The Real Deal New York

Meet the Gen Xers taking over NYC real estate

Industry undergoes unprecedented changing of the guard with a wave of new 30- and 40-something CEOs stepping in

September 01, 2013
By C. J. Hughes

From left:

Elizabeth Ann Stribling-Kivlan, Justin Elghanayan, Jeff Blau, MaryAnne Gilmartin and Rob Speyer

They’re young, they’re tech-savvy, and some even wear sweatshirts and trendy retro-style sneakers to the office.

No, we’re not talking about the newest batch of Silicon Alley CEOs. Meet real estate’s new ruling class: The 30- and 40-something executives who have recently taken over operations at New York City development firms, hotel companies, investment banks and real estate brokerages.

While many of these heavy hitters — including the Related Company’s Jeff Blau, Forest City Ratner’s MaryAnne Gilmartin, Silverstein Properties’ Marty Burger and Tishman Speyer’s Rob Speyer — have been in the industry for years, a slew of their venerable predecessors have recently retired, opening up the top jobs at their respective firms in an unprecedented, industry-wide changing of the guard.

These new leaders are collectively overhauling some long-followed industry norms, and reinvigorating a market sector known for embracing the status quo.

“This is not really an industry known for being innovative,” said Gilmartin, 49, who became CEO of Forest City Ratner in April.

And even though most have been groomed by their predecessors for leadership positions, this new generation brings a fresh perspective that is impacting not only their own companies, but the New York real estate industry as a whole, sources said. For example: These younger moguls are more likely to have MBAs than their predecessors, to invest in neighborhoods that their companies have previously ignored, to go after global financing and to keep their companies at the forefront of technology.

“They’re all coming up at once,” said Mitchell Moss, a professor of urban planning at New York University. “They have energy, they have know-how, and they want to have an impact. They don’t just want to sit back and collect rent receipts like some people before them.”

Family tree

Real estate is well-known for its family ties, so it’s not surprising that several members of this next generation of company leaders are taking over for their parents.

At Queens-based Muss Development, for example, 42-year-old Jason Muss is gradually taking over for his 71-year-old dad, Josh. The younger Muss, a company principal, is expanding beyond Queens — where the company recently launched the last phase of Oceana, a 15-building gated Brighton Beach condo complex on the waterfront — and into Manhattan development. One of those Manhattan properties is 181 East 119th Street, a new 90-unit luxury rental building in Harlem.

And at Rockrose, Justin Elghanayan became president last year, taking over for his father, Henry. The move signaled a new phase for that firm, which split its properties in 2009,when Henry’s brothers — Thomas and Frederick — broke off and formed a new development company, TF Cornerstone.

Similarly, Rob Speyer joined his father Jerry’s firm, Tishman Speyer, in 1995. He was promoted to co-CEO in 2008 and last summer Speyer was chosen to be chairman of the industry’s most powerful trade organization, the Real Estate Board of New York. Speyer is REBNY’s youngest-ever chairman, replacing powerhouse Mary Ann Tighe, the CBRE Group’s Tri-State chief executive.

Assuming command of dynasties with entrenched roots in New York comes with a lot of advantages. For starters, many of these companies have established reservoirs of goodwill built up over the years, not to mention amassed wealth, relationships with banks, and access to lawyers who know their way around the zoning process.

Jed Walentas, 39, who has taken over most of the day-to-day running of Two Trees Management Company from his father, David, noted that it also provides a certain level of freedom.

“My father grew up with nothing and I grew up with a lot, so there maybe is less pressure for me to make a lot of money,” he said. “But I think when you are well-enough capitalized, and you have the intellectual curiosity, you can explore other kinds of stuff, non-proven ideas.”

A case in point, he said, is Two Trees’ plans for the former Domino Sugar factory site on the East River in Williamsburg, a stalled project that the firm bought last year for $185 million. (The purchase also expanded the company into another section of Brooklyn from its longtime Dumbo base, the once-industrial neighborhood it helped transform into a vibrant mixed-use community.)

Also, instead of feeling pressure to squeeze in the maximum number of apartments at the 11-acre mix-used Domino complex, Two Trees is including more parkland, retail and offices, and fewer apartments than the plan from the original developer team, which included the Community Preservation Corporation and the Katan Group.

Until the Two Trees proposal is approved and construction is underway, Walentas is allowing the development site to be used by the neighborhood for an urban farm, yoga studio and bicycle course, according to published reports.

In addition, architect Rafael Viñoly’s original design has been radically rethought since Two Trees bought the Domino site. The company hired SHoP Architects, which came up with a bold new look that includes two taller towers with cutaway, doughnut-type openings in their centers.

“If we weren’t in the position we’re in, we would neverhave made that decision,” said Walentas, noting that he had the luxury of time when it came to his decision to redesign the project.

