Some owners come from countries with stable governments and economies, but many do not, and for them, 15CPW serves as an insurance policy against the possibility that in their native lands their luck might turn or their connections fail them. Far better to have assets in a country where the rule of law is secure and property rights respected. “If you buy here, it’s yours,” says an Indian-born banker who lives in 15CPW. “There are only two places that are safe havens like that, London and New York. The rest of the world is scary, unstable.”
But those emerging nations are hardly the only sources of today’s outrageous wealth. The reinterpretation and loosening of many Depression-era laws that restricted the activities of financial institutions beginning in the 1960s, and the deregulation of financial markets in the early 1980s, led in 1999 to the repeal of Glass-Steagall, the 1933 law separating investment and commercial banks, unleashing what Kapur calls a “massive premium,” a torrent of raw gains for a small few that inflated bankers’ wages, bonuses, and egos and led to the creation of too-big-to-fail financial institutions such as Citigroup, AIG, Bank of New York Mellon, Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, ING, JPMorgan Chase, Morgan Stanley, and the Royal Bank of Scotland. Each is represented at 15CPW. Former executives of the defunct Lehman Brothers round out its financial cast.
An even larger cohort of 15CPW residents comes from the alternative-investment universe, where they’ve earned disproportionate incomes both by betting on markets and backing the entrepreneurs whose innovations drove the economy of the last three decades. The contours of alternative investments are often indistinct, as they are typically complex, hard to define, illiquid, and lightly regulated, if at all. But to generalize, they are investment products designed for institutions and high-net-worth individuals that are not traditional cash, stocks, or bonds. Hedge funds such as Daniel Loeb’s Third Point are alternatives, and so are private-equity, real estate, commodities, troubled-asset, biotech, and emerging-market funds.
Adding up the aggregate assets managed by the hedge funds and boutique investment firms whose executives own or rent 15CPW apartments is an inexact business, but combining their boasts with reported guesstimates yields a staggering number: about $437 billion. No wonder residents refer to it as Hedgie Hive.I
That’s just the beginning.
These investment executives’ neighbors at 15CPW include executives and alumni of our era’s great innovators: tech giants such as Google (Omid Kordestani, a sales and marketing executive, paid about $30 million for a duplex next door to Sting’s), Garmin (Min Kao, the founder, has a half-floor penthouse), Intuit, and Yahoo! (Roberta Campbell, the ex-wife of the chairman of the accounting software company, lives next door to the search giant’s cofounder, Jerry Yang), and smaller, but still massively profitable enterprises engaged in hardware and software, advanced medicine, biotech, and biopharma.
By merging ideas and the means to communicate them, technology has also geometrically increased the audience for the information and entertainment industries. Thanks to the “audience magnification” brought about by globalization and instant distribution, Kapur says, “the monetization of talent is a lot bigger now, and talent creators get to keep a lot of that.” Thus, international celebrities such as Sting, Denzel, NASCAR’s Gordon, and NBC sportscaster Bob Costas, and renters Mark Wahlberg, Kelsey Grammer, and New York Yankee Alex Rodriguez, live at 15CPW alongside their titular bosses, infotainment moguls such as the writer-producer Norman Lear, Disney chairman Alan Horn, NASCAR chairman Brian France, and Comcast’s Brian Roberts, Stephen Burke, and Edward Snider. They don’t need big names; their control of the pipes through which content is pumped ensures their fortunes.
There have also been more traditional wealthy types at Fifteen, including executives of the pharmaceutical giant Merck, MetLife, Princeton Information, Hearst Newspapers, and the big-four auditor Deloitte & Touche; the chairmen of legal giants such as Cadwalader, Wickersham & Taft and Case & White; energy-company executives; brick-and-mortar retailers such as The Limited’s Leslie Wexner, Eric Smidt of Harbor Freight Tools, and Eugene Kahn, a former chairman of May Department Stores; doctors, surgeons, and health-care executives ranging from a vice president of corporate affairs at Pfizer to the owner of a small but thriving chain of dental clinics; and a raft of real estate developers, operators, investors, and brokers.
