A Relentless Developer
The Wall Street Journal
In June 1997, Carl Paladino had been pushing to build a Rite Aid pharmacy in a Syracuse neighborhood when he was turned away by the city's Planning Commission due to residents' concerns. The prominent Buffalo developer told the Syracuse Post-Standard that such a rejection was "one of the reasons your city is dying," and pledged to stop developing such stores in the struggling upstate city.
Mark Ovaska for the Wall Street Journal
In June 1997, Carl Paladino had been pushing to build a Rite Aid pharmacy in a Syracuse neighborhood when he was turned away by the city's Planning Commission due to residents' concerns. The prominent Buffalo developer told the Syracuse Post-Standard that such a rejection was "one of the reasons your city is dying," and pledged to stop developing such stores in the struggling upstate city.
A year later, Mr. Paladino returned to the same site, with some modifications, only to face similar opposition. He revised his plans again, and finally won over the planning commission; the new store was completed the following year.
Such a relentless pursuit of a development, mixed with the occasional caustic remark, has become a trademark of Mr. Paladino, the Republican nominee for governor who is bankrolling much of his campaign with the wealth created by the real-estate empire he built up over the past three decades.
With a prolific and opportunistic strategy of buying property, Mr. Paladino has become, at once, the Rite Aid king of Western New York—building more than 150 of the drugstores—as well as one of Buffalo's largest office landlords and a major residential developer. His style in real-estate transfers to his campaign, and perhaps portends an approach as governor: he is aggressive, unorthodox and a tough-as-nails negotiator.
"He plays to win," says Craig Cozza, a former Rite Aid executive who worked on leasing dozens of stores from Mr. Paladino in the 1990s. Mr. Paladino was skilled at identifying an intersection ideal for a Rite Aid and then quickly assembling the site needed by convincing a set of homeowners to sell, Mr. Cozza says.
"Most of the stuff we bought wasn't for sale—so that's what he became very good at," he says.
Mr. Paladino was unavailable for comment for this article. But his son, William Paladino, who is the chief operating officer, acknowledged that relentlessness is part of their business strategy. "We don't really give up on anything," he says.
Carl Paladino, the son of a water meter reader who immigrated from Italy, fell into the real-estate business almost by accident. Raised in Buffalo, he went to St. Bonaventure University, followed by law school at Syracuse University, and joined the Army Reserve. Then, working as an attorney in Buffalo, his father-in-law, who was the building manager for the centrally located Ellicott Square building, died. Mr. Paladino took over the management business for the hulking grey building, according to William Paladino.
When the building fell into default, the owners asked Mr. Paladino if he wanted to put together a group of investors to match a bid on the property, according to campaign officials. With money he raised from others plus his own funds, he was able to take control in a deal valued at $3.8 million.
From there, he gradually increased his holdings. His firm, Ellicott Development, now says it has more than two million square feet of office space in Buffalo, making it one of the largest commercial landlords.
Many of his deals, like Ellicott Square, have involved distressed property. His firm targeted buildings in foreclosure and properties reclaimed by the city. He buys to hold, keeping the properties—often vacant—in his portfolio until a tenant is lined up, a neighborhood improves, or an opportunity presents itself. He owns multiple closed churches that he might redevelop, an estimated 50 vacant lots and recently bought a large shuttered nursing home.
"The kind of buyer Carl is, is he will constantly go through tax foreclosure rolls," says James Militello, who dealt with Mr. Paladino as a former Buffalo city official and now now runs a real-estate brokerage firm.
William Paladino, 38 years old, says, "We buy at values that we feel we can carry for as long as we want."
The recent downturn in commercial real estate has caused some pain, William Paladino says. Some of its strip malls in suburban areas are struggling. Also, Mr. Paladino has been unable to build a new office building in downtown Buffalo on a site he has owned for years.
Much of Mr. Paladino's success over the years has come in large part because of government tenants, who occupy at least 530,000 square feet in his Buffalo buildings, according to state, federal and local government records. His company also has received New York state tax credits to develop properties across the state.
Critics enjoy pointing out that a candidate who has attacked government excess owes much of his fortune to incentives and state offices. Democratic gubernatorial nominee Andrew Cuomo's campaign has raised similar criticisms about the Paladino camp.
The Paladino campaign has responded by saying Mr. Paladino is often the low bidder on a contract, and the incentives would have been awarded to anyone. "We save the state money," William Paladino says. "We have a lot of these tenancies, so we're providing them the best rates in terms of their deals."