By Miriam Hall | Bisnow
Silverstein Properties Chairman Larry Silverstein is one of New York City’s most renowned and indefatigable developers. He joined commercial real estate as a broker, and bought his first property — an industrial loft on East 23rd Street — in 1957 with his father.
More than six decades later, Silverstein Properties has developed over 40M SF of office, residential, hotel and retail space in New York City and a handful of other markets across the country. In 2001, Silverstein signed a $3.2B, 99-year ground lease on the World Trade Center, six weeks before the 9/11 terrorist attack.
This year alone, Silverstein opened the doors on 3 World Trade Center, established a lending arm and spent $1.2B on ABC's former Manhattan headquarters.
For a behind-the-scenes peek into the life and business strategies of the real estate mogul, Bisnow spoke with Silverstein about how he met his wife, diversity in commercial real estate, why he didn’t invest in La Cage aux Folles and how he makes difficult decisions.
Bisnow: How do you describe your job to people who are not in the industry?
Silverstein: I build buildings that tend to be tall. They tend to be large, they tend to be office buildings. They tend to be apartment houses. Some of the apartment houses are for rent, other apartment houses are for sale. They also tend to be hotels in different locations [and] areas of the country, primarily Florida and New York. The hotels tend to be on the expensive side, and more in the luxury category. That’s essentially what I do.
Bisnow: If you weren’t in commercial real estate, what would you do?
Silverstein: I think I’d like to go back to school and learn, and just take a whole range of courses. Learn a lot more about the world than I currently know. I think that would be exciting, interesting, diversifying, mystifying.
Bisnow: What is the worst job you ever had?
Silverstein: The worst job I ever had was working in a camp kitchen for a young lady who turned out to be my wife. That was when she was representing Hunter College at an educational camp that we both went to.
I was representing New York University as an undergraduate. She was representing Hunter as an undergraduate, and you had to work in this camp if you wanted to attend it. She turned out to be my boss in the kitchen in 1951 and here we are today. She’s still my boss in the kitchen, and my boss in everything else. Nothing changed. We've only been together for 67 years. We got married in '56.
Bisnow: What was your first big deal?
Silverstein: I was working as a leasing broker in the rag and woolen district of New York. I consummated a lease for 14K SF of office space, where the rent was $1.40/SF and where my commission would amount to $400 for a transaction that had taken about a year to negotiate.
I remember coming to the closing, to collect at the lease signing my $400 commission, only to find another broker present. I remember looking at him and saying 'what are you doing here?' And he looked at me and said, 'what are you doing here?'
At which point the owner looked at us both and said, 'OK, gentlemen, I'm only paying one commission of $400, you guys settle this between you.' So, end of day, we each walked out with $200 — instead of walking out with $400. Not a very happy time, but that was life in the big city.
Bisnow: What deal do you consider to be your biggest failure?
Silverstein: I was building 7 World Trade center on spec, which means without a tenant. It was a 2M SF building, and I was asked by Drexel Burnham — who was in need of space at that time — if I would make a presentation to the board about the building.
Subsequent to that presentation, they made a decision to lease the entire 2M SF building for a period of 20 years. It was a huge, huge success, except that we then spent about a year negotiating the terms of the 20-year lease transaction. About three days before the lease was to be executed, the telephones went quiet.
The next thing I knew, Drexel was in trouble. A gentleman by the name of Ivan Boesky turned state’s evidence against the power behind Drexel, and that was Michael Milken, who ultimately served jail time for insider trading. That brought Drexel down to bankruptcy, and that was a point in time when the building was now a completed, 2M SF building and I needed a tenant.
Drexel was no longer occupying the entire building. It was a very difficult time in my life, and it was a time of great distress and tremendous pressure. The question was — 'What was I going to do now?' So that was probably my biggest failure in terms of not being able to close that lease transaction, due to a problem that Drexel had.
As it turns out, I got lucky. Another tenant came along by the name of Salomon Brothers. They leased 1.3M SF, and with their signing of their lease, I was able to sign leases for the balance of the building. Then it became a successful venture. But until then, it was extraordinarily difficult. So it went from disaster to success in a period of months, and having made it through I breathed a deep sigh of relief. As did my wife.
Bisnow: If you could change one thing about the commercial real estate industry, what would it be?
Silverstein: I think women are increasingly being represented in aspects of the industry. I think that it would be good [for there to be more] women, minorities [in positions of power]. I think that’s what's important in our industry.
And also, more educational opportunities for members of the industry being able to access and benefit from. Many years ago I established the Real Estate Institute at New York University, where I subsequently became a member of the board of trustees, a long, long time ago. We started growing the Real Estate Institute, it became the largest and most successful real estate school in the country. Today it's called the Schack School of Real Estate at NYU.
Bisnow: What is your biggest pet peeve?
Silverstein: I like to shake hands with people, come to an understanding, come to an agreement and then keep my word.
Whether it is in [writing] or not, if I’ve made a commitment I like to keep it. That isn’t always the case in our industry. So I wish there was more of that. Today we’ve got these documents that precede every kind of agreement, and the size of these documents has become huge.
The cost of them is ridiculous. Life has become much more complicated than it ever used to be. There was a time when you could come to an understanding with someone, shake hands on it and you could take his word, he would take your word, and you knew you had a deal.
That is not necessarily the case today, and that's unfortunate.
Bisnow: Who is your greatest mentor?
Silverstein: I lost my father at a pretty early age, and benefited from meeting someone who was significantly older than I was. [I] found his advice and guidance immensely helpful.
