Dan Ackman

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Gold Coast Fever By DAN ACKMAN May 27, 2005; Page W8 Once when Warren Buffett was touring San Simeon, or so the story goes, he grew tired of the tour guide's endless stories of the millions that William Randolph Hearst used to build it and the additional millions he splurged to furnish it. "Don't tell us how he spent it," Mr. Buffett told the guide. "Tell us how he made it!" Mr. Buffett, for all his wisdom, is clearly in the minority. For the many, watching the super-rich spend is a source of endless fascination, and there are few ways to spend it faster than on real estate. From "Lifestyles of the Rich and Famous" to Architectural Digest, from the Billionaire Home listings in Forbes.com (where I work) to the Private Properties column of this newspaper, real estate has become a "voyeuristic preoccupation in America," writes Steven Gaines in "The Sky's the Limit" (Little, Brown, 273 pages, $26.95), his exposé of high-end Manhattan real estate. Of course, such an interest is nothing new. The wealthy have been building ostentatious homes for centuries. I am no Egyptologist, but I'd venture to guess there was plenty of gossip about how much exactly this or that pharaoh laid out for this or that pyramid. Old School What is new, or at least newer, is the ubiquity of multimillion-dollar homes, not everywhere but in the hot spots on the coasts. Few spots are hotter than Manhattan, where news of a $10 million apartment sale is hardly worth mentioning, not when there are so many $20 million apartments to chatter about. As of this writing, there are 39 properties listed at $20 million or higher in The New York Times's classified ads. As to whether the real-estate market is a bubble, Mr. Gaines quotes a broker who says it's not -- but then he would, wouldn't he? Homes have always been built to impress. It works on Mr. Gaines and on most of us. The book chronicles the old-school cooperative apartments, especially on Fifth Avenue, that still serve as bastions of wealth and snobbery. The acceptance of Tommy Hilfiger into one exclusive building -- although he made his fortune in the garment business -- is, in this telling, an event of historic import. Mr. Gaines lets us know which of the many expensive cooperatives are officially known as "good buildings." He details how (on rare occasions) the co-op boards reject disfavored or famous applicants, from Richard Nixon to Madonna, for reasons that, by law, can be entirely arbitrary. In the end, though, Mr. Gaines proves Mr. Buffett's wisdom. "The Sky's the Limit" is a fun read, flush with anecdotes. The renovations are particularly entertaining: Steve Jobs, for instance, spent seven years and $15 million redoing his Central Park West penthouse, but it wound up looking like a granite quarry and he never moved in. Still, Mr. Gaines's book gets better when the author stops telling us about the buyers and starts writing about the sellers, the brokers and builders at the center of the mania for space on a small island. An especially telling story concerns Dolly Lenz, one of the city's most successful brokers. She got that way at least in part by turning her back on the co-op boards, which long held the keys to the kingdom for some of the best addresses. In Manhattan the cooperative had long been the dominant form of ownership for apartment buildings. A relatively few had been built as co-ops; many more had been converted from rentals. In the 1980s, though, new buildings were going up as condos, and Ms. Lenz made millions by selling them individually or even in bulk to wealthy Asians and South Americans who preferred not to lay bare their finances and personal lives to nosy co-op boards. "It's not that my clients can't pass muster, because they can pass muster; it's that they don't want to pass muster," Ms. Lenz says. By now, Ms. Lenz has worked her way in and out of several agencies, fighting with the old guard at every turn. But she has sold $3 billion worth of properties, and her ferocity is such that she was hailed publicly as "one of the great killers of all time!" by none other than Donald Trump. The Last Word The best story of all involves a building that was historically neither a co-op nor a condo but a rental, the 100-year-old Ansonia Hotel. Built as the last word in luxury, the Ansonia once housed Babe Ruth and Enrico Caruso. Since they moved out, its fate has been as up and down as an elevator. Finished in 1903, the Ansonia was built by William Earl Dodge Stokes, a visionary and psychopath, who married his 16-year-old wife a year after seeing her picture in the window of a photographer's studio. (They divorced after four years.) It was 17 stories with an experimental farm on the roof, a 550-seat dining room, a shopping arcade in the basement and the world's largest indoor pool. Though it was a hotel, many guests lived there year-round. From its early days, it became a hangout for gamblers; the plot to fix the 1919 World Series was hatched in one of its rooms. Starting with the Depression, the Ansonia stopped being a hotel and, as an apartment house, started going downhill. It went through a variety of owners and housed a luxurious gay bathhouse as well as the sex club Plato's Retreat. All the while, the building decayed as a cycle of neglect, rent control and landlord-tenant disputes took their toll. Ultimately, a landlord named Jesse Krasnow, a specialist in reviving beleaguered properties, took over and made the old building his mission. Still, for a decade, the Ansonia was "the single most litigated residence in the history of New York City," Mr. Gaines writes. Finally, in 1990, it went condo. It's not fancy the way it once was, but a three-bedroom apartment was recently sold for just under $4 million. That's two-thirds of the $6 million it cost, in 1903 dollars, to build the entire structure, which, Mr. Gaines reports, was 800% over budget. Some things never change. Mr. Ackman is a senior columnist for Forbes.com.