Given the bleak economic outlook and uncertain times for New York City real estate, the late developer Lewis Rudin’s steadfast belief in hanging on to all his holdings may serve as an encouraging example for jittery developers in a slumping market.
Rudin, who died of bladder cancer in 2001 at age 74, did more than shepherd his family’s development dynasty through some of the most challenging periods for the real estate industry in the city’s history as he ran the Rudin Management Company, his family’s business. He played a leading role in rescuing New York from several fiscal crises.
He first took a role in civic affairs during the bad old days of the early 1970s, when the city was cutting back on services and crime was a fact of life.
To help change the conditions that made New York the butt of late-night talk show hosts’ jokes, Rudin helped found the Association for a Better New York, along with a group of prominent New Yorkers that included public relations maven Howard Rubenstein, developer Robert Tisch and real estate investor Sanford Abelson.
The association devoted itself to turning the city around, embarking on ventures that included “adopting” a Bronx school, spearheading the famous “I Love New York” ad campaign and helping to pay for bulletproof vests for the New York Police Department.
“The world had changed,” William Rudin, his son, said. “And my father realized that you couldn’t just focus on your own building anymore. He made the connection that you had to be proactive not just within our own buildings, but within the environment around them. We could have the greatest building in the greatest location, but if nobody wanted to live or work in New York City, then it didn’t matter.”
Rudin’s relentless New York boosterism, which included passing out his famous Golden Apple pins, was one of his defining character traits in the real estate community.
Golden Apple pin recipient Liz Smith, the gossip columnist, frequently ran into Rudin and his brother Jack during lunch at the Four Seasons.
“I always thought that they were in a class by themselves,” said Smith. “He [Rudin] was so sweet and down-to-earth.”
Government work
One of Rudin’s most noteworthy acts came in 1975, when the city was on the brink of bankruptcy.
The federal government had already declined the city’s requests for a loan, prompting the famed Daily News headline: “Ford to City: Drop Dead.” Albany took the same posture. And even the city’s banking industry refused to lend it money.
With the city weeks away from bankruptcy, Rudin led a successful effort to persuade developers and corporate leaders to make a series of prepayments in property taxes that eventually allowed the city to rake in $600 million.
This novel municipal financing strategy enabled the city to meet its financial obligations and avert the biggest financial disaster in its history.
“You find very few people in the private world who would cross the line and say, ‘I want to help the government,'” said Jack Nyman, dean of the Steven L. Newman Real Estate Institute at Baruch College. “But Lew knew that for his residential holdings and for his office buildings, he had to keep the city going.”
He stepped up again in the 1980s, when President Ronald Reagan sought to abolish deductibility of state and local taxes in calculating federal tax liability. Rudin worked closely with then-Governor Bill Clinton of Arkansas and other leaders to defeat the plan.
“There is no question that Lew Rudin as head of his family and as a frequent fiscal savior of the city is a model for real estate textbooks,” Nyman said. “The Rudins have the classic, solid old-school values, which most of the real estate industry has lost.”
Family philosophy
Rudin grew up in the real estate industry. His grandfather, Louis Rudinsky, whom Lewis was named after, came to New York City as an immigrant from Poland with only a few cents in his pocket and worked as a grocer on Chrystie Street on the Lower East Side before starting the family real estate business.
Lewis and his brother Jack, now age 83,
inherited the business from their father Samuel in the mid-1970s and expanded it significantly.
According to Fortune magazine, the family company owned 36 buildings in New York, constituting a total of 15 million square feet of property as of November 2007. Their holdings include some of the most prominent addresses in the city, including 3 Times Square, where they built the Reuters building, and 345 Park Avenue, home to the headquarters of pharmaceutical giant Bristol-Myers Squibb.
The empire is still growing, though one of the projects it is currently involved with in Greenwich Village, which includes new residential housing and a new complex for St. Vincent’s Catholic Medical Centers, has drawn community fire. As part of the project, St. Vincent’s has requested permission to demolish two buildings within a historic district.
