NEW YORK — “I’d like to see 550 as the last dinosaur,” said Robert Liberman, chairman of the Kaufman/Adler Group, the real estate firm that owns the tony Seventh Avenue building with that address.
This story first appeared in the July 2, 2002 issue of WWD. Subscribe Today.
The garment district has changed a lot in recent years, with the decline of local manufacturing, the boom and bust of the dot-coms and the uptown flight of some businesses following the Sept. 11 attacks, leading to a lot of turnover in local business tenants.
Still, Liberman, who credits his grandfather, Louis Adler, with the idea of clustering apparel businesses on one major thoroughfare of the city — though he wanted Fifth Avenue, not Seventh — has kept his building a designers-only enclave. Today, Polo Ralph Lauren Corp., Donna Karan International and Vivienne Tam are among his more prominent tenants. Polo recently renewed the lease for its four floors, Liberman said.
A Polo spokeswoman declined to comment on the lease.
While Liberman admitted that he thinks about the changing mix of the neighborhood “a lot,” he said he declined to take on dot-com tenants during the boom years of 1999 to 2001, viewing the business as “too risky.”
He said it’s safer to stick with a proven mix of well-known fashion names. The approach to filling the building is similar to the one he took earlier in his career when he was a mall developer, he said.
“The idea was always to keep the right kind of tenant, and that hasn’t changed,” he said in a recent interview at his 14th-floor office, overlooking the corner of Madison Avenue and East 60th Street. “More even than in a shopping center, the right mix is key.”
It’s a world the 59-year-old executive learned from the ground up. As a teen, his summer jobs included vacuuming the building’s boilers and warning tenants when fire inspectors were on the way.
“They’d tell me, `Kid, get out of here,”‘ he reminisced about some of the building’s former tenants. Liberman had a simple explanation for why they were so dismissive of him.
“The building department was corrupt in the old days,” he alleged. “The fire marshal would come in and Mr. Garmento would give him $5, or $20, and he would look the other way.”
While Liberman said he believes city agencies have become a little more orderly since the Fifties, the fashion universe hasn’t resisted the forces of inertia.
“The designer’s world is still a madhouse world,” he said. “It’s a lot of creative work at a madhouse pace under tight deadlines.”
The biggest change he’s seen in his decades observing the industry, particularly in the 14 years since he was named chairman, has been the consolidation of companies and the creation of enormous corporate entities.
“I remember when Abe Schrader did $10 million in sales,” he said. “He was the biggest tenant we had.”
Today, some of Liberman’s tenants pull in more revenue than that on one licensed sub-brand.
Adler Group’s investments are by no means limited to 550 Seventh. The company owns 10 Manhattan buildings, including garages in Harlem and other midtown office buildings. It also manages two East Side cooperative apartment buildings, including the one where Liberman resides.
With such an investment, Liberman said he was pleased by former mayor Rudolph Giuliani’s successes in lowering crime and increasing order in the city. He said Mayor Michael Bloomberg hasn’t yet established enough of a track record for him to have an opinion on whether he’s good for the real estate business, though he’s been pleased personally with the mayor’s initial efforts.
“His biggest thing is education,” he said. “We’re waiting to see what he’s ready to do.”
The Bloomberg administration so far has hinted that it would approve the Fashion Center BID’s push to raise its budget, which is collected by the city and paid for by garment district landlords, by 30 percent as part of a push to provide seven-day-a-week security and sanitation services.
Liberman, whose nephew, Robert Savitt, sits on the FCBID board and is a principal in Kaufman/Adler, was non-committal in his response to the proposed hike. The FCBID directors, who will bear the brunt of the dues hike, have approved the increase.
“I’m not acutely aware of the need for it,” he said. “But I wouldn’t oppose it, either. There may be an extravagance in there, but what do we do that doesn’t have some extravagance?”
Liberman’s daughter, Kristin, and son, Robert, are not involved in the business.
While there has been some talk in the wake of the destruction of the World Trade Center that businesses might become less interested in clustering together in high-rise buildings, Liberman said he didn’t believe the attacks would result in a long-term change in commercial real estate patterns.
Still, the fallout of the September attacks drove Manhattan rents down in the months following. In May, the FCBID released a study showing that asking rents in garment center buildings have dropped from $32 to $33.50 a square foot on average, compared with $40 to $43 on average a year earlier.
Asked if he’s noticed rents easing in the months since the attacks, Liberman acknowledged, “The simple answer is yes.”
Then, however, he put on his reading glasses and pulled out a rent book dating from before World War II, showing rents per square foot at about $1.50.
“Nothing goes up directly,” he said, explaining that he thinks Manhattan will remain a desirable place to do business.
“We are just going back to business as usual,” he said, while acknowledging, “I wouldn’t want to have my office at the top of the Empire State Building today. But I don’t know that I would have wanted that before.”