Zeckendorf Read online

  "I speak about an extraordinary American pioneer of immense imagination, courage and nerve...a man of fathomless loyalty, generosity and public spirit. Take him for all in all, we shall not look upon his like again. I only hope that ambitious young Americans eager for genuine achievement rather than ordinary financial and social success will take a chapter from the book of William Zeckendorf."

  Robert Moses, from his eulogy

  at the services for William Zeckendorf,

  October 3,1976

  ZECKENDORF

  Not since the days of the Louisiana Purchase has America seen any bigger real estate transactions than those executed by William Zeckendorf, the derring-do head of Webb & Knapp. Figuring with supersonic speed and an uncanny flair for making money, the flamboyant impresario bought and sold property, remodeled whole sections of New York, Denver, Washington, Montreal and Dallas, and moved the UN, the capital of the world, to New York. At the peak of his power, William Zeckendorf was a man with the Midas touch in an age of computers.

  From his windowless teakwood igloo office set in a white marble lobby (designer I.M. Pei explains, "It would be ridiculous to create any environment for him other than one consisting exclusively of himself."), William Zeckendorf played a real-life game of Monopoly and won the largest real estate empire in the world – so large, in fact, that Wall Street tottered when he went bankrupt. And bankrupt he was, but never in spirit.

  Now beginning what he calls his "second life," William Zeckendorf says, "I've had no reverses of anything except money. My sense of accomplishment is full, and the cities and the art and the architecture I have influenced will live long after I am gone."

  An autobiography bursting with vitality, enthusiasm, and financial knowhow, Mr. Zeckendorf reveals himself as a visionary whose creativeness and sense of adventure are matched only by his unalloyed joy at being able to successfully juggle a dozen incredibly complicated transactions at once. The spectacular Mr. Zeckendorf, who has fished for piranhas in South America and sold ships to the Greeks at profit, comes to life in this autobiography. You will not want to miss meeting him.

  William Zeckendorf's grandfather was a German immigrant and Indian trader who, in 1868, established a store in Tucson, Arizona. It is still doing a flourishing business there under the name of Steindorf's. Mr. Zeckendorf was born in Paris, Illinois, in 1905. Shortly thereafter, the family moved to Long Island where he spent a classic American boyhood. He attended public schools and dropped out from New York University to work for an uncle in the real estate business. Since the collapse of Webb & Knapp, Mr. Zeckendorf has worked with his son, William, Jr., and his son-in-law, Ronald Nicholson, in a new real estate firm.

  PLAZA PRESS

  Chicago, Illinois

  PLAZA PRESS

  Chicago

  Copyright © 2014 by Plaza Press, Chicago, Illinois, U.S.A

  All rights reserved.

  Cover Designed and Photographed by Larry Ratzkin

  ISBN 10: 0615993524

  ISBN 13: 9780615993522

  FOREWORD

  Real estate developers have big egos and big plans. They are indefatigable promoters for their deals. They are unrelenting optimists. Developers tend to bounce from dramatic economic highs to precipitous lows- back and forth. Bill Zeckendorf was no exception. What made Mr. Zeckendorf special was his love of making blockbuster development deals such as the site acquisition for the United Nations, Roosevelt Field Mall, virtually all of Wall Street, Place Ville Marie, Century City, Society Hill to name a few. Bill Zeckendorf was truly a pioneer in real estate finance. His innovation and understanding of complex capital structure enabled him to make deals that others could not (e.g. The Hawaiian Technique). He also knew that great design sells itself. Why else have I.M. Pei and Harry Cobb, two of the world's most talented architects, on staff? Bill Zeckendorf's passion was achievement in monumental developments and deals; money was merely a by-product of his efforts.

  A lot has happened since Bill Zeckendorf was working his magic on the American urban landscape. For one, real estate has become more institutional. Once in a while, a developer appears on the scene who is a highly creative character, driven to produce innovative projects with the power of personality to make it all happen. It is these visionaries that take our civilization a step or two forward. Look for him or her in the news. Like Bill Zeckendorf they are exciting and inspiring.

