Developer Bob Congel
wants to turn Syracuse into a tourist destination.
by Daniel Kruger
Syracuse, N.Y. A tourist hot spot? It takes a certain imagination, or
perhaps desperation, to come up with that as an economic development plan.
But Robert Congel has believers.
Congel, 66, is a contractor turned mall owner. He already has in his
portfolio the 1.5-million-square-foot Carousel Center in Syracuse. Help me
triple the size of the mall, he is telling New York politicians, and I will
make this into a destination shopping site. I will pull in shoppers from 500
miles away and inspire them to head off to vacations in the Adirondacks,
Niagara Falls and the Finger Lakes. The 18,000 construction jobs, followed
by 11,000 retail jobs (plus all that tourism), could inject $10 billion a
year into the New York economy.
It would be easy to dismiss the scheme as daydreaming if not for Congel's
considerable success in the real estate business. Starting in the late 1950s
as a contractor, he assembled Pyramid Management Group, a collection of 23
separate private mall partnerships that rang up a collective $4.5 billion in
retail sales last year, primarily in upstate New York. The existing Carousel
Center pulled in $650 million of that total, or $430 a square foot.
Comparable malls average $300, says a mall trade group.
If Congel accomplishes his plan to add 3.2 million square feet to
Carousel, it would become 500,000 square feet larger than the Mall of
America in Minneapolis. A gargantuan Carousel, he hopes, will draw 50
million visitors a year by 2004, up from 17 million last year (43 million
visitors passed through Mall of America in 2000).
But seriously, folks. How many people are going to give up their summer
rentals in Cape Cod or the Berkshires... for Syracuse? Yes, there are lovely
rolling hills, a nice university and very cheap housing. But there's also a
long legacy of spending taxpayer money on economic development schemes that
don't quite pan out (FORBES, May 29, 2000).
Congel himself has built plans around some unfulfilled promises. In
clearing ground for Carousel back in 1990, Congel said he hoped that
Syracuse would dredge nearby Lake Onondaga and build a marina, and that
hotels and homes would sprout along with the improvements. Didn't happen.
Carousel went up with substantial tax breaks--but former partners charged
that the project ran 50% over its $200 million projected cost. Congel says
the overrun is minor.
There have been other disappointments. Pyramid bought the venerable but
moneylosing Bonwit Teller in bankruptcy court proceedings in 1990 for $20
million and moved its headquarters to Syracuse. Congel wanted Bonwit as a
high-end mall tenant. But Pyramid was out of its element running a retailer
and couldn't turn the company around. Plans for a new flagship store on
Manhattan's Fifth Avenue fizzled, and Bonwit returned to the dust from which
Congel had tried to save it. "We are a leasing company," Congel concedes.
Lenders have confidence in Congel's abilities. Pyramid is carrying a
total $2 billion in debt on its properties, which are worth $3 billion in
all, by the estimate of outsiders we spoke to (Pyramid says $3.8 billion).
To finance the $935 million Carousel expansion, Congel plans to borrow
$325 million from banks and the like, get $250 million from a tax-exempt
bond issue, get $260 million from new tenants' building contributions, and
use $100 million of his own and his partners' money.
Congel likens his project to that of Governor DeWitt Clinton, whose Erie
Canal transformed the economy of a young state back in the 1820s. It might
end up like the canal. Or it might end up more like Syracuse's many dead
ends on the path to economic revival.