There is a publicist, or an assistant, or some other kind of handler to make sure the boss doesn’t say something he wasn’t supposed to. (And to make sure “off the record” rules are respected.)
William C. Rudin, the 60-year-old chief executive officer and vice chair of Rudin Management, brought no retinue with him when he met with Commercial Observer on the 22nd floor of the office building at 1675 Broadway between West 52nd and West 53rd Streets. He arrived tieless, and futzed with the earphones for his iPhone for a moment or two before the interview commenced. And he entered the big empty floor with the kind of amuse-bouche that tantalizes hungry reporters.
“We just signed the lease for this!” Mr. Rudin declared.
Just signed it? Could we get the tenant?
Mr. Rudin grinned mischievously. Not yet.
But with Mr. Rudin, you don’t necessarily need to get the goods on every last deal to feel like you’ve learned something after sitting down with him.
With the annual Real Estate Board of New York gala set for this week, few people could comment with better insider’s knowledge on the industry’s lobbying arm than Mr. Rudin. He is not only a member of REBNY’s executive committee but he’s the organization’s point person on federal issues, and the chairman of the Real Estate Roundtable, a public policy organization.
With the stock market spasming, there are few voices more levelheaded on the tumult roiling China, and what this will mean for the New York real estate market, than Mr. Rudin.
And with Fiddler on the Roof headlining the Shubert Theatre that 1675 Broadway was built over, few industry moguls could talk better about Times Square, its history and what lies in its future, than Mr. Rudin. (For the record: Mr. Rudin hasn’t seen this latest incarnation of Fiddler. “I went to the opening of Les Miz,” said Mr. Rudin, which was playing at the Shubert in 1987 when he was erecting the building.)
That seemed as good a place as any to delve into all these topics, and a few others.
Commercial Observer: Why do you think Times Square is still such a compelling story?
Mr. Rudin: Well, obviously, over the last 20-plus years, Times Square has evolved into not only a tourist attraction, but also a major office and commercial sector. That was the original vision in terms of reimagining Times Square back in the mid-1980s. So all the development that’s happened and the continuing development just fortifies what’s gone on for the last 15 or 20 years.
Did you have a hand in in that? In the redevelopment itself?
My dad [Lewis Rudin], back in the 1970s and the 1980s, worked very hard through his Association for a Better New York to clean up Times Square. In the late 1990s, we became the developer of 3 Times Square, which is right on [West] 42nd Street [and Seventh Avenue]. Definitely the catalyst back then was Disney and its commitment to the area and the redevelopment plan that Carl Weisbrod, Mayor [Ed] Koch and Governor [Mario] Cuomo had initiated. But it wasn’t until the Dinkins administration that things really accelerated, and we’re seeing the byproduct of that visionary thinking today. When we started this project, 1675 [Broadway], Mayor Koch wanted to encourage more development on the West Side, and we found this site that was owned by the Shubert Organization. We have a long-term ground lease and we literally built our 750,000-foot building cantilevered over the Broadway theater to create the floor space that we’re in now, these big, 25,000-square-foot floors.
I remember as a kid growing up in New York in the 1980s, everybody was scared away from Times Square. What was your experience with the area prior to all of that redevelopment?
We used to go to the theater a lot as a young kid, and obviously knew what was going on here. I’m a New Yorker. I was brought up in the 1960s and the 1970s and really didn’t think about it that much. I just thought that was the way it was and you just had to be careful and be very cognizant of your surroundings, but obviously knew that things needed to change. We were part of the original creation of the Times Square BID with Gerry Schoenfeld of the Shubert Organization and Arthur Sulzburger, Jr. of The New York Times, and so that was another key moment in terms of getting the business community together to hold hands and really work with the city to clean up Times Square.
On the business end, do you think that TAMI, or tech, advertising, media and information, tenants can look at Times Square as a viable home?
Oh, no question about it. Our original tenant in this building back in 1987 was a company called D’Arcy Masius Benton & Bowles, which was a major advertising name. They’ve been here since the beginning—they’re now owned by Publicis. Last year, in 2015, we signed, I think, the largest lease in the city with Publicis. They renewed their lease, and they expanded by over 100,000 feet, so they’ve got over 650,000 feet in this building. There’s a lot of energy, there’s a lot of creativity, there are a lot of amenities—all the things that TAMI companies are looking for. I think as TAMI companies mature they realize that in certain buildings on Park Avenue South and in Chelsea, there are some limitations. The elevators are older, the infrastructure and the building is not up to speed for their growth and that’s why these types of buildings like 1675 Broadway are modern, but you can also have the exposed ceilings and create that cool, funky look that these companies are looking for.
