Building with glass and steel can be a lot easier than dealing with flesh and blood.
In our cover story this month, we look at how New York City’s biggest real estate companies are planning — or failing to plan — for succession and the next generation of leadership. Some of the most prominent development firms in the city are lorded over by septuagenarians and octogenarians — such as Steven Roth and Harry Macklowe — who haven’t always planned for the future.
Part of the reason, write Eddie Small and E.B. Solomont, is that real estate, unlike industries such as Wall Street, continues to operate on the “Great Man theory,” where founders have almost complete control over their firms. Their famously prominent egos often prevent them from designating an heir apparent.
Ego, in other words, helps skyscrapers go up but doesn’t always help firms live on.
The easiest way to pick a successor is by giving birth to them. Plenty of firms go this route, the most prominent being the Trump Organization, the family-run business that now runs the country.
But that can be problematic, too. In the case of Macklowe and his 13-million-square-foot portfolio, it doesn’t help when you sue your son, which Macklowe did several years ago for $300 million (it was an operational dispute).
And it gets trickier when there are multiple offspring vying to be No. 1. The question of picking the favorite son goes all the way back to the biblical story of Jacob and Esau, both of whom battled over their birthright. Luckily, as we mention in the story, these days there are advisory firms that can help a family choose the sibling more qualified to lead.
“Enlisting an outsider to ratify a decision [on succession] can help other family members accept it,” one such adviser told us. Perhaps the patriarch Isaac should have used an outside consultant to help smooth over the tension between his two scriptural sons.
Speaking of family — though more happily: My wife, Julie Satow, who writes about real estate for the New York Times, just published her first book. “The Plaza: The Secret Life of America’s Most Famous Hotel” is a history of the iconic property and the ultra-wealthy in New York over the last 100 years. It’s filled with accounts of real estate tycoons (like Trump) that owned the hotel and the eccentric society figures who stayed there.
Tina Brown, reviewing the book for the Times, called it “dazzling.” It’s been named one of the best reads of the summer by Vogue, Newsday and Time. Fortunately, we were able to land an excerpt free of charge. (My wife and I met covering the real estate beat and, in fact, got married at the Plaza.)
Elsewhere in the issue, we have our annual ranking of Manhattan’s top residential brokers, looking at those with the most listings by dollar volume. The top finisher, Corcoran’s Carrie Chiang and her team, had $384.2 million in listings at the time of our survey. The top 40 agents on the list are collectively marketing more than $6 billion in Manhattan properties.
In another piece, we write about a firm that some are saying is a lot more tech savvy than venture capital darling Compass. Agents at the firm communicate with one another in a virtual world using avatars… really. The virtual brokerage, eXp, is gaining traction nationally, but it’s now attempting to enter the New York market, which is always a tough nut for outsiders to crack. E.B. Solomont looks at its chances for success.
Just as interesting is an investigative story by Kevin Sun that uncovered a giant network of fake websites for luxury buildings in the city, which are generating real leads for brokers. Some 270 such websites exist that try to lure buyers into entering their contact information.
Lastly, don’t miss our stories about the industry impact of the trade war with China; the upcoming mansion and transfer tax hikes; and Mayor Bill de Blasio’s run for president. Spoiler alert: None will be good for real estate long-term.
Enjoy the issue!