  PLAZA PRESS

  John Colt Landreth

  March 2014

  ACKNOWLEDGEMENTS

  The following people made contributions and supported us in the republishing of this book:

  I.M. Pei

  Leicia Black

  Nancy Horn

  Marvin Lifschitz

  Thomas C. Turner

  Donald A. King

  PLAZA PRESS

  John Colt Landreth

  To dear Marion

  for many, many reasons

  Contents

  One

  PROLOGUE

  1 / BEGINNINGS

  2 / APPRENTICE TO THE TRADE

  3 / FROM JOURNEYMAN TO MASTER

  4 / ASTOR RISKS

  5 / THE MECHANICS OF PROGRESS (1942–1945)

  6 / "X CITY" BECOMES THE UNITED NATIONS

  7 / END OF AN ERA, START OF A REIGN

  8 / GOOD-BYE, PARTNERS; HELLO, WORLD (1948–1952)

  Two

  PROLOGUE

  9 / THE TOWN THAT TIME FORGOT

  10 / FILLING IN COURT HOUSE SQUARE

  11 / FROM COURT HOUSE SQUARE TO ZECKENDORF PLAZA AND BACK

  12 / WARP, WOOF, AND SOME EMERGING PATTERNS

  13 / PEOPLE AND PLACES

  14 / CHANGE COMES TO CANADA

  15 / MANEUVERS AND BATTLES FOR PLACE VILLE-MARIE

  Three

  PROLOGUE

  16 / WASHINGTON, D.C.

  17 / WEBB & KNAPP'S PERIPATETIC SCHOOL OF URBAN DESIGN

  18 / CENTURY CITY AND TWO OTHER LAND DEALS

  19 / WALL STREET MANEUVER

  20 / THE WEBB BEGINS TO TANGLE

  21 / THE DEMISE OF WEBB & KNAPP AND THE REBIRTH OF WILLIAM ZECKENDORF

  EPILOGUE

  Twenty-four pages of illustrations follow page 180.

  One

  ▪ Prologue

  LATE ON FRIDAY afternoon, May 7, 1965, I asked my chauffeur to drive me down to Wall Street for one more visit with my creditors. After that there would be the blessed relief of the weekend.

  As we were traveling down the East River Drive, my car phone rang. I picked it up. It was a reporter from The New York Times asking, "Is it true that Webb & Knapp is going into bankruptcy?"

  I said, "My boy, somebody is pulling your leg. Webb & Knapp is not going into bankruptcy. We are paying our debts and will continue to do so."

  I put down the phone. It rang again. This time it was Larry O'Donnell of The Wall Street Journal. He asked the same question. Again I said no, but now I knew something concrete must be causing these rumors. I called my office. They knew of nothing. A few seconds later, however, the office called me back. The Marine Midland Bank, as trustees of an old 8.5-million-dollar Webb & Knapp bond issue, had just called in this note. Webb & Knapp was being put into bankruptcy.

  The note the Marine Midland was calling in was signed years ago when we bought 120 Broadway, for which we had paid more than eight million dollars in cash plus 8.5 million dollars in notes. Under what is called the boiler plate (the standard small print of any contract) there was a particular clause which stated that Marine Midland could demand full payment of the note before its maturity date if Webb & Knapp could not meet its obligation as due—in other words, they could collect the 8.5 million dollars whenever they wished, once they learned Webb & Knapp had not paid one of its other creditors.

&n
bsp; Ironically, we were not in arrears either as far as interest or principal on the Marine Midland note, but there was no defense against the statement that we were not meeting other obligations. For more than three years I had been maneuvering to keep a suddenly greatly overextended Webb & Knapp from actually falling over the edge of the cliff. To this end I had gone into deep personal debt, often by countersigning the notes necessary to keep the company going. We had, of course, curtailed expansion, and we were liquidating assets and retiring debts as rapidly as possible. Knowing what we had accomplished in tight corners in the past, as well as our capacity for making money, our creditors had been riding with us. With just a little more time to capitalize on one project or perhaps salvage another, we would have been able, I believe, to make it to safety, but on that Friday afternoon in May time ran out. The directors of the Marine Midland, as trustees of an 8.5-million-dollar note, felt vulnerable about stockholder suits if they did not act, so they acted. They pulled the cord. Twenty-six years of work, plus what remained of Webb & Knapp, were now moving down the chute.

