Xanadu’s $3B ‘White Knight’ knows how to get things done
Sunday, February 7, 2010
Last updated: Sunday February 7, 2010, 9:13 AM
The Record
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In the late 1990s, developer Stephen Ross asked real estate consultant Ben Lambert to look out Ross’s Manhattan office window at the unexceptional space that was Columbus Circle.

Back then, the aging New York Coliseum stood at West 59th Street and Broadway, a symbol of the area’s untapped potential for shopping, office space and housing. Years of delay and protests against development, led by boldfaced names such as Jacqueline Onassis, had stalled attempts to remake the crossroads at the southwestern corner of Central Park.

Ross, whose firm The Related Cos. was vying to develop the site, told Lambert how his idea would fit in with the city planners’ original vision for Columbus Circle.

Despite doubts the project would succeed, despite construction delays because of the 9/11 terrorist attacks, and despite the uncertainties brought on by recession, Ross transformed the site into the $1.7 billion, 2.8 million-square-foot Time Warner Center "vertical mall,’’ featuring a Whole Foods Market, the Mandarin Oriental New York hotel and the Jazz at Lincoln Center performance venue.

"He’s a big picture guy," one who "knows how to pick the right people to carry out the plan," said Lambert, chairman of investment firm Eastdil Secured LLC, who in the late 1990s was advising the Metropolitan Transportation Authority, which owned the site.

North Jersey may now depend on Ross to finish Xanadu, the troubled retail and entertainment project that’s been mired by delays and needs an estimated $500 million in financing.

No one knows whether Ross — who the New Jersey Sports and Exposition Authority confirmed last week is in talks to take over the project — can salvage Xanadu. But a look at the developer’s previous ventures, the huge New York projects he’s been chosen to complete, as well as interviews with real estate and former government movers and shakers who worked with him suggest Ross has what it takes to make Xanadu work.

If he decides to take on the project.

Born in 1940, Ross grew up in Michigan. His father was an inventor, his mother a homemaker, according to news reports. In previous stories, he has cited his uncle, the late businessman and philanthropist Max Fisher, as a major influence. (A spokeswoman for Ross’ Related Cos. declined The Record’s requests to interview him.)

After studying business administration at the University of Michigan, Ross earned law degrees at Wayne State University in Detroit and New York University, then worked as a tax lawyer in Detroit.

Soon afterward, Ross left for New York City to take a job at the investment bank Bear Stearns Cos.

"I intended to take Wall Street by storm," Ross — slender, tall, bespectacled and now with a head of short gray hair — said in a commencement address last year at his undergraduate alma mater. "The result — I got fired."

Ross went off on his own and formed Related in 1972. Ross’ company initially focused on government-subsidized housing for low-income residents, before aiming at more upscale projects in New York, but also in Florida, California and elsewhere.

Since then, Related has grown into a company with more than 2,000 employees and has developed more than $20 billion worth of real estate and owns properties valued at more than $15 billion. Ross’ personal fortune was estimated at $2.9 billion, according to Forbes magazine, and he was ranked the 110th richest American in September 2009.

His projects included ventures in North Jersey. By 1998, Related had begun work on Clifton Commons, a shopping center along Route 3 in Clifton, anchored by a Barnes & Noble bookstore and AMC theaters. That same year, Ross won his biggest project yet: redeveloping the Columbus Circle site that would become the Time Warner Center.

Partnering with Apollo Real Estate Advisors, Ross proposed building two condominium towers, along with a multifloor shopping center, performance space for Jazz at Lincoln Center, a hotel and office space for a major tenant: Time Warner.

In 2001, however, after construction had begun at Columbus Circle, terrorists destroyed the World Trade Center. Construction workers on the project were diverted to Ground Zero, and there was concern the attacks might set back the condo market – especially for units in two towers, recalled Bob Feller. Feller was president and chief executive officer of GMAC Commercial Mortgage, which provided about $1.5 billion in financing for the project.

Ross reassured Feller. "We’re not worried,’’ Feller recalled Ross saying. "We’re not going to drop prices. We really believe this market’s going to come back."

Some had doubted whether a "vertical mall" could work in New York. E. Virgil Conway did not doubt Ross’ ability to get things done. Conway was chairman and CEO of the Metropolitan Transportation Authority from 1995 until 2001 and the man who oversaw the process that awarded the Columbus Circle project to Related.

"Stephen Ross is the finest example of a developer for big projects," Conway said last week. "He thinks big and he’s got a great sense of vision. He gets projects done on time, and he has a great feel of the public sense of the project."

