When Charles Bagli first started poking into the businesses and lives of New York’s real estate elite more than three decades ago, he made his ground rules clear.
“As a former Catholic boy, I make a distinction between sins of omission and sins of commission,” he would tell the likes of Harry Helmsley, Donald Trump and Harry Macklowe, developers and inveterate gamblers he got to know well over his career on the beat. “Never lie to me.”
Bagli was the real estate reporter at the New York Observer during its heyday, when the then-salmon-colored newspaper dished gossip and news on the city’s upper crust. He covered the go-go days of 1980s Manhattan and the subsequent stock market crash and then spent over two decades at the New York Times, reporting on everything from 9/11 and the city’s recovery, to the overheated market of “Other People’s Money” in the mid-2000s (he penned a book of the same name about the Stuy Town debacle) and the sordid saga of Robert Durst. The most well-worn ringside seat to the drama that is New York real estate undoubtedly belongs to Bagli.
In the first of a series of conversations with The Real Deal, Bagli discussed how the industry has changed over his career and the characters that stuck with him.
This interview has been condensed and edited for clarity.
It’s been quite a career, so we have a lot to talk about. Why don’t we start with the real estate beat and how you’ve seen it change over the years?
It was viewed as sort of a backwater, and reporters either didn’t think they knew enough about it or didn’t find it very interesting. So a lot of stories went uncovered, or they were relegated to the so-called real estate pages.
What developed when the New York Observer started was Arthur [Carter, financier and the paper’s founder], was a guy that had a lot of money, but he got a kick out of making trouble. So the whole pitch of the Observer was: “no sacred cows.”
I like to think that we’ve inherited some of that spirit, but the Observer really was the pioneer. Like, “Hey, let’s look at who’s bought these apartments. Let’s look at who’s developing these buildings, and let’s look at them as characters in the story of the city.”
I think it flows from an understanding of the role of real estate within the political economy. Fundamentally, you cannot understand what’s going on in New York without understanding the real estate industry. I always pointed to the City Council. It’s relatively weak, compared to the mayor. There’s one area of power for the City Council and that’s land use.
As a result, you see this tremendous amount of money that’s always flowing into City Council races, as well as into the Assembly and the Senate because they control certain things that happen in New York. It was very clear that the real estate industry was a huge player, and they were very pragmatic because most of them were Republicans. But on the other hand, they’re playing in New York. Even some of the old real estate families, they used to have a designated guy that would go to the Democrats and one that went to the Republicans to find out where they were really putting their energy. You had to see what committees they were on. Back in the ’80s, [Mayor Ed] Koch was getting $50,000 a pop from individual real estate entities. So it was a lot of money that was at stake here.
And zoning, here’s this boring subject, but it can make land worthless [or] as valuable as the Taj Mahal.
Developers and others associated with the industry almost took advantage of that sort of boringness of the process to get away with some incredible things.
Absolutely. There would be big scandals about individual situations, but there wasn’t a sort of systemic look at how it functions and how [people] influence politicians and change the face of the city. Now, it’s also true that in the ’80s, while the city was coming back from the economic and fiscal crisis of the ’70s — when nothing got built, when people walked away from the property they owned because their taxes were more than the property was worth — I could walk around Manhattan and tell you who was building every single construction project. Not because I have a photographic memory — I don’t — but because there just weren’t that many buildings and players.
It’s such an incredibly concentrated industry. It is very clubby and cliquey in a way that no other industry of that size and importance seems to be.
Absolutely. So one by one, I met the developers. I met the lawyers that worked for the developers and the publicists that worked for developers. I met the community groups and got to understand their view of things. And I made up my own maps, because they didn’t exist, on who owns what now. And I’d pore over the real estate books, trying to figure out ownership and who these people were.
That’s probably the first time in the city that someone was really looking into their business. How was that received?
The fun part was, at least in the beginning, here’s the New York Observer — nobody had heard of it. So I always felt like I had to kick down doors to get people to respond to me. What I usually did was if I called a developer, a Harry Macklowe or someone, and they didn’t call me back, I called everyone I could find around them. I knew as soon as we hung up that person would call Harry and tell him, “This guy’s not going away. You’d better talk to him.”
Harry doesn’t pick up, you call Rob Sorin. He doesn’t pick up, you call [Rob] Horowitz. That sort of thing.
The other thing that I would say to people was, “Look, I’m in this for the long haul. So you’ve got to take the vinegar with the honey. And we’re going to be back and do other stories. I promise I will be fair.” The second thing I would say to them was, “Never lie to me.” I said, “As a former Catholic boy, I make a distinction between sins of omission and sins of commission.”
They can avoid you. They can duck and weave, but they can’t lie.
And if I didn’t ask the right question, and they didn’t provide the information, that’s on me. And so over time — remember, I did this for a very long time — I met everybody. I knew how the system worked.
Developers have always seen themselves as civic champions of New York. They’ve always seen themselves as very important people, but the amount of attention they got, compared to other titans of industry, was minimal. Was there any element of, “Finally someone is paying attention to what I do because I do it at a very high level”?
