The book, Developing: My Life is about the life of real estate developer William “Bill” Zeckendorf Jr. He was a pioneer who helped revitalize neighborhoods in New York and Santa Fe, New Mexico.
He developed many New York projects until 1987, when the stock market crashed and left him in a terrible financial situation. After that, he moved to Santa Fe, New Mexico, where he continued real estate development. In Santa Fe, he was involved in community affairs with universities, hospitals, performing arts, and more.
Bill’s strength and focus was in structuring the project, which means envisioning a project, buying the land, choosing an architect, securing financing, hiring contractors, and placing a team that would follow through.
This book talks a lot about generations. His father, William Zeckendor Sr. was one of the biggest and most famous developers in the United States. His two sons have a billion-dollar real estate development business. His grandchildren are almost all involved in real estate.
Real estate development is a craft where the most common path to get in is by apprenticeships through family businesses. It is tough to get into the business because you need a lot of capital, expertise, and connections.
Development is slow, and having many projects under your belt might take decades. This book helps you identify some patterns and learn from someone who was once the most active developer in New York—one of the world’s most sophisticated markets. I recommend this book to people who want to improve their judgment on real estate development or better understand how cities get built.
Bill’s life story is full of warning tales. It demonstrates how someone so knowledgeable in real estate can make small fortunes in many projects but lose their shirt when a deal goes sour or when the market dries up. In the last chapter, “Summing Up,” Bill opened up on what happened to him and his father, explaining the concept of “developer’s disease.”
“After suffering with my father through the demise of his company and personal bankruptcy, I was determined never to let that happen to me. Still, many years later, I, too, succumbed to what ultimately took him down. I call it developer’s disease.
Developer’s disease is a rare but highly contagious condition that afflicts certain developers. They hire the best architects. Their projects are the most admired. They’re financially very successful. They start with one project at a time. Then one project grows into another and another until they have many projects—some would say too many—underway. They begin to take on the most difficult projects, not just to put up buildings but remaking whole neighborhoods. Their goal is no longer making money; it’s being a savior. And they are treated royally for their pains. Based on their sterling records, financial institutions rush to provide money, and investors clamor to partner on their projects. And then, just as these developers are riding high, invincible, a deal goes sour or the market turns, and their luck runs out. Developer’s disease mows them down.
That’s pretty much what happened to me. After a cautious start in the 1970s, by the middle of the 1980s, I was the busiest developer in New York City, with a full plate of deals in progress and a full-blown, if undiagnosed, case of developer’s disease…
…Were I to make my career over, I might undertake fewer projects, juggle fewer balls, and steer clear of personal guarantees. But I wouldn’t for a second choose another field. I can’t think of anything more challenging, more satisfying, more frustrating, and more fun than real estate development.”
Favorite quotes:
“Bill would chase a deal, secure financing, and then pore over the plans with the architect. But as soon as the first shovel hit the ground, he moved on to the next deal.”
“One of the challenges in a renovation is something most people don’t think about: you have little control over the construction workers. When a new building goes up, construction proceeds in an orderly fashion, floor by floor. The floors’ sides remain open, so you can readily see who’s doing what, and where and when. But in renovations, workers are hard to track; they are all over the building at any given time. We found that some of them were hiding in rooms, literally sleeping on the job.”
“These things happen: projects that look good on paper for one reason or another don’t pan out.”
“Big is key for turning around a decaying neighborhood. A small building won’t change anything; the infusion of high-quality new apartments must be sufficient to upgrade the available housing stock.”
“As a further amenity—one not offered before in a New York apartment building—the one and two-bedroom units were laid out so they could be combined easily into larger apartments. This provided to be an effective marketing tool, and designing interiors so the apartments could be readily joined became a Zeckendorf trademark.”
“For me, the thrill of developing was not in watching a building go up: I seldom spent any time on job sites, leaving construction supervision to my project managers. My passion was putting together the deal. I loved every aspect of it: finding a property, assembling a site, securing financing, hiring an architect, and working on the plans. Once we broke ground, I was happy to turn over day-to-day supervision, only stepping back in if a problem arose or we needed more financing.”
“Most developers like to hold on to commercial buildings, leasing out the office space as an ongoing source of income. However, I didn’t want to be a landlord any more than I wanted to be a hotelier and preferred the business model of our residential condos: sell off the individual units as quickly as possible and get out.”
“With apartment sizes ranging from studios to two bedrooms, the Vanderbilt was aimed at younger buyers. To attract this market, we put in a state-of-the-art health club with a swimming pool, sauna, and basketball and squash courts.”
“Building apartments near a hospital center is good for business: doctors welcome the convenience, and buyers find it reassuring to have a top-flight medical care close at hand.”
“Big projects take more time and money and involve more parties. All of that ups the ante. In executing the four biggest projects of my career, I discovered the many ways a project could go right—or horribly wrong.”
“The terms were stiff, however, and we had to make personal guarantees on the loan. I always tried to avoid personal guarantees: if you put up personal assets as collateral and the project runs into trouble, you risk losing your assets.”
“Negative opinions come with the territory: developers automatically get a bad rap because what we do inevitably means change.”
“A complicated project can easily take ten or more years to come to fruition, exposing the developer to uncontrollable changes in market conditions.”
“The key to a successful assemblage is to keep your intentions quiet. You don’t want to tip your hand and have other developers swoop in and tie up parcels you’re after. Nor do you want the owners of the lots to jack up the prices, or rent-controlled tenants to stick you up for exorbitant relocation fees.”
“And we were a full-service organization, not merely developing our own properties as a managing partner with equity but also offering our expertise as project managers.”
“Between New York and Santa Fe, I had more than a dozen projects in the works when the stock market crashed in 1987. I was leveraged to the hilt, and it was only a matter of time before I ran aground.”
“Unless a developer has very deep pockets or a large portfolio of properties, leverage is the only way to finance a deal. I seldom financed a project alone. Having multiple partners allowed me to share the risk, but also meant sharing the returns. And often, it meant taking my money out to invest it in my next venture before I could reap the profits.”
“Inevitably, if a project is going to make a big impact on a community, somebody is bound to oppose it.”
“I learned a long time ago not to assume that anything is impossible.”
“And while my father and I usually had half a dozen or more projects underway simultaneously, my sons concentrate on one or two buildings at a time.”