Boiling Development into a Science

by Tom Stabile

A slate of $4 billion in projects set to break ground this year sounds like a government agency capital plan, but it happens to be 2006 for Brooklyn-based Forest City Ratner Cos.

The company is co-developing the 52-story, 1.6-million-sq.-ft. New York Times building in Manhattan and planning to launch a 9.1-million-sq.-ft., mixed-use project with a 20,000-seat arena in Brooklyn; a 2.5-million-sq.-ft. retail, commercial, and residential complex on 81.4 acres in Yonkers, N.Y.; a 75-story mixed-use Lower Manhattan tower; and a 500,000-sq.-ft. East Harlem retail complex.

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"The size of the pipeline doesn't scare us," said Matthew Messinger, senior vice president for investment management at Forest City. "We have the capacity from an infrastructure and financial standpoint as long as it's consistent with our core competencies and risk levels where we like them. The current mix happens to be big, longer-term projects."

Forest City Ratner divides its more than 350 employees into development, construction, and property management teams. Messinger is on a strategy-forming and problem-solving unit that dives into a particular project's regulatory or financing issues.

"Depending on the issue, we'll ask, 'Why would we put that much money into a deal?'" Messinger added. "'Are we relying too much on one tenant? Is there an engineering solution?' We are figuring out how to mitigate risk and improve performance."

The firm taps Forest City Enterprises, its Cleveland-based parent, for capital but sticks to projects close to home, said MaryAnne Gilmartin, executive vice president for commercial development and leasing.

"They are our major source of equity for projects," she added. "We've learned that the New York metropolitan region is our real base of business, and to take on a project beyond that is not good because our projects are very intense."

But Forest City Ratner also partners externally. It is partnering with a Long Island developer on the East Harlem retail center and is co-developing its Times Square tower - where it plans to lease speculative office space on the upper floors - with the New York Times Co. and ING.

Forest City's professional approach was a big selling point when the Times sought a partner, said David Thurm, vice president and chief information officer for the newspaper company, who oversees real estate.

"We wanted to own our building, but what we needed would not have used the full development rights on the site or given us room to grow," Thurm added. "We were looking for a development firm to guide us through this process but also be a partner."

The Forest City choice has been fruitful, with the companies agreeing they want a signature building at a reasonable cost, Thurm said.

Forest City Ratner's construction team is also active at early stages of development. The team of 40 architects, engineers, and construction managers - led by Robert Sanna, executive vice president and director of construction and design development - handles preconstruction, cost estimating, forecasting, and construction management.

The team managed construction itself on new Brooklyn office buildings for Empire Blue Cross Blue Shield at 15 MetroTech Center in 2003 and the Bank of New York at Atlantic Terminal in 2004. In both cases, it managed them internally because of tight development timelines.

But the unit also serves as a go-between for the development staff and outside contractors, such as Turner Construction, which managed construction on 12 MetroTech Center, completed last year, or AMEC Construction Management, which is overseeing the New York Times tower. It now is coordinating preconstruction with Tishman Construction on the East Harlem retail center and Kreisler Borg Florman on the 1-million-sq.-ft. Beekman Tower in Lower Manhattan.

Sanna said outside contractors bring expertise beyond Forest City's range of experience, such as residential building or the Brooklyn arena. For the relocation of rail infrastructure at Atlantic Yards, it hired a transportation specialist, Philadelphia-based McKissack & McKissack.

"Ordinarily, a third-party CM talks directly to the client, but sometimes the language doesn't fit," he said. "Development is an investment instrument. The closer we are to our product, the better the quality."

Sanna's team plays a similar role with architects, such as Pelli Clarke Pelli Associates of New Haven, Conn.; New York's Swanke Hayden Connell; and Italy's Renzo Piano [see Architect story].

"We sort out the technical decisions to keep the deal flowing," Sanna said. "For the Times tower, it was demystifying Renzo's wall system."

Sanna's team also is the link for engineering firms such as Thornton-Tomasetti Group and Mueser Rutledge Consulting Engineers, both of New York. Mueser has worked on nearly every Forest City Ratner project since the 1980s, said Joel Moskowitz, a partner in the firm.

"They have that capability and knowledge and experience to understand the technical information we're bringing to them," he added.

All of these elements usually are in gear long before a shovel hits the ground. Gilmartin said construction is usually when things calm down.

"Some projects have the longest beginnings you can imagine," she said.