[He was a] person with whom I maintained a relationship over a course of maybe 40 years. We fell into a father-son relationship. Although it was not real, it certainly felt like one. He treated me as a son. I treated him as my father, and it was just fabulous.
Having that relationship over the years was one of the most extraordinary experiences of my life. [His name] would not ring the bell with anybody. He was an Italian gentleman who ultimately moved to Florida and settled there. We ... did millions upon millions [of dollars] worth of business on the telephone and with handshakes. It was really quite something.
He ultimately passed away. All good things at some point in life come to an end, and that was one of them.
Bisnow: What is the best and worst professional advice you've ever received?
Silverstein: I went to a fundraiser for a Broadway show. I'd never invested in a Broadway show before, but decided to go to this one. My wife couldn’t make it, but she said, ‘you go and tell me what you think.’
So I went, and I liked the music, I liked the score, I liked the singers. I thought the whole thing was really terrific, and the next morning I met a friend of mine who was also there and who asked me what I thought. I said 'I liked it. I thought the whole thing was terrific.’
I thought I'd invest a little bit of money in it. Just to see what it is like. So, he asked me if I'd ever done it before, and I said no. 'Well,' he said, 'I have. I've done it for years and let me tell you — the music is bad, the score is bad, the singers are bad, the book is bad. Everything about it is bad.'
So I listened to him, because he had done it many times before, and did not invest in "La Cage aux Folles," which turned out to be one of the great all-time hits of Broadway musicals. That was the worst advice.
Probably the best advice I ever had was my father talking about the New York Times in terms of advice as to whether or not to do something in life. He said ‘you know, if you are about to do something, and you are wondering whether or not it's right to do ... [just think about] if you would be at all concerned by putting this issue on the front page on the New York Times. Would you have any glimpse of hesitation? And if the answer is yes, just don't do it. And if the answer is no, you would have no hesitation ... You should go ahead and do it.’
[I] have used it in my life many, many times when confronted with a major decision. I've always told my people at Silverstein Properties, I've said, ‘it's advice that I was given by my father many, many years ago. And by golly, I've used it zillions of times. And it worked very well for me.’ Therefore, I recommend it to them.
Bisnow: What is your greatest extravagance?
Silverstein: I suppose my greatest extravagance was buying our first home, spending for us what was a huge amount of money at the time, and then wondering, having invested $20K over a $50K mortgage [then] leaving the closing and looking at my wife and saying, 'We’ve got $1K left in the bank, how are we supposed to do this?' Somehow we figured it out.
[We] went on after living in the house for 20-plus years, almost 30 years, [to sell] it for many, many more times more than we paid for it. And it was the home in which we raised our children. They love it, and we loved it. It turned out to be extraordinarily successful.
Bisnow: What is your favorite restaurant in the world?
Silverstein: We were in Sicily and we went to the concierge of a local hotel and we asked the concierge for his recommendation for a local Italian restaurant where local Sicilians went to dine. I said, ‘it doesn't have to be fancy, it doesn't have to have fabulous views. Doesn't even have to have tablecloths. We just want the food to really be terrific. Italian food — homemade, legitimate Italian food.’
We were given directions and we were driven as close as we could get to the restaurant. We then had to walk the rest of the way through dark alleys, seedy neighborhoods.
We finally got to a clearing where we saw clothing hanging from clothing lines up above, children running in every direction, motorcycles, scooters, dogs, cats and in the middle of this little opening were a few tables where an older woman with a big skirt held up with a rope tied around her waist; she looked like a peasant woman who had been used to hard work. She was the owner of this outdoor restaurant and she, in broken English, [said that she] wanted to know what we didn't like. And she said, 'OK, I'll make you dinner.' Never finding out what we liked, just what we didn't like. And she made us the most incredible Italian.
It was an extraordinary culinary experience.
If you could sit down with President Donald Trump, what would you say?
Silverstein: I think I'd better pass that one.
Bisnow: What's the biggest risk you have ever taken?
Silverstein: I think probably building 7 World Trade center the first time around. That was probably the biggest risk. It turned out to be a successful building. Unfortunately it was the last building to come down on 9/11. But it was the first to go back up in the rebuilding. It’s the only building we've had the chance to build twice in one lifetime. The second time around was totally different than the first edition that we built back in 1987.
Bisnow: What is your favorite place to visit in your hometown?
Silverstein: My hometown is New York City. I just love walking the streets of New York. For 30-some odd years we lived on Park Avenue and 59th Street. And now we've moved down, most recently, to 30 Park Place in Lower Manhattan. There are more young people around in Downtown Manhattan from Midtown where we used to live. More baby carriages. More strollers. More families. But just walking the streets of New York, I find enormously exciting. Lincoln Center for the performing arts. The Theater District, Midtown, the Financial District in Lower Manhattan. It’s all very exciting.
And how New York continues to grow and revive itself, and renovate itself and alter itself and reconstruct itself is fascinating. Just to walk around the streets of the city today, there isn't a street where there isn't some sort of construction activity. It's really quite amazing how it continues to flourish. I love it.
Bisnow: What keeps you up at night?
Silverstein: The current state of the world I find terribly troubling.
Bisnow: Outside of your work, what are you most passionate about?
Silverstein: My wife of only 62 years. We are finally getting to know each other. Our family, children, our grandchildren. Our city, our state, our county. I think it’s the greatest country in the world and I want it to stay that way.