Scott Rechler ’89 is a major force in the competitive world of Manhattan real estate, but among his greatest achievements is helping One World Trade Center rise from the ashes of Ground Zero.
Growing up in New York, he had wanted to attend the sort of leafy New England college whose personality was entwined with a deep, colorful history. When he visited Clark and saw Jonas Clark Hall, Rechler immediately thought that this was a place where the famed movie archeology professor-swashbuckler Indiana Jones would be comfortable teaching. He was smitten.
“They told me that the school was renowned for its geography program,” he recalls. “At that point I didn’t really know what it meant, but it sounded adventurous.”
The early career plan was to become a lawyer; at least that was his mother’s hope. But Scott was leaning toward joining the family’s real estate business. The night before his Clark graduation, at dinner with his family, he handed back the deposit check his mother had written reserving his seat in law school. She was less than thrilled.
“It took me a couple of years to get the relationship back on track, but now it’s perfect,” Rechler laughs.
It turns out he made the right decision. Today, Rechler is chairman and chief executive officer of RXR Realty LLC, the largest purchaser of commercial real estate in New York City since the financial crisis, with $7 billion in assets and more than 17 million square feet of property. He is also vice chairman of the Board of Commissioners of the Port Authority of New York and New Jersey, appointed in 2011 by New York Governor Andrew Cuomo.
In that role, Rechler is overseeing the completion of the World Trade Center development, including One World Trade Center, the tower that rises above the Manhattan skyline at Ground Zero. On May 10, 2013, he was featured on NBC’s “Today” show, atop the building as the final spire was put into place, capping a process of many years, many emotions, and many challenges.
Real estate is in Scott Rechler’s blood. His grandfather founded Reckson Associates, which built the first planned industrial park in New York City and another on Long Island.
His father and uncle joined the business in 1968, and made Reckson the largest owner of office parks and industrial buildings on Long Island. Rechler worked for the family business while he earned his master’s degree in finance, with a focus on real estate, from the New York University School of Finance.
“It was the right move for me,” he says. “It was a dynamic time in the early ’90s, a sort of crisis in the real estate business. If I had gone to law school I would have missed some of that crisis. It gave me a real-life Ph.D. in real estate along with opportunities to grow that I otherwise would not have had.
“There was a recession that was taking down a lot of companies, which created interesting opportunities. We came out of that relatively strong and decided to go public to expand throughout the New York region.”
The $300 million IPO in 1995 helped Reckson become one of the largest developers in the tri-state area of New York, Connecticut and New Jersey, and the largest in New York City.
“New York City was the big prize for us,” Rechler says. “We initially expanded around the city, first going to Westchester, then to New Jersey, then to Connecticut. We spent literally two years trying to find our way into the city. Ultimately, there was a public company that had 2.5 million square feet of New York City assets, and they were in trouble; so we went to their board, and ended up buying the company for a billion dollars.
“It was a very big deal for our company at the time,” he recalls, “but talk about getting hit with tough timing.” The 1998 Russian financial crisis began, “and the whole market shut down. So here we are betting our company on completing this transaction, right in the middle of a crisis that we had to persevere through. But we got through it and we were off to the races.”
Rechler’s father and uncle left the business in 2003, and in 2007 Scott made the tough decision to sell.
Real estate values were soaring, fueled by highly leveraged buyers who assumed rents would continue to climb. Starting in 2003, Rechler sold suburban assets and increased Reckson’s presence in the strong NYC market. Reckson stock rose from $22 per share in 2003 to $45 in 2006, and Rechler saw a coming market “dislocation” that would cause real estate values to crash from their speculative highs. “We decided it was a better time to be a seller than a buyer, and come back into the market when things got better,” he says.
It was also a unique time in the market, when a number of buyers could afford to pay cash for the $6.5 billion company.
The sale was not without its critics. Rechler recalls that the Sunday before kicking off the sales process, one of his partners came to the family’s house to discuss the details. His then-10-year-old son, Elijah, overheard the conversation. Later that night, he confronted his father.
