Pyramid Management Group

Pyramid Management Group (also known as The Pyramid Companies) is a development firm formed in 1968 in Upstate New York, by Robert J. Congel. It is the largest privately held shopping mall developer in the Northeastern United States, with a concentration on secondary markets. The firm is widely known for its tactical use of litigation in pursuit of development. The company's flagship mall is DestiNY USA in Syracuse, New York.
History.
Early Years (1960s and 1970s).
The Pyramid Companies (Pyramid) was founded as a small construction company in 1968 in Syracuse, New York by
Robert J. Congel in partnership with Michael J. Falcone and Joseph T. Scuderi. The company grew slowly at first, with their first break coming when they won a $13,000 contract to lay sewer pipe. Hoping to become involved in more lucrative ventures, Congel contacted Simon Property Group, an Indianapolis, Indiana developer. The Simons gave Congel a two-day seminar on the principles of the shopping center development, teaching him design, building, and financing.
In a couple years, Pyramid had begun developing shopping centers in Upstate New York. Their first three were Pyramid Mall Johnstown in Johnstown, New York, Pyramid Mall Fulton in Fulton, New York, and Pyramid Mall Oneonta in Oneonta, New York. All three malls opened in 1972. Each mall featured a White-Modell's department store and Loblaws supermarket as anchors. These malls were much smaller, community-type centers compared to the company's later projects.
Pyramid's next shopping centers, regarded as their "pioneer malls", were Pyramid Mall Ithaca (later The Shops at Ithaca Mall) in Lansing, New York, Pyramid Mall Plattsburgh (later Champlain Centre South) in Plattsburgh, New York, and Pyramid Mall Saratoga (later Saratoga Mall) in Saratoga Springs, New York. All three malls opened in 1975 and marked the beginning of widespread changes in shopping center construction and ownership. Of these three malls, the Plattsburgh and Saratoga properties were demolished for strip centers, but the Ithaca property is still in operation as of September 2020.
Following these initial successes, Pyramid began a rapid expansion. By 1976 they had completed 22 shopping centers, several office buildings and project for Syracuse University. The founding partners split in 1978 to pursue their individual passions. Congel wanted to concentrate on shopping mall development, whereas Falcone and Scuderi were more interested in the office market.
1980s.
Over the next decade, Congel and Pyramid built a dozen malls in New York and Massachusetts, during which time Congel and his team honed their development and management methods.
When planning new projects, they targeted secondary markets where a new regional shopping mall might thrive, either through unmet demand or, when markets had become saturated, by targeting competing malls. They then identified parcels of inexpensive land in close proximity to interstates or major arterial roads. This practice occasionally resulted in the selection of environmentally sensitive land or brownfields, which were purchased by Pyramid using affiliated subsidiaries. Once selected, Pyramid could usually complete its projects in half the time of other developers, needing only six to nine months from groundbreaking to completion. To achieve this, the firm often skirted the edge of acceptable business practices. For example, during construction of the Berkshire Mall, Pyramid and a contractor paid more than $240,000 in fines for filling in a wetland, relocating a stream, and laying drinking water and sewage pipes in the same trench. According to a 1998 "Business West" article: "Pyramid brings to the table a sophisticated knowledge of land-use and zoning laws and a mastery of local political processes to achieve its ends. A common tactic is to employ litigation as a means of forcing cities and towns, where tax assessment offices are often undermanned and poorly equipped, to lower tax obligations on Pyramid properties."
These methods triggered controversy and lawsuits, and Pyramid became known for their conflicts with small business owners, residents, and environmentalists. A notable example of the latter is Pyramid's plan for construction of Crossgates Mall in a suburb just outside Albany, New York. Under subsidiaries, the company purchased parcels in the Pine Bush, one of the largest of the world's 20 remaining inland pine barrens. When revealed in 1978, residents and local environmentalists sued the company under the New York State Environmental Quality Review Act, intending to halt construction. While the mall was completed and opened in 1984, the environmentalists won a number of legal battles, establishing environmental case law. The battle resulted in the formation of environmental group Save the Pine Bush, which remains in active legal conflict over Pyramid-controlled properties in the Pine Bush nearly four decades later.
According to a 1988 "Boston Globe" profile, the Pyramid Companies established "a reputation not only as the biggest and fastest-growing builder of shopping malls around, but also as a corporate operator--aggressive, prolific and proud of it. One company executive referred to Pyramid's squadrons of young executives as 'the Green Berets of mall-building.'" In order to plan, finance, construct, and litigate on behalf of these complex projects, corporate headhunters would recruit talented lawyers and M.B.A.s from prestigious colleges and universities, seeking those who would thrive in the company's intense, fast-paced environment and work any schedule necessary to complete a project. Many of the company's alumni would go on to establish their own development companies and legal firms around the country.
