House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address

by Gross, Michael

  “I would rather be alive at eighteen percent than dead at the prime rate,” Big Bill once famously said. Within months, though, he was forced to stop spending and start selling as building costs rose and his accumulated debt threatened to overwhelm Webb & Knapp. At one point in 1960, he had to pay back $100 million in three months and still owed another $400 million. He was juggling these debts even as Webb & Knapp was gearing up for $150 million in slum-clearance development and starting to build Century City. There and elsewhere, cost projections proved overly optimistic and would soon force him to come up with even more cash.

  So Zeckendorf sold skyscrapers, including the Chrysler Building, and his huge empty tract in the Santa Monica Mountains. Then, in July 1960, he abandoned the already-under-construction Hotel Zeckendorf and parted ways with I. M. Pei, who’d created his own firm in 1955 but continued to work exclusively for Webb & Knapp. Worried about Zeckendorf’s finances, Pei cut that tie, too.

  In 1961, Zeckendorf sold his Chicago hotels, lost control of his Denver development to his financial partner, but nonetheless bought Yonkers Raceway, a Westchester horse track, and three new hotels, including the famous Beverly Wilshire in Beverly Hills, and put his son in charge of a new project, Freedomland, an attempt to duplicate California’s Disneyland in the Bronx. “Talk of his impending downfall became common,” Life magazine would later say.

  At the end of that year, Zeckendorf grabbed a lifeline, $44 million to cover his short-term debts, from a group of British investors in exchange for half of his thirteen ongoing Title I projects. But a month later, when his Yonkers Raceway deal fell through after he failed to get it financed, his new partners grew restive. “William Sr. could not live with oversight,” says Will Zeckendorf. “He just couldn’t stomach the idea of not being his own boss any longer.”

  That’s when real estate values reversed a long run-up and began to decline. Zeckendorf was no longer able to piggyback one new project on the last, financing development with dealmaking. He stopped selling properties as their prices dropped, but still continued buying, even after his latest partners objected. In December 1962, the representatives of the British investors resigned from the Webb & Knapp board and began an effort to oust him. By mid-1963, they’d succeeded in taking over those big projects. Bill sold his remaining interest in Century City to what had until then been his minority partner in the project, Alcoa, aka the Aluminum Company of America.

  Webb & Knapp was still alive, but it was staggering. Zeckendorf’s desperation was an open secret; friendly competitors who’d once bought and sold buildings with him on a handshake now offered him less than the properties’ worth because they knew he couldn’t say no. “How can they say I’m broke?” he asked developer Alan Tishman, a childhood friend from the West Side, one night as they stood at side-by-side urinals during a black-tie benefit. “I owe a billion dollars!”

  For the next two years, crisis after crisis, all attributable to the debts rung up by his frantic dealmaking, kept Zeckendorf off-balance. Freedomland started sinking, literally (it was built on marshland) and economically, and he sold his share in it in summer 1964, shortly before it went bankrupt. More mass liquidations of property were followed by more carefully choreographed sales, but all they succeeded in doing was keeping the terminally ill patient on life support. His wife even sold 30 Beekman Place, but kept a twenty-five-year lease on their penthouse at $10,000 a year. She denied that the sale had anything to do with her husband’s troubles, calling the decision purely personal.

  In early 1965, Life magazine revisited Zeckendorf. “A Big Man on the Thin Edge,” its headline read, over a photo of him in one of his signature homburgs. But his other signature, a great big grin, had been replaced by a worried frown. “It’s terrible, terrible pain,” he told the magazine. “Agony. It’s mortifying and humiliating.” In its final paragraphs, Life noted that Bill Jr. had refused to be photographed with his father and was considering going out on his own. “Webb and Knapp has been too much of a one-man show,” Bill Jr. said. “We should take a hell of a lot harder look at things.” Today, Bill Zeckendorf’s opinion remains pretty much the same: “My father owned the company, ran the company, and did all the financing. I worked project by project. Of course I was concerned. But there was absolutely no way I could affect it.”

