Permits to relocate stairways and elevators on the 30th through 47th floors were partially approved in 2007, but the permits for the entire $6 million job were finalized with the city's Buildings Dept. on May 2.

"Now, we are spending all the money necessary to do all the systems," Witkoff said. The building is already divided into an "upper" and a "lower" condo. City records show a mortgage on the upper portion was made by Hypo Real Estate Capital a year ago for $9.7 million.

While Witkoff declined to get into a "name game," he noted, "We've had a lot of people come to us to do hotels." But the owners are also deciding whether or not they should do it themselves as rentals because the after-tax basis "is better."

After it opened in 1913, Cass Gilbert's gorgeously Gothic coppertop was dubbed "the Cathedral of Commerce," and for 17 years it stood as the tallest building in the world. It went to seed along with the company that gave it its name, but Mr. Witkoff has done much to turn it around, creating a Silicon Alley haven during the first boom. Even two years ago, at the height of the recession, Bloomberg reported the building was 99 percent occupied. That was when an Italian investor was looking to take a controlling stake, with an eye toward hotels.

At the dawn of the last decade, when the condo plans were first being hatched, The Observer went inside the Woolworth, then a "salt of the earth" kind of place still full of barbers and shopworn offices:

Now, Mr. Witkoff's team of architects are drawing plans to convert the building's 30-story crenolined tower into apartments with majestic views, and surely just-as-majestic price tags. The crowning piece of the $20 million project, as conceived, will be a penthouse triplex with access, via an antique glass elevator, to the building's long-closed observation deck.

Tinkering with architect Cass Gilbert's masterpiece is not something Mr. Witkoff and his associates are undertaking lightly.

"This is a building that, when it was done in 1913, became the symbol not only for New York but for the world of what a skyscraper should be," said Roger Duffy, a partner at the architectural firm Skidmore, Owings and Merrill, who is working on the project.

[...]

Mr. Witkoff declined to elaborate on plans for the building's conversion. But Costas Kondylis, a residential architect working on the project, said some floors, which run from 4,000 to 5,000 square feet, might be marketed as single apartments. All the floors-as insisted by Mr. Woolworth-have high ceilings, up to 19 feet.

Whoever buys the 5,000 square-foot top-floor triplex will get exclusive use of a four-foot wide observation deck that rings the pyramid-shaped crown of the building.

There are plans for a spa and a small movie theater, to attract film industry buyers, downstairs. Mr. Landstrom, the manager, said apartments would also be marketed toward Silicon Alley millionaires.

It seems the biggest challenge facing Mr. Witkoff now is competition. The recent boom has seen the former sentinel surrounded on all sides. Frank Gehry's rippling wonder and the dodgy Barclay Tower by Costas Kondylis have already stormed the horizon, and Larry Silverstein and Robert A.M. Stern are still trying to get their Four Seasons off the ground. Is there room, then, for this old gray mare with her emerald crown?

mchaban [at] observer.com | @mc_nyo

Sharif El-Gamal, chairman and CEO of the real estate investment group, has dropped $45.7 million on the property at 31 West 27th Street, which PropertyShark describes as a 12-story, 108,594-square-foot office building.

"We just bought it for the income," Mr. El-Gamal told The Observer. "It's got great long-term leases, and the financing was really attractive. We have five years at a very attractive interest rate, and it's probably the best B building in this submarket."

Steve Witkoff, CEO of the Witkoff Group, bought the building in 2006 for $31.5 million. He could not immediately be reached for comment. 

Mr. Witkoff is also reportedly in discussions to sell a 51 percent stake in the Woolworth Building to the Italian Sorgente Group, which is apparently on something of a buying spree, having recently increased its majority stake in the Flatiron Building.

drubinstein@observer.com

"It's terrible," he said, nearly spitting, during an interview on March 30, the day he received the eviction notice. Sitting in a barber's swivel chair in his narrow, windowless shop on the Woolworth's mezzanine floor, he drew furiously on a Marlboro Light and recalled how mayors from Abe Beame to Rudolph Giuliani used to dash across the street for a haircut. Aging pictures of Mr. Oliva taking his scissors to Ed Koch and Joe Torre hung on the wall behind him; a Playboy magazine sat on a table nearby.

Time was, he said later, when "the Woolworth Building was the cream of the crop, the salt of the earth. It was family and they knew how to treat people."

But these days, every office-hungry dot-com wants to be in lower Manhattan. Signature office buildings are being reborn as high-end condos. And suddenly, the Woolworth Building is hot.

