Contractor of the Year

Tishman Builds Winning Recipe from Forward Thinking, Family Values

Decades of a measured strategy of pursuing innovation, exploiting niches, and preserving a corporate culture have given Tishman Construction not only longevity, but also in 2008 the mantle of the New York region’s busiest and most notable contractor.

By Jack Buehrer

Overlooking the massive jobsite at 1 World Trade Center in Lower Manhattan, Dan Tishman, dressed immaculately in a navy blue suit with a red and pink striped tie, stands watching the 300-plus construction workers scurrying around below him.

He shakes his head.

“Sometimes I think I shouldn’t be the guy up here,” Tishman, chairman and CEO of Tishman Construction Corporation, says with a smile. “I’m out here looking down at this site and I’d love to be down there building the scaffolding, pouring the concrete. I was always a big Lego guy as a kid. I guess I’ve always just loved building.”

Everyone at Tishman Construction seemed to share that passion in 2008 as the family-owned firm enjoyed one of the biggest – and busiest – years in its 111-year history.  It amounted to rising above grade on the 2.6-million-sq-ft Freedom Tower, tallying a market-leading $2.8 billion in work regionally, and dominating the skyline to manage more than 80% of Manhattan’s commercial high-rise projects. The year also saw the company steering ahead of the looming private development drought by diversifying into public works, small projects, countercyclical sectors, and strategic locations nationally and abroad.

Years of hard work below grade at 1 World Trade Center culminated in 2008 as Tishman Construction brought the building out of the ground.

“They have been very smart in how they’ve executed their business plan,” says Louis J. Colletti, president and CEO of the Building Trades Employers’ Association, a New York City-based organization that represents contractors – an association in which Tishman has been extremely active. “They’ve just had an outstanding reputation over a long, long period of time and they’ve built a lot of really strong relationships. That’s culminated in the tremendous success they’ve had over these last couple of years.”

The seeds for this noteworthy year are sprinkled throughout Tishman’s long history. One example is its appetite for innovation, illustrated in its embrace decades ago of construction management as a specialty. There is also the firm’s private, locally controlled, and family-owned status – an advantage today when public owners face harsh market pressures, say Tishman’s leaders. And the company can trace many notable assignments back to carefully cultivated client relationships built over years.

But the recipe requires balancing loyalty to principles that have taken it this far with strategic nimbleness, says Dan Tishman. “It’s very important not to become stagnant as a company,” he adds.

Co-owners John Vickers (L) and Dan Tishman (R) have executed a plan aimed at maintaining a presence across all sectors. (Photos by Michael Falco)

One example is the recent decision to hire Pete Marchetto, who last year left his post as CEO of Bovis Lend Lease, one of Tishman’s strongest local rivals in New York. Some contractors – even ones without a family at its nucleus – would be loathe to add such a senior personality, but Tishman says hearing new perspectives is invaluable. “I’ve seen too many companies over the last 20 years of my career that just do the same thing the same way, year after year, and they just sort of slowly peter out,” he adds. “[W]e continually look for ways to reinvent ourselves.”

A conservationist, Dan Tishman takes pride in the company’s commitment to sustainability. Nowhere is that more evident than on One Bryant Park (R), the nation’s first LEED platinum high-rise, completed by Tishman in 2008. (Photo by Jason DeCrow)

Tishman Construction has another distinguishing trait – an internal development arm through its Tishman Hotel & Realty affiliate, headed by John Vickers as chairman and CEO. The construction arm builds the development unit’s projects, notably the E Walk entertainment complex and Westin New York at Times Square. It now is building the 22-story InterContinental New York Times Square hotel on West 44th Street.

“It’s just a tremendous advantage that other construction companies don’t have, and it’s a tremendous advantage that other real estate companies don’t have,”

Vickers says. “And I think we do a great job of blending the two.”

Banner Year

“2008 was a big year in a number of ways,” Tishman says, and the metrics indeed show an active contractor. The company’s regional-best $2.8 billion of construction in place was spread across 60 projects in the tri-state market. It also logged another $1.9 billion of work in another 65 projects around the country. 

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Just in the New York region, Tishman was building more than 15 million sq ft of commercial space and 2.5 million sq ft of residential space across 1,500 units last year. It also was adding 4,000 hotel rooms in the region at a time when many hospitality projects are stalled.

Tishman also spread into smaller assignments, with more than 20% of its roster in jobs valued at less than $10 million last year. But there was no shortage of signature projects, starting with its role building three skyscrapers at the World Trade Center, including the 1 World Trade Center and the 2.3 million-sq-ft 150 Greenwich Street, also known as Tower 4.

