Solow’s last stand?
The litigious 89-year-old billionaire is ramping up his development game and pursuing three legacy-cementing Manhattan projects
For someone who’s filed hundreds of lawsuits throughout his career, evicting a begrudging retail tenant might seem trivial. But this could be Sheldon Solow’s last stand — his final court battle. And, this time, a crucial piece of his legacy as a New York City developer is at stake.
The 89-year-old is trying to kick out Metropolitan Fine Arts and Antiques, which occupies the ground floor of Solow’s 10 West 57th Street right in the middle of Billionaires’ Row. Solow is looking to demolish the building, along with five adjacent properties that he’s amassed over the past decade, to make way for a 54-story hotel and condo tower. There’s just one problem: The tenant claims that its lease doesn’t technically expire until 2023.
Solow argues that Metropolitan violated its lease in several ways, including getting convicted for selling ivory, which is banned in New York State because it comes from endangered animals.
“The fact is, these are bad people,” said Warren Estis, Solow’s attorney, referring to the tenants during a recent heated court hearing. “They don’t deny that they were selling illegal goods on the premises. They don’t deny it whatsoever.”
The shop’s owners have maintained that they didn’t know their license to sell ivory was invalid because the law only changed a few years ago. They’ve sued Solow, alleging that he’s trying to harass them out.
Being on the receiving end of a lawsuit is something of a reversal for Solow. But in typical Solow fashion, he’s fighting back and, not surprisingly, filing counterclaims.
This time, however, the clock may be ticking, not so much on the lawsuit or on his company but on Solow himself. And the project is not the only legacy-cementing one he’s pursuing in New York.
The mogul, whose net worth has been pegged at $4.7 billion by Forbes, has two other active developments in the works: a 19-story residential Billionaires’ Row tower at 7 West 57th Street, which he landed ground-work approval for this summer, and a 42-story rental-and-condo project on First Avenue.
But given his age and the length of time it takes to get a New York City project done, the octogenarian seems to recognize that there’s a level of urgency.
“Everybody was kind of amazed that he got all these things underway,” said Michael Offit, Solow’s long-time financial advisor. “The likelihood of him seeing them all to their finish, I can’t believe that it’s high.”
Succession, but not yet
Solow got his start in real estate in the 1950s. He and his father, a Russian immigrant and bricklayer, secured financing for a 72-unit apartment building — later dubbed Sheldon Gardens — in Far Rockaway.
From there, he built one-family homes on Long Island and upscale homes in Far Rockaway. Then, in the 1960s, he took it to the next level and began amassing properties on West 57th Street in Manhattan, where he ultimately built the project that catapulted him to local real estate stardom: 9 West 57th Street.
Today, the Skidmore, Owings & Merrill-designed office tower is home to some of New York’s highest-paying office tenants and to Solow’s 200-person company, which occupies the 45th floor. Solow declined to comment through a representative.
According to an August analysis by The Real Deal, Solow Realty and Development has at least 3.8 million square feet of New York City property and an annual net operating income of $223.4 million.
Over the last decade, Solow’s son, Stefan — who owns ranches and farmland in Kansas, Colorado and New Mexico — has worked with the company on and off. In 2010, when his dad had health issues, Stefan temporarily took the reins.
But Offit said the father and son have more recently discussed their company succession plan. And while the elder Solow still runs the show, Stefan steps in when his father isn’t feeling well, Offit said.
If Stefan’s 2010 stint is any indication, his approach is likely to be tamer than his dad’s. During his time at the helm, Stefan tried to sell an undeveloped parcel of land on First Avenue and worked to settle some of his father’s ongoing lawsuits, according to the New York Times. He also tried to fill up vacant space at 9 West 57th. But his father put the kibosh on the development site’s sale and insisted upon leasing space in the office building for no less than $200 per square foot, the Times reported.
Those who know Solow seem to agree that the developer has a righteous streak that often drives him to sue.
