Diverse Portfolio

City Method Plucks Undesirable Sites for Variety of Projects

With a portfolio of 12.5 million sq. ft. in properties valued at $3 billion completed over the last 20 years, Forest City Ratner has become a big player in New York's development market. With another 14.7 million sq. ft. planned worth more than $4 billion, it is poised to reshape a big part of the city and its own legacy.

by Katherine S. Robertson and Tom Stabile

(Photo courtesy of Paul Martinka)

By the early 1990s, after decades of decline, Times Square finally bottomed into blight.

But in the famous Manhattan district - which even the staid Smithsonian magazine described in 1998 as "grand old theaters…replaced by porn houses, peep shows and other questionable forms of entertainment" - Forest City Ratner Cos., an affiliate of Cleveland-based and publicly owned Forest City Enterprises, saw potential.

It's a story that repeats itself in the Brooklyn-based developer's repertoire, occurring in Brooklyn's downtown, the Atlantic Terminal site, and other locales across New York City.

Unlike those other projects, Forest City wasn't alone in the early planning for the renewal of Times Square, a vast effort that involved city and state officials, local business leaders, and other developers. When the developer stepped in, however, it played a pivotal role that helped get a snowball of redevelopment rolling for what has become a complete transformation of the famed crossroads.

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Forest City's efforts to develop an entertainment and retail complex on 42nd Street near Times Square was among the projects that helped ensure the Walt Disney Co. would stick to its own plans to renovate the old Amsterdam Theater - a high-profile sign of the district's return.

"In 1985, West 42nd Street was one of the highest-crime streets in New York, blanketed with sex-related businesses and paying only a small fraction of its tax potential," said Deborah Wetzel, vice president of public affairs for the Empire State Development Corp., a state agency that spurred the district's redevelopment. "Today, as theater, cinema, and museums attract families from all over the world, West 42nd Street is booming, with housing all the way to the Hudson River and exponentially greater taxes returned to the citizens of New York."

Forest City Ratner's foray into the district - at the time an uncharacteristic move for a firm focused on the outer boroughs - provided leverage for Disney, which redevelopment officials had attracted to Times Square but which did not want to be its lone new presence, said MaryAnne Gilmartin, Forest City's executive vice president for commercial development and leasing.

"I think of us as opportunistic," she added. "It's about paying attention where you can create the value."

Though the redevelopment authorities promised Disney they would find other retail or entertainment anchors, they were having trouble getting the right deal, Gilmartin said. Forest City was offered a chance to develop a site near Eighth Avenue if it could land two major tenants.

Gilmartin said she and James Stuckey, an executive vice president and director of commercial and residential development at Forest City, entered hard negotiations with Madame Tussaud's Wax Museum and AMC Entertainment.

"We spent every waking moment to negotiate a deal with them to be anchors for a 360,000-sq.-ft. development opportunity," she said.

In the end, both signed on to use 150,000 sq. ft. of the complex, which helped the government deliver on its pledge to Disney.

The $300 million entertainment, retail, and restaurant complex ended up including the 25-story, 444-room Hilton Times Square hotel and involved a notable construction effort that restored the Liberty and Empire theaters and the façade of the Harris Theatre. To accommodate the 25-screen AMC movie theater, Forest City jacked the historic 3,700-ton Empire Theatre to a new location 138 lateral ft. away by building a rolling platform beneath the structure's foundation and transporting it via pile-supported tracks to its new location.

Like Times Square, Downtown Brooklyn had degenerated in similar fashion by the mid-1980s into "a very trashy and scary place," said Jane Marshall, senior vice president for commercial development at Forest City. "The east side was the worst precinct in the city."

Yet Forest City saw potential there, too, eventually developing its ambitious 16-acre, $1.5 billion MetroTech Center there over 18 years.

"This story really begins with Bruce Ratner's vision for a neglected borough," Marshall said. "It also hinged on an opportunity presented by [former mayor] Ed Koch's concern about jobs leaving New York City for other states. MetroTech Center fit with Koch's dream and Bruce's vision."

The development begun in 1987 culminated last year with the opening of 330 Jay Street, also known as 12 MetroTech Center. The $600 million, 1.2-million-sq.-ft. steel-frame building houses the Kings County Family Court and New York State Supreme Court, though originally it was planned for commercial offices, Marshall said. The eventual use came about because the developer was struggling to find an anchor tenant and the city was in a similar lurch for a courthouse site.

"We're very good at building to suit needs," Marshall said.

The building, on which work began in October 2001, houses the court facilities on the lower 25 floors and has commercial tenants leasing the upper five floors.

Forest City saw yet another opportunity with Atlantic Terminal, a complex completed in 2004 on a 3.6-acre parcel of land in a previously decrepit area. The complex - built atop one of the city's busiest transit terminals, where the Long Island Rail Road and nine New York City Transit subway trains converge - features a $114 million, 400,000-sq.-ft. office property built over a four-story, $120 million, 471,000-sq.-ft. retail podium.

And as with MetroTech Center and West 42nd Street, the Atlantic Terminal project brings synergy between what's good for the company and what's good for the city, Marshall said.

"The company is very good at identifying opportunity and highest and best uses of property," she added. "We always want to be consistent with public policies the city is promoting."