“You’re catching me at a crazy time,” Michael Shvo said over the phone from his limo last month.
The audacious marketing genius behind such hugely hyped high-end condo projects as Bryant Park Tower and 20 Pine The Collection had just returned to Manhattan after several weeks overseas. While family business took top priority—his father recently passed away in Israel—Mr. Shvo, 35, lately has been rather preoccupied with expanding his presence internationally.
In January, he launched a glitzy promotional campaign for a new $180 million hotel-condo on a private beach on Mexico’s Mayan Riveria. He said he’s also setting up “a very large Middle East operation” in booming Dubai, among other places worldwide: “We’re moving over 50 people out of New York to international offices.”
All his globe-trotting comes at a time of great uncertainty surrounding Mr. Shvo’s natural habitat, New York’s once seemingly impenetrable real estate market, as the era of euphoria that Mr. Shvo embraced quite like no other appears to be ending.
Speculation also surrounds his own high-profile boutique marketing company, Shvo, what with its recent mass exodus of staffers, some openly complaining of an abusive, “draconian” work environment, splashed repeatedly across Page Six.
But Michael Shvo isn’t finished in Gotham: “In New York alone, we have four more projects in the works right now.”
Rivals are skeptical. “How can you possibly handle everything in New York and then be in Dubai or wherever he says he has his projects?” asked Andrew Gerringer, managing director of the Prudential Douglas Elliman Development Marketing Group. “You can’t service your existing clients, get new business and travel the world doing projects over there. Something’s got to give.”
“THE IDEA REALLY is just to have fun,” Mr. Shvo said.
It was May 2007, and he was at a launch party for his latest project, the 21-story Gramercy Yoo condo building, designed by French giant Philippe Starck. The splashy, jam-packed event in the Third Avenue sales office featured performances by burlesque dancers and music by trendy DJ’s the MisShapes.
It was the kind of thing Mr. Shvo had become known for in the previous four years—turning four walls, a kitchen and a bathroom into an Event.
“It’s really not about another building coming up,” he explained then. “There’s a lot of other people that do that. We create unique buildings for people, really to elevate design in the city, to elevate the experience for people to come buy apartments.
“I’m told we have over 1,000 people here,” boasted the trim, tanned host, dressed in a crisp black suit and white shirt, sans tie. Mr. Shvo has that preternatural look of the eternally young; he appears much the same as he did in his late 20’s, when his star rose as a top broker at Douglas Elliman. “A lot of celebrities, a lot of socialites, just a lot of great, great people.”
Even the rented port-a-potties were marked “Celebrity.”
Amid all the pageantry, there was little indication that this supposedly unique building would include such ubiquitous retailers as CVS and McDonald’s. (“It was disclosed in the offering plan,” Mr. Shvo noted later.)
Back then, only a brazen party pooper would dare to even utter the words “bubble bursting” in mixed company. Condos were selling briskly (2,344 units closed that second quarter of 2007 alone—the highest number since analysts at Miller Samuel began counting in the late 1980’s), often at insanely high prices (average sales price: $1.45 million).
Nobody embodied the boom more than Mr. Shvo.
“If Gordon Gekko stepped out of the 1987 film Wall Street and into today’s New York real estate market, he might look like Michael Shvo,” said New York Post columnist Steve Cuozzo, when he introduced the marketer during an industry forum on new development at Cooper Union Great Hall in 2006.
Knowing, somewhat nervous laughter rolled through the room.
Indeed, Mr. Shvo, like Michael Douglas’ megalomaniacal character from the movie, seemed to thrive on the motto “Greed is good.” “The ideal buyer, as far as we’re concerned,” Mr. Shvo has said, “is somebody that will give us the highest dollar per square foot for a product in that location.”
Mr. Shvo also draws comparisons to Jay Gatsby, the enigmatic socialite from F. Scott Fitzgerald’s classic novel. He became that mysteriously wealthy man throwing ridiculously lavish parties at the trendiest addresses in Manhattan—a truly ostentatious lifestyle that belied Mr. Shvo’s rather humble roots.
The Israeli émigré, who arrived in New York with just $3,000 to his name, once managed a group of taxis as well as a Manhattan bar before making his nut in the real estate game. He would go on to nab the honor of running the top-grossing group at Prudential Douglas Elliman in 2003 before starting his own eponymous firm the following year (after a nasty and public split with his Elliman mentor, the legendary broker Dolly Lenz).
