F.W. Woolworth Didn’t Sleep Here: Landmark Tower Goes Residential

When the process server finally came to serve an eviction notice on Tom Oliva and his little barber shop in the Woolworth Building, its home of 33 years, he couldn’t say he was surprised. Just angry.

“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.” F.W. Woolworth Didn’t Sleep Here: Landmark Tower Goes Residential