Mr. Oliva had already seen Harry's at the Woolworth, where restaurateur Mario Cascone did a healthy business with the City Hall lunchtime crowd, close for good on March 3. Developer Steve Witkoff is negotiating with four "world-class" restaurants, one of which will move into Mr. Cascone's ground-floor space, sources said.

Mr. Oliva had heard that all the law firms on the upper stories were getting the boot, too. Mr. Witkoff plans to convert the office space in the top 29 floors of the 60-story building into high-priced apartments.

The last straw was when he heard Starbucks was moving into a vacant storefront downstairs.

But his landlord, Mr. Witkoff, the highly-leveraged, swaggering, reportedly pistol-packing Bronx native, has big plans for the soaring neo-gothic skyscraper that writer Edwin A. Cochran called, in 1916, "a monument to small things." He's bringing in a roster of high-tech tenants, and plans to remake its upper stories as an address for the filthy rich.

Salt-of-the-earth tenants, meanwhile, are fast going the way of the five-and-dime.

The tallest inhabited building in the world when it opened in 1913, the Woolworth Building was already something of a shabby relic by the time Mr. Witkoff bought it, for $122 million, in 1998.

Sure, its terra cotta exterior was still resplendent, and its lobby, with its gargoyles and vaulted mosaic ceilings, a gem. Upstairs, however, the Woolworth's dry-goods business was in its death throes, and the building's other longtime occupants ran toward personal injury and criminal-defense lawyers. Rents were in the range of $20 per square foot per year, said Brad Gerla, the managing director at Insignia-ESG, who's handling commercial leasing for Mr. Witkoff.

At the time Mr. Witkoff bought the Woolworth, the price he paid was widely scoffed at as a top-of-the-market folly. There were questions as to whether he had the financing to close the deal.

Mr. Witkoff has proved the naysayers wrong. With high-technology firms anchoring the first 30 floors, which had been Woolworth's offices, at rents of $45 a square foot, he's already projected to recoup his investment.

Now, Mr. Witkoff's team of architects are drawing plans to convert the building's 30-story crenolined tower into apartments with majestic views, and surely just-as-majestic pricetags. The crowning piece of the $20 million project, as conceived, will be a penthouse triplex with access, via an antique glass elevator, to the building's long-closed observation deck.

Tinkering with architect Cass Gilbert's masterpiece is not something Mr. Witkoff and his associates are undertaking lightly.

"This is a building that, when it was done in 1913, became the symbol not only for New York but for the world of what a skyscraper should be," said Roger Duffy, a partner at the architectural firm Skidmore, Owings and Merrill, who is working on the project.

All About Greed?

Others, however, are less sure of Mr. Witkoff's good intentions.

"I think that Mr. Woolworth must be turning over in his grave at the thought of his building being made into something he never intended it to be," said Joyce DeBlasio, office manager for the firm of DeBlasio, Figman, Epstein, LaRocca. (Her husband, Peter, is a partner.) Last month, she received a notice giving her 60 days to vacate, and she's now looking for office space in other downtown buildings. "We've been tenants in this building-my husband's been here since 1958. We knew all the management people in the building, we had very good relationships with them. This is a whole different ball game now. This is all about greed, money."

Mr. Gerla countered that most of the law firms had been given the opportunity to rent space, albeit at higher rents in other parts of the building. The old tenants' dissatisfaction, he said, was just a symptom of their discomfort with changing times.

"You're going to get that wherever you go," he said, adding after a moment, "They're lawyers."

It's debatable, too, whether Mr. Woolworth would really be spinning in his grave at the thought of Mr. Witkoff's renovations. Looking at the scrappy young developer's rapid rise from owner of a few Bronx tenements to real estate mogul, he might see a bit of himself.

Woolworth built an empire from a single "Five and Ten Cent" store in the town of Lancaster, Pa., and made himself a multimillionaire. Piqued by the attention paid to the Metropolitan Life Tower, a 50-story classical building on Madison Square Park, he was determined to make his skyscraper the tallest in the world. Goldman Sachs & Company refused him a mortgage on the building. No matter. Woolworth's simply delved into his vast coffers and paid for the building with $13.5 million of his own fortune.

He realized his dream-at 792 feet, the Woolworth Building would not be surpassed for 17 years, when the Bank of Manhattan building at 40 Wall Street and the Chrysler Building passed it in quick succession.

