Developer Bruce C. Ratner Digs Into Difficult Deals to Alter the Urban Landscape
Bruce C. Ratner is renowned for taking the path of most resistance. Over 28 years of development gambits in the New York City area, the reluctant real estate mogul has created 16.7 million sq ft in 42 buildings by chasing deals with physical, financial and political potholes.
For the 68-year-old Ratner—cut from a different cloth than most developers—complexity has become the mother of many inventions. The latest gamble of the founder of Forest City Ratner Cos. (FCRC) is born out of a need to provide 2,250 units of affordable housing for Brooklyn's $4.9-billion Atlantic Yards sports village.
Once again, Ratner has exited his comfort zone. He is bent on redefining tall residential building by creating a new business brand with a union label: turnkey, modular, high-rise housing—100% steel-framed and 60% factory-made.
The Cleveland native did not plan a career in development. Though his uncles and aunt started a real estate business in the 1920s, Ratner never worked in it.
A Manhattanite since 1967, he went to Harvard College and then Columbia University Law School, graduating in 1970. For 15 years, he worked mostly in city government. But a part-time venture into real estate syndication, in 1982, grew into a career focused on urban revival.
"I had no particular interest in real estate, but, to work for the city, I had to live in the city," says the executive chairman of the Brooklyn-based FCRC, which Ratner formed in 1985 at age 40. "Because the public school system was not good, I needed [extra] money to send my daughters to private school."
Ratner also blames economic necessity for his initial attraction to risky ventures. "I couldn't compete with people who had tons of money," he says. "I needed to do something with some barriers to entry."
Problem-Solver
Ratner is described as an inquisitive problem-solver who is somewhat quirky and occasionally prickly. He is also farsighted and willing to go out on a limb.
FCRC is "very interested" in innovation and technology to manage complexity, says Christopher Sharples, a founding principal of SHoP Architects, which is the modular tower's architect.
But at his core, Ratner has the talent to see land opportunities that others do not. "Bruce is a brilliant man who envisions real estate," says David J. LaRue, the first non-Ratner president and CEO of the family business, Forest City Enterprises Inc. (FCE), Cleveland. "He also has a tremendous ability to execute his visions," says LaRue, a 27-year veteran of FCE, which has owned FCRC since 2006.
Along the way, Ratner has helped spark the revival of Brooklyn through his first megacomplex—a public-private academic development called MetroTech Center. In the mid-1980s, at the time of the deal for the 16-acre MetroTech, no other commercial real estate company would touch the blighted borough with a 10-ft pole, let alone replace a high-crime area deep in the broken heart of downtown Brooklyn with a $1-billion-plus high-technology office park (ENR 2/10/92 p. 26).
Spillover development followed. A subway stop got renamed Jay Street-MetroTech. Not only that, the development became a model for urban renewal.
"Bruce was way ahead of anyone else in the public or private sector in understanding the potential of Brooklyn as a vital economic contributor to New York City," says Kathryn S. Wylde, president and CEO of the non-profit Partnership for New York City, which helps grow the city's economy. "I'm a big fan."
In the mid-1990s, Ratner shifted his sights a mile from MetroTech. There, he triggered a trend in the city by building its first big-box-store mall. He also planted renewal seeds in an unsavory area.
Ratner then crossed the street to an even worse urban wasteland and made Brooklyn, population 2.6 million, hip. He bought the New Jersey Nets, partnered with entertainer Jay Z and built the borough's first National Basketball Association arena. The $825-million year-old home of the Brooklyn Nets, called Barclays Center, is the centerpiece and first completed building of Atlantic Yards, a transit-oriented development. The city's third-largest transit hub has been renamed Atlantic Avenue-Barclays Center.
The public-private development, delayed five years by lawsuits from local opposition, is Ratner's most public, ambitious, complicated and controversial venture. Foes of the plan, who often refer to the developer by the first syllable of his last name, remain outraged by what they call FCRC's land grab and the project's scale. Thinner-skinned developers would have run for the suburbs.
FCRC's modular high-rise venture at Atlantic Yards may be his biggest gamble to date. ">The 32-story B2 Bklyn is on deck to be the Western Hemisphere's—and perhaps the world's—tallest modular apartment building. If B2, which is under construction, works out, FCRC plans to use hybrid modular delivery for the village's other 15 residential towers. B3 and B4 are already in design.
FCRC figures the approach could cost 20% less than conventional cast-in-place concrete construction. And it could cut a typical 2- to 2.5-year project schedule by four to six months, thanks to concurrent sitework and factory fabrication.
B2 may be just the beginning. With the tower, FCRC hopes to set a 322-ft-tall stage for an era of faster, safer, less intrusive and less costly apartment-building construction. Eventually, his plan is to sell turnkey modular high-rises to other developers and landowners.
"If they are successful, they are going to provide a solution to achieving affordability in union-built, high-rise housing," says the Partnership for New York City's Wylde.
The high-rise modular venture is an example of FCRC's "bigger vision of how the industry needs to operate," adds Bill Flemming, Skanska USA Building Inc.'s president and CEO.
He should know. Skanska, also committed to modular construction, is the construction manager for B2, working for FCRC. But in a twist, the CM is also FCRC's equal business partner in the fledgling modular-high-rise production company producing B2 units, a few miles from the site. The collaboration is called Forest City + Skanska Modular (FC+S).
"There's tons of risk, but we expect B2 to be profitable," says Flemming.
Modus Operandi
The developer has not built his real estate portfolio flying solo. As with the modular enterprise, his modus operandi has long been to find public and private partners to share risk and lend expertise.
