For almost two decades, Bruce Ratner, president and chief executive of Brooklyn-based Forest City Ratner Cos., has been the stealth mogul — quietly amassing a real estate empire with 11 million sq. ft. of office, retail, residential and hotel space in New York City.
But Ratner became a household name last fall, when he unveiled his master plan not only to rebuild a shabby section of Brooklyn but also to reinvigorate the entire borough. The key to the scheme was to buy the New Jersey Nets basketball franchise for $300 million and transplant it to a $2.5 billion mixed-use project designed by the acclaimed architect Frank Gehry.
The centerpiece of a 21-acre complex, called Brooklyn Atlantic Yards, is a $435 million, 800,000 sq. ft. arena that seats 19,000. The rest of the plan, to be developed over a 10-year span, includes four office towers with 2.1 million sq. ft. of space, 300,000 sq. ft. of retail, 4,500 units of affordable, middle-income and market-rate housing, and six acres of parks.
Developing a project of that scope — not to mention owning a pro sports team — is a far cry from the career in public interest law that Ratner once envisioned. Although Ratner, who rarely speaks to the press and declined to be interviewed for this story, is a member of the Cleveland family that built thefirm Forest City Enterprises into a $1 billion publicly traded company, he never planned to work in real estate.
After graduating from Harvard College and Columbia University School of Law, he headed for public service. “I had no interest in business,” he told New York magazine, but “family finances and so forth” led him to it. “My intention was to go into this for a short time,” he said.
That was in 1985, when Ratner established his company as Forest City Enterprises' New York affiliate. He headquartered the firm and has since developed the greater part of its portfolio in Brooklyn. With 2.5 million residents, it is the most populous of New York City's five boroughs. In those days, Brooklyn was struggling, as were many urban centers — but it had the added burden of operating in Manhattan's shadow. Ratner nonetheless recognized what it might someday be.
“Bruce is a very persistent and focused visionary,” says Glenn Markman, executive director at Cushman & Wakefield in New York. “He saw something in Brooklyn few people saw, and he saw it 20 years ago.”
Urban Renewal Endeavors
Ratner has spent those years on a crusade to revitalize Brooklyn's landscape. Although he recently expanded into Manhattan with several projects, including a new headquarters for the New York Times, a 1.5 million sq. ft. tower by the renowned architect Renzo Piano, he is most widely recognized for his contribution to Brooklyn's renaissance.
In 1988, when Ratner's firm opened its first major project downtown, One Pierrepont Plaza, the 650,000 sq. ft. building was the first new officethe area had seen in 25 years. He followed it with a vastly more ambitious project: the $1 billion MetroTech Center, a 16-acre commercial and academic complex built between 1988 and 2003, a few blocks north of the Brooklyn Atlantic Yards site. Its 14 buildings, containing 7 million sq. ft. of space, are now fully occupied by companies like Bear Stearns and J.P. Morgan Chase.
MetroTech's modern facilities, blue-chip tenants, proximity to Manhattan and competitive prices all helped put Brooklyn on the map as a corporate destination, especially for back-office functions, says Abe Gross, senior associate broker with CB Richard Ellis in New York. “MetroTech gave Brooklyn a whole new outlook.”
Now downtown Brooklyn is New York City's third-largest business district, after Midtown and Lower Manhattan, with nearly 16 million sq. ft. of office space. And, despite the upswing in construction, Brooklyn ended January 2004 with just a 2% vacancy rate for Class-A office space, according to Cushman & Wakefield.
The impact of Forest City Ratner's efforts on the corporation is harder to gauge, as Forest City Enterprises reports only companywide figures and does not break out its business groups' results. The firm, which is controlled by Ratner's relatives but publicly held, has $5.9 billion in assets and more than $1 billion in revenues.
The Arena Complex
In size, expense and sheer audacity, Ratner's proposal for Brooklyn Atlantic Yards eclipses anything Forest City Ratner has undertaken to date. Its combination of uses would help create “a downtown that doesn't roll up its sidewalks at 5 p.m.,” says Kenneth Adams, president of the Brooklyn Chamber of Commerce.