His Gatsby fairy tale even comes complete with its own tragic auto-accident drama: One January night in 2006, Stacia Banta, a young, ambitious saleswoman, who had signed up to work at Manhattan’s first-ever 24-hour residential sales office at 20 Pine The Collection, was struck by a motorcycle while crossing an intersection at Ninth Avenue and 14th Street. She survived; her unborn child did not.
Ten days after the accident, she returned to work on crutches, only to be told she was fired “because she would be unable to take prospective customers’ coats or get them coffee,” according to a lawsuit later filed in the State Supreme Court, which charged Shvo with breach of contract and human-rights violations. Lawyers for Mr. Shvo denied the allegations; they further denied that Ms. Banta was technically a Shvo employee. The case has since been settled out of court.
IT’S PERHAPS THE most extreme example of the cut-throat business climate that Mr. Shvo has fostered amid the intense hustle of Manhattan’s recent boom. “You’re expected to run full-steam ahead, 24 hours a day, and you have to be on your A-game every single minute,” said Kelly Kreth, who lasted all of one week as Mr. Shvo’s publicist—“my dream job,” she noted—before bailing out. “It’s just so many hours.”
Another former member of his workforce likened the turnover rate among Mr. Shvo’s personal assistants in particular to a running gag in the 90’s TV sitcom Murphy Brown, where secretaries rarely lasted a whole episode.
“Just because you’re a great publicist does not mean you’re a great businessperson,” one ex-employee told The Observer. “It does not mean you can manage a company. It does not imply that you understand business strategy. It does not mean you understand how to treat people well.”
There’s always room for more aspiring marketing masochists at Shvo. The company advertised at least 11 job openings simultaneously this past January. Mr. Shvo mostly attributes the high turnover rate to his international expansion, but added, “There are some people that just didn’t fit. When you grow at the pace that Shvo is growing, you’re always due to make some mistakes along the way in hiring people.”
It’s with this Darwinian attitude that Mr. Shvo now enters a brave new era, both personally and professionally. Engaged to be married to fashion designer Laura Poretzky, with a $3.75 million house in the Hamptons hamlet of Water Mill, can the freshly summering family man keep up his frantic pace?
If he has any intention of slowing down, he’s not letting on. The New York market in which he thrives, that’s a different story.
In the fourth quarter of 2007 alone, condo sales declined by 27 percent from the prior quarter, according to Miller Samuel. Even in the high-end luxury sector, sales were down 28 percent over the same period. A February report in The Wall Street Journal noted that owners of two apartments in perhaps the most sought after building in the whole city, the Plaza Hotel, had to cut their asking prices by hundreds of thousands of dollars. And, in 2007, for the first time in four years, Wall Street’s year-end bonuses, which fuel so much of Manhattan’s higher-end retail and real estate, didn’t set records.
Mr. Shvo likes to think he is immune.
“What’s important to understand is that people with money still have a tremendous amount of money, and there’s still a lot of funds out there,” he said in February. “Where you’re seeing a lot of issues both in the retail industry and in the real estate market is both in the middle sector and the bottom sector of the market. And that’s the market that we really don’t handle, and it’s not a market that’s even on our radar. I think the Shvo products appeal to a very particular buyer; it’s a buyer who’s looking for a lifestyle, and they are looking to pay for a lifestyle.”
Consider the luxury sports car, to which Mr. Shvo often compares his apartments: “When one goes to buy a Ferrari, it doesn’t matter what the economy is. The Ferrari’s a limited product. Only a few people are privileged to own it. Those people are always willing to pay a lot of money for a Ferrari.”
His shiny new roadster of the moment is the forthcoming W New York-Downtown Hotel & Residences, a 58-story tower in the Financial District scheduled for completion around mid-2009. Units are priced as high as $2,000 per square foot, well above even Manhattan’s averages.
Within 24 hours of the W sales office’s opening this past November—complete with an interactive laser show featuring gesture-tracking “like Minority Report,” in the words of one Shvo staffer—Mr. Shvo announced that 72 out of 159 available units had already sold. (Once completed, the building will have a total of 223 residential units.) “To sell almost 50 percent of a project’s inventory in one day defies everything that’s being declared about the state of the market right now,” he said then in a written statement.
“It’s the only W residence you can buy in New York City,” Mr. Shvo said later. “So if you’re interested in living that lifestyle, you’re going to pay the price, you’re going to pay $2,000 a foot; but you’re going to get a product that only, let’s say, 200 people in the world have the privilege of owning. And once we’re sold out, you’re not going to be able to buy it anymore or you’re going to have to pay a premium to buy it from somebody that owns it.”
That is, if it sells out.
Critics like to point out that Mr. Shvo’s high-profile buildings generally don’t sell out, a grim statistic—which the master marketer himself did not dispute—especially considering the high expense it likely takes to bankroll the kind of extravagant campaigns that Shvo is known for.