1990s.
In 1998, Congel made an attempt to sell his shopping center empire to General Growth Properties for $4 Billion. His eldest son held up the deal, resulting in disgruntled Pyramid partners, who ultimately sued and then settled for an undisclosed sum. It is believed that in 2004, the company was poised to sell for $6 Billion. Again, his eldest son wanted more money, and the deal fell apart. Since then, there has been no interest in purchasing the company.
Strategy.
Pyramid has generally practiced a stealth development strategy, targeting potentially under-valued land already zoned for commercial use, which they then purchase their own financing. After adequate parcels have been acquired, they announce their development project and begin the process of obtaining municipal approvals. A notable exception to this strategy is Destiny USA, which the company promoted as a boon to the Syracuse, New York region and Upstate New York.
Whereas Pyramid will often maintain ownership and management of their projects for many years following construction, they periodically sell off their properties. When they do so they often use the "financial tear parts" strategy, such as was done at Pyramid Mall Saratoga in the Saratoga Springs, New York suburb of Wilton during the late 1980s. The theory of the strategy is that optimum profit from a development can be achieved by deconstructing the ownership into financial "tear parts", the aggregate sale price of which would exceed the sale price for entire unit. In the case of Pyramid Mall Saratoga, Pyramid sold the land, structure, and management contracts each to separate investors.
While Pyramid had once been a dominant player in the industry, major consolidation has largely led to it being irrelevant, with the big players in the industry being Simon Property Group and Brookfield (formerly General Growth).
Operations.
As of September 2020, Pyramid is the largest privately owned developer of shopping malls in the northeastern United States, owning 14 properties in total, with 11 in New York and three in Massachusetts. Pyramid developed and currently manages four out of the 20 most visited shopping malls in America - Destiny USA in Syracuse, New York, Palisades Center in West Nyack, New York, Walden Galleria in Buffalo, New York, and Crossgates Mall in Albany, New York.
Criticism and Controversies.
Strategy.
According to a 1998 "Business West" article, a town supervisor from Watertown, New York, once referred to Pyramid's actions as a 'con job.' Following this statement, Pyramid filed a libel suit against the supervisor, who responded: "Where they might fail, they threaten legal action to attempt to intimidate [...] they file lawsuits based on distortions, half-truths and falsehoods. They try to portray themselves as good corporate citizens by throwing a few nickels and dimes around for PR purposes. Greed is their motivation, and only greed. I would never trust anything they say. They are the worst kind of corporate citizen."
Black Friday.
In November 2014, the Pyramid-owned Walden Galleria in Buffalo, NY was involved in a national controversy regarding their Black Friday policy. Mall management told their tenants that they must open at 6:00pm on Thanksgiving Day, or be fined $200 for every hour, up to a maximum of $1200. This was because all mall stores were expecting to open at midnight. A local radio station reported that a mandatory notice was posted around the mall stating "we caution you to be open at 6 pm when the rest of the mall opens." When owners of smaller stores in the mall found out about the policy, they quickly spoke out against it. The manager of a small T-shirt store located in the mall said it forced him to open the shop because "[we are] a small company" and the fine would "substantial to us." Local citizens outraged by this policy also spoke out against it, with a massive boycott against the mall organized at 12:00am on Black Friday, with over 4,000 people purportedly attending, which encouraged shoppers to "steer clear" of the Walden Galleria. An Indiegogo campaign entitled "Coffee and Cheer on Thanksgiving Day" was also started to deliver coffee to the mall employees "forced to work at supper time" during Thanksgiving.
Although Pyramid did continue to enforce this policy, it shifted some of the blame to anchor tenant Macy's, who was a major proponent of Thanksgiving sales nationwide, for pressuring the mall into adopting the policy.
Relevancy.
The company struggled to stay relevant in the last decade, partially due to the fact that Pyramid no longer was seen as a development shopping center owner. The company, which had over-leveraged its assets through multiple refinance initiatives, gave back several properties to the lenders. Additionally, it was plagued by large vacancies as many of its large format stores and anchors went bankrupt or closed for under performance. Palisades Center, in particular, was very affected by these problems.
The Family.
Congel was once on the billionaires list, but in recent years, money had dwindled significantly. In-fighting among the second generation of the Congel children created family fissures and control wars about properties and money. Shady business dealings initiated by the eldest son led to much resentment, with the eldest Congel blinded by his son. Without a unified strategy among them, who are now the majority owners of every asset, the likelihood of a sale of the company is minimal at best, and certainly not at the high amounts previously offered in other decades. There is a great belief that after tax liabilities, each child will be left with almost nothing.
List of properties.
Past properties.
The following is a list of malls and power centers that were either closed by Pyramid, or sold to another company.