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He's a man with a mission. Bill Rudin is out to wire New York City for the 21st century. And he's off to a good start. The 44-year-old real estate scion already owns a chunk of Manhattan's most wired buildings, including the New York Information Technology Center at 55 Broad St., the under-construction Reuters building at 3 Times Square, and AT&T's former global headquarters at 32 Sixth Ave. These high-tech towers house leading industry players such as Sun Microsystems, IBM, and Ericsson. More important, they represent the future of the New York City landscape. "Soon it won't matter whether you're a dot-com or a pantyhose manufacturer," Rudin says. "Connectivity will be as ubiquitous as central air conditioning."
President of his family's 75-year-old real-estate management firm, Rudin is at once steeped in tradition and eager to take risks, a trait uncommon for landlords. One of the city's first property managers to lease space to dot-coms, he has spearheaded the development of "smart buildings," Internet-ready centers for Web companies. As a result, both New York Republican Mayor Rudolph Guiliani and Democratic Senator Charles Schumer have tapped him for committees to address Net companies' growing problem of finding affordable space in the city.
Today, Rudin Management Co. owns 17 buildings with 10 million square feet. Six of them, with 3.6 million square feet, are in the coveted dot-com territory of lower Manhattan. Rudin's signature building at 55 Broad St., near the New York Stock Exchange, is home to some 75 telecommunications and Internet companies. His tenants include CDNow, Nokia, Ernst & Young, and Infonautics. Rents are higher than other buildings in the area -- about $40 a square foot per year and are expected to be as high as $60 a square foot in Times Square. But it wasn't always that way.
"ADAPTIVE RE-USE."
Built in the '60s for Goldman Sachs, 55 Broad St. was headquarters to investment bank Drexel Burnham Lambert until the firm went bankrupt amid flames of scandal in 1990. Recession set in, and Wall Street soon became a commercially moribund district. For the next five years, the building stood vacant at an expense of about $3 million a year. Then Rudin came up with his "adaptive re-use" theory, which he says is "all about taking facilities that are considered obsolete and turning them into something viable."
His concept: a building for new media companies. He poured $40 million into it to install fiber optics, satellite connectivity, videoconferencing, and an advanced telecommunications architecture. Perhaps most important, it would be low-cost, flexible space. "Five years ago, information networks like those at 55 Broad were unavailable," says Andrew Rasiej, CEO of online music site Digital Club Network. "If you had asked for a T1 line back then, owners wouldn't have known what you were talking about." Still, Rasiej says Rudin took the risk out of necessity. "He was forced to be progressive because he was marketing an undesirable building."
Rudin agrees. "We saw the wiring as a defensive investment," he says. "It was painful to have a building sitting empty for that long." At first, Rudin's only encouragement was New York's downtown revitalization plan, which gave tax breaks to encourage development. "We had to be our own venture capitalists because we couldn't get backing from bankers," Rudin says. Telecom companies, such as AT&T, also questioned the model, which depended on creating a central distribution system that would sit between it and its customers. (Recently, AT&T has agreed to be the main telecom provider for all of Rudin's commercial properties.)
TOGETHERNESS.
The more Rudin talked to Net companies, however, the more he believed he had the perfect opportunity. "We carved a niche for ourselves in terms of understanding the needs that weren't being met with existing space," he says. Technology companies crave a collaborative environment in which they can share ideas and maybe even find strategic partners, Rudin adds.
So his buildings put companies in close proximity with one another, whether that means a short jaunt down the hall or connecting all of his superwired properties via a network. "No one believed these companies would want a communal space," he says. "They couldn't have been more wrong."
"It sounds funny now, but we were lucky we had a vacant building we could use as a model," adds John Gilbert, chief operating officer of Rudin Management. When the 400,000-square-foot building reopened as the New York Information Technology Center (ITC) in March, 1996, it soon became a hot commodity and was 75% leased by the end of that year. One reason was the rent. At $15 to $18 per square foot, space at 55 Broad was one of the best deals in town. Although prices have risen over the past five years, the building has no vacancies. Gilbert says all but one of the original tenants has stuck around.
Since opening ITC, Rudin has renovated three other sites in Manhattan and one on New York's Long Island. He has leased all but 50,000 square feet of his most recent purchase -- the former AT&T headquarters at 32 Sixth Ave. Ironically, AT&T will occupy 400,000 of the building's 1.1 million square feet, while the rest goes to other communications infrastructure companies. "New York is the most wired city in the country," says Steve Huffaker, senior telecommunications engineer for high-rise consultant Riser Management Systems, "and Bill Rudin set the pace."
EQUITY STAKES.
Rudin concedes that he's more selective about his tenants these days, but says he doesn't have the same reservations as other landlords about renting to dot-coms -- which often lack profits and in some cases revenues. "We look at dot-coms differently than other owners because we've been doing this for awhile," he says. Although he's no longer the only Web-friendly landlord in town, he has taken an equity stake in four of his tenants: Xmind.com, HomeDelivery.com, ClickThings.com, and LC39, an incubator whose CEO started NetCast, a former tenant of 55 Broad St. that went out of business in 1996.
"Most people say Bill still would have been successful if all he had done was keep his family's business on the path it was on," Gilbert says. "But he wanted to integrate global connectivity with the quality real estate his father and uncle had given him to run with." Plenty of Gotham's dot-coms are glad he did.
By Stefani Eads in New York
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