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Chapter 7 – Trump Tower: The Tiffany Location

“I knew this was a tough sell, so I tried to find ways to make the deal sound more attractive.  I suggested, for example, that I would build above his store, and that he could keep it open during construction.  That’s not really feasible, but the point was that I would have done almost anything to get that piece of property.”

“I was relentless, even in the face of total lack of encouragement, because much more often than you’d think, sheer persistence is the difference between success and failure.”

It just shows you that sometimes making a deal comes down to timing.  Somebody else might have called him a few days or a few weeks before me, and the whole thing could have turned out differently.  Instead, I went to see him, and we had a very good meeting.”

“In order to put up the building I had in mind, I was going to have to assemble several other adjacent pieces – and then seek numerous zoning variances.  That’s often the situation in New York real estate, but in this case I was dealing with an exceptionally prestigious, visible site, which meant every move I made was going to be unusually difficult, and very carefully scrutinized.”

“He was skeptical that I’d get the zoning necessary to build the huge building I had in mind, but he’d also seen what I’d achieved with the Commodore.  By the time I left his office, he’d given me a commitment – subject to my delivering on my promises.  Once again, I found myself juggling provisional commitments.

Walter Hoving looked at me as if I’d insulted him.  ‘Young man,’ he said, ‘perhaps you didn’t understand.  I shook your hand.  I made a deal with you.  That’s that.’  I was speechless.  You have to understand where I was coming from.  While there are certainly honorable people in the real estate business, I was more accustomed to the sort of people with whom you don’t want to waste the effort of a handshake because you know it’s meaningless.  I’m talking about the lowlifes, the horror shows with whom nothing counts but a signed contract.  With Walter Hoving, I realized, I was dealing with a totally different type – a gentleman who was genuinely shocked at any suggestion that he might renege on a deal.”

“Walter Hoving was just a totally honorable, totally classy man.  That’s exactly what made him such a brilliant retailer, and it’s why Tiffany has never been the same since he left.”

“A guy named Arthur Drexler, from the Museum of Modern Art, put it very well when he said, ‘Skyscrapers are machines for making money.’  Drexler meant it as a criticism.  I saw it as an incentive.

“It wasn’t until much later, when I began to see how magnificently it was turning out, and when we started to attract the best stores in the world as tenants, that I realized the atrium was going to be something special, a hit on its own terms.”

“To me, we were creating the best of all possible worlds.  It was a great-looking design, but it was also very saleable.  To hit a real home run, you need both.

“… we entered into serious discussions with city planning, I had some ammunition of my own.  For starters, I could  have chosen to build something called an ‘as of right’ building – one that doesn’t require any variances.  Much the way I’d done earlier with Walter Hoving, I had Der prepare a model of the ‘as of right’ building to show city planning.  It was hideous: a thin little four-sided box going straight up eighty stories, cantilevering over Tiffany’s.  We took the position that if the city wouldn’t approve the building we wanted, we were prepared to build ‘as of right’ – and we showed them the model and the renderings.  Naturally, they were horrified.  I’m not sure they believed we’d ever build it, or even that it was buildable, but there was no way they could be sure.

Responding to the way I’d used bonuses and air rights to create a much bigger building, the city amended its zoning laws to prevent others from doing the same thing in the future.

“The person I hired to be my personal representative overseeing the construction, Barbara Res, was the first woman ever put in charge of a skyscraper in New York. … It’s funny.  My own mother was a housewife all her life.  And yet it’s turned out that I’ve hired a lot of women for top jobs, and they’ve been among my best people.  Often, in fact, they are far more effective than the men around them.

[Ivana’s] employees respect her because they know she’s pushing herself as hard as she’s pushing them.

“It was not the sort of publicity you like to get.  Looking back, I regret that I had the sculptures destroyed.  I’m not convinced they were truly valuable, and I still think that a lot of my critics were phonies and hypocrites, but I understand now that certain events can take on a symbolic importance.  Frankly, I was too young, and perhaps in too much of a hurry, to take that into account.  The point is that despite what some people may think, I’m not looking to be a bad guy when it isn’t absolutely necessary.”

