The Closing: David Schwartz

The Slate Property Group founder on America’s housing crisis, his father’s “Gridlock” legacy and his firm’s controversial Rivington House deal

David Schwartz (Photos by Emily Assiran)
David Schwartz (Photos by Emily Assiran)

David Schwartz is a principal and co-founder of Slate Property Group, the real estate development and investment firm that has been at the center of several headline transactions. The Manhattan-based company, which has been pivoting away from luxury condos toward affordable housing developments, has inked more than $1 billion in acquisitions in the last five years. Slate, which Schwartz and his partner Martin Nussbaum founded in 2013, has completed about 50 development and renovation projects over the years and has 10 more in the works. Its properties span about 2.5 million square feet and are valued at more than $3 billion combined, according to the company. Rental buildings, comprising roughly 3,000 apartments, now make up about 95 percent of Slate’s portfolio. Schwartz said he plans to mostly focus on workforce, transitional and other affordable housing projects moving forward — given the dire need for more below-market rental apartments around the country. His firm closed on its first Los Angeles deal early last year, when it bought a pair of multifamily properties in Hollywood, and it has its eye on the housing markets in Florida, North Carolina, Tennessee, Texas and other states. Schwartz and his team also landed a major sale in the thick of the pandemic, going into contract to sell a newly built rental tower in Downtown Brooklyn to Goldman Sachs for about $100 million in early May. In 2016, Slate found itself in the middle of a widely publicized scandal after it bought Rivington House, a former Manhattan nursing home the company planned to convert into residential condos. That deal led to a settlement between the property’s seller and the New York State Attorney General two years later. Schwartz grew up in Flatbush, and his father Sam Schwartz — better known these days as “Gridlock Sam” — had a major impact on the city as its former Traffic Commissioner. In a phone interview with The Real Deal, Slate’s co-founder talked about everything from his support for the ongoing protests over George Floyd’s death to his interest in buying public housing and his firm’s controversial Rivington House deal.

DOB: March 13, 1977
Live in:
Tribeca, Manhattan
Flatbush, Brooklyn
Married with three children

What is your full name? David Jeremy Schwartz.

What were you like as a kid? I was always really interested in sports. I was a die-hard Mets fan and unfortunately still am. I was outside running around any chance I could get, and I was very social and tried to spend as much time with friends as I could.

What did your parents do when you were growing up? My dad worked for the Department of Transportation as the Traffic Commissioner, and he is now better known as “Gridlock Sam.” My mom was a social worker. She worked in addiction treatment and later on at a Head Start in Flatbush. It was a very civic-minded household. My parents bought their house in 1976 and chose to raise a family in Brooklyn at a time when many people had left, and they always felt a strong connection to that.

Do they feel vindicated now seeing what Brooklyn has become? They feel extremely vindicated. They fought for it really early on.

Your dad has been a longtime advocate of congestion pricing. Do you agree with him that it would be helpful for the city? I totally support his congestion pricing plan. We need to address the traffic situation in New York City.

What was your first job? Growing up, I worked as a messenger, and then I was a bartender in college, which was a lot of fun. My first job [in the business world] was at JPMorgan doing investment banking with a focus on public finance.

How did you first get into real estate? I was always interested in it, and after leaving a big bank, I wanted to do something more concrete. At a bank, you’re raising capital for things but not really touching the projects. My first real estate job was at Crescent Heights doing development. My first day there was the first time I ever went to California, and my second day was the first time I ever went to Hawaii, so it was quite an interesting experience.

Is Slate still interested in buying multifamily properties in New York given the strict rent law the state passed last year? We are still very interested. We never had a strategy of deregulating apartments, so the law didn’t really impact us.

What are your general thoughts on the rent law? I think there are some good and bad elements. But the fundamental thing is that the citizens of New York were having an affordable housing crisis. The rent law was a reflection of people struggling and having a hard time paying their rent. I think as an industry, we have to figure out how real estate and government and community leaders can work together to figure out some solutions to housing.

The real estate industry gets portrayed as the bad guy pretty often in debates over issues like rent. Do you think that portrayal is justified? Sometimes it’s justified, and sometimes it’s not. The deeper issue is people are upset that they can’t afford housing. We’re the ones that they’re paying, and if you’re paying 50 percent of your income to somebody, I can understand why that’s frustrating. It’s not all the fault of one industry, but when people are struggling, they’re going to look for someone to blame.

How do your conversations with New York’s affordable housing or tenant advocacy groups usually go? Most of the talks we have with affordable housing groups and city agencies are really productive. With the tenants, it depends. When you have tenant groups that you’re having conversations with, it’s really productive. When you’re doing a rezoning and going to community board meetings, those tend to be more charged. New Yorkers have really strong opinions and are not shy about sharing them.

