By Lauren Raymond
Photographs by Rob Kinmonth

Top to bottom Elijah, Scott and Gabrielle Rechler

Reckson Associates Realty Corporation (NYSE: RA) has ventured beyond its Long Island roots to become one of the largest owners of office and industrial properties in the New York tri-state area. Scott Rechler, co-chief executive officer and chairman of the executive committee, is the architect who guided this family run business into the public market in 1995. The company has increased its portfolio to approximately 21 million square feet with a total market capitalization of $3 billion. Rechler recently talked with Portfolio about the benefits of working closely with his family, his eclectic vacationing tastes and the joys of cooking.

Portfolio: Reckson is very active in the New York City market. How do you think the market has changed since Sept. 11, 2001?

Rechler: When you look for the biggest change from the September 11 situation, it was the New York-based companies and companies around the country realizing that it’s not good business judgment to have much of their organization under one roof in one marketplace. The concept of regional decentralization has really taken hold. I think in every boardroom around the country, people are talking about disaster recovery and risks associated with being all in one location.

As a company, we have seen significant benefits from that focus of regional decentralization, since our strategy is basically to be in the New York tri-state region supporting Manhattan as well as all the suburbs.

The reason I say regional is that I don’t think companies feel good moving people all around the country, because you still need people to be able to convene in a reasonable timeframe. If you can be one hour away from each other by car and get to one location to convene for meetings, you really don’t lose out too much. If everyone has to get on planes, it becomes a very different scenario.

Portfolio: You have been described as the architect behind Reckson’s public offering in 1995; what were your thoughts on taking the company public at that particular time?

Rechler: My family had built a very dominant franchise on Long Island, started by my grandfather. It seemed like a good opportunity to go out and replicate that franchise in the other suburban markets around New York and build a regional franchise. By accessing the capital markets, we were able to create a currency using operating partnership units to do it in a tax-advantaged manner for the owners as well as build a brand and governing structure that worked. When people look back at that time, it just made the most sense to use it as a springboard to go forward.

Portfolio: Your grandfather founded Reckson on the premise of providing tenant-focused management. How have you continued this agenda?

Rechler: My grandfather always focused on building a real estate franchise, not just building a building. We look at our business, not over quarters but over decades, building a franchise that serves the New York tri-state area and the corporations and companies that work in that community. That’s been something that’s been consistent.

Portfolio: Leading a REIT in which your family members also assume significant management functions, what is the biggest benefit to working so closely together in management and what is the biggest drawback?

Rechler: I think that being a family run, public business provides us with the best of both worlds. The best of being public is getting the discipline, the access to capital, the exposure from the capital markets and the corporate governance that goes along with that. On the family side, we get the core values that are inherent in everyone’s belief structure that gets passed on, a longer-term perspective, and the commitment of being a family business and being in business for the long term. Everyone [in the family] is involved; none of us are free agents in the scope of things. This is inherent in us.

The only negative drawback is from the governance standpoint or a capital market standpoint. Some people might look at being a closely held family business and view it as a negative. We look at it as a positive, though.

Portfolio: If you could give one piece of advice to a new REIT executive, what would it be?

Rechler: The biggest piece of advice I would give is to try not to be distracted by the will of the public markets, because the public markets can be fickle. It’s critical to not just get lost in the corollary reporting and focus on short term, but focus on creating value for the long term.

If you invest well, operate your business well and take care of your customers, everything else will fall into place. The public markets will recognize the value you’re creating. But if you try to guide your business to the will of the public markets, I think you’ll go down a path that never ends.

Portfolio: There seems to be a lot of talk about the negative outlook of the office sector in terms of occupancy rates. Do you see a turnaround in the near future?

Rechler: Well, I still think in the financial services sector there’s still some job reduction to come. Until corporations get into the expansion mode and start hiring, I don’t think we’re going to see an expansion or a turnaround on the positive side. I do think we’re sort of stable at this point, that in most of our markets we’re not really seeing new supply put on the marketplace or new sublet space put on the marketplace. I think 2003 is going to be a relatively flat year, but it will recover; it’s just a question as to when it’s going to happen and when companies are going to start hiring again.

Portfolio: I understand you are involved in a number of community charities. Which ones are you most active in?

Rechler: The one I’m most active in is the Long Island Children’s Museum, which is a very interactive, educational museum that lets children and families have fun and learn at the same time. Children learn about social issues, environmental issues, music, arts, communication and technology. This is a museum I became involved with before I even had kids. It was just an idea at that point. This past year we opened up a 40,000 square foot museum and raised more than $16 million.

Portfolio: Your grandfather was an avid art collector and it sounds like an interest in art runs in the family.

Rechler: Yes, I think it’s inherent in all of us to have an artistic background because of my grandfather. My family is a large art collector, and we’re involved in a number of different museums throughout the tri-state area.

As a company, one of the things we judge ourselves and our management team on is community involvement. When we sit down and do our year-end reviews, we look at where we help the communities in which we operate and what organizations we were involved in—including supporting the arts.

Portfolio: I hear you are quite passionate about cooking, particularly baking. What’s your specialty?

Rechler: (chuckling) I like to cook everything, but I make a mean caramelized onion and goat cheese focaccia. That happens to be one of my winning recipes.

Portfolio: Do you enjoy traveling, and what’s your ideal vacation spot?

Rechler: I definitely enjoy traveling. I have somewhat of an eclectic traveling appetite. One trip I do annually is to Lake Powell, AZ. It’s between Arizona and Utah and is the largest man-made lake in the world. I go with my family, and we take a houseboat into the canyons—almost like the Grand Canyon but filled with water. We go out for a week and see nobody; no TV, no radio, no phones. We do some hiking, water skiing, jet skiing, and all those outdoor types of things.

In addition, I love going to Europe. Italy is one of my favorite locations.

Portfolio: Do you typically take your kids with you on these vacations?

Rechler: The Lake Powell trip we do. We haven’t on the Europe trip yet, although they’re lobbying for it.

Portfolio: What are some other activities you enjoy doing with your family?

Rechler: We love to be outdoors. We hike and bike ride. Also, my kids cook with me on a regular basis. Whenever I’m in the kitchen, it’s a family affair.

Portfolio: I’m from the New York-New Jersey area, and I know how enthusiastic most people there are about their sports teams. Which teams do you follow?

Rechler: Here’s the New York rundown: the Giants, Islanders, Rangers and Mets. I’m a fairly dedicated New York Giants fan. My family has had season tickets since 1956. We love football.

On the weekends, we used to always go to the Giants games. I’ll never forget early on Sunday mornings, we would go to this place called P. J. Clark’s in the city at Third Avenue and 55th Street. We used to get hamburgers at 10:30 a.m. The ham burgers really weren’t that good, but it was part of the experience. Then we would head over to Giants Stadium. Coincidentally, when Reckson bought 919 Third Avenue, we ended up owning the P. J. Clark’s where my family and I used to get our burgers.