Key Executives: (Top L-R) John Livingston, president of corporate operations; Peter Marchetto, president of construction operations. (Bottom L-R) Jay Badame, regional president and COO for New York, New Jersey and Pennsylvania; Daniel McQuade, regional president for New England, Nevada and California.

2008 also saw major progress on One Bryant Park Tower for Bank of America and the Durst Organization, a 2.2-million-sq-ft, $1 billion project that was the nation’s first LEED Platinum commercial high rise. Long-noted for its commitment to sustainable building - Tishman has built 50 million sq ft of green projects - One Bryant Park marked another in a long line of collaborations between Tishman and Durst, starting with the city’s first green high-rise, 4 Times Square in 1999.

“Tishman Construction was with us at the beginning,” says Durst Organization Co-President Jody Durst. “One Bryant Park is the most complex building we have ever built. [Tishman’s] commitment to innovation, embrace of environmentally responsible construction practices made them a perfect partner.”

Another landmark completion was the $400 million renovation and reinvention of the Plaza Hotel into a 282-unit luxury hotel and condominium building.

“What stands out most about Tishman is the type of projects you see them doing year in and year out,” says Larry Silverstein, whose Silverstein Properties is developing the World Trade Center site and who hired Tishman to build the original 7 World Trade Center more than 20 years ago. “They’re building projects of scale, projects of complexity. They’re building them all over the country. And they build them exceptionally well.”

The firm also completed the Water Club, a $325 million, 39-story hotel at the Borgata complex in Atlantic City, N.J., for MGM Mirage and Boyd Gaming – a project on which Tishman partnered with W.G. Yates & Sons. And it finished a “classic” with the $71 million renovation of the Hoboken Ferry Terminal in Hoboken, N.J. – including reconstruction of an historic clock tower.

Tishman’s Corner: 2008 included continued work on the World Trade Center site, as well as the Goldman Sachs building (third building from left). 7 World Trade Center (far right) was finished by Tishman in 2006. (Photo by Michael Falco)

Tishman also continued work on a battery of newer efforts, including 123 Washington, a $300 million project that will become the 57-story W New York Downtown Hotel & Residences for Moinian Group, as well as 510 Madison, a 30-story commercial tower that it topped out for Harry Macklowe Real Estate. And it is nearing completion of the $2.4 billion, 43-story Goldman Sachs headquarters in Lower Manhattan.

Other projects were in earlier stages, such as the $2 billion Revel Resort & Casino, a 5.8-million-sq-ft complex in Atlantic City, as well as its construction management role for New Jersey Transit on an $8.7 billion cross-Hudson River passenger rail tunnel, which broke ground in June.

And all the while, the company was also managing projects from offices in Boston, Chicago, Los Angeles, Washington D.C., Philadelphia, Newark and Las Vegas, where it is finishing one of the largest private construction efforts ever launched in the 18.5-million-sq-ft, $8.8 billion City Center for MGM Mirage and Dubai World.

Tishman (R) and Vickers tour the 22-story InterContinental New York Times Square hotel on West 44th Street. The firm’s development arm, Tishman Hotel & Realty, is developing the project. (Photo by Michael Falco)

Rebuilding a Legacy

Despite that stocked lineup, the heart of the company’s current efforts is rebuilding the World Trade Center. “There’s so much history [there] for our firm,” Dan Tishman says, referring to the company’s central role as construction manager for the original complex built in the late 1960s and early 1970s under the leadership of his father, John.

“Probably my most vivid memory as a kid is having my father take me down to the World Trade Center site when he was the construction manager…and walking on the site when it was a hole and they were building the slurry wall,” Dan Tishman adds.

The destruction of the Twin Towers and the rest of the complex in the terrorist attacks of Sept. 11, 2001, left deep scars, but the process of rebuilding actually began the next afternoon.

“We get a call from Larry,” Dan Tishman says of a conversation Silverstein had with John Tishman. “Larry said, ‘John, we’re going to rebuild. Can you guys be at a meeting tomorrow?’”

Not long after, initial planning began on what would become the new 1.7-million-sq-ft 7 World Trade Center, which broke ground in 2002 and was completed in 2006 – replacing one of the buildings that had been destroyed.

“There was never any doubt after [the attacks of Sept. 11] who I was going to call to rebuild,” says Silverstein. “It was the most natural reaction I could have had. And they didn’t hesitate either. It all seemed to fall into place instantly. They were right there.”