  Soon, the Securities and Exchange Commission barred all trading in Webb & Knapp shares. A few days later, Marine Midland Trust asked a judge to declare the firm insolvent and put it into involuntary bankruptcy. “We just ran out of gas,” Big Bill admitted, just before a trustee was appointed to take over. He was fifty-nine years old. “There was an almost welcome stillness,” he recalled in his autobiography. “I became, in effect, a bystander at the wake.” Zeckendorf resigned from his firm in July 1965. His son and son-in-law had quit a month earlier, vowing to open their own company. In fact, they bought back the furniture in a bankruptcy sale and almost immediately started again even as Webb & Knapp’s remaining assets were sold. Its stock was delisted by the American Stock Exchange, an investigation found that its liabilities exceeded its assets by $39 million, and in 1967 the bankruptcy trustee sued Big Bill and others for $50 million for waste and mismanagement. People wondered if he would kill himself. Stories about an affair he’d had suddenly leaked to the newspapers. And still, the worst was yet to come.

  In May 1968, Marion Zeckendorf was killed in a plane crash on the island of Guadeloupe, en route to a vacation with Big Bill, who was waiting at the airport. But the tragedy had an upside. He inherited enough money from Marion’s estate to return to buying, selling, and trading real estate. He still lived in the penthouse at 30 Beekman, thanks to that lease Marion had arranged when she sold it. He also kept his I. M. Pei–designed office. His landlord was General Property Corporation, which employed him as a consultant. His bosses were his son and his son-in-law. It’s unknown who paid the salary of Eugene, his private chef, who stayed on, too.

  Big Bill celebrated his sixty-third birthday that summer by giving an interview to the newly launched New York magazine. He detailed his recent deals, many done on commission for others, but at least he was dealing: assembling a site for a department store; planning a Lower West Side artists’ community and an upstate urban renewal project; buying and developing the Queen Mary as an attraction for the city of Long Beach, California, with Diners Club, the credit-card company; disassembling London Bridge and moving it to Arizona, the wellspring of the Zeckendorf fortune, as a tourist attraction. “They were doing deals left and right,” says Arthur Zeckendorf. Big Bill was still “dreaming huge dreams,” adds Will. “He wanted to convert the Staten Island ferry for gambling. He had ideas for nuclear power.” But he was running on empty—and would soon have to admit it. Crushed by judgments and facing the imminent seizure of his personal property, Big Bill declared bankruptcy, listing assets of under $2 million and debts exceeding $79 million. The court took away his Greenwich estate, his wine, his Cadillac with its custom WZ-1 plate, and his airplane.

  They couldn’t take away his story or his accomplishments, though, so he took some time to write his autobiography, which, naturally, grew out of a bigger deal. Webb & Knapp had sold Metropolitan Life the underlying lease on its Madison Avenue office building, and MetLife agreed to sell it to Bill Jr.’s new General Property with financing from Equitable Life, but only if the Zeckendorfs could convince some existing tenants to renew their leases for twenty-one years. All agreed but one, the book publisher Holt, Rinehart and Winston, which would only sign a new lease if Zeckendorf wrote an autobiography for them. He did, preempting an unauthorized biography that was in the works, so everybody won . . . again.

  Two years later, the bankruptcy trustee’s mismanagement suit against the Zeckendorfs was finally settled with the payment of $86,000 in cash, and the issuance of two promissory notes, one from Bill Jr. for $275,000, secured by Philadelphia real estate, and the second, for $499,000, unsecured, from Big Bill. That settlement finally freed Bill Jr., then forty-two, to
start his own career in earnest. His ties to his father were still too strong to break, though. In fall 1972, he bought the Kips Bay Plaza project from Alcoa, got back Lincoln Towers, too, and was soon making real money again.

  General Property, with seventeen employees (and no airplanes), was much smaller than Webb & Knapp. It, too, did development deals and relied on financing from entities that had once backed his father, but like most of New York’s builders, faced with rapidly rising costs and inflation in the midsixties, Bill Jr. was cautious. He stuck to “merchant” building, using other people’s money on projects and selling out of them quickly.