“I was barbecuing, and he came over and said, ‘Dad, are you out of your mind? You can’t sell our family business.’ “So here I am, already emotional, trying not to let him see the tears coming down my face as I tried to explain to him that it was the right thing to do.” It didn’t end there. Just before the deal closed, it hit a snag that was pounced on by the media. “We were at my daughter’s bat mitzvah and my son said, ‘Dad, I told you, it’s a really bad idea to sell the company.’ My goal, ever since then, has been to prove him wrong.”
Despite his son’s concerns, the sale worked in Rechler’s favor. “We sold on January 25, and it was basically two weeks before the market peaked—then spiraled down to new lows as the country navigated through the Great Recession.”
Timing, he notes, is critical.
“In my view, you have got to be leading the market when you enter and when you exit,” Rechler says. “We might buy something for what people think is a lot, but you need to have conviction in your belief that the market is improving and rents will go up…you have to be ahead of it or you are too late to be a buyer.” Rechler has been friendly with Andrew Cuomo since 2002, when Cuomo ran unsuccessfully for governor of New York. “It was a good experience, going through that with him, but it was a little premature for him at the time,” he says.
Cuomo won the governor’s job in 2010, and in June 2011 he asked his friend to take on the role of vice chairman of the Port Authority.
In 2011, Cuomo and Rechler visited the World Trade Center site together. “He said, ‘Right now this project is viewed as a symbol of government waste and mismanagement. Your job is to make this a symbol of national pride and government effectiveness.’
“When I got there, there was no schedule of when it would be completed, no budget as to what the final cost would be. There were disputes between multiple agencies and government bodies, including the 9/11 Memorial Museum—which stopped all work on the museum.
“There was a lot of mess that had to be cleaned up, a lot of restructuring that had to be done. And now, I’m proud to say we’re ahead of schedule, and we’re going to come in on or below budget.” The entire site will include a park, the museum and memorial, five skyscrapers (including One World Trade Center), a transportation hub, retail space and a performing arts center.
Rechler was proud to lead the “topping out” of One World Trade Center in May 2013. The spire officially made it the United States’ tallest building, at a symbolic 1,776 feet. He also escorted President Barack Obama and First Lady Michelle Obama around the site when they came for a tour in 2012.
He notes that rebuilding Ground Zero is one of the most complex construction projects ever undertaken. Live subway stations and rail lines have been moved around during construction. The project is “multi-governmental”—owned by a two-state agency, on New York City land. The emotions and concerns of 9/11 victims’ families, as well as survivors, were also taken into account during the decision-making process.
“What’s amazing is that this is not a job to the construction workers, it’s a mission,” Rechler says. “People view it as their patriotic duty to rebuild this, and they work with a different degree of intensity to get it done.”
That intensity was illustrated after Hurricane Sandy flooded the site with more than 150 million gallons of water in November 2012. Workers spent the night pumping out the water and trying to salvage what they could — even though many of them had their own homes damaged in the storm. “It was truly inspiring,” Rechler says.
The superstorm was a case where Rechler’s relationship with the governor came in handy. Gas was needed at the site so the water could be pumped out, but the trucks couldn’t reach Ground Zero. A call to Cuomo resulted in a National Guard escort. Five pumps worked 24 hours a day, and construction resumed a week later. (Rechler was dealing with flooding in one of his own properties as well. The Starrett-Lehigh building, which encompasses an entire city block next to the Hudson River in lower Manhattan, saw its basement flooded with 2.5 million gallons of water. A team of 50 people pumped out the basement, reworked the electrical system, and did whatever the tenants—including Martha Stewart and Tommy Hilfiger—needed. The building was one of the first to reopen after the storm.)