  There was nothing at all I could do now for Webb & Knapp on Wall Street. I told my driver to take me back to our 383 Madison Avenue office. This is where I had started Webb & Knapp's climb, and here I would stay with it to its fall.

  When I had joined Webb & Knapp as a partner in 1939, it was a management company, a caretaker of other people's property. Gradually I moved the firm into wider and more complex fields. By 1942 the company controlled assets of two million dollars. By 1945, after the end of World War II, our assets were seven million dollars. By 1951, when the company went public our holdings had swelled to a net worth of forty-two million dollars, and kept growing from there. By then, we had acquired all manner of properties. We had accumulated strategic acreage such as the site of the UN, Roosevelt Field in Long Island, the 63,000-acre Indian Trail Ranch in Florida, and Mountain Park in Los Angeles. We had bought television studios, warehouses, and the Chrysler Building. In the 1950's, Webb & Knapp, the property company, underwent a further change in character. In some part this "change" was a logical result of our growth, but in large part it was a matter of my own personality: I like to build. After envisioning a given property's building and architectural potentialities, the challenge always lay in making these potentialities come true. I had ideas, all kinds of ideas, that nobody else was willing to carry out, so I carried them out myself. I knew where to find partners and backers, and because of its excellent business record, Webb & Knapp had access to plentiful financing. In time I found a gifted architect, I. M. Pei, and I talked him into leaving Harvard to work with us.

  We were off.

  Actually, Webb & Knapp had moved rather modestly into construction work, by erecting office buildings. These were enormously successful. Then we branched off in several directions at once. In Long Island we created Roosevelt Field, the first of the giant suburban shopping centers. At the same time, we were pushing the Rip Van Winkle city of Denver into the twentieth century through the creation of Mile High Center, an office complex, and by putting up a new department store and hotel on the site of Denver's Court House Square. Webb & Knapp started a Denver building boom that has greatly improved and drastically altered that town's skyline and history. The same is true of Montreal, where we built Place Ville-Marie, a midtown office and shopping complex that has become the new heart of a refurbished city. As urban-redevelopment laws were passed by Congress to encourage rebuilding in America's cities, Webb & Knapp moved into this field. We fathered the southwest Washington, D.C., redevelopment area whose five hundred acres are now one of Washington's most prestigious office and residential areas. We designed and built the Society Hill towers and townhouse complex that is the centerpiece of Philadelphia's revitalized city core. We conceived and created University Towers in Chicago. We built in Pittsburgh, and in New York we created Kips Bay, built Lincoln Towers and Park West Village. With the possible exception of that extraordinary man, Robert Moses, Webb & Knapp was the largest urban redeveloper in the nation. We placed twice as many bids as we finally won, and in doing so, Webb & Knapp made Title I respectable. Time after time it turned out that our decision to bid was what drew other builders out to bid as well. Invariably, in these encounters, it was our designs that set the planning and architectural standards others had to meet.

  Throughout this period we were also buying land and properties, putting up individual buildings in various cities, creating a string of new shopping centers and industrial parks across Canada, and drilling for oil off the coast of Surinam. The secret of any great project is to keep it moving, keep it from losing momentum, and this, for me, meant a constant flow of telephone calls and trips, often by company plane, to Montreal, Chicago, Washington, Cleveland, Philadelphia, Denver, and points west. Meanwhile, there were ceremonial as well as promotional presentations to be made; to President Eisenhower for our work in southwest Washington; to the Queen of England, in Montreal, for Place Ville-Marie, and to bankers and backers in boardrooms across the country for many other projects. In New York, and in every town where we had interests, there was a constantly changing skein of contracts, agreements, and trades to be kept in motion.