“Sheldon sues people when he feels taken advantage of,” he said, adding that he “doesn’t sue people for amusement.”
When Heller brokered the sale of an Upper East Side development site to Solow in 1997, the developer overrode his attorney and opted not to extend the closing date as a courtesy to Heller, the broker claimed.
Offit said that over the years, some of Solow’s attorneys have encouraged the developer to pursue unnecessary litigation — perhaps banking on the fact that he’d be receptive.
Offit said he once intervened and stopped Solow from suing his loan servicer after the developer’s attorney told him that the servicer was accusing him of defaulting. In reality, the servicer had sent a warning letter stating that a small escrow had been improperly filed.
Perhaps no attorney misled Solow more than the now-infamous Marc Dreier, who handled litigation for Solow for years. Dreier was sentenced to 20 years in federal prison in 2009 for running a Ponzi scheme that used Solow as a pawn. According to prosecutors, Dreier sold investors fake promissory notes on the pretext that Solow was trying to raise $500 million. Without Solow’s knowledge, he tricked the investors into thinking that they were meeting with executives at Solow’s company, when they were, in fact, speaking to his co-conspirators.
Though Offit said he didn’t know much about Solow’s relationship with Dreier, he attributed Solow’s litigious nature to his old-school mentality.
“I don’t want to say he’s the last of a dying breed, because that sounds maudlin, but they don’t make them like Sheldon anymore,” Offit said. “He’s one of the last truly great, self-made real estate developers in New York City.”
A closet introvert
While other infamous serial litigators are often brash and outspoken, sources say Solow is actually introverted and shy.
Heller recalled bumping into Solow on the escalator on his way into the Real Estate Board of New York’s annual dinner a few years ago.
“He sort of wrapped his arm inside of mine, and he said, ‘People like us should stick together. Why don’t we walk into the function together?’” Heller said. “He’s shy, and he’s just not comfortable in those circumstances. But it’s actually quite gentle and charming.”
Solow — who’s married to sculptor and jewelry designer Mia Fonssagrives — is also a major art collector and nature lover.
Offit said the first time he met Solow, in the late aughts, the developer’s office was adorned in what had to be a half a billion dollars’ (or more) worth of art with works from the likes of Matisse, Francis Bacon and Giacometti. He said Solow’s private collection primarily focuses on modern and Post-Impressionistic art. Over the last few years, Solow has sold some of his priciest pieces, including the Giacometti sculpture, “Pointing Man,” which fetched $141.3 million in 2015 at auction, a world record for a sculpture.
The developer has also been known to plant apple and ginkgo trees near his buildings, even instructing workers on proper irrigation methods, one former employee said.
Ackman-Ziff’s Simon Ziff told TRD that several years ago he periodically ran into Solow as they both admired Japanese maple trees at a private nursery in Westchester.
“I found myself alone with him on a few occasions,” Ziff said. “I’m guessing he has a pretty special collection, since his budget was likely greater than mine.”
But balancing out all of those quiet moments are dozens of more aggressive actions in court and at the helm of his company.
In 2005, Solow sued Bank of America, one of his big tenants at 9 West 57th, over various terms in its lease and its renovation plans, and filed complaints against several other tenants in the building. Most landlords don’t want to antagonize their main customers. “He doesn’t seem to have that as a concern,” said one well-connected attorney.
Steven Cherniak — who worked for Solow Realty from 1982 to 2008 and is now COO at Cohen Brothers Realty — has seen virtually all of his former boss’ sides.
After 26 years at Solow, where he rose to CEO, Cherniak was abruptly fired in 2008, told only that his services were no longer required. Four years later — a delay he attributes to his close relationship with his ex-boss (he viewed him as something of a father figure) — he sued Solow, claiming he was terminated without cause and was owed his promised retirement.
Despite the lawsuit, Cherniak said that the two remain friends.