Meanwhile, Walentas has broken tradition with his dad in developing the 72-room Wythe Hotel in Williamsburg. The project represents a rare foray into hospitality for Two Trees.

Having a young CEO can create distinct advantages when marketing properties geared towards younger residents, said Justin Elghanayan. His firm is now leasing Linc LIC, a 42-story, 709-unit rental tower in Long Island City, where one-bedrooms average $2,700 a month.

The building has 25,000 square feet of interior amenity space, which includes squash courts and a screening room, plus three roof decks totaling 25,000 square feet, Elghanayan said. Those amenities were specifically included to attract young renters, he said.

Many millennial tenants are picky when it comes to restaurants, Elghanayan said. That’s why Elghanayan has taken pains in choosing the right restaurant for a Rockrose-owned site across from Linc. He said that restaurant, which is supposed to open this summer, will be M. Wells Steakhouse, an offshoot of M. Wells, the popular Long Island City diner that closed in 2011, but has since reopened as a cafeteria inside MoMA’s PS1 in the same neighborhood.

“Henry is more in touch with the general winds of culture, like where is going to be a good neighborhood,” Elghanayan said of his father, who, still runs the company but has turned over more responsibility to Justin. “I am more interested in the particulars of what restaurants to put in.” He noted, however, that both approaches are needed to achieve success.

And Justin is choosing deal locations as well.

He’s recently pushed Rockrose further into Washington, D.C. The firm has picked up five office buildings there in the past few years, and is about to close on 2000 L Street NW, an eight-story, 401,000-square-foot office building currently owned by Brookfield Office Properties.

In addition, under his stewardship, the company is ramping up plans for a massive mixed-use hotel and residential development in Manhattan’s Hudson Yards area on 11th Avenue between West 38th and 39th streets, which could include 520 apartments, he said.

In order to sell apartments, these young guns are drawing on different skills than their predecessors did, according to Elizabeth Ann Stribling-Kivlan, 34, who last January took over as president of residential brokerage Stribling & Associates from her mother, company founder Elizabeth Stribling.

For example, Stribling-Kivlan is now making social media a bigger priority with features like the recent “7 under $700,000,” which was posted to the company’s Facebook page.

Of course, there’s downside to family-run businesses. Lawrence Longua, a former professor at New York University and longtime real estate banker, said that a risk with dynasties is that untested kids can come up too quickly.

Some say a lack of experience may have played a role inRob Speyer’s push for his company to buy Stuyvesant Town in 2006 for a record-setting $5.4 billion. He reportedly took the reins on that deal instead of his father.

Tishman Speyer, which paired with other investors in the deal, was unable to cover its debt service because it couldn’t charge high enough rents at the middle-income complex. When Tishman tried to crack down on what it claimed were illegal rentals, tenants pushed back aggressively. Tishman Speyer, which did not return a call for comment, eventually lost the building.

“Was it Rob Speyer’s fault 100 percent? No,” Longua said. “But it astounded me that a family whose individuals are so rooted in New York real estate would not be more sensitive to the politics of Stuy Town.”

A rendering of the Domino Sugar factory that Two Trees is redeveloping in Williamsburg

A rendering of the Domino Sugar factory that Two Trees is redeveloping in Williamsburg

Not just blood

These days an increasing number of company leaders are outsiders and are not being tossed the baton from a family member, sources say.

Silverstein Properties, for example, tapped former Related executive Marty Burger in 2011 as a co-chief executive. In December, Burger will take over as CEO from the 82-year-old company founder, Larry Silverstein.

Silverstein’s children, Roger and Lisa, “didn’t want to run the business,” explained Burger, 48.

The way Burger and Silverstein currently share responsibilities may suggest a new direction for the firm once its namesake retires. Silverstein spends almost all his time on the firm’s signature project: the three towers rising at the firm’s World Trade Center site, which have been in the works for more than a decade.

Burger, meanwhile, focuses on the rest of the company’s residential and hotel projects, which are expected to move more into the limelight once the time-consuming World Trade Center wraps up: Tower Four will open this fall, and One World Trade will debut next year.

Burger said some criteria will stay in place. For starters, the company will remain selective, taking on only big, impactful and pricey projects, he said. He pointed out that six of its current projects in New York have price tags of $800 million or more.

One that might fit the bill is a soon-to-be-announced project on West End Avenue, which will break ground next spring, Burger said. He declined to discuss the deal, but said the project will be mixed-use with a heavy residential component.

Hyper educated

While in the old days some builders didn’t even make it through college, the latest generation of CEOs often come armed with MBAs.