Since then, Related has taken on other major projects in the city among them the redevelopment of Penn Station and Madison Square Garden (with partner Vornado Realty Trust). Related also was tapped for the Hudson Yards project, for a mix of retail and office space alongside affording housing on Manhattan’s West Side.

Whether or not Ross will want to finish Xanadu — and can — is another question.

Thomas Barrack, chairman and CEO of Colony Capital, the Los Angeles private equity firm that is the largest stakeholder in Xanadu, described Ross in a 2008 BusinessWeek story as "courageous in the face of fear."

Ross can also leverage his company’s strong relationships with potential retail tenants, said a senior executive at a New York firm that’s worked with Related as a client.

Friends and associates portray Ross as intelligent and tenacious, but with a humble, straightforward and earnest Midwestern persona.

"He’s not slick," said Ross’ friend Dan Doctoroff, who served as deputy mayor for economic development in the last decade and now is president of the financial information company Bloomberg LP. "He just doesn’t give up. He is so resourceful that he always finds a way around a problem."

Doctoroff noted a project he worked on with Ross — a small office and retail building in a depressed commercial area of the South Bronx. In the end, Doctoroff said, Ross did not make much money on the venture; the larger goal was supporting a city he loved.

"He’s willing to sacrifice some of the economics to do something that makes a difference,’’ Doctoroff said, "and I think that distinguishes him among his peers."

Since leaving Detroit, Ross, now 69, has risen to the top of the country’s real estate industry. In 2007, he served as chairman of the powerful lobbying group The Real Estate Board of New York. In another high-profile move, last year he became owner of the Miami Dolphins football team.

His philanthropic roles include serving on the board of the New York Chapter of Juvenile Diabetes Research Foundation International. He’s perhaps best known for a $100 million donation to the University of Michigan in 2004.

According to Bob Dolan, dean of Michigan’s business school (now named for Ross), the developer wasn’t interested in helping to fund an initially proposed, more modest $30 million campus improvement project. In the end, the school spent $150 million, demolishing half of its campus and building grand new facilities.

"He’s a guy who inspired us to reach beyond anything we thought was possible," Dolan said.

What Ross might reach for with Xanadu is anyone’s guess.

Bill Mack, whose firm Apollo (now AREA Property Partners) collaborated with Ross on the Time Warner Center, said Xanadu needs financing, expertise and credibility — which Ross can bring.

Mack is chairman of the Mack-Cali Realty Corp., New Jersey’s largest office landlord and an early partner in the Xanadu project. Mack-Cali retains options to build a hotel and office space on surrounding property.

"He’s every bit as competitive on the golf course as he is in business," Mack said of Ross. "He hates to lose at whatever he does."

E-mail: tangel@northjersey.com

Fit story on 1 page Page 1 2 >>

In the late 1990s, developer Stephen Ross asked real estate consultant Ben Lambert to look out Ross’s Manhattan office window at the unexceptional space that was Columbus Circle.

Billionaire real estate developer Stephen Ross was the power behind redeveloping New York's Columbus Circle.
ASSOCIATED PRESS
Billionaire real estate developer Stephen Ross was the power behind redeveloping New York's Columbus Circle.

Back then, the aging New York Coliseum stood at West 59th Street and Broadway, a symbol of the area’s untapped potential for shopping, office space and housing. Years of delay and protests against development, led by boldfaced names such as Jacqueline Onassis, had stalled attempts to remake the crossroads at the southwestern corner of Central Park.

Ross, whose firm The Related Cos. was vying to develop the site, told Lambert how his idea would fit in with the city planners’ original vision for Columbus Circle.

Despite doubts the project would succeed, despite construction delays because of the 9/11 terrorist attacks, and despite the uncertainties brought on by recession, Ross transformed the site into the $1.7 billion, 2.8 million-square-foot Time Warner Center "vertical mall,’’ featuring a Whole Foods Market, the Mandarin Oriental New York hotel and the Jazz at Lincoln Center performance venue.

"He’s a big picture guy," one who "knows how to pick the right people to carry out the plan," said Lambert, chairman of investment firm Eastdil Secured LLC, who in the late 1990s was advising the Metropolitan Transportation Authority, which owned the site.

Ross' next challenge could be the Xanadu project.
DAVID BERGELAND / STAFF PHOTOGRAPHER
Buy this photo
Ross' next challenge could be the Xanadu project.

