Zeckendorf

by William Zeckendorf

  Ironically, this escape hatch had in effect been put there by the May Company. Under the standard "good-faith" contract which we normally used, the matter of an overhang in some section of the property would not have invalidated our agreement. But the May Company had been such tight, ungenerous bargainers, and their lawyers had written up such a hard-nosed, detail-crammed contract, that our people, in reply, had felt obliged to put in an equally detailed boilerplate specifying, among other things, that the title to the property must be unequivocably clear.

  Soon after this, when no less than a four-man delegation of lawyers for the May Company stalked into our Denver office to enjoy the drama of presenting the deed for the Champa Street building, and to demand their two million dollars, we gave them a surprise ending. After the visitors had served their papers, Wallace called in his secretary and dictated his own papers rejecting the old May building and stating his grounds. When he was done, there was a long silence. Finally the chief of the visiting lawyers, gesturing at the deed lying on the desk, said plaintively, "But what am I going to do with this?"

  Looking up from his chair, my man, keeping an utterly straight face, asked, "Do you really want me to tell you?"

  That was in November, 1959. I'm told the other lawyer has not spoken to Wallace since.

  In March, 1960 at the newly developed area around old Court House Square, we put up a plaque naming it Zeckendorf Plaza, and here, as previously in Mile High Center, Pei and his associates had proved themselves master architects. The relationship of buildings, forms, and spaces in that plaza, the play of height to mass and of textured stone to golden anodized aluminum in the interconnected hotel and department store, worked well. The generous setback of the skating rink combined visually with the hyperbolic paraboloid entrance to the department store and the hotel to give the city a focal point such as it never had before.

  The hotel itself opened, with appropriate fanfare, in April, 1960. I was there, of course, but not in the happiest of moods. The Denver Post, I remember, was running a special supplement for the occasion and came to us seeking advertising. By this time we had poured some forty-three million dollars into Zeckendorf Plaza. Twenty million of this, in the form of equity financing, was our own hard cash. There was not a dollar of local money in the project; the rest of Denver, while now profiting from the overall effect of our development, had never seen fit to invest in its own possibilities, and in fact had not at first believed in them. I felt we had done just about enough for Denver for the time being, and was against taking out any ads at all. But then they showed me a picture taken from Fifteenth Street, looking northeast down Court Place. This photo showed the new May–Daniels and Fisher store on the left, with its overpass connection to the hotel at the right, while two blocks straight down, at the end of the street, was Mile High Center. The caption read: "They Said It Couldn't Be Done."

  I bought that ad: it said it all.

  In the afternoon Conrad Hilton and I raised the flag at the hotel's opening ceremonies, but my job was now done, and I did not stay for the later festivities. This would be Hilton's usual opening-night show, for which he had arrived primed with a planeload of dancing girls and captive celebrities. By the time it started, I was halfway to New York.

  My next official visit to Denver would be in February, 1961, to address the Tenth Annual Building Industry Conference, but before touching on this visit, I should continue with a Denver windup.

  In June, 1961, we turned over ownership of Zeckendorf Plaza to the Alleghany Corporation in settlement of a Webb & Knapp twenty-million-dollar debt to that organization. We took a lease on the property, paying a stiff one million dollars in rent. And there we took a loss, having to pay out more rent than the property could produce. This happened because the May Company did a disappointing business in their new store. No sooner had they closed their deal with us than, as if scorning profits from their new store, they embarked on a program to decentralize business in the downtown area, and ended by hurting all business in the Zeckendorf Plaza area, their own included. Hilton Hotels Corporation never made good at the hotel. The Brown Palace Hotel which had the goodwill of the public, added an annex. Because of the Brown's annex and the rise of various motor hotels, the Hilton remains Denver's much-needed and often-used convention hotel but it took many years before it made it on a bread-and-butter-transients basis. So, financially, our project, with its profit-sharing arrangement with tenants, did not succeed. It was an architectural triumph. It was a redevelopment triumph, and the community gained enormously by it; the project stabilized downtown and drew in new businesses and opportunities, but it did not succeed for the developer-promoters, ourselves.