Cherniak said that during his years working for Solow he saw the paranoid litigator, who was obsessed with seeking revenge on those he believed wronged him, but that he also saw a “brilliant developer” with a deep appreciation for design.
He said Solow is fiercely loyal and has a “strong, loving” side. Once Solow waited in the hospital with Cherniak for hours while Cherniak’s wife underwent surgery.
He said Solow’s strong ego drove him to pursue “litigation with alacrity.”
Case in point: After losing out to Harry Macklowe in a 2003 bid to buy the General Motors Building — and ultimately dropping a lawsuit against Macklowe — he still refused to accept that he did not own the building and continued to refer to it as his property.
“You can’t roll over in this business,” Cherniak said. “But Sheldon sometimes formulated a theory in his mind that was not the reality.”
Still, Cherniak said he admires Solow’s tenacity for pursuing what he believes in, even when it would be easier to walk away.
Estis added that Solow’s approach to litigation is “creative.” He said that his client would come up with theories he initially disagreed with but later realized were “pure genius.”
Cherniak said friends and colleagues thought he was crazy for staying at the firm for so long. He even referred to himself as the company’s CBO — chief blaming officer — because Solow blamed him for everything. But he called his former boss a “genius,” noting that he often jumps between thoughts so fast that those around him can’t keep up.
“Many days felt like I was watching TV while a six-year-old was holding the remote control,” Cherniak said. “He had a short attention span.”
A final development push?
In the 1990s — after a legal battle with Fisher Brothers, his partner — Solow’s plans for a 9-acre megaproject on First Avenue were put on ice.
While Solow indicated last year that would revive the site, he hasn’t released specifics yet.
But he has moved forward with a 42-story rental-and-condo project across the street at 685 First Avenue, which starchitect Richard Meier designed. Pricing for the project has not yet been released.
The building, which is under construction, is a departure for Meier: Instead of his signature white, the building’s façade is a sleek black.
“He said, ‘I want something different, and I’d like you to do a black building,’” Meier told TRD. “It’s different, and it fits in. It’s a good complement to the United Nations building; they are both the same height.”
Meanwhile, SOM is designing 10 West 57th Street for Solow, who’s filed a motion for summary judgment to have Metropolitan Fine Arts and Antiques evicted so that he can erect his hotel-condo. An offering plan has not yet been filed for the project.
“He doesn’t want to wait until my client’s lease is up,” said David Rozenholc, a well-known tenant attorney who is representing Metropolitan. “It may have worked in the past, but not against me.”
If Solow wins, he may have to fight slowing hotel and condo markets.
The average number of days that new development condos spent on the market jumped by 25 percent between mid-2016 and mid-2017, according to appraisal firm Miller Samuel. It was an even higher 37 percent for luxury apartments.
Hotels aren’t doing much better. Average nightly room prices in Manhattan have dropped 11 percent over the past three years amid a surge in new supply, according to CBRE.
And while 10 West 57th may have a prestigious address steps from the Plaza Hotel, its view will likely be blocked by 9 West 57th.
“That location doesn’t have the breakout views that the other 57th Street locations have. It’s a key amenity,” said appraiser and market guru Jonathan Miller.
The chance to make serious money with luxury condo sales in this market cycle seems to be over, Miller said. “But [Solow] may be looking out five or six years from now for the next cycle to begin.”
Solow’s known for taking “enormous amounts of risk, almost crazy amounts of risk,” Offit said. The risks, he said, tend to pay off.
“He’s Midas. Everything he does turns into a mountain of money,” he said. “He’s obviously very strong-willed and thinks that he’s right. Time usually proves that he is.”
Offit said Solow likely believes that he’ll live long enough to see these projects completed, but if not, he’s confident his son will complete them.
“I think he wants to make sure that what is built is what he had in mind,” Offit said.
Rozenholc had a different take.
“I don’t believe that Mr. Solow believes that he’ll ever die,” he said. “He’s sitting with empty buildings [on 57th Street]. He’s trying to get rid of all the tenants.”