Unintended Consequences

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Fisher Brothers went back to the Racquet Club and offered a deal. If it could run an arcade through the club to its building, thus giving it the precious Park Avenue address, it would pay the club $300,000 a year for the privilege. But the club said no. It insisted that the club’s architectural integrity had to be preserved and that its air rights had to be part of any deal.

So Fisher Brothers offered $600,000 for the entrance and the air rights, along with a modest escalator clause for inflation. The club thought the escalator should start at a cool $1.2 million a year. Fisher Brothers refused abruptly. The Racquet, however, remained confident it was in the catbird seat.

It was not. Fisher Brothers, after all, had not become the highly successful firm it was without having learned its way around the corridors of power in city government. First it went to Manhattan Borough President Andrew Stein and asked him to give its lot a new address. In the time it takes to issue a proclamation, 51 East Fiftysecond Street became One Park Avenue Plaza and the market value of the Racquet Club’s address vanished.

Next, Fisher Brothers hired Skidmore, Owings, and Merrill, one of the city’s premier architectural firms, to redesign the building. The architects were instructed to design a first-class building with enough public amenities to justify floor-area bonuses equal to what Fisher Brothers could have acquired by buying the Racquet Club’s air rights.

The architects came up with the idea of a public “galleria” running through from Fifty-second to Fifty-third Street and soaring fully sixty feet above street level. Sixty feet, by no coincidence, was exactly the height of the Racquet Club. It meant that all of the Fisher Brothers’ rentable floors would have views overlooking Park Avenue, thus commanding the highest rents. And the galleria, open to the public and even equipped with public rest rooms—a rarity in midtown Manhattan—would justify bonuses allowing a larger building.

In the 1970s a private club in New York used the zoning laws as an instrument of alchemy, turning thin air into five million dollars.

Fisher Brothers quietly negotiated with the city to win approval of this scheme. Only when it had clinched the deal, in March 1978, did the Racquet Club learn that far from having Fisher Brothers against the wall, the club was about to be cut out of the action.

It looked like game, set, and match for Fisher Brothers. But not quite. It turned out that some members of the Racquet Club were nearly as good at playing the game of New York real estate as other members were at highstakes backgammon.

Only three weeks later a headline in The New York Times sent a chill down the collective spine of Fisher Brothers: HOTEL IS PLANNED OVER RACQUET AND TENNIS CLUB . The hotel, utilizing an alleyway behind the club as an entrance, would leave the club itself untouched. But it would rise 475 feet, right up to Fisher Brothers’ fortieth floor. Fisher’s tenants, then, instead of having a wonderful view toward the Seagram Building, St. Bartholomew’s Church, and other splendors, would have a view of a brick wall a few feet away.

Fisher Brothers had already spent millions to buy the land and millions more to design and shepherd through the approval process a building that would cost $82 million to actually build. The Racquet Club’s hotel threatened ruination. But could it be built? Legally the answer was certainly yes. The proposed building’s design was in strict conformity with the zoning law and thus could be built “as of right” without any negotiations with the city. And the Racquet Club was not then a New York City landmark (it is now).

But could the Racquet Club really build a hotel? Again the answer was yes. Intercontinental Hotels, not only an owner and operator of large hotels but a builder of them as well, announced that it thought the scheme was feasible and worked with the club to refine the design. Brokers lined up lenders to finance construction. Structural engineers worked out ways of threading the hotel’s support structure through the clubhouse without disturbing its major rooms.

Fisher Brothers was sure the plan was nothing but a holdup. However, it was now in a tough time bind. It received the last piece of paper needed to begin construction on June 9. Any delay in construction at this point would have cost thousands.

Further it had lined up a major tenant who agreed to take three hundred thousand square feet of space, provided its employees could move in by 1980. And provided, of course, that Fisher Brothers guaranteed that it would not be looking out on a brick wall.

When Fisher Brothers failed to begin construction as soon as legally able, the Racquet Club suspected it had the real estate firm on the run. The club was right. When the dust settled, Fisher Brothers paid $5 million for four hundred feet of empty air.