Lewis Rudin’s approach to real estate was formed by a family ethos that was passed through the generations. His grandfather’s first real estate purchase was an apartment building on East 54th Street in the 1920s.
Rudinsky reportedly advised his son, Samuel, never to sell it. Today, the property is part of a 32-story office building owned by the Rudins, and the family has continued to follow its founding patriarch’s dictums by holding onto virtually all of the buildings it builds or buys.
Succeeding generations have also stayed close to their roots. The Rudin Management Company, which is run by Lewis’ son, William, and by his brother, Jack, still invests primarily in Midtown and Lower Manhattan.
“We are long-term holders, and we think that helps us attract financing and tenants. It makes institutions and tenants feel comfortable,” William said.
Paying the price
The Rudins’ strategy of holding onto properties through the hard times has ultimately been a profitable one. But during the 1990s real estate crash, the Rudins paid a steep price to hold onto their money-losing investments.
Between 1990 and 1992, the family’s net worth plummeted from $1.5 billion to about $500 million, and the following year, they did not even make it onto the Forbes 400 list, according to the New York Times.
Lower Manhattan had a 30 percent vacancy rate in 1995, William Rudin told the New York Sun in a 2005 interview. And the family’s downtown properties were hurting after Drexel Burnham Lambert, their anchor tenant at 55 Broad Street, went bankrupt. The building remained empty for several years.
But instead of unloading it, the Rudins overhauled it into one of the first so-called “smart” buildings in the country, reportedly investing up to $40 million into what Rudin’s son William anointed the New York Information Technology Center.
“Nobody was doing anything in Lower Manhattan at the time,” recalled Steven Spinola, president of the Real Estate Board of New York. “But the Rudins pumped millions of dollars into Broad Street, and it became a huge success.”
Spinola said the Rudins were known for “not giving away anything, but they were also known for not insisting upon making the last penny.
“So if you were a tenant in their building, you knew that when your lease was up for renewal that you were going to get a fair deal,” he said.
William Rudin said that Park Avenue was his father’s front yard; he enjoyed being in New York so much that he didn’t own a vacation house until the very last years of his life, when he built one in Palm Beach.
Because Rudin was such a bon vivant, people sometimes underestimated his capacity for business, recalled Kenneth Patton, divisional dean of New York University’s Real Estate Institute, who first met him back in
the 1960s.
But Rudin could cement a deal with a handshake
because he had all the statistics either memorized or written down on scraps of paper that he carried in his pocket, said Patton.
“He was a numbers guy,” Patton said. “He could talk about a lease at a cocktail party, and he would dissect it dollars per square foot, escalation, CPI [consumer price index], all of that. He was very good at it. He concealed this behind an uptown demeanor. He didn’t look like a guy with a green eye shade.
“I think that Lewis Rudin had the biggest impact of any leading real estate figure in the last 50 years. And I don’t just think it — I know it,” he added. “People would say of Lew, ‘He is just a salesman because of his outgoing personality.’ And I would say, ‘Bullshit, he knows his numbers as much as anyone in our business,’ and I think that gave him his handshake deal-making ability — it came from his being well-informed, not just his salesmanship.”
For his efforts on behalf of the city, Rudin won many awards, including the Bronze Medallion, New York City’s highest civic award, and the Living Landmark Award, which is given by the Landmarks Conservancy to distinguished New Yorkers.
The block of East 52nd Street between Park and Lexington avenues is named “Lew Rudin Way,” and the street sign hangs above the corner where Rudin used to buy hot dogs at an outdoor stand. “The Lew Rudin Way” is also the title of an hour-long documentary about Rudin’s life, which was produced by his son, William, and narrated by actor Sidney Poitier. The film, which was shown at the Tribeca Film Festival in 2006, features luminaries such as former presidents George H.W. Bush and Bill Clinton reminiscing about the man widely known as “Mr. New York.”
As Kent Barwick, president of the Municipal Art
Society, a prominent civic organization, put it, “His big
impact in the city wasn’t so much daring architecture or huge deals, but rather, bringing the developer community into a dialogue about the future of the city at a time when people were losing confidence in the future.”