On April 24, 1913, Mr. Woolworth hosted a lavish opening reception on the building's 27th Floor. In a speech that night, the Rev. S. Parkes Cadman christened the building "The Cathedral of Commerce." The nickname stuck, even after the Woolworth Corporation's declining fortunes made it seem ironic.

In 1998, with its last 400 stores closing, Woolworth's shed its name-it's now the Venator Group-and sold its flagship building to Mr. Witkoff. Renowned for his tough-guy persona, Mr. Witkoff had by that time amassed a real estate portfolio that included the Daily News building and the Goldman, Sachs building at 10 Hanover Square.

A Close Call

He borrowed heavily to do so-sometimes as much as 98 percent of the purchase price, the Wall Street Journal reported in a scathing 1998 profile. When the debt crunch hit, the deal for the Woolworth Building nearly came apart.

But Mr. Witkoff scraped together $25 million, then talked Venator into knocking $20 million off the original sale price of $142 million.

The result, said Newmark & Company Real Estate Inc. executive vice president William Cohen (who wasn't involved with the deal), was a "smashing success."

The building's commercial floors are already fully leased. Internet marketing firm Xceed is taking four floors. Organic.com took almost 200,000 square feet. The advertising firm Fallon McElligott leased two floors.

"When we took over the building, our marketing strategy was to grab the hip companies," said Mr. Gerla, the leasing agent. "We rewired the building, and the whole marketing campaign was really toward the e-commerce companies. The building was dubbed in its day the 'Cathedral of Commerce.' Well, we changed it to the 'Cathedral of E-Commerce.'"

Mr. Witkoff declined to gloat about his success, but conceded that he was "nervous" when it appeared his lenders would back off. "But me and my partners, we never swayed from wanting to buy the thing, because $125 a square foot for this particular property seemed to be a very good buy."

Mr. Cohen, the Newmark executive, suggested, though, that success might have less to do with financial acumen than market timing.

"As far as I'm concerned with regard to the Woolworth project, the moon was in the seventh house and Jupiter aligned with Mars," he said.

Mr. Witkoff declined to elaborate on plans for the building's conversion. But Costas Kondylis, a residential architect working on the project, said some floors, which run from 4,000 to 5,000 square feet, might be marketed as single apartments. All the floors-as insisted by Mr. Woolworth-have high ceilings, up to 19 feet.

Whoever buys the 5,000 square-foot top-floor triplex will get exclusive use of a four-foot wide observation deck that rings the pyramid-shaped crown of the building.

There are plans for a spa and a small movie theater, to attract film industry buyers, downstairs. Mr. Landstrom, the manager, said apartments would also be marketed toward Silicon Alley millionaires.

Then there's the view.

"The view is simply awesome," said Pam Liebman, president of the Corcoran Group, who was shown the top of the building recently. "When I stood on the top of that building … I felt like I was standing on a piece of history and on the top of the world."

Given the ever-rising market, the building's location, and historic significance, those involved with the project declined to speculate how much such apartments could fetch on the open market.

"Will the Chrysler Building ever become a residential building?" Mr. Duffy asked. "Will the Empire State Building? No. This is a chance to live in one of the top three buildings in the city."

One person involved said, however, that preliminary price estimates range from about $6 million to more than $12 million for the penthouse.

Meanwhile, what of Mr. Oliva, the barber? He said he's considered legal action, but is not optimistic. He'll probably retire.

"I'm 66," he said. "I'm too old to be knocking on doors. And anyway it's a dying era for barber shops. It's all unisex now-they don't know how to use scissors anymore."

Mr. Witkoff, a spare, knifelike man who keeps a copy of the book Tough Jews on his desk and used to carry a gun while collecting rents uptown, railed about a four-month-old Wall Street Journal article depicting his $2.5 billion portfolio of properties in Manhattan, Philadelphia, Dallas and Chicago as an overleveraged disaster-in-the-making. "I've been victimized," he fumed, before launching into a tenuous defense of his borrowing habits.

Many brokers in the audience shook their heads in disbelief. Several of his recent major deals, including the purchase of three Newark, N.J., office towers, had unraveled because he couldn't find the money to close on them, and there were rumors that his lenders might soon foreclose on the rest of his holdings. He had been forced to abandon a plan for an initial public offering and to pull out of a deal to become a part owner of the New Jersey Nets. Indeed, the decade's fastest-rising real estate star seemed on the verge of a colossal crash and burn. And there were many people who would have enjoyed seeing him fall.