North Jersey may now depend on Ross to finish Xanadu, the troubled retail and entertainment project that’s been mired by delays and needs an estimated $500 million in financing.

No one knows whether Ross — who the New Jersey Sports and Exposition Authority confirmed last week is in talks to take over the project — can salvage Xanadu. But a look at the developer’s previous ventures, the huge New York projects he’s been chosen to complete, as well as interviews with real estate and former government movers and shakers who worked with him suggest Ross has what it takes to make Xanadu work.

If he decides to take on the project.

Born in 1940, Ross grew up in Michigan. His father was an inventor, his mother a homemaker, according to news reports. In previous stories, he has cited his uncle, the late businessman and philanthropist Max Fisher, as a major influence. (A spokeswoman for Ross’ Related Cos. declined The Record’s requests to interview him.)

After studying business administration at the University of Michigan, Ross earned law degrees at Wayne State University in Detroit and New York University, then worked as a tax lawyer in Detroit.

Soon afterward, Ross left for New York City to take a job at the investment bank Bear Stearns Cos.

"I intended to take Wall Street by storm," Ross — slender, tall, bespectacled and now with a head of short gray hair — said in a commencement address last year at his undergraduate alma mater. "The result — I got fired."

Ross went off on his own and formed Related in 1972. Ross’ company initially focused on government-subsidized housing for low-income residents, before aiming at more upscale projects in New York, but also in Florida, California and elsewhere.

Since then, Related has grown into a company with more than 2,000 employees and has developed more than $20 billion worth of real estate and owns properties valued at more than $15 billion. Ross’ personal fortune was estimated at $2.9 billion, according to Forbes magazine, and he was ranked the 110th richest American in September 2009.

His projects included ventures in North Jersey. By 1998, Related had begun work on Clifton Commons, a shopping center along Route 3 in Clifton, anchored by a Barnes & Noble bookstore and AMC theaters. That same year, Ross won his biggest project yet: redeveloping the Columbus Circle site that would become the Time Warner Center.

Partnering with Apollo Real Estate Advisors, Ross proposed building two condominium towers, along with a multifloor shopping center, performance space for Jazz at Lincoln Center, a hotel and office space for a major tenant: Time Warner.

In 2001, however, after construction had begun at Columbus Circle, terrorists destroyed the World Trade Center. Construction workers on the project were diverted to Ground Zero, and there was concern the attacks might set back the condo market – especially for units in two towers, recalled Bob Feller. Feller was president and chief executive officer of GMAC Commercial Mortgage, which provided about $1.5 billion in financing for the project.

Ross reassured Feller. "We’re not worried,’’ Feller recalled Ross saying. "We’re not going to drop prices. We really believe this market’s going to come back."

Some had doubted whether a "vertical mall" could work in New York. E. Virgil Conway did not doubt Ross’ ability to get things done. Conway was chairman and CEO of the Metropolitan Transportation Authority from 1995 until 2001 and the man who oversaw the process that awarded the Columbus Circle project to Related.

"Stephen Ross is the finest example of a developer for big projects," Conway said last week. "He thinks big and he’s got a great sense of vision. He gets projects done on time, and he has a great feel of the public sense of the project."

Fit story on 1 page Page 1 2 >>

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Reader Comments (5)
  1. Tuesday February 9, 2010, 9:00 AM - Passaic_advocate says:
    find a way dump more STATE MONEY into Xanadau

  2. Tuesday February 9, 2010, 8:59 AM - Passaic_advocate says:
    difference is Xanadau is already built...not property neeeding to be developed....have no idea why the plan was approved, looks nothing like a mall, does not look inviting at all, cannot even tell where the entrance may be....horrible plan.....who was the architect for this place?.....which State head approved this horrible plan?........where is the "green" in this building??

  3. Monday February 8, 2010, 7:52 PM - rob481 says:
    Why do I get the felling that we are being set up?

  4. Monday February 8, 2010, 4:59 PM - coakley says:
    Steven Ross is the Chairman of Related as well as the Owner of the Dolphins. Steven Roth is the Chairman of Vornado Realty Trust.

  5. Monday February 8, 2010, 4:41 PM - MickeyRealEstate says:
    This article is incorrect. Stephen Ross, the owner of the Miami Dolphins should not be confused with Stephen Roth, Chairman of Related Co. His name should be changed to Roth and the picture of him above is that of Stephen Ross of the Miami Dolphin. Ross has nothing to do with Related. Who's the Editor over there? lol

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