The selection process, one participant joked, bore a bit of a resemblance to the College of Cardinals selecting a new pope in Vatican City.
One by one, the seven present and former chairs of the Real Estate Board of New York arrived at the trade organization’s Lexington Avenue headquarters and joined REBNY President Steven Spinola in the Harry Helmsley Boardroom. Then, over deli sandwiches and chocolate-chip cookies brought by developer Larry Silverstein, the conclave set to work selecting perhaps the closest thing New York real estate has to its own Holy Father — the titular head of REBNY, the group charged with lobbying for the industry’s interests.
The gathering consisted of Related Companies CEO Stephen Ross, Brookfield Office Properties cochairman John Zuccotti, Glenwood Management CEO Leonard Litwin, Tishman Speyer co-CEO Jerry Speyer, Jack Resnick & Sons CEO Burton Resnick, the CBRE Group’s Tri-State CEO Mary Ann Tighe and Silverstein — a group that together is responsible for billions and billions of dollars in New York real estate deals.
The selection process didn’t include a vote. It simply consisted of a discussion. And the group, say those involved, considered at least four finalists, all of whom had indicated that they would be willing to serve.
But in the end, Rob Speyer, who heads Tishman Speyer along with his father, Jerry, emerged as the consensus candidate. (Those interviewed by The Real Deal declined to name the other three contenders).
The 42-year-old scion of the powerful real estate family will assume his three-year term as REBNY chairman at the organization’s annual gala in January.
His ascension represents a generational shift of sorts at the board — Speyer will be the youngest chairman to ever lead REBNY.
“It was time to drop the average age down — previously it was 104,” joked two-time former REBNY chairman Resnick.
And with the leadership position, Speyer’s also following in the footsteps of both his father, who led the group from 1986 to 1988, and his grandfather, Robert Tishman, who held the position from 1972 to 1975.
(While Jerry Speyer was present for the selection discussion, he “did not wish to opine in any way on his son,” said Tighe, REBNY’s outgoing chairman, noting that “it was all done very properly.”)
Even so, the three-generation trend is a first for REBNY and calls to mind the names of other family dynasties such as the Kennedys and Bushes in politics and the Bonds and Griffeys in baseball.
The choice is also a powerful affirmation by the industry that the young mogul’s reputation remains largely unblemished, despite his role in what many consider a public relations fiasco of epic proportions.
QUICK FACTS:
COMPANY: Tishman Speyer
TITLE: Co-CEO
AGE: 42
PROPERTIES OWNED OR MANAGED: $36 billion
NUMBER OF EMPLOYEES: 1,300
NYC PROPERTIES INCLUDES: Rockefeller Center, Chrysler Building, MetLife Building
Stuy Town, which Tishman Speyer famously defaulted on in 2010
Growing pains
In 2006, Speyer led the efforts to shell out a record $5.4 billion to acquire the sprawling Stuyvesant Town and Peter Cooper Village housing complex and transform the buildings into luxury apartments. The New York Times dubbed the project a “very public introduction for Rob Speyer,” and, in the early days, he was the chief spokesman for the effort.
Then, of course, the credit bubble burst, cutting the value of the property in half. Tenants organized and attacked the plan as a rapacious development scheme that would erode New York’s stock of affordable housing.
Finally, a judge blocked efforts to raise rents and ordered Tishman Speyer and its partners to pay about $4,000 each to those in 4,000 apartments ruled to have been illegally deregulated.
Tishman Speyer and its partners walked away in 2010, defaulting on the debt, wiping out the investments of two massive public employee pension funds and leaving lenders holding billions of dollars in bad debt.
In the end, the project was painted by opponents as an aggressive play by greedy developers to drive middle-income tenants from their apartments to make a profit.
It was a nasty outcome for Speyer, who had maintained from the beginning that his motivation was to transform the development with $150 million in upgrades, that would both attract a new kind of tenant and improve the quality of life for longtime tenants who remained. Throughout the ordeal, Speyer insisted that Tishman Speyer’s goal was to go after tenants who were abusing the system, not those with a legal right to remain there.
By the time Tishman Speyer and its partners walked away, however, Speyer had shifted his attention within the company. He had joined his father as co-CEO two years earlier, in 2008, moving his focus from overseeing all New York–based projects to also running the company’s global operations.
Meanwhile, he was quietly emerging as a powerful behind-the-scenes player in New York politics.
Bob Knakal, chairman of Massey Knakal, and a member of REBNY’s board, said Speyer “is very well-known by politicians in town and in the state, from the governor down to city council members.”
Indeed, last year, Speyer founded a nonprofit called the Committee to Save New York that’s raised and spent $12.1 million to buy TV and radio ads in support of Governor Andrew Cuomo’s agenda, said Bill Mahoney, research coordinator for the New York Public Interest Research Group, a nonpartisan nonprofit that’s tracked the effort. The group’s founding members were Speyer and two of his employees, according to Mahoney.