As it turns out, however, reports of Mr. Witkoff's implosion were premature. After his outburst at the University Club, the once-voluble real estate investor became very quiet. (He declined to speak to The Observer for this article.) That fueled more rumors about his demise. But in truth, Mr. Witkoff has had a very productive year, one that he capped in September by purchasing a major office building in London. In the last 12 months, he has rolled up his sleeves, fixed most of his problems and calmed his lenders. "Through it all, I think people didn't give him credit for how smart he is," said Stephen Siegel, chairman of Insignia-ESG Inc.

But Mr. Witkoff hasn't just survived, he's changed. After his peek into the abyss, he has grown a bit humbler, more self-aware. His friends agree it is for the better. "Now he's again the guy who I first met several years ago," said a close acquaintance. "I think the guy you met in 1997 was a full-fledged nut."

It was Steve Witkoff, full-fledged nut, who personified the 90's version of the flashy real estate player. He got rich buying and selling existing buildings, most notably the landmark Woolworth Building in lower Manhattan, with other people's money (as opposed to building them with other people's money). And he timed it well: He caught the market when the city's stuffy real estate families were still hesitant to get back in the game, after the recession at the beginning of the decade.

He wasn't a member of their skyscraper club, either. He ran with a different gang–a crew of carousers led by former New York City policeman Bo Dietl, the author of One Tough Cop and gossip column regular. He did deals with investment bankers from Crédit Suisse First Boston and Lehman Brothers at Rao's, the East Harlem hangout where celebrities go for succulent veal and a little mobster ambience. "You talk about burning a candle at both ends," said William Adamski, a C.S. First Boston managing director. "If there was a way to burn it in the middle, Steve Witkoff would figure it out. He doesn't stop. He's like the last guy to call it a night."

Zoom Her Twice

Born in the Bronx, Mr. Witkoff grew up in Baldwin Harbor, L.I., and got his law degree from Hofstra University. After graduating, he landed a job at the real estate firm Dreyer & Traub, where one of his clients was Donald Trump.

The young lawyer, however, was more interested in emulating the famed developer than doing his legal paperwork. So in 1985, he and his fellow attorney, Larry Gluck, started touring Washington Heights in a beat-up 1978 Buick, searching for cheap buys. He wound up digging trenches and doing his own plumbing work when his rental income slumped. But he learned a thing or two about how to turn distressed properties into money makers. It served him well when he began nosing around for cheap office buildings in lower Manhattan in 1995.

In the wake of the 1987 stock market crash, most of the city's old real estate families were fleeing the financial district. But Mr. Witkoff quietly crept into the neighborhood and bought several small buildings at low prices. Then, in 1996, he struck a deal to buy the mortgage on 33 Maiden Lane, an imposing 27-story tower designed by Philip Johnson for I.B.M. Corporation. He asked C.S. First Boston for financing.

C.S. First Boston's bankers were leery at first. The word out in the Hamptons, where Andy Stone, the firm's chief real estate financier, spent his weekends, was that the pistol-packing apartment owner had all the makings of a bad actor. But they agreed to loan him the money, anyway.

With the help of C.S. First Boston, which sometimes underwrote as much as 97 percent of his purchases, Mr. Witkoff quickly bought a number of other properties, including the landmark News Building on East 42nd Street. It wasn't long before he became the talk of the city's clubby real estate community, not just for his deals but the way he carried on.

By then, he had fallen in with Mr. Dietl's rat pack of self-proclaimed tough guys, including the jeweler known as Mike the Russian, clothiers Sheldon Brody and Joseph Abboud, singer Paul Anka and Joey (Pots and Pans) DeKama. Mr. Witkoff began to stay out late. "He was not a guy who used to go out every night," Mr. Dietl told The Observer . "He used to do his work till 8, 9 o'clock at night, go home, and that was his life. Now I don't think he goes home anymore. He's out with me every night!"

Mr. Witkoff even cut Mr. Dietl in on the action at the News Building, 33 Maiden Lane and other quickly appreciating properties. Mr. Dietl returned the favor, referring to his friend as "the great real estate mogul Steve Witkoff" during his Friday morning movie reviews with Joey Pots and Pans on the "Imus in the Morning" radio program.

At his 40th-birthday party at the Glen Oaks Country Club on Long Island, a friend, banker Saverio Giarrusso, kidded him about his taste in friends and nightspots. "Steve really wants to be Italian," Mr. Giarrusso said in a toast.