From 1985 until 2006, Ratner, also an FCE executive vice president and director, was in partnership with the publicly traded FCE, which owned 70% of FCRC. Currently, a third of FCE's $10.7 billion in assets are in the New York City area. FCRC still owns and operates 34 of the properties it has developed.
Ratner also did not build his reputation by himself. His two senior deputies are MaryAnne Gilmartin, who took over as FCRC's president and CEO on April 15, and Robert P. Sanna, executive vice president and director of construction and design development.
"What distinguishes Forest City Ratner's leadership is a long-term commitment to building projects that advance community interests," says Wylde.
"Clearly, they have a deep bench," adds Thomas Z. Scarangello, chairman and CEO of Thornton Tomasetti, structural engineer for Barclays.
Gilmartin, 49, is a 19-year veteran of Ratner's escapades. She oversaw the development of architect Renzo Piano's New York Times Building; architect Frank Gehry's 870-ft-tall New York by Gehry, which ranks as the tallest residential building in the U.S.; and Barclays.
"MaryAnne is a brilliant choice to take over the reins of the company for she will take it to another level," says Wylde.
Gilmartin says she made her first dispiriting decision in her new role last month, when she decided to pull the plug on a possible deal in Manhattan because of the high cost of the land. "I felt uncomfortable and stopped bidding," she says.
While Ratner concentrates on strategic planning, the modular business and the upcoming Nassau Memorial Coliseum and Cornell NYC Tech projects, Gilmartin is more focused on running the business and growing its talent base.
B2 is the only project currently under construction. "One and a half buildings per year is a good pace," says Ratner.
Sanna, 57, a registered architect, has been with FCRC for 24 years. "Bob is the quiet guy behind the scenes," says Joseph Aliotta, managing principal of Swanke Hayden Connell Architects, which has worked for FCRC over 25 years, beginning with MetroTech.
Sanna is known for solving technical problems through innovation. "Construction cost is the biggest single piece of a pro forma, so if that is out of whack, it can easily topple the investment," he says.
For MetroTech, Sanna introduced brick-faced precast-concrete panels to the New York City market. For the Gehry tower's draped facade, ">FCRC used a traditional unitized curtain-wall system for the air-and-water barrier, with a rain screen for the folded shapes. Unitized systems are unusual for residential towers, especially rental ones, says Joseph A. Rechichi, an FCRC construction senior vice president.
FCRC also relies on research before moving forward. The B2 team spent four months developing modular and conventional designs. "It's rare for a developer to pony up money for research," says David Farnsworth, a principal structural engineer of Arup, B2's engineer.
FCRC has a reputation for being a tough-but-fair client that is collaborative, cost-driven, knows what it wants and doesn't suffer fools. "If asked, I would recommend them to a contractor," says Patrick Muldoon, a principal with owner's representative Gorton & Partners.
That is somewhat surprising. In an earlier role, Muldoon was AMEC's senior vice president in charge of the Times job. It was a thorny project for many reasons, including but not limited to complications from the bankruptcy of the steel fabricator (ENR 3/26/07 p. 28). FCRC is "tough, but that's not a bad thing," says Muldoon. "We settled on great terms."
When Don Banker, CEO of Banker Steel, first considered working for FCRC, he was warned off. A number of fabricators told him the developer was difficult to work for, didn't pay in a timely manner, didn't easily settle extras and claims and drove the contractor hard.
"I found them to be the opposite [on all counts]," he says. "Bruce asks my advice," he adds. "Our conversations are brief but pointed. It's not just that we like them—we're friends."
Banker is currently B2's steel contractor. The fabricator-erector also worked on Barclays and East River Plaza—the first big-box-store mall in Harlem, developed in a joint venture with Blumenfeld Development Group.
Family First
For engineer-lawyer Linda Chiarelli, FCRC's deputy director of construction and former outside counsel, her colleagues are more than friends. "It is my family here," she says.
Chiarelli also likes the way FCRC values women. "The advancement of MaryAnne is an inspiration for young women because it shows what you can accomplish with great strength and compassion," says Chiarelli, who has been on the FCRC staff for 15 years.
Chiarelli, who worked a three-day week when she joined the companybecause her children were young, also says family comes first at FCRC.
Foes of Atlantic Yards have a drastically different take on Ratner. Having failed through litigation to stop the project, they are now concerned that construction is not happening fast enough.
"They have not fulfilled their promises and are not on track to do so," says Daniel Goldstein, co-founder of Develop Don't Destroy Brooklyn (DDDB). "Plenty of people have enjoyed events [at the arena], but smaller business are being driven out because landlords have jacked up rents," says Goldstein, the last holdout of the 118 households and 18 businesses relocated for the project.
FCRC paid Goldstein $3 million so he would not fight his eviction or remain a spokesman for DDDB. "I will grant, in my personal opinion, [Barclays] could have looked worse," he says.
Thanks to DDDB efforts, a judge ordered the Empire State Development Corp., which oversees the project, to do a supplemental environmental impact statement (SEIS) on FCRC's longer Atlantic Yards build-out period, approved by ESDC after the recession hit. A judge then ordered FCRC to pay DDDB's lawyer fees for the decision. ESDC won't give a date for the SEIS release.
Currently, FCRC is trying to speed the pace of the project by selling 70% of its stake to the Shanghai-based Greenland Group. The companies are seeking necessary approvals for the transaction.
Ratner says he wasn't surprised there was opposition to the Atlantic Yards plan, but he didn't expect the settlements to take so long. The lawsuits delayed construction long enough for the bottom to fall out of the market. To salvage the venture, FCRC disengaged Frank Gehry as the architect, scaled back the arena and slowed the build-out of the village.
It was Ratner's darkest hour on the Atlantic Yards project. But, he says, with his usual resolve, "Never once did we consider giving up."