For example, mega developer Sheldon Solow, 84, dropped out of New York University. Others have a single bachelor’s degree under their belts. And when that previous generation did continue their studies, it often was a law degree. Silverstein, for example, got a JD from Brooklyn Law School.

But as real estate has become a more sophisticated investment area, opening up new streams of funding, it’s attracted more professionals with backgrounds in finance.

Burger did his undergrad at the University of Pennsylvania’s Wharton School of Business and worked for elite financial firms like Goldman Sachs and the Blackstone Group. Forty-five-year-old Jeff Blau, of Related, meanwhile, also went to Wharton, where he earned a MBA. Fellow Wharton grad Jonathan Gray, 43, the global head of real estate at the Blackstone Group, has catapulted to the top rungs of the firm in recent years and is a newly minted billionaire to boot. In 2011, Gray was promoted from co-head of the real estate division to its sole chief. And sources say he’s frequently one of a handful of people on the short list to take over the entire firm when CEO Stephen Schwarzman steps down. However, company sources say that is not likely to happen anytime soon.

Having leaders with a financial background has helped focus real estate companies on getting capital from more sources. For example, both Burger and Blau have launched asset management divisions within their firms, which give them broader access to critical debt and equity markets overseas.

The new division scored Silverstein a loan from Grupo Financiero Inbursa to build a new 434-room Four Seasons in Orlando, the largest in the world. Indeed, Mexican billionaire Carlos Slim’s bank will provide $190 million in debt financing for the $360 million project.

Similarly, the asset management division secured a $660 million loan from the Children’s Investment Fund Management of London to resume construction at the Four Seasons on Park Place in Manhattan.

Blau — who took over as CEO for Stephen Ross last year — created Related’s asset-management arm in 2008, which established a funding network that includes Goldman Sachs, Olayan Group, from Saudi Arabia, and Mubadala, from the United Arab Emirates.

And though Ross, who founded his company in 1972, is considered more of a well-connected schmoozer, Blau, in the style of his generation, has honed his financial chops.

Blau also has his sights set internationally as a place to develop. Related has recently opened offices in Shanghai, Abu Dhabi and Brazil, with a possible London outpost to join the mix soon, said Blau, who acknowledged that this global focus is one of his priorities and a new direction for the firm.

Technology obsessed

While almost all major real estate companies already have established websites and social media operations, these new CEOs and presidents are more apt to spend money upgrading their company’s technological resources, from streamlined billing systems to high-powered building-wide wireless networks.

Indeed, when Burger arrived two years ago, Silverstein’s IT department, which wires new developments, had only two employees; now it has eight. A new accounting system that allows tenants to pay their rent electronically has also been created.

“I sort of forced that to happen sooner than it probably would have,” Burger said.

Blau said he has pushed for technology upgrades at the firm for years. For example, he persuaded Ross, who is about three decades older, to use technology to streamline the leasing process at Related’s many rental buildings. Related now also accepts credit cards for rent payments and has a free transfer policy between its properties, to save tenants money if they move within the company portfolio. Also, some apartment buildings have resident-only websites.

“This is not Stephen’s demographic in these buildings, so it’s not like he was suggesting this,” Blau said. “This came more from me.”

Hints of what’s to come may be seen in the other business lines Blau has focused on, like growing the Equinox gym, which Related bought in 2005 for $505 million.

Staying at the forefront of technology and trends extends to construction techniques, too. Forest City Ratner, for instance, made headlines when it announced that it would use prefab modules to build its first residential tower at the Atlantic Yards site in Brooklyn. Located next to Barclays Center, the 935-module high-rise will have 350 apartments, half targeted at middle- or lower-income housing.

The modules, which are fabricated at the nearby Brooklyn Navy Yard, increase efficiency (and lower costs), but also represent that things can change in a somewhat hidebound industry, said Gilmartin, who pushed the company to test the modular design.

Gilmartin, who took over as CEO from company founder Bruce Ratner, said more projects using this technique will be forthcoming under her leadership.

Using prefab construction “could bring opportunity to high-rise developers here and in any gateway city where high land prices and unpredictable construction costs stifle the growth of a market, especially affordable housing,” she wrote in an email.

Gilmartin is also eager to capitalize on the success of the Barclays Center. Last month, Forest City was picked to take on a $229 million renovation of the Nassau Veterans Memorial Coliseum on Long Island.

Gilmartin noted how much the industry has changed since she joined Forest City in 1994. As the obsession with real estate has swelled, the industry has taken on a patina of cool, she said.

“In the beginning, being a developer felt like the equivalent of being a used-car salesman,” she said. “But now, it’s like everybody wants to do it.”

Collared shirts, optional

If there is one overarching change that the next generation is making in the industry, it’s rapid dissolution of longstanding New York City neighborhood lines. In recent years, rezonings, mega-mixed-use development projects, and industrial conversions have transformed blighted areas into vibrant neighborhoods, particularly in Brooklyn, where young people now flock in droves.