  In July, 1964, Webb & Knapp lost its lease at Zeckendorf Plaza in a default judgment for nonpayment of the Alleghany Corporation lease. In October of that year, the new owners at Alleghany changed the name from Zeckendorf Plaza to Court Place, and that, I assumed, was the end of the Denver story.

  In February, 1966, however, after the collapse of Webb & Knapp, at a time when we were getting a new, comeback company, General Property Corp., under way, I received a letter inviting me to Denver. The city planned to name a small park after me and to give me an award as the man who had done the most for Denver. It seems that following an article in The Denver Post about our comeback efforts, a number of private citizens and then the city council decided to make this gesture. They were much aware of the changes that had come to Denver in our wake, and perhaps a bit annoyed at the sudden erasure of the name Zeckendorf Plaza. The park is a modest triangle of ground at the intersection of Speer Boulevard and Seventh Avenue, but as a postscript of acknowledgment, not from the powers that be but from the citizenry of Denver, it is one of my most cherished accolades. Not to be outdone in graciousness of gesture, as president of the Marion and William Zeckendorf Foundation, I donated funds for a work of sculpture for the park, to be dedicated to the early pioneers of Colorado. The work, to be chosen by a competition of local artists, provided a five-thousand-dollar prize to the winner, Susan Pozzeba, a talented young sculptress. In a brief but moving ceremony in April, 1968, the semiabstract statuary was unveiled and arrangements made for an inscription to be added in memory of my dear Marion.

  My final comment on Denver's ruling circle, however, was given back in 1961 at the Building Industry Conference. At that time, speaking of the city's plans for a redevelopment of parts of the oldest section of town, I said that the project would not work unless it were large enough to be self-sustaining, a minimum of seventy-five acres. I added that with the shortsighted second-rate leadership dominating the Denver business community, the project would probably come to little as far as aesthetics or economics were concerned. Developments and lack of developments to date in Denver tend to bear me out. And now, recalling that speech, the gist of which the Post agreed with in an editorial, I am reminded of other remarks and the subsequent furor back in the late 1940's. This was when B. B. Harding made his famous faux pas and unkind judgments of Denver's Chamber of Commerce and the city fathers. I must admit that what I was saying, though in less direct language, was pretty much what B. B. had been telling us all along.

  I could speak with such feeling and authority of Denver and its leadership because of what, against odds, we had done in that town and because of what I had discovered could be done elsewhere. At that time, in Canada, joined with some truly powerful and dynamic men of vision, we were creating Place Ville-Marie, which would turn Montreal into the principal city of Canada. Meanwhile, we were also involved in multiple other deals about which I was beginning to discover some generalities.

  ▪ 12 ▪Warp, Woof, and Some Emerging Patterns

  FROM THE VERY beginnings of my ascendancy at Webb & Knapp, I made a practice of keeping the momentum going by constantly developing new projects, some of which might bear fruit and some of which might not, and some of which might divide and interact upon other deals over the years.

  Meanwhile, the fifteen years we spent in Denver
are something of a yardstick against which we can measure various changes in the company as well as our varying types of projects. For example, between the time of our first involvement in Denver in 1945 and the start of Mile High Center in 1953, Webb & Knapp changed from a partnership, to sole ownership, to a publicly held company. We acquired capital and staff; great holdings, such as the Graybar and Chrysler buildings in New York; an extensive reputation; an enormous momentum in the marketplace. During this time we ventured into an even greater variety of deals. Many were prosaic, the acquisition or resale of another piece of land or a building, some were more exotic, and a few were whimsical.

  During the late 1940's, for instance, suspecting that there would be a worldwide shortage of tanker bottoms, I had put Webb & Knapp into the shipping business. We acquired four T–4 tankers and a number of C–2 cargo ships which we chartered out. In the mid-1950's we sold off our ships at a gain, making me one of few men in the world ever to buy from and then sell back ships to Greeks at a profit.

