryland, near the Chesapeake Bay. It was there at the Chestertown Yacht Club that the Mays and the Zeckendorfs first reached a preliminary settlement back on June 15, before lawyers from both camps hammered out the financial details of the deal. Mr. May still doesn’t fully understand what drove his brother-in-law into the arms of an arch rival.
“I don’t fully know why he did it. I’m a numbers person. And Peter is a people person. Sometimes we have different ideas on what is best for the business.”
Mr. Marra did not return calls for comment.
Just as the strength of individual apartment sales indicate the health of the residential real-estate market, the competition in the brokerage industry provides a snapshot of the changing dynamics of the New York luxury real-estate market, which in recent years has come to echo the corporate consolidations that have swept across a panoply of industries, from bookstores to espresso bars. Both the NRT-backed Corcoran Group-which most recently acquired Palm Beach–based McCann Coyner Clarke Real Estate, a two-branch firm with 45 brokers-and Prudential-backed Douglas Elliman have used their massive financial imprint to expand their operations in New York, as well as into lucrative second-home markets across Long Island and in South Florida.
In this climate, Mr. May was steering the family business through an 18-month restructuring plan to find a corporate patron that would allow the company to pull money out of the New York market, which the family had come to believe was perilous following the Sept. 11 terrorist attacks. The day news broke that Mr. Marra had ankled the May company for Brown Harris Stevens, Mr. May was hours from signing a deal with a franchisee of the Cendant Corporation-the world’s largest real-estate brokerage franchiser, with more than 13,000 offices and 265,000 brokers across the country-that would have provided capital to expand into new markets along the East Coast from Maine to Florida. The deal imploded following the standoff with Terra Holdings, but Mr. May now says his company has reached an agreement with Cendant to move ahead on a more limited restructuring that will have the firm sell its offices at 575 Madison Avenue as well as its Beekman and Tribeca branches, and become a premium brand under the Cendant corporate umbrella, known as Second Century William B. May. For the May family, who own a broad portfolio of real-estate-related businesses, their residential brokerage company will be just one chess piece in its broad domain.
With the purchase of William B. May’s Brooklyn branches, Brown Harris Stevens’ expansion in Brooklyn marks their efforts to bolster their position in an increasingly competitive outer-borough brokerage market, that up until recent years was viewed as secondary to the firms focused on Manhattan. But in a sea change, Corcoran opened up a 70-broker branch in 1985 just across the street from the William B. May office in Brooklyn Heights, and in 1995, Corcoran added a second Brooklyn office in Park Slope with 38 brokers. The company opened a Fort Greene branch in 2000.
“Brooklyn has become very important. It’s a larger percentage of the business. We’re constantly amazed at how fast the expansion has been. I see an enormous growth pattern that is happening. In terms of opportunity, there is a major opportunity here,” Frank Percesepe, the managing director of Corcoran’s Brooklyn Heights office, said.
Mr. Zeckendorf, and his partners Arthur Zeckendorf, Kent Swig and David Burris, are looking to fend off the Manhattan juggernauts now that the William B. May deal is closed.
“Brooklyn is the fastest growing borough, we see a tremendous market to grow,” Mr. Zeckendorf said. “Brown Harris Stevens’ strategy is to keep growing, focusing on luxury, new markets, and on the tri-state region and Florida,” he said.
Still, for real-estate watchers, the May family meltdown showed yet again how personal ambition, designs on power and a lack of a clear succession plan can cause successful family businesses to spiral out of control. From the Milstein real-estate magnates to the recent ruptures in the Molson family for dominance of the $3 billion Canadian beer empire that spilled over into the pages of The Wall Street Journal , disagreements between family members over money and power, time and again, trump loyalty to the family business.
“People develop a sense of entitlement, a belief that this would be what mom and dad wanted for the business. And often the case is, it’s not,” said Y. David Scharf, a real-estate attorney with Morrison, Cohen, Singer & Weinstein, who was contracted by Mr. May to prepare litigation against Mr. Marra and Terra Holdings. “This is a thread that I see flowing through most of these circumstances.”
Mr. Scharf said the recent agreement with Mr. Zeckendorf forestalled any potential court action on the part of the Mays, for now.
“In these family business conflicts, once litigation starts, the allegations become nasty and it escalates quickly. It becomes very difficult to back down. That is why unless litigation is absolutely necessary, it’s advisable to try and work things out.”
For the Mays, this tale is all too true. The past four months has transformed this fourth-generation family dynasty into just one of the many players in the city’s ever more competitive real-estate landscape.
For a firm rooted in New York history, its future may rest beyond the Hudson.
“Now, with all the decks cleared, I can go back to Delaware, and concentrate on the blocks in Wilmington that will revitalize that city,” Mr. May said. “We can’t affect New York the way we used to. We’re a small private company.”