Joseph Moinian made a name for himself with audacious real estate deals — like the building on John Street that he bought at $12 a square foot and rented out for $58 a square foot. Or his purchase of Chicago’s Sears Tower, which he bought in 2004 with Joseph Chetrit and a number of other investors, paying $840 million.
Chetrit’s most recent acquisitions include 620 Sixth Avenue, which houses Bed Bath & Beyond, Filene’s and TJ Maxx. Yair Levy and Charles Dayan were his partners on that $300 million purchase last year.
But ask Moinian, Chetrit, Levy or Dayan about their very first deals, and you’re liable to get stories about an altogether different kind of transaction. They’ll probably tell you about selling pants, shirts and undergarments to the very same kind of business owners to whom they now rent space.
Moinian, Levy, Dayan and Chetrit all got their starts in the garment industry. It’s a path that might seem improbable at first, but it’s one that’s increasingly well-trodden by some of the biggest players in New York real estate.
“I could give you 1,500 names,” says Levy. “Many of us know each other from the garment center and we have done business together for 30 years.”
In some ways the transition is only natural. Many garment manufacturers end up buying their warehouses, or the stores in which they sell their wares. But there’s a less obvious connection at work: Both the garment trade and real estate are tailor-made for that perennially replenishing pool of entrepreneurial grit — the immigrant New Yorker.
In the garment industry, “there are relatively low barriers to entry,” says Sarah Crean, executive director of the Garment Industry Development Corp. “You don’t need a huge amount of capital to rent a factory and get it equipped. Thousands and thousands of Americans have gotten their start that way.”
Real estate, says Mitchell Moss, a professor of urban politics and planning at NYU, has been a very “porous industry,” and a long line of immigrants have found fortune in it.
“Real estate in New York has been a very important industry for people with entrepreneurial know-how,” he says.
Adds Wellington Chen, director of the Chinatown Partnership, a local development corporation: “When you accumulate wealth, the natural investment is real estate.”
It is even more natural for those in the garment trade, who find their experience prepares them with many of the skills they need to negotiate.
“People learn wheeling and dealing,” Levy says. “When you are a wholesaler, you have good years and bad years. It’s not stable. It’s a tough business. You develop very strong experience, you learn to be a survivor, and when you come into real estate it’s an easier business because it’s more stable.”
David Adelipour, a developer who recently opened the Hotel Mela in Midtown, arrived from Iran in 1968. He got his start in the garment industry selling junior wear before making the transition.
“People in real estate are risk takers,” he says. “That relates to the garment industry. You have to take a lot of risks. You’re doing fashion, and you have to commit to investing in your styles and products before you sell them.”
Since both the garment trade and the real estate industry require an entrepreneurial spirit, it’s not surprising that immigrant groups with the strongest tendency toward risk-taking are drawn to those fields.
In New York City, almost 28 percent of Syrian immigrants and 24 percent of Iranian immigrants are self-employed, more than all other immigrant groups, according to “A World of Opportunity,” a recent report put out by the Center for an Urban Future, a nonprofit think tank. About 18 percent of Israelis, the fifth-highest group, are self-employed.
Charles Dayan is a Syrian immigrant. Moinian and Adelipour are Iranian. Levy is Israeli, as is Joe Nakash, a successful developer and a founder of Jordache.
Says Jonathan Bowles, director of the Center for an Urban Future, “A lot of people went from the factory floor to contracting, so it has produced some of our best entrepreneurs. Then, once they get enough savings, they get into more lucrative areas.”
But entrepreneurship is just one of the skills the garment trades hone.
Levy says his experience opening stores and traveling the nation looking for outlets also taught him to have a good eye for a deal.
He got his start in the garment industry at the age of 15 in Israel, selling clothes door- to-door in Tel Aviv. At 18, he bought his first store. He was marketing his own line of men’s sweaters by 20. And at the age of 22, he came to New York to join a brother. Together they opened a wholesale line of ladies’ wear.
“As a wholesaler you sell to many retailers,” says Levy. “I also owned many stores to sell my own products. You are always looking for good retail locations, so that gave me a sense of what’s going on in the real estate industry.”
His small-business background often gave him an advantage when evaluating distressed properties.
“Sometimes when tenants aren’t paying rent, other investors are scared away,” he says. “But I can sense when the tenants are simply trying to take advantage of an owner’s bankruptcy, and when their businesses are not good. So that has never turned me off.”
Lately the garment industry in New York City has been in decline. That has only accelerated the transition to real estate for some.
John Lam, a prominent garment manufacturer in Chinatown, is a major hotel developer in the city. He is also building 50,000 square feet of shopping space under the Manhattan Bridge and developing condos in Soho, Tribeca and Woodhaven.
“The garment industry is sinking,” he says. “We’ve got to find something else. I’ve being doing real estate part time for 20 to 25 years already. I don’t want to travel to Asia. So I have to find some other vocation.”
Adelipour says he left the garment industry for similar reasons. “The garment industry has started to fade,” he says. “Real estate is more stable.”
Bowles, whose study looked at a number of other cities, says New York City is not alone in this transition.
“In Los Angeles, we found similar things with people in the garment industry,” he says. “Iranians and Armenians are prolific in the garment trades there, and some of them have turned to real estate. The garment trades have produced a lot of entrepreneurs in this country.”
Even so, Bowles says, the number of new immigrants looking to buy a piece of the American dream is unlikely to drop. Many new immigrants are turning to other low-capital industries to get their first starts as the garment industry fades — such as cutting hair and opening restaurants — and in the years ahead they are likely to continue to pour their saving into real estate, Bowles says.
“Immigrant entrepreneurs are key parts of the economic growth of cities like New York and Los Angeles,” he says. “They have been, and will continue to be, entrepreneurial sparkplugs.”