He recently tapped Oscar-nominated movie director Alejandro González Iñárritu to produce a six-minute promotional film for his upcoming Mexican hotel-condo project. Grammy winner John Legend sang at the sales opening of 20 Pine The Collection. And the 3-D animators from San Francisco’s Heartwood Studios that Mr. Shvo routinely enlists to produce high-tech building renderings prior to construction are the same ones that defense contractors ATK employ to demonstrate how anti-radiation missiles would work.
“You could get a monkey to sell for less money,” said Mr. Gerringer of Douglas Elliman. “Literally, for less dollars per square foot anybody should be able to sell anything related to decent product anywhere in Manhattan south of 96th Street for under $1,000 a foot on average. That shouldn’t be a hard thing to do. But he seems to have a hard time doing it.”
Perhaps the most glaring example is 20 Pine, a building with over 400 apartments developed by Shaya Bomelgreen with interior designs by Giorgio Armani’s firm; many of the apartments, priced around $1,020 per square foot on average, are still available nearly two whole years after first coming onto the market. Those who did buy are still waiting to move in, as the project, originally slated for completion last summer, has been hampered by construction delays. Some buyers even launched a Web site to carp about the building and their dealings with Shvo.
Ask Mr. Shvo, though, and everything’s going great at 20 Pine. “Last week, we signed eight contracts, which, in a market like today, is a fantastic number,” he said last month. “We’re going to start our first closings in three weeks.”
He said he wasn’t aware of the angry buyers’ site: “If there are single incidents of people having issues, we’ve always accommodated.
“I think we’ve been very successful,” Mr. Shvo said. “I mean, you look at a project like Jade,” he said, referring to the luxury building at 16 West 19th Street, partially designed by jeweler Jade Jagger, daughter of Rolling Stone Mick Jagger. “We have, I think, six units left out of 61, if I’m correct.”
Admittedly more of an ideas guy, Mr. Shvo cautioned that facts and figures are not his thing. “Any numbers—I’m the worst when it comes to fact-checking,” he said. “Somebody else will give you the exact numbers. … Bryant Park Tower, we completed down to the last unit. The Lumiere [at 350 West 53rd Street], we sold out down to the last unit.
“Listen, every building that anybody markets, Michael Shvo or anybody else, the last 10 percent is always the percentage that’s going to take the longest to sell,” he said. “Because that’s the nature of the business; because it’s your highest-priced project, it’s a lot of times the least desirable product. It’s just the nature of how supply and demand works.
“People can criticize, but when you see the amount of business that Shvo is handling today—after only four years of existence—obviously, we’re doing something right, and we’re doing something special and we’re going to continue doing what we’re doing. And if we didn’t sell out the project, and we didn’t do what we do successfully, and we didn’t get the developer’s premium, and we didn’t provide the consumer a great product, we probably wouldn’t continue getting all the business we’re getting.”
W developer Joseph Moinian, for one, remains confident in Mr. Shvo, whose youthful perspective the 54-year-old real estate tycoon needed in order to reach the right downtown audience.
“Look at who’s downtown,” Mr. Moinian said. “It’s all about younger people. It’s all about educated people. It’s all about the investment banking community. It’s all about cherry-picked graduates from all over the country.
“He has good ideas. He has great energy. He’s very creative. And he knows what it takes,” the developer said of Mr. Shvo. “We will be 110 percent sold out.”
THOUGH ENGAGED AND now closer to 40 than 30, Mr. Shvo believes his career is still very much on its normal rise, whatever the market conditions of his chosen hometown.
“There’s a lot of product that’s $1,500 a foot, $1,800 a foot, that in the last year or year before, would sell with no problem, but in today’s market, when the consumer has choices and they could decide to buy in a cookie-cutter project, or to buy in W residences, or Starck residences, or Armani residences, most likely, they’d rather spend their money on something special and not on just another four walls, a kitchen and a bathroom,” he said. “Consumers want to get value for their money; they want to get something special; they want to get something that they can come to their friends, they can come to their family or to their co-workers and say, ‘I live at the Armani building,’ or ‘I live at the Starck building,’ or ‘I live at the Jade Jagger building,’ or the W hotel.”
And if those vanity buyers don’t show up?
“A very, very large percentage of our portfolio sits outside New York today and outside the United States,” he said. “If New York is bad, then maybe Houston will be good, or Mexico, or London, or Singapore, or D.C. We’re in so many different markets. You’re not going to see the entire world, as a whole, drop in the luxury end.”