  Bill Jr. had seen what overreaching could do and openly admitted that his ambitions weren’t as large as his father’s. That would eventually change, but not until after Big Bill had left the stage. For the moment, he still had some living to do. Just after the Lincoln Square buyback, the elder Zeckendorf got married for the third time, to Alice Bache, widow of the founder of Bache & Co. stock brokerage, whom he’d been seeing since Marion died. They’d been constant companions and best friends, but marriage proved a mistake. The couple separated after three months. Zeckendorf would marry one more time, in 1975, but by then he’d been diminished by a series of strokes that culminated in his death a year later in his last apartment at the Mayfair House, a residential hotel on Sixty-Fifth Street and Park Avenue.

  His landlord was his son.

  General Properties had bought the Mayfair in 1972 in partnership with a savings bank. It was an early move in Bill Jr.’s campaign to restore the family name and fortunes.V Shortly after his father died, Bill, who looked like him but was a man of few words, diffident, calm, remote, and stern where his father was voluble, excitable, engaging, and boldly optimistic, dropped the Jr. from his name—an act that symbolized his ascension. Newspapers continued using the suffix anyway.

  Three years before his father’s death, Zeckendorf had found the business partner of his dreams when his second wife, Nancy, a former ballerina, introduced him to Justin Colin, a lawyer-turned-arbitrageur, partner in a Wall Street brokerage, and head of the Ballet Theater Foundation, the parent of the American Ballet Theater. Nancy Zeckendorf sat on the foundation’s board. When the foundation bought a new home for its ballet company, Bill Jr. was named its adviser.

  Colin was the son-in-law of a Wall Street financier whose investments included the Grand Union supermarket chain. After it was sold in 1973, Colin began investing the family’s fortune. Bill Jr.’s brother-in-law had left his wife and walked out of General Properties the next day. Zeckendorf brought in Colin and kept going. Though his primary interest was airlines, Colin also became a partner in a new Zeckendorf Co. in the early eighties.

  In 1975, Zeckendorf and Colin bought the Hotel Delmonico, a few blocks south of the Mayfair on Park Avenue, and announced plans to convert it to condominiums. A year later, as that project neared completion (with the first American outpost of the Paris discotheque Régine set to open in its basement), they and a construction company bought the run-down McAlpin Hotel on Herald Square out of bankruptcy for a dollar. In the next three years, Zeckendorf and Colin added the Hotel Navarro on Central Park South, the Statler Hilton near Pennsylvania Station, and the Shoreham Hotel in Washington, DC, where they planned to add a new building full of condominiums.

  Zeckendorf “was keeping it low-key,” says his son Will, “building up a net worth. He did a great job buying and flipping hotels” such as the Mayfair, sold to a big hotel group. In the process, he amused his teenage sons. One summer, the Who stayed at the Navarro, and Will remembers his father’s accountant presenting the bill after the group’s drummer, Keith Moon, destroyed his room. “And Bruce Springsteen lived there,” Arthur says. “That was cool for us.”

  Bill’s sons remember Colin fondly as the best partner their father ever had. Again, though, in 1981, fate and finance conspired against Zeckendorf. Justin Colin’s airlines began to lose money and abruptly closed, and in August 1982 he declared bankruptcy. Left hanging was their purchase, financed by two banks, of a large property at Broadway and Ninety-Sixth Street on the Upper West Side, where they’d just begun Zeckendorf’s first new construction project since the collapse of Webb & Knapp, a three-hundred-apartment condominium tower called the Columbia. Zeckendorf’s dream of stable backing evaporated, but still “he had an itch for development,” says son Arthur. “Development is a lot of fun.”

  “I remember him saying, ‘Hotels are great, but you’re leaving no imprint,’ ” adds Will. And Bill knew where he wanted to build. “The Upper West Side was desperate,” says Arthur. “This is when you couldn’t walk on Eighth Avenue or in Central Park. He knew Ninety-Sixth and Broadway would change the entire West Side. He had a vision. He had the stage. He took the gamble.” And took the Columbia project alone.

  His dreams were even larger than the West Side. He saw decay up and down the chain of circles, squares, and plazas that had marked Manhattan’s growth from Union Square up Broadway. Since the end of World War II, when New York solidified its place as America’s financial heart, developers had been more interested in building offices than homes. Zeckendorf wanted to build the latter in a kind of one-man urban renewal program. “His vision was changing horrendous neighborhoods,” says Arthur. It was a vision worthy of Bill’s father. “Yeah,” Arthur says, “all of a sudden, he goes from buying hotels to doing development. Boom.”