  Again, aware of the choking effect which the automobile was having upon our cities, Webb & Knapp spent over a quarter of a million dollars on research and development of an automated parking system I had conceived—but the thing proved too complex and costly to be usable. I had turned down an opportunity to back Rodgers and Hammerstein's hit musical Oklahoma!, which was the only poor advice Marion ever gave me. Somewhere along the line, though, we acquired a profitable piece of the Broadway show Gentlemen Prefer Blondes. At one point in time it looked as if we would take over the Brooklyn Dodgers. John Galbreath, the real-estate builder and investor and an owner of the Pittsburgh Pirates, brought his friend Branch Rickey into my office with an offer to sell Rickey's twenty-five-percent share in the club. The instant that word of these negotiations got out, our switchboard was jammed with calls from friends angling for box seats, but I never had to test their love by a refusal. I bid one million dollars. Rickey's partners had the right to match my offer. They did so, and I lost my chance at a lifetime supply of player-autographed baseballs. Suspecting this might happen, however, I had made my offer conditional on a $50,000 agents' fee if my bid were matched by Rickey's partners. In effect, I got a five percent commission for getting Rickey a sale. This took place in 1950, when we still expected to be finished in Denver very shortly.

  During 1953 we took on the construction of forty Safeway Stores across the country, and bought Charlie Chaplin's Hollywood studio. That was the year I also got talked into backing a movie, The Joe Louis Story, and in which we picked up the air rights over the Pennsylvania Railroad's tracks and its terminal in Manhattan.

  The year 1954 was equally busy, and its curious high points were a series of meetings involving Laurance Rockefeller, General Electric Company, Lehman Brothers, and others in secret negotiations with the famous and eccentric Howard Hughes for the purpose of buying out his multimillion-dollar industrial holdings.

  In 1955 there was the less frustrating and quite profitable partnership I organized of the Rockefeller Bros. Corp. and various Texas investors to buy and develop the 2,500-acre Waggoner Ranch between Dallas and Fort Worth as an industrial center. That same year, working now with David Rockefeller and the Chase Manhattan Bank, I began the Wall Street Maneuver, a five-year operation during which Webb & Knapp moved the headquarters of many of New York's greatest banks but kept these banks still within the Wall Street area. As a result of this game of musical banks, at which we profited to the tune of many millions, the Wall Street area, which was in grave danger of being abandoned for midtown New York, became stabilized.

  In 1956, as our excavation in Denver reached its greatest depth, I became involved in a curious series of negotiations, which were never completed, involving great acreage in Cuba which Fulgencio Batista, the "president" and dictator of Cuba, cut himself in as a silent partner. By 1956 we were also seriously involved in an urban-development project in Montreal, which in time surpassed even our Denver developments, and in 1956 we opened Roosevelt Field, the country's largest (125 acre) suburban shopping center.

  If in 1955 and 1956 we had pulled in our horns and nursed only a few key projects along, I could have settled back as a multimillionaire and staid property holder. But with all of America before us and with so many useful things waiting to be done, I no more knew how to settle down to mere money counting than a bee in clover knows how to doze in the sun. Instead, I shuttled my men, and traveled myself, back and forth across the nation looking for projects, people, money, and ideas to bring together. We had discovered that in many cases it takes only a relatively little bit of seed money, plus quantities of effort and imagination, to get a worthwhile project under way. I was expanding Webb & Knapp from the management, purchasing, and packaging of real estate, at which we were now past masters, into new fields, in which we were pioneers.

  By the end of 1957, for example, we had sold off the Chrysler Building and our highly profitable Thirty-fourth Street building on the block between Macy's and Gimbels. We made these sales partly to meet debts and partly to generate cash for other, newer projects, many in the special field of government-sponsored urban redevelopment. Webb & Knapp had entered this field by initiating a multimillion-dollar, five-hundred-acre redevelopment project in Southwest Washington, D.C. We were now in many other cities as well. In New York City, Robert Moses had called on us to bid on several projects. We were working on Kips Bay, Park West Village, and Lincoln Center, of which more later. We were involved in a project in Chicago and were talking to key officials in St. Louis, Boston, Hartford, Providence, Cincinnati, Cleveland, and at least a half-dozen other cities.

  By the close of 1957 we were also embarked on a hotel-acquisition program. Blocked in our 1954 attempt to get a hotel in Denver by the Statler chain, we were now creating a new Zeckendorf hotel chain. At one point, mostly through ownership of New York hotels, we would be one of the biggest (8,000 rooms) hotel groups in the nation.