Fred Peters, 61, president of the residential brokerage Warburg Realty, said younger real estate pros “don’t see neighborhoods as we saw them. They see living anywhere as an option.”

In something of a role reversal, Elizabeth Stribling moved to a $6 million-plus apartment at One Brooklyn Bridge in 2009. And, in May, Stribling opened an office in a former furniture store on Atlantic Avenue in Boerum Hill, after focusing primarily on the Upper East and West Sides for much of its existence.

And in Manhattan these days, “if you said, ‘People don’t go above 96th Street,’ it would be laughable,” said Adam Mermelstein, 34, a principal at Treetop Development. His firm has targeted Harlem, where it recently bought 17-27 West 125th Street, a 50-unit prewar rental for $13.6 million, and Rego Park, Queens, where it purchased the 417-unit apartment building Saxon Hall for $85 million.

“The younger generation is looking not to invest in the stable real estate like on the Upper West Side, where the returns are next to nothing, and which are completely tapped out in many cases,” he said. “We are looking for the up-and-coming areas.”

Meanwhile, this so-called Generation Facebook has ushered in the era of the casually dressed CEO.

Like the social networking site executive, Mark Zuckerberg, Walentas is known for wearing hooded sweatshirts to work, in an industry that used to favor suits.

Walentas said he began wearing hoodies partly because he was spending so much time at construction sites. But there may be marketing upsides to his wardrobe, which he doesn’t change even when he meets with bankers.

“The combination of our principals being pretty casual and being in Dumbo … it kind of became what people knew us for,” he wrote in an email. “It was not at all planned. It just seemed appropriate.”

Stribling-Kivlan said she’s continued her mother’s practice of wearing a suit coat every day, but often pairs it with slacks, as opposed to her mom, who was known for her Chanel suits. “We look very different and dress very differently,” Stribling-Kivlan said.

“If you are showing a loft space in Bushwick, [the client] might be more comfortable if you have jeans on,” she said, adding that “the world has become much more casual.”

Old-guard wisdom

With a critical mass of respected industry veterans simultaneously retiring, the industry risks losing institutional knowledge. Luckily the previous generation of industry veterans are not exactly lounging around on tropical islands.

For example, Related’s Ross, 73, who is staying on as chairman, will “work in his office until his dying day,” said Blau, though he’s less involved in daily management issues. Ross’s current role is as “a great visionary,” Blau said.

Similarly, Henry Elghanayan, who plays an active role at Rockrose, has no immediate plans to step down for good, sources say.

Scott Alper, 38, the principal of the Witkoff Group — which recently sold out 150 Charles Street, a 91-unit West Village condo — is in no rush to take over for company founder Steve Witkoff, even as he takes on more responsibility behind the scenes.

Alper, who was promoted to partner in 2005, has also been active in other major deals as of late, like the residential conversion of 10 Hanover Square, which was sold for $261 million, and his current undertaking, adding condos to the top of the Woolworth Building.

“All I did when I started was number-crunching,” he said. “Now, I spend a lot of time on the design and development side,” he said.

Alper, who has worked alongside Witkoff since 1996, declined to elaborate on his behind-the-scenes role.

But Adam Spies, 38, a broker with Eastdil Secured who has worked on deals with him, told Crain’s this summer that he is formidable.

“He is methodical and detail-oriented,” said Spies. “He is the glue behind Witkoff.”

CORRECTION: In the September story “Real Estate’s New Ruling Class” TRD incorrectly stated the name of the restaurant taking space across from Rockrose’s Linc rental building in Long Island City. It is M. Wells Steakhouse. 
  • the usual

    Would be nice if the Real Deal ever wrote about successful agents or people in the RE industry who are not related to developers or other very successful industry figures. There is hardly anything ‘news breaking’ about this article.

  • SomaVision

    Booooooorrrrrrriiiiiinnnnnnnggggg

  • Simon Jones

    All those “successful” RE personals are taking their families business….Real Deal should interview the parents (1st generation) that made it happen and not the children who just taking over…..

  • YEBH

    I appreciate the history lesson, generational-torches will continue to be passed down for years to come. I believe what would be more impressive is highlight those in the real estate space who started from the bottom, no ties to old money – nothing but will. Moreover, the absence of minorities in development has been a prevailing issue for years and needs to be addressed. This issue is mainly driven by the lack of access to capital more than a lack of skill. Great read but recommend looking forward 20 years, what will the built environment look like and who will it be built by.

    • Katherine Barlusco

      It doesn’t matter minorities or not, all people are equal and Real Deal should definitely highlight those who started from the bottom , agree on that.

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