Farrell has virtually recast the East End landscape, contributing mightily to the rebranding of the Hamptons from a sleepy beach community to a global resort destination. The evolution has not been without controversy, often pitting traditionalist resisters against the incoming flood of well-heeled luxury and convenience seekers.
Farrell is unabashed about his successful business model, which comprises acquiring vast swaths of land for development, as well as obtaining older, existing houses for teardown. Due in part to Farrell, the winds of change have reached full gale here in the Hamptons. Progress or regress? The debate is a passionate and topical one.
Here, Farrell opens up, and discusses plans for his next wave of projects, some smaller in scale than usual, which he deems critical to our community— as well as his expansion beyond the Hamptons.
When did you know that you wanted to build houses for a living?
In the fourth grade I moved to Dix Hills from Hicksville. We moved from a developed area to someplace where it was nine houses in the woods; it was like the country to me. A builder lived across the street and I was fascinated by him. I followed him around everywhere. He had a white 1971 Cadillac Coupe de Ville, which back in those days meant that you had made it. You were big time.
Then in the fifth and sixth grade, I started building stuff and selling it on my own. I made Japanese birdhouses and tree houses and sold them. My mom said something about how I was going to grow up and be a carpenter, but I distinctly remember telling her, “I don’t want to be a carpenter, I want to build houses.”
But you didn’t get into residential development straightway as an adult. What happened?
I was an oil trader on the New York Mercantile Exchange. At the age of 30 I started buying two-family houses in Long Island. In 1995, I bought a foreclosed property in Brookville for $275,000 that ended up being worth about $500,000. I bought some plans from a magazine, hired a builder, and I built this house and sold it before the first floor was framed. I made close to double the money I put into it.
And you stopped trading …?
After that first house I decided to take a month off from my work to focus on building something. I loved being in the dirt every day so much, I just fell in love with the process and the outdoors and the whole thing. I liked the contractors, the smell of the sawdust, the dirt. When the month was over, I couldn’t bring myself to go back to 4 World Trade Center and back to the trading pits. So I sold my seat on the Exchange for $475,000. I figured I’d make half the money [building] but to hell with the money.
What happened next?
I started building condos in Centerport. Then I bought three lots in the Hamptons—one in East Hampton and two in Water Mill North. My trader friends made fun of me, they said I was a trader not a builder. But then I got $1.6 million on a house that everyone told me I’d get $1.1 for. They stopped making fun of me.
My business exploded in 2001. Then in 2002, I went on a rampage and bought every south-of-the-highway property that was $2 million and less. That’s when our business exploded. Mega. Fortunately, in 2008 and 2009 I sold everything before the meltdown. But in 2010 I started buying again because there were no spec builders left. After that, we tripled our business from before the meltdown.
You’ve become the biggest name in Hamptons development. Was this all part of your plan?
I never strived for it. True story. I wanted to make things that made sense, that people wanted. Not to get rich, but because I loved it so much. I never anticipated having a giant company with 55 full-time employees and scores of others dependent on the business. I figured I’d build two or three houses a year, then I’ll play golf the rest of the time.
Why do you keep doing what you do? What drives you in your work?
I love what I’ve been doing practically every day for the past 19 years. You know how you wake up in the middle of the night and hope it’s midnight? I wake up and hope it’s 6 a.m. so I can start getting ready for work.
The other big key for me is the thousands of people who make their living off what we do here. I always want to make sure that we’re keeping these people employed, as well as my workers who depend on me, for the next 18 months. The houses are great, but it’s really about the people.
What’s changed about your building philosophy over the years?
We’re changing with the times a little bit. We’re building more in the $3- to $5- to $6 million range instead of just the super high end. We’ve also added an in-house interior design team within the last two years, which is headed by my wife, Kristen. I don’t even get to pick out tile anymore!
What’s the biggest mark you’ve made on the East End?
When I came out here in the early 2000s, houses were being built in the T&M—time and materials—model, but I came in and started offering these houses as full packages. I’m not into “the more time you take, the more money you make” business. We get in and we get out within six to twelve months; that’s how we make money. It’s one fixed price and a one-stop shop where you don’t have to deal with anybody but us. You write one check and that’s guaranteed. That’s how we’ve revolutionized building out here, and that is the biggest thing we’ve done in Hamptons real estate.
Where does the future of Farrell lie?
Here in the Hamptons, we’re accumulating an inventory of land for our build-to-suit division in all hamlets. I did it once before in 2010 and 2011 when I developed Sagaponack North and it worked out well for us. Land is becoming more and more scarce. So we buy it and immediately permit it, then clear it and put in all the utilities in so it’s shovel-ready. Then clients can come to us and buy the land from us, but only with a package deal.
Does that mean that you will only sell if they become a Farrell client?
Yes. They must build with us. We don’t sell land.
You’re expanding into other parts of the country as well, right?
We’re also moving into multi-family buildings, shopping centers, commercial buildings and self-storage in several states. We’re going all over. We’re building in the city, on the North Fork, up island, and for Woody Johnson, the owner of the Jets, in Palm Beach.
You’ve taken some flak over the years from naysayers. Anything you want to say in response?
The higher up the tree, the clearer the shot. Years ago it bothered me. Many of the people that say these things have already got their house, pool and tennis. Now they think that everybody else shouldn’t have one.
I just build houses on building lots that I buy from people. I’m not buying farms and splitting them up. I don’t like the overdevelopment of the Hamptons either. Don’t forget, Manhattan was a farm once. Look, I’m the biggest payer of Peconic tax [CPF tax] on the East End.
I’m going to be doing this for a long time. I try to do it tastefully, quickly and by keeping our neighbors in mind. The next generation deserves their paradise too.
Any final thoughts?
I’m never going to retire. I want to die standing up. It’s not about the money by any means. This is what I love. And if in 20 years, I’m doing the same thing I’m doing now, I’ll be a very happy man.