  As it turned out, unexpected and phenomenal delays (especially in urban-renewal projects) between the start and actual finish of our building programs greatly increased carrying and interest costs for these projects. However, we had committed ourselves, and the eventual return from these projects promised to be so great that we carried on. At the same time, Webb & Knapp's profits from the purchase and sale of lands and buildings were so great that we had no financial worries. Once, when I was talking to Billy Reynolds of Reynolds Aluminum, I asked, "What's your company's net per year?"

  "Around nine million dollars," he said.

  "My God, I pay my shylocks more than that!"

  I have never been afraid of debt, because debt is what gives you leverage, and I also knew our projects were excellent ones. So, one day when the head of Morgan Guaranty stuck out his hand at a gathering of bankers and said, "Bill, you look like a million dollars," I could crack back, "I'd better—I owe you three million."

  At the time, we all laughed, but in May, 1965, no one was laughing. Webb & Knapp had been wiped out.

  We had been loaded down by too many projects that were taking too long to be realized, and we could no longer control the direction we were going in. Like a doomed father on a raft who throws his children to shore when approaching the rapids, I had thrown some of our most cherished properties, such as Place Ville-Marie and Century City, to the trustworthy hands that I knew would bring these projects to fruition. This lightening of the load helped. For more than three years I was able to maneuver Webb & Knapp through the rapids. Then, a combination of trends and events, which I shall mention in more detail later, finally piled up and smashed the company. They almost did the same to me. In fact, there were moments after the breakup when I found myself all but in the wreckage bobbing alongside me.

  Actually, once Webb & Knapp had completely gone under, there was an almost welcome stillness. For month after month we had been hectically working to raise cash, to make one last deal, to fend off or pay off creditors. Now, all action ceased. Even our phones were disconnected. When I tried to use my car phone, the operator refused to place my call. Once declared bankrupt, Webb & Knapp was out of the reach of individual creditors and in a fiscal limbo where no one could do business with us. In any event, since Webb & Knapp would now be in the hands of a trustee, I could no longer act for the company. I became, in effect, a bystander at the wake, and an official nonperson, a role both unfamiliar and unenjoyable. At the office, where my associates and I showed up to be of all the help we could, we had the dubious pleasure of watching appraisers come in to evaluate and tag all company fixtures and furniture for bankruptcy sale. Meanwhile, downtown, the New York Real Estate Association posted my son and me for nonpayment of dues. My membership, maintained by Webb & Knapp, was not a detail about which I would normall
y concern myself. The association board members and officials knew this, but none had bothered to call about those dues. Rather, it seemed to me as if they jumped at the opportunity to tear at us as we went down. In the next few weeks and months, we learned not to be surprised at such behavior.

  In moments of crisis, one's world tends to become simplified, and its people and events fall into distinct categories. They did so now. Predictably, a number of people who used to call on me for information, for contacts or favors, vanished from the scene. Meanwhile, quite a few of the people whom I tried to call about one matter or another were suddenly not available or "in conference." Others were carefully distant in their manner. Only my creditors were ever anxious for a chat, and the most eager and anxious of all was Henry Sears, an ex-partner from the old days at Webb & Knapp. It was Henry and I who, amidst the two-A.M. merriment at the Club Monte Carlo in 1946, signed the basic document turning over to the United Nations the seventeen acres that now house their headquarters. Henry, a well-to-do man in his own right, was made 1.5 million dollars richer when I bought him out of Webb & Knapp in 1948. We had parted friends. Recently, in trying to save Webb & Knapp, I had signed a note for $250,000 to Sears' wife. Now, for this note, he pressed me with a harsh zeal that none of my professional loan sharks could match.

  But others went out of their way to offer sympathy and regrets, and, in some cases even help. The great majority, however, stayed neutral, uninvolved, waiting to see what I might do. Moreover, there seemed to be more than a touch of old Japan in modern America: I learned that there was betting in certain quarters that I would choose to end the drama samurai-style, by committing suicide. At the same time, an extramarital liaison I had once formed was also making news. The pain and embarrassment that this brought to my wife was intense. She suffered deeply. Though in the end she loyally stayed with me, as I had always believed she would, there were moments when my depression was absolute. But killing myself was something I was not about to do.