What Could Sun Tzu Have Taught The Owners of Stuyvesant Town?

Gordon Gekko's favorite military strategist, Sun Tzu, said, "If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him." Stuyvesant Town owners Tishman Speyer and Black Rock apparently failed to heed that lesson.

With hindsight, the biggest conceptual mistake the buyers (and the lenders to the buyers) made — and we’re talking some very smart people at Tishman Speyer and BlackRock here — is that they forgot about the whole living-in-a-democracy thing. Landlords, in general, are good at asserting their legal rights. But when you’re trying to make life significantly more expensive for 11,000 families all living in the same place, you have to expect that those people will organize and fight back — and that they’ll have local lawmakers on their side.

Hat tip: Felix Salmon Indeed, apartment complexes with populations the size of towns can easily unite against an owner-operator. Tenants associations did so way before Al Gore helped create the internet.When 20,000 tenants can be mobilized as a political force, it is wise not to arouse their ire gratuitously. Nevertheless, I don't think Salmon's point has traction in this particular context: even the most generous treatment by owners would not have prevented the tenants' lawsuit. After all, city agencies had issued amd then followed advisory decisions that Tishman Speyer reasonably relied upon. Their underwriting in turn relied on getting those units deregulated. Perhaps Sun Tzu's lesson for large New York multifamily buyers is this: If your potential tenants are in superior strength, buy only fire sales. And even then, use caution...