  Between 1949 and 1957 Webb & Knapp's staff multiplied sixfold, from 40 to 240. As the biggest, most aggressive real-estate firm in the country, we inadvertently became the prime research-and-management training school of the industry; dozens of our alumni now hold eminent positions in the industry all over the country and in Canada.

  Our brilliant counsel, Maurice Iserman, and his key assistant, H. Jackson Sillcocks, had assembled a group of smart aggressive young lawyers who soon became the most expert and fastest-moving practitioners in business, and by now Webb & Knapp closings had become famous industry "happenings." The fifty-two million-dollar Chrysler-Graybar closing, for instance, took three days and the concerted efforts of ninety-seven participants. Between closing out old mortgages, setting out new ones, checking existing leases, fitting in new ones, arranging sales and leasebacks, plus exchanges of stock and the transfer of funds, the sequential strands of logic and procedure in a deal could become as intertwined as spaghetti on a plate.

  Like directors at a rehearsal, Iserman and his team would often stage a dry run before a big closing. At the actual affair, participants would then move from one room to another signing and exchanging papers and checks in a real-life game of Monopoly. At one closing, as the work wore on in a limbo of its own, the Chase Bank suddenly found itself lending several times more than the legal limit permitted it in any one operation. Had the transactions broken down at that instant, it would have been quite embarrassing, but they did not. By day's end enough loans had been called and settled so that the Chase was once more safely within its limits.

  By now my son was another key figure in the company. He had grown up with Webb & Knapp. He was the ten-year-old messenger who delivered the final papers to Mrs. Clews Spencer when we sold her property in 1940. Through high school and early college he worked with us during vacations, and after his military service in Korea he had joined us full time. He learned quickly and accepted responsibility. I gave him all the exposure I could; he was my companion and adviser on all new developments.

  What I was consciously doing a
t Webb & Knapp was creating an integrated real-estate and development company with its own construction division, an excellent design staff, and experienced specialists not only in trading or packaging or managing of real estate but also in urban development and in the economics and design of shopping centers. No such thing had ever existed before, but then, neither had the kinds of projects we undertook.

  Meanwhile, although individual projects intermittently took up important parts of my time, they were never more than one part of an interconnected latticework of money, men, and real estate. At the center of this formation, keeping it together and keeping it growing by constantly phoning or visiting prospects, channeling funds from spot to spot for maximum usage, or riding the lawyers to get the red tape out from underfoot, I lived and loved a hyperactive sixteen-hour day.

  In the midst of all this action, though not always entirely at a conscious level, I had been developing some special techniques which set the pattern and provided much of the color in our operations. For instance, in more than two decades of tailoring projects to suit the special needs of specific investors, we created the groundwork for what would amount to a quantum jump in the financing of real estate. I invented the "Hawaiian Technique," so called because the idea came to me while I was casting for fish on a Hawaiian beach.

  This was in 1953, and Webb & Knapp was in process of buying 1 Park Avenue, a twenty-five-story showroom and office building. The sales price to us was ten million dollars, or ten times the million-dollar yearly earnings of the property. With first and second mortgages we could raise as much as eight million toward the purchase price, but this still left two million of equity to go. Though we did not have the money, the papers were in process of being drawn up when Marion and I went on vacation to Hawaii.

  Charley Boettcher, the son of Claude Boettcher, then my partner in Denver, a man of about my own age, had a beautiful Japanese-style house on the windward side of the island of Oahu, with an excellent wine cellar and a very pleasant Japanese couple in attendance. He invited us to make use of the place, and we did. The house had beach frontage, and I went surf fishing each morning before breakfast. While casting out into the rough surf, I continually found myself casting about in my own mind for some proper method of financing the purchase and arranging the sale of 1 Park Avenue. Generally in real estate there are two types of funding—mortgages and equity. We needed more of both, and there was no visible way to get either, but I was sure that if we could get commitments from investors to purchase the building from us once we had it, this could create the financing by which Webb & Knapp would be able to acquire the building in the first place.