Bisnow Exclusive: Cary Tamarkin On What It Takes To Be An Architect And Developer

Cary Tamarkin, founder of Tamarkin Co, has carved out a place for himself not only as one of NYC’s most noteworthy architects, but also as one of its successful developers. Cary’s projects have helped define the vistas along the Highline, considered by many the focal point of innovation on the city’s architecture scene.

And yet, his buildings use classical building materials and techniques; he jokes people sometimes say they don’t know if they want to be old buildings or new ones.

Either way, they’ve been commercially successful, with buyers including celebrities like Meryl Streep and Clint Eastwood. He’ll soon be adding two projects to his portfolio: 550 West 29th St, which will be his third project visible from the Highline, and 555 West End Ave on the Upper West Side. We caught up with Cary to get his take on starting out, merging development with design, how to convince lenders to give you money, getting through lean times and more.

Bisnow: There aren’t a lot of developer/architects out there. How’d you become one?

Cary: I’ve known I wanted to be an architect since I was like 12 years old. So I got a master's in architecture from Harvard. The whole time teachers told us architects don’t make money.

I always knew I’d make money. My whole life was identified with being an architect, so I thought about what I could do that that would have a chance of making some money. In 1991, all on the same day, I decided to quit the small firm I’d started with some colleagues from architecture school designing furniture, I quit therapy and asked my girlfriend at the time to marry me.

1991 was a great time to get into this, but I had no idea at the time. It was the end of a huge dip in real estate in the city and the start of a 14-year upward trend. I started meeting with people, anyone I knew, learned what a pro forma looked like and all the stuff developers have to know. There were lots of buildings for sale.

I should have bought every building in Tribeca, but if you look backwards, you’ll kill yourself. I found a beautiful building on Perry Street, down the street from where I was living.

I wasn’t sure if I was going to get the $4M to do the project. Russ Bernard, who now heads up Westport Capital, was the head of Oaktree Capital's real estate division then. He took a look at the building and we talked about it. He said, ‘forget about banks, forget about your stepfather, we’re gonna do the whole thing.’ He gave me a crazy-high interest rate, and said we’ll split any profits.

Bisnow: Why did he have that kind of confidence in you if you’d never done anything like that before?

Cary: We knew each other, and he believed in me. He went with his gut. He ended up making over a 75% return, and I made a million dollars. I’d never seen a million dollars.

Bisnow: Was that a feeling of success, or did it only make you want more?

Cary: As an architect, you’re taught that if you design a $10k table and it gets into MoMa, that’s success. But you need to sell thousands of those to have real financial success. As an architect who’s a developer too, you need to recognize that you have a bottom line, but I also won’t do a building that I don’t think is beautiful, or is leaving the city better than I found it.

Bisnow: Where do those two impulses meet? It seems like there’s a pretty basic conflict there.

Cary: When I started, I had no idea where or if they were going to meet. People love architects and they hate developers. The two things meet right in the middle, as it turns out. There’s a developer on one shoulder, an architect on the other, the developer wants to make a ton of money, the architect wants to spend a lot of money.

I went up to Harvard to give a talk, and the students went crazy, they wanted to go out for coffee and talk to me about merging development with architecture. And I’d ask them: Why do you want to do real estate as an architect? They’d say all these architect-y things. And I’d say there’s only one answer to that: money. And I don’t feel gross saying that.

Bisnow: Being ruthless like that about money means you get to make more work, right?

Cary: It definitely does. And it means I pay myself on time, every time. But that’s an interesting choice of words: "ruthless." I’m actually not ruthless. I don’t attempt to reap every penny out of every job. I’m very interested in what I’m selling and how it’s received, how much it goes for, but it’s all very consciously done and with an eye toward the bottom line.

Bisnow: If ruthless isn’t the right adjective…

Cary: Sometimes it is.

Bisnow: OK, but if the adjective for your approach to the bottom line isn’t "ruthless" most of the time, then what would the word be?

Cary: The adjective would be cautious. Everyone thinks, 'Oh, you’re so ruthless, you’re so risk-taking," but really, I’m dealing with hundreds of millions of dollars other people's money. We’ve never lost a project. I don’t want to build the biggest in the world. It’s a competition with ourselves to build the best buildings we can. It all gets back to that meeting point we discussed. I’ve never been asked to define it before.

Bisnow: So you’ve got three projects along the Highline, like 456 West 19th St (model above). It's an area that’s really showing off some of the top architects in the world right now, and it’s now considered one of the premier places for developers to own in Manhattan, which is of course arguably the world’s top real estate market. Does that drive some competitiveness in you?