Well, yes. And further, in the beginning, not every developer had a publicist who would put a muzzle on them.
Just to be clear, we’re not talking about Trump’s John Miller, who turned out to be Trump.
The funny thing about Trump is the first time I called him, you went through Norma [Foerderer, his longtime assistant], and Norma would put me through to Trump. And usually, he picked up.
Look, in New York, what do we talk about over lunch or at cocktail parties? It’s, “What development is going up outside my window? What shoe store or convenience store is getting wiped out? How did I flip my apartment for a lot of money?” These are the kinds of things that people talked about. So it was natural to get into that deeply and write about it in an interesting way, acknowledging the fact that [developers] were rich and powerful, and that they were shaping the face of New York for better or worse.
There’s been a change away from the “five families” sort of approach to the business. There’s a very big difference between a Harry Macklowe, a Marc Holliday of SL Green Realty and a Jonathan Gray of Blackstone. It’s not the same level of color and access. As real estate in New York has become more institutionalized, the players in the business have changed quite a bit. I wonder how you tackled that.
Oh, you’re absolutely right. One illustration of that would be Steve Green of SL Green. When that was a privately owned company, I could call Steve up and talk about something that was going on. But once he became a public company, it was very hard to get a hold of him. And it was a negotiation. I think with the families, generally, they were multigenerational. They didn’t feel like they had to sweep the board for every cycle. They did a couple projects per cycle. They didn’t like debt. So they were basically more cautious, but they understood New York — the market goes up, the market goes down.
And they could not see themselves doing anything else. Whereas I feel with some of these people, it’s really become a financial engineering game. It’s become more high finance… I think Harry Helmsley used to talk about “romance” in buildings. There’s less of that now.
I would mark that time up until the ’90s, when the royal real estate families dominated the industry in Manhattan. And as more and more foreign money and insurance money and all kinds of money came flooding into real estate in New York, you had a number of new players come on the scene.
The real estate families were sort of eclipsed by the publicly traded companies. They had access to the markets where they could get more or cheaper financing. As New York land prices escalated, that became very important. Because even for a big real estate family, a $2 billion office building is a lot to carry on your balance sheet. So, you had those guys, and then these other guys that, if they weren’t doing real estate, they’d be trading pork bellies.
When you think of New York real estate and your career, who are the most memorable characters you’ve come across, the ones you still think about?
Well, before I name names, the thing is that they were characters, and I think they were fascinating characters. I’m not judging what they did.
Take someone like G. Ware Travelstead. In the ’80s, he and his wife had a little firm that did lighting analysis for office buildings and interior designs. They did a project for Credit Suisse First Boston. And the brilliant executives at CS First Boston thought G. Ware Travelstead must be a genius. So they made him head of their real estate company, and he talked about wanting to build 383 Madison, a supertower on top of this little bank building, just north of Grand Central Terminal. And his idea of how to do this was to take the air rights from Grand Central, smuggle them down into the tunnels underneath Grand Central, and then they pop up on 47th Street at 383 Madison.
The Koch administration thought this was a horrible idea. The head of City Planning basically said, “Over my dead body.” That led to a huge war that went to the Supreme Court. Ultimately, Travelstead failed, but he was still the head of CS First Boston. So what did he do? He went to London and started inventing Canary Wharf.
When I went to the Times, I get a big Sunday cover piece, “G. Ware Travelstead wanted on three continents.” And he had this fabulous tale that was… I’m not saying whether it was true or not, but there was one tale of him holding his wife by her ankles, outside the window of a London hotel.
Nice. Who else have you got?
I guess another person would be Harry Macklowe. Just because when I started in New York, Harry was a big time player. His claim to fame, however, was the midnight demolition, five minutes before the city had a ban on demolition of those kinds of buildings.
What’s fascinating about Harry is that he’s been interesting in every phase of his career. Some people are interesting when they start, out of necessity, and then they kind of become a more corporate version of themselves. Whereas Harry Macklowe has been a scoundrel for his entire career.
Yeah. Very clever, a guy who has been willing throughout his life to gamble, to bet the house on his latest project, and a guy who’s fallen three or four times and come back.
You have a great detail in one of your pieces on Macklowe pitching bankers about why their clients should buy at 432 Park. He shows the bankers a slide quoting Willie Sutton, the famous bank robber, saying. “That’s where the money is.” So he has that buccaneer, gambler spirit, but he also had great drama in his personal life, which played out in the papers. The most recent one, which even for Macklowe, I was blown away, was when he had a photo of his new wife and him on the side of the retail at 432 Park. That was quite something.
Harry was kind of, at that point, liberated. I’m not commenting on their marriage, but he wore his hair a little longer. He wasn’t wearing socks with his loafers. He had this sort of European air suddenly about him and was much more relaxed. But he’s got a really big project that he wants to do right now that he may not even be around long enough to finish it, but it’s pretty spectacular. Of course, it breaks every rule in the book.
What I always say about Harry is there’s three things to know. One, he’s very creative, and I think he is a great salesman…
The Apple Cube is a great example of that.