  The end of Zeckendorf-Colin coincided with the arrival of the third generation of Zeckendorfs in real estate. Will, the elder brother, had gone to work for their father in 1980 at age twenty-two, after graduating from Tufts. Arthur, also a graduate of Tufts, had joined full-time a year later at twenty-one, just before Will left to get an MBA at Harvard Business School. At twenty-three, Arthur got to work on the Columbia, which was then something rare in Manhattan, new construction built on a vacant lot bought in 1981 near an express subway stop. Bill Jr. bet the area could be gentrified despite neighborhood skepticism. Arthur worked on the floor plans, oversaw construction, chose finishes such as paint, stone, and appliances, and oversaw marketing. “I’m manager for this gigantic project,” he says. “We have nobody else. My father had three people working for him.” Yet they succeeded, selling out the building at an average $200 per square foot after it opened in 1983. Within eighteen months, prices there had risen by 50 percent.

  Zeckendorf wasn’t just a West Side evangelist; he took his opportunities where he found them. In 1982, he’d started building Delmonico Plaza, a midtown office condo, and another apartment condo at Sixty-Eighth and Broadway, when Justin Colin went bust. “Of course it was a bad moment,” says Bill Jr. But he knew fresh financing could be arranged—and where to get it. So though Colin’s collapse stung him, it didn’t stop him from undertaking even more new projects. As the economy began improving in the early eighties, new wealth poured into the city, and the building revival that had begun in 1978, fueled by government-sponsored bonuses and tax incentives, showed no signs of abating.VI

  Henceforth, he would always work with multiple partners, was far more comfortable (in contrast to his father) when spreading the risk widely, even at the cost of his own equity. His new backers were World Wide Holdings, a company originally formed to trade in surplus goods left around the world after World War II; Kumagai Gumi, a Japanese construction company; and Arthur Cohen, one of the local developers then dreaming with Aristotle Onassis of building the Olympic Tower. In exchange for their money, Bill Jr. assembled sites, handled the regulatory process, and designed buildings. Construction was generally left to others, though still supervised by the Zeckendorfs. And with partners, they spun off a separate company, Manhattan Marketing, to handle on-site sales; it paid Arthur and Will salaries and bonuses. “It was a very lucrative business to be in,” says Arthur.

  Will returned from business school in 1984 to a very different company, still tiny and headquartered at the Delmonico (Zeckendorf and Nancy lived in a four-room penthouse above the store), but building all over the
city. In 1985, Institutional Investor found the Zeckendorf Co. development “pipeline quite full” and wondered, “Might Zeckendorf Jr. turn out to be a late-blooming Zeckendorf Sr. after all?”

  Two years later the New York Times would describe Bill as Manhattan’s most prolific developer. It found him at work on Zeckendorf Towers, a huge mixed-use project on Union Square named to honor his father, with commercial space alongside 670 condos. He was also selling six other condo projects that would put three thousand apartments on line within two years, plus a Times Square hotel billed (like the phantom Hotel Zeckendorf) as New York’s tallest.

  If his ambition was beginning to look a lot like his father’s, so was his taste for the finer things. He’d been named a grand officer of the Confrérie des Chevaliers du Tastevin, an elite group of gourmets, served on the board of governors of the oenophile Commanderie de Bordeaux, and kept a wine cellar at Spilling Pond, his big weekend home in Bedford, New York. “I was left with nothing but the name Zeckendorf,” he told a writer, “but that turned out to be a lot.”

  He worked hard for his money. A graphic with the Times story showed his projects as a string of condos running up the East Side from Union Square, a small bunch at the south end of Manhattan, and a swoosh of nine buildings across the West Side, including Central Park Place, a three-hundred-unit, fifty-six-story condo tower just south of Columbus Circle, where prices had hit $600 a square foot and a penthouse with terraces cost $4.1 million. It was distinguished by a green-glass-and-aluminum façade and larger apartments than in typical condos—and would eventually attract name-brand celebrity residents such as Goldie Hawn and Kurt Russell, Gene Hackman, and Al Pacino.