It seems at least slightly likely that the days of Wall Street’s onyx-coated hyper-prosperity are over, and that New York’s era of perpetually broken real estate records (the hedge fund manager Scott Bommer paid $46 million for a co-op in January; in July, a Tisch heir was said to be paying $48 million for a co-op; this month Mr. Bommer sold his place for $48.8 million) was some sort of fleeting, irrational fluke.
But whereas everyone long ago accepted that American homeowners hugely erred by assuming their home values could only go up, and that Wall Street went even further astray by borrowing billions to make sour mortgage investments based on that optimism, the top tier of New York City’s real estate market still seems to consider itself magically protected. There are just so few trophy properties, the thinking goes (even now), and just so many executives who want them.
But a staggering number of the recent multimillion-dollar real estate purchases in New York were made by executives at the free-fallen Lehman Brothers: In January 2007, of course, the firm’s chief executive, Dick Fuld, and his wife paid $21 million for a Park Avenue co-op, despite the fact that it needed massive amounts of work.
And consider that at 15 Central Park West, the co-head of Lehman Brothers Real Estate Partners, Raymond Mikulich, paid $17.9 million for a spread; Lehman CFO Erin Callan paid $6.48 million; the head of Lehman’s European fixed-income sales, David Bizer, paid $5.3 million; and managing director Arthur Estey bought one of the building’s biggest non-penthouse units for $16.9 million.
Meanwhile, Lehman’s global head of investment management, George Herbert Walker IV, one of the president’s cousins, paid $13.95 million for a townhouse at 6 East 10th Street in Greenwich Village, even though his sellers had only paid $7.5 million two years earlier. (Ms. Callan’s and Mr. Mikulich’s positions have both changed; the fates of the others have been unreported.)
None of those deals looks more ironic in hindsight than the $25,063,711 and $2,351,537 spreads that Bear Stearns’ ex-CEO Jimmy Cayne bought in February at the Plaza. Still, it’s not that Mr. Cayne (or Mr. Walker, Ms. Callan, Mr. Fuld) could be blamed for spending handsome Wall Street profits on handsome apartments with ever-increasing price tags. It’s just that the tiptop of the high end of the market will miss them if there are suddenly a lot fewer buyers with a lot of money to spend.
Besides, there are easier-to-loathe real estate deals that have little to do with Lehman. In January, Jerold Katz, the head of a Texas family that owns a debt collection agency—recently in the news for no-bid state contracts and accusations of customer harassment—paid around $4 million for a unit that appears to be three floors up from Mr. Cayne’s at the Plaza.