Even if you go back to the video he did for the building he built on 57th Street, it looks very amateurish, but there’s a sense of humor there, there was some salesmanship. Of course, that was the most famous building that skipped a few floors so that it could claim to be much taller than it actually was.
He’s willing to bet the house, and he is a scoundrel. So something is going to happen in the end. And of course, it always infuriated him that the midnight demolition, which happened in the ’80s, haunted him for the rest of his life.
We used to really knock heads for a couple of decades. Later, with some of his newer projects, Harry mellowed, and he felt, I think, that it was better to go with the devil you know than the devil you don’t know. So, he gave me an early look at his two most recent projects and invited me into them. With the  Park Avenue project, we both went up to the top of the building when it was under construction. And we’re up there with the iron workers, who were always at the very top. They don’t want anyone else above them because they don’t want things falling on them. And the wind is blowing. There’s no walls. You’re just up there balancing on a beam or something. And I’m thinking, “Holy shit, Harry’s going to get blown off the building, and I’m going to get blamed.”
Did he deserve that reputation of being the most creative dealmaker out there?
I think so. But if you think about it, Harry’s come back three or four times over the last 40 years, and he’s always come back with a great new project. Just like Trump, at the end of the ’80s, the banks didn’t want to lend to him. So he had to go to alternate sources, but Harry persisted as a developer, as a builder.
Just like Steve Ross. I met Steve Ross when he wanted to build the ill-fated Riverwalk project, just north of Stuyvesant Town. He was the designated developer under the Koch administration, and the community fought him tooth and nail. Ultimately, the project didn’t get off the ground, and Steve was almost flat on his back at the end of the ‘80s. But he’s come back to be the biggest, most prolific developer.
Now he’s the man that’s holding the biggest headache in Manhattan at the moment, Hudson Yards.
Steve is a steamroller. Once he sets his sights on it, it’s just like they move everything out of the way. They’ll roll over it or shove it to the side.
One of the other people that I got to know was Charlie Kushner.
Charlie is worthy of a novel, or several novels.
Charlie is a Shakespearean character, and he is just this driven guy. And I think part of what he would might say about his volcanic personality is that he was taking so much risk. So he was under so much pressure and he took it out often on the people around him. And then the warfare that went on within the family was just…I said to him at one point, “Charlie this is really over the top.” I said, “I’m the oldest of 12, and when I get really mad the worst I ever do is not talk to my brother or sister.” I said, “I could not imagine doing what you did.”
And there’s a long pause and Charlie says, “You’re right. We should have been spending the money on psychiatrists instead of lawyers.”
You use the word “Shakespearean.” What did you see beyond the incredible story that we know about, with the brother-in-law and the tape and the prostitute? That one’s documented quite well. But what else have you seen from him that gives you that Shakespearean sense?
Well, when Charlie got out of prison in 2006 and he was looking to come back, Jared had already graduated and was living in Manhattan, and he didn’t want to be a Jersey developer or anything like that. So Charlie calls up a friend who at the time was at Cushman & Wakefield. And he says, “Find me a building in the $1 billion to $2 billion range.”
And 666 [Fifth Avenue] became the fulfillment of a building in the $1 billion to $2 billion range. But that was the criteria. And so what I think they were doing was paying up to crash the Manhattan real estate market. They didn’t want to just be another player, so it had to be a big move.
That’s something all these people that we’ve been talking about have in common, right? This single-mindedness, this ability to gamble at a level that most people would not be physically able to handle, let alone mentally. Since real estate in New York has traditionally been a very multigenerational business, have you seen the second or third generation being able to be as creative as the ones who started it? If you’re a dynasty and you’re sitting on hundreds of millions of dollars of cash and you’ve grown up in a certain lifestyle, you’d become more conservative about that money.
I think they tend to be less willing to take risk.
Michael Fascitelli said it really well. He’s like, “I’m not in the ‘get rich’ business anymore. I’m in the ‘stay rich’ business.”
That’s exactly right. They’re willing to work with interest, but they don’t touch the principal. And you get developers like the Rudins who have been very dominant, but they do one building, maybe two buildings per cycle and that’s it.
Then there’s a lot of these guys that are operating with other people’s money, like Joseph Beninati who was going to build a big tower at Sutton Place. I remember the first time I sat down with him, and he’s got his slicked back hair and the monogrammed cuffs, and he wanted to be in a fancy restaurant and I thought, “This guy’s still in the ’80s.”
He’s being what he thinks a developer should be as opposed to being what he is.
He was basically a failed developer in the suburbs that came to New York and thought he could do better.
The late Lou Ceruzzi was another of that breed. He was on a reality show. He got almost Bezos-type jacked, had this glamorous lifestyle and got into these incredibly risky luxury condo projects that they’re now pulling out of and there’s a lot of restructuring and drama going on.
Yeah. So it’s those kinds of stories that make it an interesting group. When the Times was recruiting me, they wanted me to come and work in the business section and do mergers and acquisitions. And I said, “I’m not really a business reporter. Those real estate guys are like cowboys. It’s just so fun to cover.”