“Nobody in the state has come close to the efforts of this group, which has spent millions spreading images of the governor around the state and propping him up before his budget was even available on paper,” said Mahoney. “It’s impossible to know how close [Cuomo and Speyer] are in terms of how often they communicate. But it’s clear he has done a lot to endear himself in the governor’s eyes.”
Meanwhile, Speyer also serves as chair of the Mayor’s Fund to Advance New York City, a nonprofit that raises private money for some of Mayor Bloomberg’s highest-priority projects. And he’s been a generous financial backer of political candidates at every level. In the last three elections alone, he has donated well over $70,000 to federal candidates and committees, according to the Center for Responsive Politics, the Washington, D.C.–based research group that tracks the effects of money on public policy.
Since 2009, he’s also contributed the maximum allowable amount to Cuomo, doling out $56,900 and giving $19,100 to the state Democratic Party, according to NYPIRG.
“Due to the outsized role of the Committee to Save New York during Governor Cuomo’s tenure, it’s difficult to argue that any other nonelected official has dominated the state’s political discourse as much as Mr. Speyer,” Mahoney said.
The crown jewel of Tishman Speyer’s NYC portfolio, Rockefeller Center
A logical choice
In recent months, the links between Speyer and REBNY’s agendas have grown increasingly apparent.
Last January, sign-waving protestors converged outside REBNY’s annual dinner to denounce the tax reductions and pension reform policies that the Committee to Save New York has been advocating. (According to the committee’s website, Spinola and Kathryn Wylde, the president of the business organization the Partnership for New York City, are also now cochairs of the committee along with Speyer.)
The combination of the committee’s public policy agenda and Speyer’s political connections helped make him a logical choice for REBNY. Indeed, in his role as chairman, he will be lobbying elected leaders who oversee everything from zoning to tax policies.
And on the city front, REBNY is gearing up for the change in political guard that will take place at the end of Bloomberg’s third term at 2013’s close.
“The first thing we talked about was the transition that will happen under the new chairmanship to a new administration in City Hall,” Tighe said of the deliberations that went into selecting a new leader.
“No one can say who will be the next mayor and what their direction will be. But we wanted someone who had strong ties to [city] elected officials, but also strong ties to Albany,” Tighe added. “And we need someone who is up-to-date on the issues currently facing the board. Rob has been involved for a long time.”
Speyer’s experience working abroad, Tighe added, was also an important consideration. He’s been increasingly involved in his firm’s expansion into foreign markets such as India, Brazil and China. In fact, the day his REBNY appointment was announced Speyer was in China, where Tishman Speyer reportedly has 20 million square feet of projects in the development pipeline. That international experience, Tighe said, will help Speyer make the case for policies that will keep New York competitive.
The other REBNY candidates considered for the chairmanship, said Silverstein, “were all very appropriate, all recognized for accomplishments and eminently qualified.”
But “at the end of day, Rob Speyer appealed to everybody, and that is what consensus is all about.”
From left: Larry Silverstein; Jack Resnick & Sons’ Burton Resnick; ishman Speyer co-CEO Jerry Speyer, Rob’s father; CBRE’s Mary Ann Tighe, REBNY’s outgoing chairman; REBNY President Steven Spinola
Next generation
The selection of Speyer can only help attract younger members to REBNY, whose membership is already at, or close to, an all-time high.
Some pointed to the role that technology plays with the younger generation of real estate players (Speyer is on Twitter, though he only tweets sporadically and mostly about company news).
“It sends a message,” said Leonard Boxer, a partner at Stroock & Stroock & Lavan and REBNY counsel. “You get somebody who is younger — though he has experience well beyond his years.”
Still, those who selected Speyer downplayed his age as a significant factor in their discussions. Tighe recalled that once the group decided that Speyer would get the nod, “someone said, ‘this is nice because it’s a nice transition to the next generation of leadership.’ ”
“But,” she noted, “that was the only remark I can remember that related to his age. Rob may be young in years, but he is old in real estate years.”
Indeed, Speyer grew up in the real estate business — learning alongside his father and maternal grandfather.
Founded by Rob Speyer’s great-great-grandfather Julius Tishman in 1898, Tishman Realty and Construction was facing financial difficulties by the mid-1970s when Jerry Speyer and his father-in-law decided to liquidate the company and reorganize it as Tishman Speyer Properties. The effort was wildly successful.
By the time the younger Speyer joined the family business in 1995 — after graduating from Columbia University, then working as a reporter for the New York Daily News and then the New York Observer — Tishman Speyer’s portfolio had grown to include 15 million square feet of real estate nationwide.
Speyer spent his first three years at the firm doing retail leasing at Rockefeller Center, the firm’s trophy property. Then he joined the firm’s acquisition and development team, working on projects that included the redevelopment and leasing of 300 Park Avenue (also known as the Colgate-Palmolive Building) and the development and pre-leasing of the 375,000-square-foot office tower his company built at 222 East 41st Street, among other projects.
