Toward the Millennium

A svelte blonde in a black sheath dress, with mink stole draped casually over her right arm, stopped during an inspection of a new apartment house on Los Angeles' Wilshire Boulevard last week and gushed: "It's the most gorgeous thing I've ever seen. But, I mean, it's even nicer than our house." Near her, a trim, wavy-haired man gravely replied: "Thank you, madam." For Norman Tishman, 56, president of Manhattan's Tishman Realty & Construction Co., the compliment was no surprise; his company had planned the building to be the most luxurious cooperative apartment house in Los Angeles, with some units costing $125,000.

From his new apartment building, Norman Tishman could look down Wilshire Boulevard toward five 13-story Tishman office buildings and the site of a projected 22-story Tishman office building in downtown Los Angeles. Such hustling has in the last few years made Tishman the biggest single landlord in Southern California, added to the firm's reputation as a pace setter for real estate men in other cities as well.

Uncut Diamonds. "We're investment builders, creators, not land speculators," says Tishman. "We buy for a specific purpose: to develop." Tishman covers the whole spectrum of real estate, from buying and building to renting and managing. The company specializes in opening up new areas of cities, is often followed by other firms once it builds. "If you get there first," says Tishman, "you find remarkably little competition. I first trust my instincts to pick the sites, then take a thorough economic survey. If the survey bears out my instincts, we go ahead. If not, I stick with the survey and forget my instincts. This is no business for guesswork."

Though Tishman is based in New York, the firm has moved into such growing areas as Los Angeles because Tishman feels that development opportunities are about exhausted in Manhattan. "To me," says Norman Tishman, "a piece of underdeveloped property is like an uncut diamond to a jeweler. I don't see it as it is--I see it as it will look when it has been properly developed." Today Tishman operates 31 large office or apartment buildings and three shopping centers in five U.S. cities (including West Hempstead, L.I.; New Orleans; Philadelphia), has other buildings under construction in Cleveland and Buffalo. Tishman's buildings win few architectural prizes, are often deplored by architects as unimaginative, even ugly. But they please tenants --and cut costs--because they lay heavy stress on economy of space, no-nonsense layouts.

Above 86th Street. The Tishman firm was started in 1898 by Norman Tishman's father Julius, an immigrant peddler who turned to real estate to get money to educate his children. Julius Tishman built small tenements in downtown Manhattan until 1910. Then he decided, against all advice, to erect a nine-story luxury apartment on Manhattan's West 93rd Street, despite a tradition that no well-to-do New Yorker would live above 86th Street. The building was profitable, and Julius Tishman made his fortune by continuing to build above 86th Street for the next ten years.

In 1923, the year young Norman graduated from Harvard, Julius decided to build an office building across from Manhattan's Penn Station. Though the area was largely occupied by factories, Tishman thought it would be ideal for commuting office workers. He was right; other companies followed his lead. Right after World War II, the firm built the first fully air-conditioned office building and the first metalclad office building in Manhattan.

Three Generations. Norman Tishman took over as president after World War II (the company now has nine Tishmans ranging through three generations), devised a better way to finance his buildings. Irked by the necessity of tying up millions of dollars of company capital in buildings, he worked out a sale-leaseback plan. Under this system, Tishman sells a new building outright to a corporation (usually an insurance firm), leases it back at about 7% a year and operates it. The company can not only use its capital for other projects, but also gets a tax break. Its lease payments are counted as a nontaxable business expense; if it owned the building--and received the same amount as rent--the income would be taxable. Ten of Tishman's buildings are now operated under leaseback agreements.

By such shrewd tactics, the company, which the Tishman family controls with nearly 50% of the 1,940,000 shares of common stock, netted $4,033,975 in 1957, although the net profit for its first half of this year is down to $1,250,000. Tishman's goal is to build enough properties so that most or all the firm's profits will eventually come from rentals, make it immune to ups and downs in the market for new building. Says Norman Tishman: "When the day comes that we don't care whether we make a sale or not we will have reached our millennium."

This file is automatically generated by a robot program, so reader's discretion is required.