THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
Steven Syre | Boston Capital

Dubious distinctions

By Steven Syre
Globe Columnist / March 12, 2010

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I don’t know what Steven Roth has been drinking, but someone please send a glass of it over to my cubicle.

Roth’s company, Vornado Realty Trust, is a principal owner of Boston’s infamous hole in the ground at the old Filene’s Downtown Crossing site. You might think a distinction like that would keep a developer humble. You would be wrong.

Roth landed on the news pages this week after recounting his grandiose version of another Vornado real estate adventure to an audience at Columbia University. Boston Mayor Thomas M. Menino saw parallels to the Downtown Crossing disaster and threw a fit, though it’s unclear Roth even noticed.

The mayor is sensitive on the subject because the Filene’s site is more than just another development project stuck in finance limbo. It’s an ugly scar on the city’s landscape that threatens real harm to the economic recovery of downtown Boston.

The story that caused such a stir was about Vornado and its development of the old Alexander’s discount department store on a choice block along Lexington Avenue in New York years ago. Roth’s retelling comes with a healthy dose of revisionist history.

Roth and Vornado took a lot of heat as the gang that couldn’t shoot straight between the time they got their hands on the Alexander’s site in 1995 and its eventual redevelopment in 2004. But it turns out Roth was really cunning and opportunistic in the version of the story told by you-know-who.

Here’s the part that stuck in the mayor’s craw: Roth suggested Vornado let the Alexander’s site remain an undeveloped eyesore in part because it gave him increasing leverage with city officials under pressure to make something happen.

The New York Observer reported last week on the Roth appearance, including his comments about the political advantages of neighborhood blight. Here’s a taste:

“My mother called me and said, ‘It’s dirty. There are bums sleeping in the sidewalks of this now closed, decrepit building. They’re urinating in the corners. It’s terrible. You have to fix it.’

“And what did I do? Nothing.

“Why did I do nothing? Because I was thinking in my own awkward way, that the more the building was a blight, the more the governments want this to be redeveloped; the more they would give us when the time came.

“And they did.’’

Roth also told the Columbia audience he took his time because the value of the property was going up. Vornado had acquired a controlling interest in Alexander’s in bankruptcy as a real estate investment and had a very low cost-basis for the Midtown Manhattan property.

But the development of that block didn’t look like a smooth operation run by heavyweights at the time. Roth was still known as the strip mall king in the mid-1990s, when Vornado’s real estate portfolio was stuffed with New Jersey shopping centers.

Give Roth credit for getting his hands on the Alexander’s site in the first place. But who was going to occupy a new building on the site? At one time, Vornado wooed the swanky auction house Sotheby’s, with no luck. Later it was Christie’s, but that auctioneer moved on to Rockefeller Center. The Ritz-Carlton and other possibilities came and went.

As time went on, the strip mall king acquired a new nickname: The Hamlet of Lexington Avenue.

Roth was on his fourth architect when he finally struck a deal with Michael Bloomberg to turn the property into a signature headquarters for the soon-to-be mayor’s booming financial media company. Even those negotiations took a couple of years, but Roth had a motivated tenant with a fast-growing business on the line.

Vornado eventually built a spectacular 56-story office tower with posh residences where stars such as Beyoncé call home. The building everyone calls Bloomberg Tower is impressive.

A fair reading of the record suggests the New York project took so long because Roth was prone to negotiating deals to death. But good fortune — a roaring economy and a spectacular commercial site — finally overcame all obstacles.

Today, the economy is awful and credit for big real estate projects barely exists. To put it gently, Downtown Crossing is not Midtown Manhattan. The negotiating style that slowed a development on Lexington Avenue could clobber the fragile Filene’s project.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.