“I’m a businessman, and I learned a lesson from that experience: good publicity is preferable to bad, but from a bottom-line perspective, bad publicity is sometimes better than no publicity at all.  Controversy, in short, sells.

“The funny thing is that the inside of the apartments was less important than a lot of the other elements.  We quickly discovered that the sort of buyer who spends $1 million for a two-bedroom pied-a-terre, or $5 million for a four-bedroom duplex, is going to hire his own designer, gut the apartment, and rebuild it to fit his own tastes.”

“From day one, we set out to sell Trump Tower not just as a beautiful building in a great location but as an event.  We positioned ourselves as the only place for a certain kind of very wealthy person to live – the hottest ticket in town.  We were selling fantasy.

Other developers cut prices to attract stars and celebrities, but to me that’s a sign of weakness.  What really means something is when a celebrity is willing to pay full price for an apartment.

With so much demand, our marketing strategy was to play hard to get.  It was a reverse sales technique.  If you sit in an office with a contract in your hand, eager to make the first deal that comes along, it’s quite obvious to people that the apartments aren’t in demand.  We were never in a rush to sign a contract.  When people came in, we’d show them the model apartments, sit down and talk, and, if they were interested, explain that there was a waiting list for the most desirable apartments.  The more unattainable the apartments seemed, the more people wanted them.”

“Fortunately, [the Japanese] have a lot of money to spend, and they seem to like real estate.  What’s unfortunate is that for decades now they have become wealthier in large measure by screwing the United States with a self-serving trade policy that our political leaders have never been able to fully understand or counteract.

The reason had nothing to do with the merits of my case.  It was all politics.  [Ed] Koch and his deputies sensed an opportunity they couldn’t resist: to position themselves as consumer advocates taking on a greedy developer.”

Chapter 8 – Gambling: The Building on the Boardwalk

“I’ve never had any great moral problems with gambling because most of the objections seem hypocritical to me.  The New York Stock Exchange happens to be the biggest casino in the world.  The only thing that makes it different from the average casino is that the players dress in blue pinstripe suits and carry leather briefcases.

“When you’re negotiating with people who’ve been promised the world a half dozen times and gotten nothing, credibility is critical.”

“First of all, I always believe in going after the best location, if you can get it at a reasonable price.  Secondly, I have an almost perverse attraction to complicated deals, partly because they tend to be more interesting, but also because it is more likely you can get a good price on a difficult deal.

“We had arranged simultaneous closings [for the pieces that would make up the Boardwalk lot], beginning on a Friday afternoon, in the offices of one of our attorneys in Atlantic City.  The closings went on around the clock – it took twenty-eight hours before everything was signed and sealed.”

“What I needed was someone totally competent, totally honest, and totally loyal to oversee the project.  There is nothing to compare with family if they happen to be competent, because you can trust family in a way you can never trust anyone else.”

“Other operators – experienced in running casinos, but not in building them – hadn’t bothered with this sort of planning.  In a rush to get their facilities up and open, many began construction before they got final approvals – only to have the regulators show up and say, ‘No, this room is too small,’ or ‘No, this slot machine needs to be there instead of here.’ From long experience, I know that midconstruction changes are extremely costly and perhaps the key reason so many major projects suffer huge cost overruns.

“With so many regulators and regulations to satisfy, we had one major advantage: the fact that we are not a bureaucracy.  In most large public corporations, getting an answer to a question requires going through seven layers of executives, most of whom are superfluous in the first place.  In our organization, anyone with a question could bring it directly to me and get an answer immediately.  That’s precisely why I’ve been able to act so much faster than my competitors on so many deals.

“I was confident we could finish ahead of schedule, and even under budget, based on how carefully we’d done our planning.”

The second way we saved money was by producing very complete plans, so that contractors could bid on every aspect of the job.  When you have incomplete drawings, a smart contractor will often come in and underbid the job just to get it, knowing he’ll be able to more than cover his costs through the change orders that inevitably occur as plans become more complete.

“A lot of managers focus on maximizing revenue since that’s what gets reported publicly most often.  The smarter guys understand that while big revenues are great, the real issue is the spread between the revenues and costs – because that’s your profit.

“In a way, I got something even more valuable than money from the experience: a first-hand view of corporate management in America.”