This is how New York real estate billionaire Larry Friedland got his start: He was studying to be a pharmacist in the late 1950s when he met a guy named Nathan Miller.
“You could name any building in New York, give him the address, without a computer, without a land book, without anything, he would tell you the size of the building, who dropped it in 1929, who jumped off the roof, he was just incredible,” Friedland said in the first interview of his 55-year career. “He really taught me the business.”
Becoming a druggist went out the window. He was hooked on real estate. In 1962, Friedland bought a string of storefronts anchored by a Bickford’s Coffee Shop in the Manhattan community of Harlem — a deal brokered by Nathan Miller. Friedland said he needed three mortgages and a loan to pay the $400,000 price tag.
Fast-forward 50 years to 2012. When he purchased a three- story, pre-war colonial on tony Madison Avenue for $141.5 million, he paid cash.
In the intervening years, Friedland Properties, which Larry Friedland, 76, founded with his late brother Melvin in 1960, became the biggest retail landlord on Madison Avenue with more than 20 buildings. Its properties also include New York City parking garages and lots and two luxury apartment buildings in Manhattan with another planned. On a block in the Riverdale neighborhood of Bronx, New York, his strategy of letting commercial properties stay empty until he gets the tenant, and the rent, he wants has been criticized by residents. Friedland said nobody wants to fill the vacancies more than he does.
Friedland Properties can endure prolonged vacancies because its holdings are vast, many properties are debt-free and there are no shareholders to answer to, said Faith Hope Consolo, chairman of retail brokerage at Douglas Elliman Real Estate, who’s done deals with the company. The Friedlands keep abreast of fashion trends and hand-pick tenants who’ll keep Madison Avenue vibrant, she said. And that means “no dreamers, no delis,” Consolo said.
In all, Friedland Properties is valued at $3 billion, and Larry Friedland owns half, according to the Bloomberg Billionaires Index. Friedland disputes the calculation as too high. Unlike other New York real estate billionaires, he prefers not to trumpet his wealth.
“They’re the gatekeepers to the best retail strip in the city,” said Jeff Karp, director at New York-based RP Miller Commercial.
The Friedland properties on Madison Avenue, one block east and with fewer tourists than the more famous Fifth Avenue, are worth $1.6 billion before debt, according to the index. Annual rents on the strip between 57th and 72nd streets average $1,633 per square foot, according to CBRE Group Inc. Friedland’s current tenants include shoe store Roger Vivier, handbag-maker Kate Spade, Ralph Lauren, Loro Piana, Dolce & Gabbana and furriers Dennis Basso and J. Mendel.
Hardware Stores
When Friedland bought his first Madison Avenue property in 1965, the street was crowded with hardware stores, haberdasheries and drug stores, he said.
It wasn’t until the 1990s that Madison Avenue began attracting luxury retailers, said Gene Spiegelman, vice chairman and head of North American retail services at Cushman & Wakefield.
“You just need to have a good feeling about an area, you have to sort of look at it from a different angle and sort of look to the future,” Friedland said.
Early in his career, Friedland was vacationing in Puerto Rico and was struck by the number of Banco Popular branches. He said he walked into one and told an employee he thought he had a choice location for the bank in New York. The bank ended up signing a deal for one of Friedland’s Harlem storefronts, and Banco Popular began financing his deals.
Old School
The Friedland family is known among realtors as old school. A handshake means a deal and the rest is left to lawyers, Spiegelman said.
Phone calls placed by realtors often go unanswered if the Friedlands aren’t interested in what’s on offer, said three realtors who asked not to be named for fear of damaging ties with the company. Friedland said it’s nothing personal. When he got started, he emulated his mentor Nathan Miller and began reviewing on a daily basis every sale of every building in the city, a routine he still maintains. That way,“if a broker calls me up with a left-field deal that makes no sense, I immediately know to say no,” he said.
While Friedland Properties is a family affair, Larry’s son William partnered with hedge fund billionaire Bill Ackman in a 12,850-square-foot retail property on Broadway in Manhattan, according to mortgage documents filed by Morgan Stanley, which underwrote a $65 million loan for the deal in 2013. The property houses a Chase Bank, luggage-maker Tumi and a pharmacy.
“It was his first deal going out on his own,” Ackman said. “He brought us what we thought was a very interesting deal.”
Ackman describes the investment as a “home run.”
In Riverdale
Seven miles north of Madison Avenue in the Bronx borough of New York City, Friedland Properties owns most of the storefronts on Johnson Avenue, a prime shopping strip. It’s where Robert Fanuzzi, former chairman of Riverdale’s community board, said Friedland is pursuing a “Madison Avenue strategy” by allowing storefronts to remain vacant.
“Exorbitant rates were forcing turnover, we were losing some cherished local businesses and new ones weren’t coming in,” Fanuzzi said.
Blue Bay, a diner on Johnson Avenue beloved by Riverdale’s senior-citizen set, was able to negotiate a lower rent with Friedland only after community members pressured the landlord and a state senator became involved by writing a letter to the Friedlands in support of the diner, said Charles Moerdler, a member of the Riverdale community board’s land-use committee. Friedland said the lower rent was purely a business decision.
“My lawyer warned me not to threaten to walk,” said Ken Dubin, owner of the Corner Café, which moved his business after 22 years as a Friedland tenant. “Unless he believes you have some place to go, he’ll call your bluff, show you the door.”
Friedland said he knows people in Riverdale want the stores filled — “nowhere near as much as I’d like to have them filled.” He said the vacancy rate for his properties is below the national average, “but they’re a little more vociferous” in Riverdale.
Friedland said he wasn’t interested in taking advantage of rapidly gentrifying neighborhoods in other New York City boroughs Brooklyn and Queens.
“I’d rather be an expert in a limited area,” he said. “I don’t want to go out to Idaho to look at something.”