Apartments at 15CPW initially sold for as little as $2 million, so the building also attracted comparatively small-change types: a TV writer, an editorial cartoonist, and myriad small businessmen and women. Entrepreneurs-in-residence have included the owners of jewelry stores, Chinatown funeral homes and florists, a luxury travel agency, a metal framing and trucking group, several human resources companies, and two nutritional-supplement dealers, but also Beny Alagem, a onetime Israeli tank commander who bought the name Packard Bell out of bankruptcy and turned it into a thriving computer company before segueing into the hotel business with his purchase of the Beverly Hilton; Gerardo Capo, a Cuban émigré who became a controversial Miami developer; Marvin Shanken, the former investment banker who created Wine Spectator and Cigar Aficionado magazines; and Jesse Itzler, who started his professional life as a Jewish rapper but segued into private aviation as a founder of Marquis Jets.
Compared to those “good buildings” of the East Side, precious little inherited wealth is at 15CPW. What there has been tends toward the untraditional, at least by the standards of Manhattan trophy apartment houses. James Kohlberg, whose father was a founder of Kohlberg Kravis Roberts, the private-equity firm, and Andrea Kerzner, whose father, Sol, a Russian Jew from Johannesburg, developed Sun City, Africa’s most famous resort complex, count as old money at 15CPW. Other heirs-in-residence have included Tyler Alexandra Gallagher Ellis, daughter of the late fashion designer Perry Ellis; Deborah Simon, daughter of a co-owner of shopping centers and the Indiana Pacers; Sultan Ahmed al-Qasimi, a crown prince of one of the United Arab Emirates; Caroline Lieberman, an heiress from a fashion and real estate fortune built by a Holocaust survivor in Sydney, Australia; and Ekaterina Rybolovleva, the elder daughter of the Russian potash oligarch Dmitry Rybolovlev, who bought that $88 million apartment for her out of the goodness of his heart or, as his estranged wife has charged in their divorce, in order to shelter some of his multibillion-dollar fortune.
As the Rybolovlev example shows, 15CPW apartments aren’t only homes; they’re “very expensive toys for plutonomists,” says Kapur. “We underestimate how rich the very rich are. For them, the fraction they are spending is not that large. You and I show off our cars. Global plutonomists need that apartment, the fine wine, the gold, the Degas” to demonstrate who they are. Their toys also serve as banks, or what Kapur calls “a store of value.” Apartments at 15CPW are often second, third, or fifth homes, and they are not rented out to pay expenses; they sit empty for months at a time. When banks and politicians dilute currencies such as the dollar and the euro, hard assets “tend to do quite well,” says Kapur. “They hold their value in times of financial debasement.” And at 15CPW they appreciate.
Arthur and William Zeckendorf, 15CPW’s lead developers, are grandsons of the real estate legend William “Big Bill” Zeckendorf and learned invaluable lessons at his knee. Big Bill was an energetic dynamo who owned the Chrysler Building and a vast swath of western Los Angeles. He developed Roosevelt Field on Long Island, the first giant suburban shopping mall; southwest Washington, DC; Century City in Los Angeles; the Mile High Center in Denver, Colorado; Place Ville Marie in Montreal, Canada; the Society Hill towers in Philadelphia; University Towers in Chicago; and Kips Bay, Lincoln Towers, and Park West Village in New York.
But he was disdained by the very people who owned the buildings he managed and who occupied those he owned. They considered Zeckendorf a crude operator who should be kept, to use their phrase, below the salt. His attempt to move into 740 Park Avenue was rebuffed—while he owned it!—by the building’s snootier occupants. Fifty years later, his grandsons saw the
new Global Super-Society rising and looking to New York as one of the few true world stages on which to strut their stuff—as well as a safe place to stash their fortunes. Like their grandfather had been, this new society’s members were often disdained as crass. The Zeckendorf brothers, who knew the type well, decided to build them a home. They made a fortune of their own in the process.
Outwardly at least, the new society has no cohesiveness or any guiding principle aside from the accumulation of almost unbelievable sums of money, which gives its leaders unprecedented clout in a world that now, to twist the well-worn phrase, cares more about the price of everything than it does the value of anything. Like F. Scott Fitzgerald’s Gatsby, the members of this ultramoneyed class want not just homes but the consoling mirror image of other freshly minted sultans. They won’t submit to being judged by snooty sorts with smaller bank balances but lofty self-regard.
