Dov Hertz (Photo by Studio Scrivo)
Dov Hertz has left an indelible mark on New York’s skyline. Two marks, actually.
Over the course of 14 years heading up acquisitions and assemblage for Extell Development, Hertz helped put together the sites for One57 and Central Park Tower — two supertalls that transformed not just the Big Apple’s physical appearance but also set the tone for how the real estate industry catered to the global superrich.
Love ’em or hate ’em — and the shadow-casting, so-called “Swiss bank accounts in the sky” certainly have their haters — the buildings Hertz helped create represent a kind of ambition that defined the first two decades of the new millennium in New York. That work is echoed up and down Billionaires’ Row with projects like CIM Group and Harry Macklowe’s 432 Park Avenue, Vornado Realty Trust’s 220 Central Park South and Michael Stern and Kevin Maloney’s 111 West 57th Street.
While the first name that comes to mind when you think of Extell is founder Gary Barnett, Hertz was his man on the ground doing the deals. Then, at the age when most people are preparing for retirement, Hertz struck out on his own and founded DH Property Holdings, which focuses on industrial real estate.
His development projects include a 350,000-square-foot e-commerce distribution center in Red Hook, fully leased to Amazon, and a 1.3 million-square-foot vertical warehouse in Sunset Park, billed as the largest project of its kind in the U.S.
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What were your biggest takeaways from putting together One57 and Central Park Tower? Every site that I worked on — some of the more famous ones and some of the less — there’s the same rule: Most assemblage work is off-market deals, and to be successful in closing off-market deals, the seller has to understand that you’re not trying to pull a fast one, that you’re trying to work a deal that is mutually beneficial.
If there’s a mistake I made somewhere, it’s that I overestimated my hand. And in those instances, I probably didn’t end up making the deal.
What are your most effective negotiating tactics? I went into business with a guy named Armand Lasky, and in ’89 we borrowed money from a Japanese bank for a building in Philadelphia. It was a turnaround situation, and we realized our tenant was not covered by a [subordination and nondisturbance agreement]. So if a lender takes back the building, he can wipe out the lease. We knew that our angle to buy out this tenant was to let him know that he had vulnerability in his lease.
Then the market crashed and we couldn’t sustain the building but he [the tenant] didn’t believe me, because who buys a building and six months later is giving it back to the bank? So I hired two Japanese actors to walk around and make a lot of noise in Japanese and the guy calls me the next day and he says, “What the hell is going on?” I said, “Well, they flew down from Japan and wanted to see what it is that they’re going to be taking back.” And he was willing to negotiate after that.
How has assemblage changed? Pre-internet, it was possible to show up as somebody else and say, “I’m just looking to buy your building.” But those days are long gone.
How did you get your start in real estate? My father started off in the insurance real estate business and moved on to real estate management and then investment. My first job outside the family business was as an office broker for a company called Gronich & Karr.
They used to do old-fashioned canvassing where you’d walk into a building and find out who the tenants were and when their leases expired. You’d follow a tenant to their space and make conversation: “Hi, my name is Dov Hertz. I’m a leasing broker. Who can I talk to about your leases?”
My first week on the job, I walked into an elevator in a building on Third Avenue. There were seven guys all around my age and nobody’s pressing a button, because nobody had anywhere to go. I’m looking around and I’m like, “We’re all brokers?”
And how did you meet Gary Barnett and end up at Extell? We went to rabbinical college together but hadn’t kept up. I brought him a deal in Toronto and he offered me a job. He was just getting off the ground and needed a head of acquisitions. I think I was employee number four or five. I ended up staying there for close to 14 years.
What was his pitch? I doubt he said, “We’re going to build the tallest condo building in New York.” His pitch was that he couldn’t do it all himself. He was the acquisitions guy, he was the development guy, he was it. We had gotten to know one another a lot better through this deal, and he said, “I’m impressed with your skill set, and I think we can grow this together.”
I don’t know that he aspired at that point to necessarily change the landscape. He had a real estate business and he wanted to be successful. Gary is not an ego guy.
What about you — do you think you have an ego? I think everybody has pride. You have pride in what you do, you want to be well received in the market, but the question is, what’s the driver? I don’t think it’s my ego that drives me. I want to be successful. I want to contribute. I want to leave a lasting contribution.
But you’ve done that — you’ve built these skyscrapers. What are you looking for at this point? I’ve changed product types completely. The focus now is on industrial and primarily urban infill last-mile distribution. When I left Extell and opened up my own shop in November of 2016, e-commerce was really just starting to make noise, and I spent six months doing nothing but climbing into industrial in New York City.
You can sell buildings to Prologis, but you’re also competing with them. Andrew Chung [of Innovo Property Group] is out there, too. What is your competitive advantage? There are a lot of good competitors in the market. Any of those guys you just mentioned are formidable competitors. I’ll see something that the other guy won’t, and maybe he’ll see something that I won’t.
Do you think the shift from physical stores to e-commerce will change the city’s streetscape? I don’t think it’s going to change the cityscape. You’re still going to have buildings with retail on the ground floor, it’s just going to be the way they’re structured that’s different. For instance, you already see where clothing stores are taking less space; they’re more of a showroom than places people go to buy things.
What do you think about the political climate around development now? I don’t understand how the agenda is beneficial for the city. Let’s forget the developer; I understand that no one’s concerned about the developer. But if you’re going to do what’s best for the people, then it has to be what’s best for the city. Amazon [HQ2] in Long Island City, for example, is an example of something that would’ve been good for the city.
What do you make of the news that Jeff Bezos is stepping aside? I have no idea what to make of it. No one from Amazon called me and asked me to step into his shoes.
If you could go back and do something differently, what would it be? I probably would have started my own shop earlier, because I would’ve had more runway. But then if I had started earlier, I probably would not have ended up focusing on industrial. Who knows what my portfolio would look like through this pandemic?
What have you taken away from being a father? Learn to listen. I think that’s true in every aspect of your life. Listen to your children; listen to your employees; listen to your business associates.
What do you do to unwind? I have a boat, and I love boating. I don’t like fishing. I just like being out. I love the feel of the speed. I like the ocean. I like the wind, the sun.
What made you decide to leave and start up on your own? I was 59. I had always wanted to open my own shop, and I realized that the window was closing and it was either now or never. I don’t know that there are many people at my age who would walk away from a great job. I could’ve stayed there [at Extell] until the day I retired, I assume, and been happy. But I had the dream and went with it.
This interview has been edited and condensed for clarity.