One of Tishman Construction’s most high-profile completions in 2008 was the $400 million reinvention of the legendary Plaza Hotel into 288 luxury condominium units. (Image courtesy of Tishman Construction)

Tishman was later selected as construction manager for most of the commercial office space at the complex, which at the outset was controlled by Silverstein. But several years into the planning and early construction, tussles over control and financing led to a reorganization that put the Freedom Tower in the hands of the Port Authority of New York and New Jersey and left other jobs with Silverstein. Tishman remains in its construction manager role on all of the upcoming projects – and is playing other senior advisory roles as well, including Dan Tishman serving as co-chair of the building committee for the World Trade Center Memorial.

Tishman says the firm is not oblivious to political and policy debates swirling around the effort that has answered so far to five different governors from New York and New Jersey. “I’m one that believes that, yes, things could have been maybe a little bit quicker,” he adds.

But he also says it took more than a year to clear the site, and several years to plan what ultimately will be a complex with a half-dozen towers, a transportation center, a memorial museum and park, and a garage, among other features. And he says progress to date is not far from what a typical large-scale project might have achieved from the point of earliest planning.

“Everyone wondered why it was taking so long to get above grade,” Tishman says. “Below grade, the Freedom Tower is 600,000-plus sq ft. So we’ve built what by any regard would be a large building in any city [but] was never seen. And we built it around [several] operating PATH tubes without having an outage even for an hour. And it took about 18 months.”

 The effort calls for the company’s expertise as “complexity managers,” says Jay Badame, regional president for Tishman’s New York, New Jersey and Pennsylvania operations. “We’re working at the highest level of difficulty down there,” he says.

Tishman Construction’s banner 2008 included the $71 million renovation of the Hoboken Ferry Terminal in Hoboken, N.J., which included the reconstruction of the city’s landmark clock tower. (Image courtesy of Tishman Construction)

Unique Business Model

Holding a critical and relevant role at the World Trade Center certainly fits into the Tishman mission. But becoming the largest contractor in the region does not.

“So one of the things in 2008 that was really remarkable for us was, as still a privately held family business, to be able to achieve such a large volume of work,” Tishman says. “Our goals have never been to be the biggest. We can’t compete – we don’t have a big brother somewhere.”

But he says he would never trade the freedom private ownership affords. “We don’t start the year with a budget that says, ‘We have to grow 15% year-over-year.’” Tishman says.

One result of that freedom is being able to set strategy. Tishman Construction has long favored construction management without risk as its primary business model. But it also has about a third of its projects in the CM-at-risk world – underscoring how it is tactically flexible enough to make decisions project by project.

Tishman kept its hold on the casino sector intact in 2008 with the Water Club, a $325 million, 39-story hotel at the Borgata complex in Atlantic City, N.J., for MGM Mirage and Boyd Gaming. (Image courtesy of Tishman Construction)

That same freedom also allows the company to adjust quickly to market conditions or diversify into cooler sectors to be in position for future swings, Tishman says. “We didn’t, like many construction companies, gamble 100% of our future opportunity on residential construction in the last boom,” he adds. “Some would say we missed out on some opportunities. We did our fair share. But our business sense required us to be more diversified even during the boom times.”

BTEA’s Colletti says that strategy has left the company in a good position, especially in the unsure times the industry now faces. “They have diversified themselves in enough markets that they’ve been able to protect themselves from the strengths and weaknesses of individual markets,” he says. “They’re not dependant on solely one or two markets to remain profitable. They’ve been incredibly smart.”

And Badame says Tishman is stocked through 2011. “We’re feeling very secure about our future but not secure enough that we’re not looking at ways to advance our business,” he adds. “We’re looking in areas that are counter-cyclical to the [economy], such as healthcare, laboratories, pharmaceuticals, universities, K-12 schools, data centers, energy, utilities and the stimulus dollars, as well.”

John Livinston, Tishman’s president of corporate operations, adds that the company is also now offering advisory services for clients in distress that can use its combined real estate and construction expertise.

And now Marchetto, the company’s newest addition as president of construction operations, says he sees one of his roles is to help Tishman guide clients through the rockier shoals ahead, working with design consultants and an owner’s budget to devise economic solutions. “The companies that will be successful…are the ones that have the talent to go beyond just building a building,” he says. “It’s trying to figure out how to make a building affordable and how to make a deal go forward.”

Wherever the work takes them, Dan Tishman says the company’s New York roots will always be at the emotional core of the firm.

“This town has been really good to us,” he says, surveying the Lower Manhattan skyline. “There are few places in the world that a company like ours could be. I don’t know if my great-grandfather knew that when he started out, but it’s certainly worked out that way.”