In 2001, he took over responsibility for all of Tishman Speyer’s New York efforts, quarterbacking acquisitions like the Lipstick Building, the New York Times Building and the MetLife Building. But his biggest deal will likely long cast a shadow over all the others: the record acquisition of Stuy Town and Peter Cooper Village.
Despite the PR fallout from the default, Tishman Speyer’s actual cash exposure to the property was relatively small. As has been widely reported, the firm doled out just $112.5 million of the $1.9 billion originally put up to buy the property — the rest came from partners including BlackRock, the Crown family and the pension funds CalSTRS and CalPERS.
In addition, prior to the default, Tishman and its partners agreed to pay between $250 to $300 million into a reserve fund to try and hang onto the property, a source close to the company told TRD in 2008. In the end, it was the other investors that took the biggest hit.
Speyer declined to be interviewed for this article, and has not often spoken publicly about the experience. But in an interview with Bloomberg Television in March, he made it clear that he was not eager to reenter the domestic residential business.
“We put Stuyvesant Town firmly behind us,” he said. “We’ve moved forward. Our activity in the United States in the last couple of years has been focused on office.”
He declined to say he would steer clear of residential acquisitions for good, but noted that: “The last nine deals we’ve done in the last 18 months in America have all been office. The next nine deals will likely be mostly office.”
Coming of age
Bernard Mendik, one of New York City’s leading landlords, was the longest-serving chairman of REBNY and considered by some to be the most accomplished, Tighe said.
Mendik — who sold his 4 million-square-foot portfolio for $437 million in cash and securities to Vornado Realty Trust in 1997 — served as REBNY chairman from 1992 until he died in 2001.
During his REBNY tenure, he helped block a plan to limit the height of New York skyscrapers and helped convince Albany to cut back on real estate capital gains and transfer taxes.
It remains to be seen how Speyer will perform in his new role, but those who’ve worked with him describe him as a consensus builder, well-suited to a position that involves dealing with the concerns of different membership groups.
“He’s very thoughtful and very good about listening to what people have to say,” said Jonathan Mechanic, chairman of Fried Frank’s real estate department. “I’ve dealt with him in a business context and watched him in meetings. … Some people are always imposing their thoughts on others. He listens to everything, takes it in and then forms a judgment based on relevant information. He will be open to the ideas of other members.”
That ability will undoubtedly come in handy.
His primary job will be to represent the organization’s 2,000 developers, brokers and real estate players in the commercial and residential sectors. (As president, Spinola runs the day-to-day operations of the board. But Spinola technically works under the chairman, who heads the so-called Board of Governors, which is made up of industry heavyweights. And while Spinola is, of course, paid, the chairman is a volunteer.)
A number of those interviewed said they believed Speyer’s experience in leasing, acquisition and development in both residential and commercial will be important in his new role.
Frederick Peters, president of Warburg Realty and a member of the REBNY board, noted that while Tighe comes from the commercial world, she was very attuned to the organization’s residential membership, too.
But “before Mary Ann’s tenure at the full-board level, residential brokerage felt a little like a stepchild to me,” he said. “She made us feel more integrated and integral to the process by reaching out, by taking an interest in our issues.”
In addition, Speyer will be expected to be a “thought leader,” said Tighe, placing the emphasis on important emerging issues so that “we are not just playing defense.”
The issues range from the broad and consequential to the narrow and relatively parochial.
During her three-year term, for instance, Tighe has pressed the industry’s interests in the Midtown East rezoning, a plan unveiled in July that would allow a “vertical expansion” of the skyline along a 74-block area stretching from 37th to 57th streets around Grand Central Station. But she also recently took on the issue of a residential broker who complained that for months the city had held up the sale of a pricey townhouse because a construction permit remained open on the city books, despite the fact that the work was finished a long time ago.
The job of chair, Tighe said, “is a material time commitment. When public officials are ready to see you, they are not working around your calendar. If [the] mayor or [a] deputy mayor wants to meet on an issue you are [working on], typically they will call up and say, ‘This is when we can do it.’”
Speyer will inherit a number of issues from Tighe when he assumes the job.
The industry has been battling to restore funding for a second station to be used for the No. 7 subway line — and potentially extend it into New Jersey, Tighe said. The battle to counteract efforts by some elected officials to aggressively landmark historic storefronts on the Upper West Side also remains an issue. In addition, tax reform is also a perennial concern.
“Our real estate tax burden as a percentage of revenue is more than double that of any state in the country,” said Knakal. “Rob can speak with firsthand knowledge with what tax policies are like in other cities across the country and really give some perspective; explain why people can decide to move to Boston, Chicago or somewhere else.”
At the heart of all these issues, said Peters, is the mission to “make sure New York remains a competitive and strong environment for both development and the attraction of business.”
Peters said Speyer’s age would be a positive for the organization.
“The perspective is different,” he said. “Many of us came of age when the city was much more segmented. People who are younger have a much broader view of the city as encompassing every neighborhood instead of just the neighborhoods where they grew up. It’s important to add into the mix.
“It doesn’t make sense,” he added, “to have all the decisions being made by a bunch of old guys.”