While the residential and office development is essential to the project's success, it's the arena and sports franchise that provide “the wow factor,” says Bruce Bender, Forest City Ratner's executive vice president for government and public affairs.
Like Madison Square Garden, which rises above Pennsylvania Station, the arena would benefit from its proximity to mass transit. It would sit atop Atlantic Avenue Terminal, New York City's third-largest transit hub. The nine subway routes and the Long Island Railroad that converge there would provide easy access to spectators, workers and residents.
But the area remains scarred, and Ratner intends the Brooklyn Atlantic Yards project to heal it. A three-block-long rail yard of exposed, below-grade railroad tracks stretches from the transit hub and business district past garages and warehouses into low-scale, largely residential communities.
Under Ratner's proposal, the railroad tracks would be shifted and decked over to create a building site, and the neighborhoods would be stitched together by buildings and parks.
A Tactical Approach
Ratner's vision of Brooklyn's landscape has been shared by few in his field. The only other major developer to dedicate himself to the borough was Fred Trump, and he was active a generation ago, notes Sharon Zukin, professor of sociology at Brooklyn College. Taking advantage of subsidies offered by the Federal Housing Administration and other agencies, Trump built thousands of affordable apartments in Brooklyn, Queens and Staten Island.
“Since Donald Trump's father died, no other big developer [besides Ratner] has been active in Brooklyn,” Zukin says. Although Brooklyn on its own would rank as the country's fourth-largest city, it “has been considered a second city, relegated to low-status manufacturing and residential use. It's been hard to attract developers with imagination and capital to the borough,” Zukin adds.
Forest City Ratner thus avoided direct competition by focusing on Brooklyn. The strategy provided another boon: the tax exemptions and other incentives New York offered to develop its outer boroughs. Following in Fred Trump's footsteps, Ratner made a specialty of developing projects that rely on public financing or subsidies.
“Their public-private partnerships are the best in the business,” says Rich Moore, senior real estate analyst at McDonald Investments, referring to Forest City Enterprises. “Cities know their expertise and want them, so they work all the tax incentives and housing credits.”
They would have to, it seems, to get Brooklyn Atlantic Yards off the ground. Although Forest City Ratner has said the $2.5 billion project will primarily be privately financed, it is seeking substantial aid from city and state agencies, including the diversion of the arena's sales and income taxes to pay for its $435 million construction costs; $150 million for infrastructure improvements and the relocation of the train tracks; and the donation of land and rail yard air rights, valued at $500 million.
Controversy swirls around the financing issues, but Ratner has nevertheless won the backing of leading politicians. “The mayor, the governor, a senator, the comptroller — all of us are in support,” says Borough President Marty Markowitz. “I have every confidence it will go through.”
Ratner's record in Brooklyn has earned him serious clout. “Ratner has the inside track on these things because he has developed enormous credibility with successful developments at MetroTech and elsewhere,” says Robert Yaro, president of the Regional Plan Association, a not-for-profit organization dedicated to the New York tri-state area. “And they were the first ones in. Brooklyn was a risky place then.”
Netting the Nets
Ratner's confidence in the outcome of his Atlantic Yards proposal is evident in his hardball pursuit of the basketball franchise. Without an arena to house them in or even a memorandum of understanding with the city, Ratner and his group of investors paid a premium for the Nets — double the team's 1998 purchase price and substantially higher than Forbes magazine's recent valuation of the team at $218 million.
Yet the proposal faces numerous obstacles. First of all, the NBA has to approve both the acquisition and relocation of the Nets franchise. The land has not been assembled, and the site has yet to undergo environmental review. The hundreds of residents and businesses that would be displaced promise to press lawsuits.
Meanwhile, other residents are concerned about the project's enormous scale. And there's the ongoing debate over financing. Still, most observers believe that Ratner will address the public's concerns, revise the plans, compensate all those evicted, as he did at MetroTech, and, ultimately, erect Brooklyn Atlantic Yards. “There are understandable concerns, but manageable ones,” says Adams. “This is going to get built.”
Nancy Cohen is a New York-based writer.