The Zeckendorfs replaced the exclusionary principle that had long defined New York’s so-called good buildings: the co-op–versus–condo distinction so basic to New York real estate yet mysterious elsewhere. Condos gave customers the ability to buy what would once have required them to belong to a selective cooperative, the bedrock of a society that like its doyenne, the last Mrs. Astor, is dead and buried.
In the process, Big Bill’s grandsons turned a drab nonneighborhood into the center of a magnetic community for the upper strata of society. They linked what had once been the mixed-use West Side—a neighborhood considered middle-class, ethnic, and deuxième, despite a fringe of mansions, a smattering of architecturally significant buildings, and the culture hub of Lincoln Center—to the international condo corridor along Central Park South and the patrician Upper East Side. They changed the city’s center of residential gravity, dragging it west with the brute force of filthy lucre.
Fifteen represents a massive paradigm shift in the lifestyle of New York’s rich and famous. For centuries, they had followed a well-worn path when choosing where to lay their heads, and the city’s aristocratic district moved with them, rising steadily northward from Trinity Church and St. Paul’s Chapel in lower Manhattan to the crossroads of Lafayette and Bond Streets in today’s NoHo to the town houses surrounding Washington Square, and then up the center of the island until the first famous Mrs. Astor, who’d created a list of the city’s four hundred worthies, built her last house, a limestone château, at Fifth and Sixty-Fifth Street in 1893. By the time she died, the city’s elite had taken their first tentative steps out of private mansions and into the shared ones originally known (and disdained) as French flats, though flats (or living quarters occupying a single floor of a larger building) were already common in London, Edinburgh, and Vienna. Vulgar as they were, French flats were considered far superior to the shared lodgings known as tenements, a common-law term that, in New York in the 1830s, came to refer to housing for the lower classes.
The first luxury apartment house, designed by the eminent architect Richard Morris Hunt, had been erected in 1869 just below Gramercy Park. “Young people of the highest genealogical merit,” as the writer Lloyd Morris put it, soon filled the place, but that still didn’t lift the stigma attached to apartments, and most proper New Yorkers wouldn’t think of living in one; they were barely less disreputable than the hotels that had begun appearing downtown in the 1830s. Not until the first decade of the twentieth century did the city’s elite gravitate to apartments bounding the east side of Central Park. The completion of 998 Fifth Avenue in 1912, a luxury apartment building by the architects McKim, Mead & White, marked a turning point. The neighborhood—Fifth to Lexington Avenues between Fifty-Ninth and Ninety-Sixth Streets—became Manhattan’s Gold Coast. And so it would remain for a hundred years.
Fifteen Central Park West sits on a cartographic and sociological hinge. To its south are the business district of midtown and the cacophony of Times Square. To the southeast is the Central Park South corridor, historically lined with tony hotels. To the north is the wealthy eastern edge of Manhattan’s West Side, where blue bloods once never tread. Central Park West and environs attracted a raffish, ethnically diverse aristocracy—artists, “show” people, wealthy Bohemians, even criminals—housed in palatial apartment houses, beginning with the Dakota, and later the Majestic, the Beresford, the San Remo, and the Century. Most of its older buildings are cooperatives, which represent a lifestyle and a phenomenon distinct if not unique to Manhattan.
Condominiums, where purchasers buy real property—their apartments, the walls, the floors, the space—and then pay taxes on them and common charges to keep up the building wrapped around them, are familiar to most Americans. Cooperatives are corporations and their occupants collectively own them as shareholders. Their shares give them the right to occupy the space they’ve “bought,” which is actually secured for their individual use by a document called a proprietary lease. The shares associated with each lease are apportioned by apartment size and amenities, so a penthouse tenant will generally have more shares than the “owner” of a same-size ground-floor unit. Condominiums are generally loose with their rules. Owners can freely alter and sublet their apartments and sell them to whomever they wish. The co-ops of Fifth and Park Avenues (and the rest of Manhattan) are very different creatures, restricting their cooperators in myriad ways. Thus they typically cost less than condos. But condo monthly carrying costs are usually higher since co-ops generally carry mortgages and condos may not.
