Cometh the Tower, Cometh the ManSep 08, 2007
Larry Silverstein darts out of the elevator as it touches the lobby of his Park Avenue apartment building, offers me a brisk yet friendly greeting, then races out of the glass door, making sure to offer a courteous “thank you” to the doorman. I am supposed to follow. Silverstein is 76, but he walks at an extraordinary clip, as if wearing stilts. It is a muggy Friday morning in July, and he has eschewed his usual double-breasted suit with striped Turnbull & Asser shirt for a blue plaid sportscoat, an open-collared shirt and boat shoes.
I attempt some small talk about the humidity as we head toward his grey, four-door Mercedes, but Silverstein merely rolls his eyes skyward and remarks that “it’s not so bad” in a raspy, Brooklyn- accented voice. Realising that chitchat is not Silverstein’s thing, I ask the New York property developer about the subprime meltdown that has been roiling the markets. As we slip into the car’s back seats, he tells me that we are seeing a healthy correction. “It’s a dislocation for some, and an enormous opportunity for others. People who are over-leveraged find themselves squeezed. This presents opportunities for those of us who have cash.”
In roughly three minutes, Silverstein has displayed the characteristics that friends and associates say define him: relentless energy and focus, and unflagging optimism.
As the driver navigates a swift route to Lower Manhattan in rush- hour traffic, Silverstein talks about his 50 years in the New York property business and, in particular, the project that will secure his place in the city’s history: the redevelopment of the World Trade Center. Silverstein talks openly about his own mortality – he often says he has “no time for green bananas any more” – and his sense of urgency is palpable.
He is simultaneously developing three of the five skyscrapers at Ground Zero, and his trio of eminent architects – Norman Foster, Richard Rogers and Fumihiko Maki – are working at a blistering pace to meet his tight deadlines. His position as the World Trade Center’s main developer is at last secure, after an extraordinary six years in which he fought some of the world’s largest insurance companies, the New York Police Department, the Port Authority of New York and New Jersey, the governor of New York, City Hall, headstrong architects and widespread public doubts about his motivations.
He fought hard, and he won. And now he’s not wasting time.
We arrive shortly before 10am at 7 World Trade Center, the elegant office tower that has replaced the building of the same name which became the third structure to fall on September 11 2001. Silverstein quickly got to work replacing it (he’d built the original, too) and, contrary to widespread gloom-and-doom predictions, is filling it with good tenants paying good rents. That success has changed the minds of many of his doubters. “All that has delayed us, all that is done,” he says. “You have five towers going forward simultaneously. It’s an enormous amount of work, but by 2012 the buildings will be done. This will be as transformative as anything ever has been in New York.”
And with that, Silverstein gives me a deal-closer’s broad smile and firm handshake, then quickly disappears into the lobby of his building.
Larry Silverstein was born in the early years of the Great Depression and grew up in the Bedford-Stuyvesant section of Brooklyn. His father was a classical pianist who taught music before getting into the real-estate business. Silverstein played the drums well enough to perform in a jazz band at New York University. But after graduation in 1952, he followed his father into property, working as a leasing broker in what was then called the rag and remnant district of Manhattan.
Times were lean. He recalls leasing space in shabby buildings for 50 cents a square foot; commissions of $200 or $300 for six months’ work were not uncommon. His wife Klara’s schoolteacher salary sometimes supported the family, which grew to a son and two daughters. (Two of the children now work for the firm, and the Silversteins celebrated their 50th wedding anniversary last year.)
It was in these hard early years that Silverstein began to hone the negotiating skills that would make him one of the toughest deal- makers in New York. “You had to depend on your wits. The skills you had to have in negotiating those transactions – well, you couldn’t help but learn what became the basis of effective management. You didn’t make the deal, you didn’t eat. The results were what counted.”
Restless and tired of struggling, he took night classes at Brooklyn Law School, hoping that a law degree would give him an edge in the property business. Around the same time, he sat down with his father and told him they would never make money unless they became owners of buildings. “But we have no money to buy buildings,” his father replied.