What made Slate want to invest in Los Angeles? We like markets that are growing; and we like markets that have multiple industries in them. L.A. has been great because all the different types of content being produced through so many different mediums has led to a lot of job growth out there.

Are there any other cities that you’d like to expand into? We’re very interested in Austin, Nashville and Raleigh-Durham. I think Florida has a few really interesting markets as well.

How big of a hit has Slate taken so far during the pandemic? It was a big shock to all of us, especially the immediacy of it. But I think Slate as a business is very diversified and still has a pretty bright future. We’ve really grown our affordable housing and homeless business, which, unfortunately, is going to be a bigger need than it was before. We’re not happy about that. But our projects that we’re doing in those sectors are very secure.

What do you think about the high-end condo market and investing further in that right now? I think the market was seriously oversupplied. But at the right price, we would definitely still have an interest in it.

Are there any moves Slate was planning to make that are not on the table anymore because of coronavirus? The biggest thing right now is the debate over New York City’s affordable housing budget. There was a proposal to cut that budget significantly. That would really impact the future production of affordable housing, so that’s put us and the whole industry in a bit of a pause. We’re hopeful that gets worked out because we really think that now is the time to double down. The city should be investing in real estate at lower prices.

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Do you think the recent wave of protests will complicate the city’s reopening plan? I guess so, but I think we’re seeing protests all over the country, and they seem to be very productive. Hopefully, the city is prepared to evaluate the data and see where it leads.

How do you feel about the country’s strong reaction to the death of George Floyd overall? We certainly support the protestors having their voice, and we need to deal with these issues that are being brought up. It’s something that people have been talking about for a long time, but now it’s gained enough attention where people have to actually deal with it.

What’s your biggest concern about the pandemic and its fallout? My biggest concern is that the people who were impacted the most are the people who were already struggling. It’s going to be a challenge to figure out how we add those jobs back.

You’ve previously referred to NYCHA as “amazing real estate.” Would Slate ever consider buying or taking control of a NYCHA development? Absolutely. It’s something we will be pursuing in the near future. NYCHA is obviously in a really tough situation, where years of disinvestment has created a huge budget deficit. It’s complicated, but we welcome that challenge.

Do you think private ownership is a good way to help improve some of the Housing Authority’s longstanding issues? Private capital is really needed. I think we have the leverage and the capital to build and preserve as many units as we can and, at the same time, make sure that tenants know these units will remain affordable. That’s really the important thing: Tenants need to know they’re not going to be pushed out, and they’re not going to be taken advantage of.

What do you think of the city’s mandatory inclusionary housing policy? I think it’s admirable. It’s not the silver bullet that’s going to cure everything, but it’s one tool. It’s going to take years for people to see the benefits of it.

I’ve got to ask about Rivington House: Did you know when you bought it that Allure Group, the prior owner, had gotten the city to lift the restriction requiring the property to be operated as a nursing home? We were told that the deal to do that had been done. We were not involved at all in the deed restriction removal and never had any involvement with the city on that transaction.

Were you concerned in general about the optics of turning a nursing home into a condo building? At the time, we were told that this was something that everybody was really happy about and that the nursing home beds were going to be put into a new facility that was going to be state of the art.

So did the backlash and amount of press the deal received surprise you? Very much so.

Are you satisfied that it ultimately ended with you signing a lease with Mount Sinai and selling the property? We’re really proud to have worked hard with elected officials and community leaders to reach what we think is a really good outcome. We got stuck with this situation that we weren’t involved in but worked hard with local groups, tenants and elected officials, and I think bringing a quality healthcare facility to that neighborhood is a huge win.

Can you tell me who the mystery buyer was? [Property records identify the buyer only as Kranken House FH LP.] I cannot.

If you were to enter into that deal again in 2020, what would you do differently? Not enter into it.

What is the biggest mistake you’ve made in your career? Not going into real estate right out of school.

What is the best advice you’ve ever gotten from someone in real estate? If you can’t figure out how to make a deal work on one sheet of paper, the deal doesn’t work.

What do you like to do to unwind? I love to spend time with my family. I like to play tennis, and I like going to the gym and going out to dinner with my wife and friends. We haven’t done that in quite some time, but I look forward to doing that again someday.

What was your last big purchase for yourself? I bought two new tennis rackets right before the pandemic for my birthday. I have yet to play with them, but I’m hoping to play with them soon.

Where is your favorite place to eat in New York? Lure Fishbar in Soho. It feels like home.

What do you want your legacy to be? To create housing for people that currently can’t afford it so that they can continue to live in the neighborhoods that they’ve grown up in. I want to figure out how to really fix this affordable housing problem in our society. 

This interview has been edited and condensed for clarity