At one of the meetings, in December 2006, Adam Rose, the co-president of Rose Associates who was managing Stuy Town’s operations at the time, set off alarms among the group when he told them it would be realistic to recover just 8 percent of the rent-stabilized apartments in the first year, which was almost double the historical average. The business model, however, called for a much higher turnover rate. “That’s not what our pro forma says,” one analyst interjected over the speakerphone, according to a person in the room. Rose, who had been managing the property since 2002, held his ground, saying double-digit turnover was an impossibility no matter what number the analysts had plugged into their spreadsheets. Another person familiar with the exchange says Tishman Speyer quickly revised the number of apartments they could convert to market and lowered their projections accordingly.
Soon, word of Tishman Speyer’s aggressive tactics leaked out to tenants. In one staff meeting not long after the deal closed, executives discussed how they could tailor services to cater to the market-rate tenants, according to a person who was present. Counters Tishman Speyer spokesman Steven Rubenstein: “This is one community, and it is our firm policy to treat everyone the same way.”
Legal battles are constantly raging. Critics say that Tishman Speyer’s net ensnares tenants who are living legally in their apartments. Colby Feller, who was laid off from his tech job at Pfizer last year, had been living at Peter Cooper for eight years when Tishman Speyer notified him in October that it would not be renewing his $1,000 lease. His father, Bruce, was an employee of MetLife who had lived in Peter Cooper since 1984, until he retired to Long Island several years ago. Colby had been on the lease since 2000. Over the summer, Bruce wrote to Tishman Speyer explaining that he was no longer living in the apartment and that his name should be taken off the lease. Tishman Speyer never responded to that letter, instead issuing nonrenewals to both father and son, citing a nearly seven-year-old New Orleans address that Colby maintained for just several months after college. Colby, who was out of work when he got the notice and was unable to pay for the legal fees, didn’t know what to do. Bruce and Colby turned to James B. Fishman, a tenants’-rights lawyer, for legal advice. Within twenty minutes of Fishman’s first e-mail, David Skaller, the lawyer representing Tishman Speyer, wrote back that they would allow Colby to keep the apartment.
“They’re just throwing darts to come up with these people,” says Fishman, who has been handling dozens of cases on behalf of residents like the Fellers. “The general view that rent-regulated tenants are freeloaders, that’s the starting point—they’re getting something they don’t deserve. If you have that mind-set, it’s easy to say, ‘Who cares if we drag these people through litigation?’ ”
“We take every complaint seriously,” Rob says. “The question we sometimes have is, ‘When is the complaint real, or when is the person using nonsubstantive complaints to advance an agenda?’ ”
Whatever the case, Tishman Speyer hasn’t been able to recover as many apartments as it had anticipated. Tenants like the Fellers have reportedly fought off more than 50 percent of the cases brought against them. “Stuy Town is the quintessential rent-stabilized apartment filled with well-educated old Jews, and you shouldn’t fuck with them,” says one affordable-housing advocate. “What the hell were these guys thinking?”
“What happened, candidly, was we overstepped a bit,” Rob says, speaking about the efforts to raise Stuy Town’s rents to luxury levels. It’s just before noon on a day in early December, and Rob is seated on a low-slung bench in the second-floor lounge of the Soho Grand Hotel, explaining how they’re planning to make the Stuy Town deal pull through. Jerry sits by his side. Both are wearing dark suits, and Jerry’s jacket is accented by a fine white pocket square. On his left wrist, he wears a whimsical Mickey Mouse watch, a tiny puncture in his formality. “In any business, you look at your inventory, you price your business to move your inventory,” says Rob. Last year, vacancies declined, as Tishman began offering incentives like a free month’s rent, no security deposit, and $1,000 American Express gift cards for recruiting new tenants. “We worked off the inventory very quickly in early ’08,” Rob says.
Succession is much on the mind of Jerry Speyer. “I can tell you really simply. Rob did the deal,” he says. Rob fidgets slightly in his seat, in a way a child does when a parent defends him in public. “He did an outstanding job in wrestling it down to the ground and making it ours.”