The son had a plan. He had been studying the property tycoons of the day and was determined to emulate them. He befriended Lawrence Wein and Harry Helmsley – who would buy the Empire State Building in 1961 – and learnt from them. Helmsley (whose second wife, Leona, would become a symbol of 1980s excess) taught Silverstein the basics of development, advising him always to buy corner buildings. Another piece of advice from the late Helmsley stuck with him: “Harry said: ‘Always go for the larger transaction. It takes the same energy and time for a one million sq ft building as a 100,000 sq ft building, but the productivity with the larger transaction dwarfs the smaller one.'”
Silverstein’s first acquisition was a loft building in New York’s Garment District. He bought paint and florescent light bulbs, made some improvements and converted it from an industrial building to offices.
Although he did some building, Silverstein was not known for new construction. In the New York property world, Silverstein Properties was a small, family-run company – albeit one that made the family very wealthy. When Silverstein built 7 World Trade Center in the mid-1980s, he put up his own money in addition to some construction loans. It was the first building he had developed from scratch, and his highest-profile project by far.
That remained the case until 2001, when the Port Authority auctioned off the Twin Towers. When they were built in the 1970s, the skyscrapers were reviled by architecture critics and didn’t, initially, attract many tenants. By the late 1990s, however, the buildings were full and the Port Authority decided to sell while the market was booming. Most of the big real-estate firms in town joined the bidding. “Hearing about all the major players involved, I thought [Silverstein’s bid] was a pipe dream,” says Leonard Boxer, a family friend and the lawyer who handled the deal. “He was the darkest horse, but he had a passion for going after those buildings.”
Ownership of the Twin Towers would cement Silverstein’s place in New York property. But they also fit his business strategy: in his view, the buildings had fallen into less than pristine condition, and he believed he could fix them up and get better rents – just as he had back in the Garment District.
It was a fiercely competitive bidding process, and Silverstein knew he had the most to prove. Days before the bids were due, he finished a meal at the swish Le Cirque and set off for home on foot. (He had given his driver the night off.) As he stepped off a curb, he was hit by a drunk driver. The impact sent him flying, and he landed hard, fracturing his hip in 16 places. Despite the pain, he asked that the morphine be cut so that he would be clear-headed when discussing the deal on the telephone from his hospital room.
Silverstein made the short list, along with Vornado, a much larger property company led by Steven Roth. Roth won the bid by $50m, but he had problems negotiating the details with the bureaucrats at the Port Authority – a government agency run by New York and New Jersey – and Silverstein got a call. He had won.
Boxer still marvels at the accomplishment. “With a limited staff, he out-manoeuvred some of the biggest companies, not just in the city but in the world. Some developers let their lawyers do the negotiating, but Larry was front and centre.”
Silverstein was committed to pay $3.2bn over 99 years to lease the two towers from the Port, which still owned the land. It was the biggest deal ever for a single piece of property. On a sunny day in July 2001, he stood at a ceremony in the plaza of the World Trade Center, next to the then-governor of New York, George Pataki, and held aloft a set of keys to celebrate his victory. It was the crowning achievement for the 70-year-old self-made man from Bed- Stuy. The celebration would last six weeks.
On the morning of September 11 2001, Larry Silverstein was planning to head to the World Trade Center after a routine dermatology appointment that his wife insisted he keep. A call came from the captain of his yacht, which was docked on the Hudson River, asking if he was all right. Silverstein had not heard the news. “Turn on the television,” he was told.
Four of his employees died in the attacks. Silverstein was terribly shaken, but he resolved that day to rebuild – a vow he repeated to friends, associates and, days later, to Pataki in a telephone conversation.
In the months to come, Silverstein would be viewed by some at the Port Authority and in New York government as an obstacle to the process of deciding what to do with the 16-acre site. The developer wanted to rebuild the 10m sq feet of office space that was destroyed, but others weren’t so sure. Before leaving the mayor’s office in late 2001, Rudolph Giuliani said he would like to see the entire area become a memorial. Although Giuliani no longer had an official say, his words carried weight, particularly with victims’ families. Michael Bloomberg, who succeeded Giuliani in January 2002, favoured a plan to build apartments and a school. Over time, New York officials would offer Silverstein other public properties in exchange for his leasehold. Associates say he was also offered millions in cash to walk away from the project altogether.