Well, the whole diversification of our economy has really, I think, changed the dynamics of the city in a positive way. There are no boundaries anymore. Everybody used to think, “O.K., either I have to be in Midtown or I have to be Downtown or maybe in Brooklyn for a back office.” That’s totally gone away over the last five, seven years, where new neighborhoods for office use have sprung up. So, obviously, the explosion of people living in Brooklyn leads us to say, “O.K., if you’ve got 60 percent of your workforce living in Brooklyn, and we create the right product with the right infrastructure at the right price point in a new development [we’ll have the market to ourselves].” There hasn’t been a new office building built in Brooklyn in two decades. And so we were approached by WeWork—we had done a deal with them down at 110 Wall Street after [Superstorm] Sandy—and they said they had been working on this deal at the Navy Yard—there are no real estate taxes, they’re going to get a long-term ground lease, and would we come and help them develop this project? We did something unique for us: we collaborated with our friendly competitors at Boston Properties, so we’ve got this triumvirate of very powerful groups coming together. It’s sort of old school with new school.
Tell us your thoughts about what happened [two weeks ago] with Penn Station?
We’ve always been talking about infrastructure and infrastructure investment and Penn Station, and the key to long-term economic growth. I think the governor’s plan is very bold and forward thinking and is something that I think needs to get done. I go down to Washington, D.C. a lot now as chairman of the Real Estate Roundtable, and what a difference between going into Union Station and going into Penn Station. It’s embarrassing, really, when you come into this great city. Also the governor came out with his plan for Javits—again, very, very important for economic growth of our city and state and again, forward thinking and something that will hopefully get done.
Do you think that what they’re doing with Penn and Javits will do for that area what happened to Times Square 20 or 30 years ago with the Association for a Better New York?
I think it will probably have even bigger implications because now you also have Hudson Yards and Brookfield’s development behind Farley [Post Office].
I want to switch to REBNY. What would you like to see REBNY do in 2016?
Continue what they normally do and represent our industry, the real estate industry, which is obviously a very vital part of the economy of our city and our state. Probably the number one priority is to try to work with labor and the city and the state to get a 421a bill passed and deal with the issues that were laid out by the legislature last year in terms of affordable housing. That’s a critical component for the growth of our city, and we need to be able to produce affordable housing and I don’t think you can do it without a 421a plan. And I think dealing with real estate taxes, dealing with zoning, dealing with quality of life, all the things that REBNY focuses on to make sure we have a viable industry and we don’t over-regulate ourselves and don’t create impediments to development and growth.
What about something I know that you were pretty outspoken about in the past, TRIA—the Terrorism Risk Insurance Act?
Well, TRIA we got [renewed by Congress] a year ago, and that was very, very critical for development not just in New York City but literally all over the country, and we have to think about long-term ways to come up with a mechanism so we don’t have to rely on the government. Maybe come up with a way to create a pool of insurance because it’s very difficult every four or five or six years to go back to the federal government. That’s something that Jeff DeBoer [the president and CEO of the Real Estate Roundtable] and myself will be working on in 2016, along with REBNY.
We’re speaking the day after China closed its stock market after 29 minutes. Do you think that what’s happening in China is going to affect the New York real estate market?
We’ve learned long ago that we are all intertwined all over the world. It’s a global economy, and what happens in China or Russia or Mexico has an impact; it’s just the degree of the impact. Maybe people [from the United States and elsewhere] will realize that they don’t want to invest in China, they want to now put their money here in the United States. Or people in China want to take their money out and bring it to the United States, which we’ve seen over the last several years. That’s why we have to keep doing the fundamentals. Obviously, I don’t want instability, but it makes investors say, “O.K., maybe I’ll take a little bit less of a return, but I know my money is safe,” and I think we are a safe place to invest here in New York and other parts of America. So, we just have to keep focusing on what we can control. We can’t control the Chinese stock market, but what we can do is advocate and push for things like Javits, like Penn Station, like East Side Access, which will totally change the whole East Side and the Second Avenue subway. That’s why EB-5 is important, that’s why FIRPTA [Foreign Investment in Real Property Tax Act] is important, and the vision that the governor has laid out for these important projects like LaGuardia is very, very critical.
You mentioned EB-5. A number of politicians have been saying we’ve got to do away with EB-5. Do you think that’s a real possibility?
I think there are legitimate points that need to be addressed in terms of the process and how EB-5 is structured, and that’s something that the Real Estate Roundtable and the Chamber of Commerce have always been willing to negotiate and discuss. The clock was ticking at the end of the year. They called a timeout [and] extended the laws, but you know, we’re on the clock now to get something done [by the end of September]. But I think the people in the industry who utilize EB-5 know and understand that there are some legitimate issues that need to be addressed. Could it end? Of course it could end, but I think it’s proven to be a very important economic and infrastructure development tool. You need to show to the congressmen or congresswomen where the supply chain is. It’s just not about New York City. We’re buying curtain walls from other parts of the country, we’re buying steel from other parts of the country, we’re buying marble, we’re buying HVAC—where is that coming from? Is that coming from your district, congressman or congresswoman?