Larry Silverstein is a New York real estate investor and developer. Well known today throughout the world as the owner of the World Trade Center, Mr. Silverstein has been a notable Manhattan real estate developer for over 50 years.
Son of a leasing broker, Larry Silverstein was exposed to the business at a young age. Having established his own family in his mid twenties, He took an entrepreneurial leap with his father from brokerage to commercial real estate development and investment.
The risk paid off and after having delivered returns to his fellow investors, more projects ensued. His journey in real estate continued as he acquired, developed, rehabilitated and re-positioned commercial properties in Manhattan entirely on spec.
Who is Larry Silverstein? Larry Silverstein was raised and educated in New York. Mr. Silverstein's father was a classically trained pianist, but made a living as a leasing broker in the garment district leasing loft space to garment contractors and suppliers.
As Larry Silverstein came of age, he went to work with his father to learn the commercial leasing business. Observing the impact lawyers had on their commercial lease transactions, Mr. Silverstein decided to attend law school to enhance his skills as a real estate professional.
Buying Real Estate With No Money Down
The demands of a growing family with his wife Klara in sight, Larry Silverstein saw greater opportunity on the real estate investment and real estate development side of the business. The opportunity presented itself when he came across an investment property for sale for $600,000 on E 23rd Street in Manhattan.
After presenting the opportunity to buy the investment property to his father, they decided to take a leap. Without any cash, they embarked on the journey to raise the necessary capital to acquire the property. After a series of refusals to get the initial $15,000 to place the building under contract, they got a lucky break and found a bank to lend them the money.
Starting a Real Estate Investment Partnership
The next step would be to raise the additional equity and debt capital to buy the commercial property. The idea would be to follow the example of Larry Wein who recently formed a real estate syndicate with Harry Helmsley to acquire the Empire State Building in 1961.
For the equity portion, Larry Silverstein's father raised the capital by asking 15 of his former clients he leased commercial space to to contribute $10,000 each and become real estate investors. The group of commercial property investors would form a real estate investment syndicate to buy the investment property. The remaining $450,000 was raised by obtaining a commercial real estate mortgage.
The Silversteins successfully bought the investment property. After operating the property, Larry Silverstein was able to deliver a good rate of return to the real estate investment group. Naturally, they wanted to do it again.
Raising Money Through Real Estate Syndication
Larry Silverstein would continue on the path of forming real estate syndicates to acquire properties until he was able to acquire 105 Madison Avenue. The property was occupied by garment contractors and manufacturers paying a rent of just under $2 per square foot per year (PSF).
Larry Silverstein would take another fateful entrepreneurial risk. He vacated a floor at 105 Madison Avenue, and improved the industrial space to see if he could speculatively rent the floor as office space. Once again his initiative paid off.
The New York Telephone Company rented the floor as office space at over twice the rental rate at $5 PSF. Even more fortunate, the New York Telephone Company continued to lease more office space on additional floors. From that point on, Larry Silverstein was extremely attractive to the commercial lending institutions. He would not have to form real estate investment syndicates out of necessity to raise capital to buy investment properties or undertake future real estate development projects.
New York's World Trade Center
The path to the World Trade Center began in 1980 when the Port Authority offered the keystone site up for bid. Larry Silverstein would win the bid to lease the site upon which he would build 7 World Trade Center. Initially engineered for a 25,000 square foot floor plate, Mr. Silverstein new the local tenants were attracted to larger floor plates that had twice as much square footage.
Larry Silverstein would build 7 World Trade Center on spec with the larger floor plates desired by the larger tenants in the area. He was successful in leasing 1,000,000 square feet of space to Salomon Brothers. Equally important, he now had experience dealing with the Port Authority.
When the Port Authority decided to divest itself from ownership of the World Trade Center, they approached several candidates to submit bids for the office towers. Vornado was initially the successful bidder, but relinquished their successful bid to Larry Silverstein who was more experienced in affairs with the Port Authority.
In addition to the World Trade Center, Silverstein Properties has developed, owned and managed millions of square feet of office, residential, hotel and retail properties.
1. How much cash will be required to make your mortgage payments? Debt Service >>
2. Who can you go to to finance your construction or development project? Construction Lender >>
3. What professional can assist you in maximizing the value of your investment property? Asset Manager >>
4. How can we assess future commitment to infrastructure to support our communities and future development? Capital Improvements Projects >>
5. What measurement indicates if a property's financial performance can cover its debt? DSCR >>
6. What part of a city is the center of urban economic development? CBD >>
7. What allows property owners and professionals to estimate the market value of a commercial property? Comparable Property >>
8. What can landords do to entice prospective tenants? Concession >>
9. What critical factor do stores depend on to drive traffic? Anchor Tenant >>