The arguments raised by Silverstein’s critics could be boiled down to a single question: could a profit-driven private developer be trusted to lead a project of such great public importance? Nothing in Silverstein’s record showed that he had the skills or inclination to build capital-A architecture. A collection of mundane office buildings, built with an eye on the bottom line, would bring shame not just on New York City but also on the entire US.
If Silverstein had doubters in government, he also suffered in the court of public opinion. A child of the Depression era, he was not given to emoting in front of the cameras. Instead, he talked about rebuilding, hoping to project his sense of resolve and determination. But it sometimes came across as inappropriate, if not opportunist. He talked about insurance money and square feet, and he pursued his causes with typical aggression. It all seemed out of step with the public mood, and his image suffered for it.
It didn’t help that Silverstein was a key figure in some of the nastiest episodes in the rebuilding process. His selection of David Childs as the main designer of the Freedom Tower – the site’s tallest building, and one loaded with most of the symbolism of regeneration and courage – was controversial. Childs was a buttoned-down architect with a long record of corporate commissions. Pataki, who as governor of New York had jurisdiction over the Port Authority, favoured Daniel Libeskind, the architect who had become the public face of the project while acting as designer of the site’s master plan. Libeskind, with his turtlenecks, chunky black glasses and spiky hair, was more given than Childs to talk about lofty concepts such as memory, representation and public space.
The architects’ battles became a proxy for the power struggle between Silverstein and government officials, and erupted embarrassingly into public view. Libeskind was portrayed as sticking up for the public interest against the profit-hungry developer and his hired lackey. Yet whatever was said about him in the press and behind closed doors, Silverstein had leverage. He was paying $10m a month rent to the Port Authority, and he stood to gain billions in insurance proceeds. Even so, there were times when he was rattled.
His biggest battle was his legal claim against the insurers, in which his team (led by childhood friend and the clarinetist in his university band, Herbert Wachtell) argued that the attacks on the two towers were two “events”, entitling Silverstein Properties to a double payment from its insurers. That would have earned Silverstein $7bn – twice the $3.5bn policy he had taken out. His entire vision for rebuilding rode on this argument, but he lost the first case. It was one of the few times that Silverstein’s confidence was shaken, and it still bothers him: “One of the greatest disappointments in my life has been dealing with some of the insurers who were involved,” he told me. (After six years of litigation, the insurance proceeds totalled $4.6bn, all of which Silverstein will put towards rebuilding.)
Silverstein’s other low moment came in April 2005, when he was set to begin work on the Freedom Tower. Just as building permits arrived allowing construction to start, the New York Police Department released a report saying the skyscraper was unsafe and could not proceed as designed. The architects would have to start over. The lack of co-ordination between the different government agencies – the NYPD and the Port Authority – was unbelievable to Silverstein and his team. “I threw out a stack of plans as high as my five-year-old,” says Janno Lieber, Silverstein’s project developer.
Tensions only got worse, and by early 2006 it appeared that Silverstein could lose control of the project. Bloomberg began his second term by lashing out at the developer, saying he was to blame for the lack of progress on the site. The mayor wanted to wrest control from Silverstein and parcel out the work to other developers. Pataki, meanwhile, accused Silverstein of “betraying the public’s trust”, while one of the governor’s aides labelled him greedy.
Yet after months of tough talk, the two sides came up with a deal, with Silverstein relinquishing his right to the Freedom Tower – thought to be the most difficult building to lease on the site – while keeping three other commercial buildings. Silverstein managed to walk away with what will probably be the most valuable buildings at Ground Zero.
Today, even Libeskind believes the contentious process resulted in a good plan, and that the heated public debate – and the emphasis it placed on great architecture – helped push Silverstein to hire Foster, Rogers and Maki. “I have to give Silverstein credit,” Libeskind tells me. “He actually went forward with it, and it’s very, very impressive. He commissioned very good architects, and each one of their buildings has its own identity. They’re doing something special there.”
Despite their conflicts, Silverstein invited Libeskind and his wife, Nina, to join his family on his yacht as the planning was going on. Having spent so much time with him, Libeskind believes Silverstein truly feels a desire to do something good for the public. “I don’t believe it’s just rhetoric on his part. He has enough money, he doesn’t need to do all this.” Yet he also believes that Silverstein is, first and foremost, a New York developer, and that the things that motivate developers – power, money, vanity – also came into play with this project.