Co-ops first appeared in the 1880s, conceived as clublike residences for the like-minded—artists, initially—who chose to live together, holding their building and all its apartments in common. This bohemian ideal evolved into something altogether different by the 1920s, symbolizing exclusivity, allowing the wellborn, the wealthy, and the well-connected, until then used to their own homes, to share their collective living quarters, secure in the knowledge that they were among their own kind and could easily exclude anyone they felt would not fit in. Some co-ops were conceived and functioned like private clubs. The offspring of Henry Phipps, Andrew Carnegie’s partner in the steel business, for instance, built One Sutton Place South for themselves and their friends.
Though other co-ops weren’t quite such inbred affairs, they nonetheless had a social dimension. Executives of the Chase bank led by James T. Lee, Jacqueline Bouvier Kennedy’s grandfather, were behind 740 Park, and they and their nouveau riche friends were among its first occupants. But they built 740 on property owned by the Brewster family, which had come to America on the Mayflower and was given the building’s best apartment in exchange for its land.
“Developers offered [co-ops] to a simpatico group of people,” says architectural historian Andrew Alpern. “Such buyers didn’t want to mingle with those with whom they did not feel comfortable. Just as they wouldn’t invite people outside their own circles into their own homes for a party, they wouldn’t want to live next to those people, either. It was the sort of thing you didn’t talk about. Everyone knew. You would invite these people but not those people. It was never voiced except perhaps when you explained to your children who was NOSD—not our sort, dear. They were the ones who didn’t know how to behave, how to dress; they didn’t belong to the right clubs.”
Even today, woe and rejection meet any attempt by an Arab sheikh, Latin potentate, or Russian oligarch who tries to buy a home in one of the traditional “good buildings.” The resistance of cooperatives and their owners to change made today’s luxury condominiums inevitable.
A Roman Law of Condominium was established in the sixth century BC, allowing for individual ownership of a portion of a structure, joint ownership of the land it sat on, and communal responsibility for its maintenance. Condos were also known in Latin America and Europe, but the American condo is a relatively modern phenomenon. In 1961, a new law empowered the Federal Housing Administration to provide mortgage insurance on condos. They remained illegal in New York, however, until March 1964, when mortgage lenders and builders who hoped to encourage development won the day and New York
became the forty-first state to allow them.
The first was the St. Tropez, completed in January 1965 at First Avenue and Sixty-Fourth Street. The dark brown building boasted a courtyard driveway, underground garage, and a forty-four-foot-long outdoor swimming pool on a setback rooftop—and appealed to the habitués of the surrounding singles’ bar strip on First Avenue. The first truly luxurious condo followed. Early in 1970, along with other developers, Aristotle Onassis, the Greek shipping tycoon who owned Olympic Airways and had married Jacqueline Kennedy two years earlier, undertook a fifty-story office tower called Olympic Tower that would morph into an office-residential hybrid with 225 condos on its top twenty-nine floors. The age of the luxury condo had arrived.
Olympic Tower and the other pricey condos that followed it were clustered on and around the chic shopping corridor of Fifth Avenue between Rockefeller Center and Grand Army Plaza, the gateway to Central Park. But in heavily trafficked midtown, they appealed more to singles than to families, more to transients and wealthy foreigners seeking pieds-à-terre than to dyed-in-the-wool New Yorkers who cared about a location’s quality of life as much as its centrality.
Well into the nineties, co-ops still attracted old and grounded buyers, while condos appealed to newer, faster money, and those with what one broker calls a “Swiss banking mentality” who wouldn’t reveal their finances to their wives, let alone a co-op board. But the tide turned as the twentieth century ended. Despite their awesome self-regard, co-op dwellers began to seem not just embattled but impoverished, insular, and increasingly irrelevant next to the brainy, brassy, free-floating, once “suspect” sorts who were redefining not only what it means to be nouveau riche, but altering the axis of the whole world social order. The new breed, whether they were rappers or Russians, bought condos, not co-ops.
House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address Page 2