Though he still could face charges over his involvement with a prostitution ring, Eliot Spitzer, New York’s former governor, is tiptoeing into the industry where his family made its fortune: Real estate.
Early last month, the New York Observer stated that Spitzer was reporting daily to 730 Fifth Avenue, which his father, real estate tycoon Bernard Spitzer, co-owns and runs his firm from. A week later, the New York Sun reported that the former governor called a meeting with union officials to float the idea of a so-called “vulture fund” to snap up distressed real estate assets with their financial help.
New properties could be a shot in the arm for the Spitzer family real estate business, which has been relatively stagnant in recent years, content to manage its existing portfolio rather than expand aggressively, as many of its competitors are doing, brokers and developers say.
In New York, the company’s property is valued at an estimated $500 million, including at least 10 buildings that are owned, co-owned or managed by Bernard Spitzer.
Most are located in Midtown or the Upper East Side. Notables include 985 Fifth Avenue, the 25-story luxury rental where Spitzer lives; and the Corinthian, an 865-unit condo that opened in 1988 at the site of the former East Side Airlines Terminal, which is bound by 37th and 38th streets and First and Second avenues. One of the firm’s newer projects is 150 East 57th Street, a 34-story luxury rental completed in 2000.
Of course, this will not be the first time the elder Spitzer has lent a hand to his son. With the success of his real estate empire, Bernard Spitzer nurtured his son’s privileged upbringing, expensive education and political career. According to published reports, Spitzer’s father injected hundreds of thousands of dollars into his campaigns.
But it remains to be seen how far Spitzer will take his newfound career in real estate or whether he’ll be successful. But with his father ill from Parkinson’s disease and his own options limited by his high-profile fall from grace, it seems likely that he will become more involved. We asked brokers, developers and real estate academics whether the industry will welcome the man once known as the Sheriff of Wall Street, before he tumbled from power after reaching the governor’s mansion. Here’s what they had to say:
Jeffrey Roseman, retail broker, Newmark Knight Frank Retail
Could a lack of experience in real estate hurt Spitzer?
No. He obviously is a very bright guy. I like to think our industry is full of rocket scientists, but we’re not. He ran the state of New York; he can run a portfolio. I would take him on my team any day of the week. And the industry will accept him. Spitzer [Enterprises] is a very reputable and honorable firm. When our renewal commission for a Piaget watch store in the Crown Building came up two years ago, they mailed us a check right away. Most people would wait for you to call and ask for it.
Kathy Sloane, residential broker, Brown Harris Stevens
What should Eliot do differently at the firm?
Eight hundred Fifth Avenue [a late 1970s rental building at East 61st Street] is their trophy property. It could do very well as a condo. Even though the company may now be in a holding pattern, those assets could be spun off to create masses of capital and opportunity. [Eliot] may have taken this business somewhat for granted before, but this is a time for the father and son to work together.
What is it about father-son tandems in New York real estate?
I love working with family businesses; there’s a wonderful feeling you get from walking into the offices and being greeted by family. Children are learning from their fathers, but the fathers can also learn a lot from their kids. Donald Trump realizes this and has three of his children with him on his Trump Dubai project.
Louis Dubin, president, the Athena Group
What was the industry’s impression of Eliot when he was attorney general?
He wasn’t particularly bad and he wasn’t particularly good at approving offering plans — his office was backlogged. And nobody blamed the attorney general for that. Condos were hot. In fact, he was in charge during some of the state’s best years, at least from a development perspective. I have no reason to believe he wouldn’t be welcomed.
Would it be a good move for him to start a vulture fund?
The market timing for something like that is excellent right now. If it’s run by someone who’s highly intelligent, in an industry that’s not incredibly technical, it could do very well.
Richard Sylla, professor, NYU Stern School of Business
Is Eliot a good match for a real estate job?
It’s not clear yet if he’s cut out for it … but the knack he has to learn is one that all successful New York real estate families [have], and that’s to pick up properties by borrowing most of the money. That’s how you become wealthy. Bernard Spitzer was among those who figured it out. Still, [the Spitzers] aren’t major players yet, like a Tishman Speyer; I just got back from Germany, where I noticed [Tishman Speyer] owns buildings. The Spitzers aren’t that big.
What are Spitzer’s chances of success?
Well, we are talking about a guy who doesn’t have a lot of options.