“Certainly it was about money, but also about wanting to do this, about him wanting personally to rebuild,” says Libeskind. “There’s the obvious motive – moving into the stratosphere of developers from absolutely nothing. He’s a tough guy, no doubt. A self-made man, one of the true New York stories. He can give as good as he can take. And he knows how to play the game.”
Step off the gleaming elevator on the 10th floor of 7 World Trade Center and you are greeted by a small sign that reads: “World Trade Center Design Team”. An arrow points to the right. Follow its directions and you’ll find an inspiring sight, one that vanquishes all the bad blood, power plays and incompetence that marred the rebuilding process. Here, amid an expanse of cluttered desks and cardboard architectural models, members of three of the world’s most distinguished architecture firms are working side by side. In all, about 120 people, including engineers and construction planners, plug away in an unfinished office with exposed ductwork. An 80ft pinboard covered in architectural renderings is tacked to one wall.
The feeling of intense pressure in the room is amplified by the digital clock ticking off the seconds until the next deadline. And as if an impossibly tight schedule were not enough inspiration, there is another reminder: a south-facing wall of plate glass that offers a commanding view of Ground Zero. On a clear day in August, I saw steel beams rising out of the north-west quadrant – the bones of the Freedom Tower – and the complex system of infrastructure emerging from the Manhattan schist bedrock.
It was Silverstein’s idea to have all the firms working together in an open-plan office, and an esprit de corps has emerged among the three firms, which normally compete for commissions around the world. “It’s a very intelligent way of co-ordinating,” says Rogers, who this year won the Pritzker Architecture Prize.
Silverstein expects to begin laying the foundation for the Rogers and Maki buildings early next year. The reconstruction has a sense of inevitability to it now. And there is little doubt the buildings will be impressive. Those who craved height to replace the Twin Towers will not be disappointed. The Freedom Tower will be the tallest in New York, if not the world, at 1,776 ft. Foster’s shimmering tower will be the city’s second-tallest at 1,254 ft, with an 85-ft antenna. Rogers’s tower, marked by diamond-shaped steel supports on the exterior, and Maki’s elegant, minimalist building are both distinctive works of art. The buildings form a spiral around a memorial of the attacks, and will be linked by a stunning train station designed by Santiago Calatrava.
Yet, no matter how grand Silverstein’s buildings are, some people will inevitably bristle at the sight of giant skyscrapers for wealthy corporate executives, anchored by retail stores at street level selling handbags or frozen yoghurt, near what is considered hallowed ground. Others critics will argue that a different developer might have encouraged his architects to take bolder leaps with the designs. Indeed, when I asked Silverstein what he had wanted for his buildings, he spoke mainly of features that would be obvious selling points to potential tenants: grand lobbies and column-free floorplans, generous ceiling heights, and uninterrupted views from corner offices. He also wants to create environmentally friendly buildings, as he did with 7 World Trade Center.
I ask Foster, who submitted a breathtaking “kissing towers” design early in the competition, about Silverstein’s commercial bent. He begins by complimenting his fellow architects on the project, saying that the high quality of design is “a fact”, but he goes on to echo Libeskind’s observations about the planning process: that the forces shaping the designs reflected New York’s values. “New York is the built embodiment of the marketplace, the democratic marketplace. That is the very important big picture which transcends the individual architecture of any one building.”
While there will be debates over Silverstein’s vision long after the buildings have been completed, the man has presented a strong case that no one could have handled the project more efficiently. It is a remarkable achievement.
It still seems at once an unlikely tale and a classic New York story: the man who surprised everyone with a dark-horse bid for the World Trade Center, only to see the buildings destroyed by terrorists six weeks later, has emerged as the competent, optimistic developer of a project with incalculable national importance. When I first sat down with Silverstein this spring, I asked him if he believed in fate.
“I don’t think about that,” he said. “I’m a fatalist. Once 9/11 happened, I realised, first, that my life was spared. I lost some of my employees. It was explained to me by my lawyer that I had an obligation to pay $120m a year for the next 99 years. Recognising that, I said, ‘Let’s get on with it.'”
Chris Grimes is an FT correspondent based in New York.