Meanwhile, he was buying with the house's money. Over time, he borrowed $500 million from C.S. First Boston. In May 1997, after their first year together, Mr. Witkoff and his C.S. First Boston bankers flew to Georgia in a private plane to the exclusive Augusta National golf course. Later, they toasted their success over ribs at a local barbecue joint. But one of Mr. Witkoff's bankers struck a note of warning. "Steven, you are, like, the success story right now in Manhattan," the banker recalled saying. "You are going to be pursued by every investment banker, every newspaper reporter. It's going to be hard to hang on to yourself."

"If that happens, we'll go there together," Mr. Witkoff said.

But when he wanted to take bigger risks, C.S. First Boston balked. So Mr. Witkoff hooked up with Lehman Brothers, which had an even bigger plan for him: a $2 billion I.P.O.

Mr. Witkoff now tells people he never really planned to go public. But his friends aren't so sure. They say he borrowed everything he could from Lehman, assuming he could pay it all off with money from shareholders.

So Mr. Witkoff and his bankers went searching for bargains in faraway places like Seoul, South Korea, where they met with top executives from Samsung Electronics Company. Mr. Witkoff even brought Mr. Dietl along for the ride. When Mr. Witkoff struggled through an interpreter to say how he wanted to develop friendships with his partners before entering into business ventures, the ex-cop interrupted: "Steven, hold it a second, let me explain it. It's like when you are with a girl the first time. When you zoom her once, then you wanna zoom her twice." That broke the ice, though it didn't lead to any real estate deals.

Still, Mr. Witkoff bought properties in Chicago, Dallas and Philadelphia. He struck his deal to buy the Woolworth Building in June 1998. He agreed to be part of a group that was going to buy the New Jersey Nets. And he seemed intoxicated by the fast money that was passing through his hands. "I can't hear you now," he joked to a reporter during a telephone interview. "So maybe I should close the roof of my Rolls-Royce."

Then in the summer of 1998, the market for publicly traded real estate firms collapsed. According to Mr. Witkoff's friends, Lehman canceled his I.P.O. It suddenly seemed as if he was in real trouble. According to several sources, Mr. Witkoff toyed with selling his company to Vornado Realty Trust. Steven Roth, Vornado's chairman, was beguiled by his younger peer. "I will tell you for a fact that Steve Roth said to me, 'When I looked to buy Steve Witkoff's company, I didn't care about the properties, I wanted to buy the kid,'" a source recalled. But nothing came of it.

The Twin Towers?

Instead, that fall, The Wall Street Journal published a front-page profile of Mr. Witkoff that read like an obituary. In the piece, he was chastised by a number of colleagues, including Andy Stone, who said it was time for him to start selling if he wanted to avert disaster.

Mr. Witkoff was deeply wounded. He felt his problems had been overblown. None of his loans were scheduled to come due for another three years. So, in his view, he had plenty of time to fix things.

He couldn't fix them all, though. His bid to become one of the owners of the Nets unraveled. So did two huge real estate deals he had announced months before. And it looked like he might lose the Woolworth Building, too. He had paid a $5 million deposit but still needed another $152 million. He couldn't count on Lehman anymore, after the bank suffered staggering losses in Russia amid rumors of insolvency. Nobody else in town was willing to bail out Mr. Witkoff at the generous rates to which he'd grown accustomed.

But Mr. Witkoff proved his epitaph had been written too early. He raised $25 million in cash from partners and convinced Lehman to underwrite the rest. Then, taking advantage of Venator's financial problems and the shaky real estate market, Mr. Witkoff demanded a discount. Venator blinked and shaved $20 million off the price.

Before long, he had leased up every square foot of the Woolworth Building. Meanwhile, he was shuttling regularly to Dallas to find tenants for a money-losing office building he had purchased there. He sold several of his Manhattan office properties–including 33 Maiden Lane–at a healthy profit. Then he plunged back into the market with Lehman, buying the famous Shell-Mex House in London.

But as he scrambled to rescue his empire, he dropped out of the public eye. He stopped speaking to reporters. He has admitted to friends that he got carried away in the real estate boom. They said he has grown calmer. Of course, he still hangs out with Mr. Dietl, who owns a piece of the Woolworth Building now. But the ex-cop complains that on weekends he can't drag his buddy away from his Long Island home and his wife and three sons. "The guy's a great father," he lamented.

That's not to say he doesn't have some surprises up his sleeve. He and Mr. Dietl recently talked about making a run at the World Trade Center. "I said, 'Stevie, let's fucking do whatever we have to do,'" Mr. Dietl recalled. "He gave me a big smile."