Cary: Secretly, it brings out the competitive spirit, but I try to keep that in. The work we produce tries not to scream for attention. A lot of those buildings on the Highline do. Whether I like the surrounding buildings or not is irrelevant. What I wanted to do was create a more quiet, confident, muscular building, almost like a rock to anchor the area. If we’re all screaming, nobody’s going to hear you. I like getting attention, I don’t like screaming for it. Building next to Frank Gehry, it’s not that intimidating. I’m flattered to be among great architects. I do have a huge ego in the end, but I try to be quiet about it.

Bisnow: These days a lot of developers are turning to technology and over-the-top amenities to attract buyers and renters. Are you?

Cary: Some of it, but not that much. Because I know the buyer, and the buyer is me. We do boutique buildings that are not amenity-driven, they’re design-driven. It’s hard because you’re designing 20 to 30 apartments without a client. Do you design the most vanilla thing you can to appeal to the most people? No. Do you design exactly what you’d do for your own house? No, you can’t do that either. But these days, most developers do more tech-driven stuff than we do. I don't even own a smartphone, to tell you the truth. I think smartphones will be the ruination of society. I have a flip phone. So because of the approach we take, we’ve cut out maybe 95% of the potential buyers.

Bisnow: 95% is a lot. Does that impact your underwriting?

Cary: It actually doesn’t. We borrow from some of the biggest banks. People have come to expect what we do. I don’t come to meetings in suits. The borrowing of money—and we now know what we’re doing when it comes to that—it’s been hugely successful. I don’t want the firm to be any bigger. I get great satisfaction from doing what I do.

Bisnow: Do you find that buyers along the Highline find the park itself to be an amenity they use and cherish, or a kind of vanity that they use to show off?

Cary: I think it’s always some of both. Here’s the thing. The first building we did by the Highline was 456 West 19th St. There was no buyer. We weren’t sure if it was gonna work out. It was a more adventurous, artistic, wealthy kind of person. It was all very moody, industrial feel of the space. Those people were more pioneers. There was at that time no infrastructure around there. For the next one, 508 West 24th St (above), the Highline was more firmly established. Now we get calls from brokers every day, and they say they have sites for sale. But a site has to be something special. The Highline is that. Then, there’s the question of it being cool to live on, or a pain in the ass. If you’ve got 4 million people a year walking past your windows, it can be both.

Bisnow: Financing is in a rough patch right now, and obviously financing is toughest for rental projects. But owning rentals can give you cash flow if work in other areas dries up for a while. Have you ever thought about doing a rental?

Cary: I would like to do rentals, because of the ongoing revenue. With condos, you dump a pile of money down and you give half of it to the government. That can get old. I consider us lucky to not have to do every project that gets put in front of us. I love doing houses for the right client. It’s like flexing your architectural muscles. But there’s a real question mark of how do you make it through times like this. There’s a lot I’ve never done. I’ve never done a hotel. It’s scary to me. But there are other development types we’re looking at as well, although I’m not ready to talk about them.

Bisnow: Makes sense with the capital markets in a rough patch.

Cary: They’re not rough, they’re dead. We’ve met with some hedge funds. The opportunities are there if you’re the right kind of entity. But I think bigger developers are also having trouble. It’s a horrible time to be purchasing property for development. Land owners hallucinate that their property’s worth $1k/SF. When one person pays $1k/SF, all of a sudden everybody’s worth that. There’s a lot of unseasoned developers, true. But there’s a lot of carnage coming. I’m not hoping that people fail, but I think that’s a function of this insane market. All of a sudden the faucets are off.

Bisnow: Any tales of what that’s been like?

Cary: When I started the 29th Street project, I met with a contractor who I was friendly with and knew very well. I took him out to lunch and asked: ‘Why are your prices so high?’ He says, 'because I’m in charge right now, and in a couple years you’ll be back in charge.' There are lot of developers hallucinating that they’re gonna get $3,500/SF to sell units. I mean, you can sell a penthouse for that much. But a lot of stars have to line up, and one of the major ones is luck. I’m really hungry to buy new stuff, that’s what we live for. But we’re using all of our self-restraint not to do it, not to hallucinate.

Bisnow: How are you gonna get through if things get really lean?

Cary: You do the usual things that a business does. The last time there was a downturn, we gathered the office together and agreed that everyone would take a pay cut, and I drew no salary for a while. That’s what we did and it sucked, but it helped us build camaraderie. And everybody got through.

Bisnow: Do you have anything to add?

Cary: The most important thing is that I really, truly love what I do, whether it’s good times or bad times. I love the arguing, the creative output, everything. It totally turns me on.