The 9/11 museum is expected to open by June 2014, and the first tenant at One World Trade Center, the publisher Condá Naste, should be moved in by the end of the year. “It’s going to be a transformative experience with the museum, memorial, a park-like feel, and the amount of activity churning around there,” Rechler says. RXR Realty’s properties all sit within 50 miles of New York City. “Everything we do is tied to the health of our communities,” Rechler says.
“The better our communities do, the better we do; the better we do, the better our communities do.”
Not all buildings are right for every market. Some, like the Starrett-Lehigh building, have big floor plates, high ceilings, and a lot of natural light. Others are skyscrapers located next to Grand Central Station, with elegant lobbies and a boutique-type feel. And in the suburbs, RXR may site a cluster of office parks by transit hubs. “We’re constantly tweaking our strategy,” Rechler says.
Last year, RXR hired Seth Pinsky, former president of the New York City Economic Development Corporation, to head its emerging submarket strategy. These are submarkets with “great potential” — parts of cities that had been vibrant at one time but that fell into decay and need economic revitalization. “These markets usually have had substantial public investment already, in transportation and parks, for example,” Rechler says. “We come in and invest the needed private capital to take the community to the next level.”
RXR is also working to transform iconic buildings in New York City, starting with 75 Rockefeller Center. “Over the years it’s been totally neglected,” Rechler says. “We’re going to gut the entire building, leave the landmark façade, and rebuild the interior as a modern office building, with ‘Rock Center’ legacy-type finishings.”
Refurbishing grand old buildings comes with great responsibility, Rechler adds. “You feel like you’re restoring something historic to the city, for the city.”
Scott Rechler is clear about why he chose to enroll at Clark University. “I wanted a small school with faculty who were willing to dedicate their time, and where any individual could be as active or inactive as they want to be. You could make a difference, delve into things. That was appealing to me.”
Rechler was one of those active students. As a sophomore, he was elected president of the Student Council. During his tenure, he created a “diversity chair” so at least one seat of student governance would be filled by a person of color. “Even though it was controversial, we were able to build consensus and move things forward for the better,” he says.
He’s stayed in touch with two of his Student Council colleagues: Jason Barnett ’90, who is vice chairman and general counsel for RXR Realty, and Jill Kaplan ’88, publisher of Crain’s Business New York.
Rechler majored in government and economics, which were in line with his original law school plans. “I always had an interest in economics, politics, and public policy, and the combination came together, driven by professors and classes I was taking, which were compelling.”
He recalls class dinners at government Professor Knud Rasmussen’s house, where students were encouraged to debate the issues of the day. “A lot of people were scared of him,” Rechler laughs. “He was a tough guy. I was always interested in current events, and we’d have debates about what was happening in the world.”
Rechler now uses his arsenal of skills as a leader in the heady, high-stakes world of New York real estate. His company has been buying buildings that attract tenants who are driving their markets in media, technology and creative innovation.
It helps that, thanks to the efforts of former mayors Rudy Giuliani and Michael Bloomberg, crime in the city is at its lowest level, and tourism is at an all-time record high. “It’s kicking at all cylinders now—the key is to watch where that growth is going,” Rechler says. “We’ve been continuing to expand and modify our strategy to take advantage of that.”
With all of Rechler’s deal-making, he still believes his most important one occurred at Clark University in 1989 when he convinced classmate Debby Feldstein to go on a date with him. Scott and Debby were married a few years later and have a 20-year-old daughter, Gabrielle, and 17-year-old son, Elijah. “Everything else in life pales when compared to my family,” Rechler says. “Nothing is more important and rewarding to me.”
Rechler will share his secrets for success on May 16 as the featured speaker at the Alumni Dinner during Reunion Weekend 2014. “I’ll likely focus on the importance of holistic learning and being a better all-around citizen — that everyone can make a difference and make the world a better place,” he says. It’s a message that undoubtedly will reflect the intellectual and adventurous spirit of Clark University that he envisioned when he first set eyes on Jonas Clark Hall.
This story was originally published in CLARK Magazine, spring 2014.