Skip to main content

Ratner hindsight: might have passed on Atlantic Yards, as it "economically... didn't turn out as well as we expected"

Bruce Ratner, second from left
There are some very interesting nuggets in the Crain's New York Business Hall of Fame interview with Bruce Ratner, who's among five business leaders who have transformed the city in their professional work and in their civic and philanthropic activities."

(Here are the 2014 and 2015 inductees, which include developers Steve Ross and Steve Roth.)

Somehow the article does not contain that piquant New York Times observation, in 2012, about "his reputation for promising anything to get a deal, only to renegotiate relentlessly for more favorable terms."

Asked if he knew when he was going to be "really successful in real estate," Ratner said every project poses a challenge and "Atlantic Yards is wonderful, but economically it didn't turn out as well as we expected."

Additionally, he said, according to Crain's:
Ratner’s Atlantic Yards development, which has since been renamed Pacific Park, has been less profitable than he originally imagined. If he knew the true economics at  the outset, he said, he would probably have passed.
Verrry interesting. Surely Ratner is not reaping what he once expected.

Economics in flux

However, the "true economics" have been in significant flux, related to the very long time it took to move the money-losing Nets, which relates to how he managed the Atlantic Yards proposal, and the opposition. It also relates to his parent company's unwillingness to hold onto--and invest in--the team until the value increased upon the Brooklyn move.

Similarly, if Forest City's "revolutionary" modular construction gambit had succeeded, Ratner would be crowing about having created a new business line.

Regarding the project as a whole, surely Ratner has projected the potential returns from his company's 30% share in the non-arena (minus the B2 tower) project, given the sale to 70% joint-venture partner Greenland Holdings, and they're less than once hoped.

But Atlantic Yards/Pacific Park is by no means over, and the potential returns from condos, as well as the rising levels of affordability in "affordable housing," continue to make the bottom line uncertain.

And just because Forest City is not making the money once expected, that doesn't mean they're not cheating, as I've documented.

When Ratner says "Atlantic Yards is wonderful," that sounds like the project is done. It very much remains in flux, and his company continues to jockey for future advantage, including the right to move a huge amount of bulk to build a giant two-tower project on Site. 5.

And the impacts on residents continue.

More back story

Asked how he became interested in Atlantic Yards and the Barclays Center, Ratner responded:
I believed it would be great for Brooklyn to once again have a team and sport to rally around, and what better sport than basketball? I had a friend who was a part-owner of the New Jersey Nets and had heard they wanted to sell, so I put together a group to buy the team and build the arena. Residential was to make the economics work.
Bruce Ratner, a guy who barely understood basketball? I'll go with cousin Chuck Ratner, then CEO of parent Forest City Enterprises, who on 9/9/05 told investment analysts:
"I will confess that it was less than two or three years ago we were sitting around in New York wondering where the next deals were going to come from. We had finished a whole bunch of office and we completed MetroTech and we didn't have the next great site in Brooklyn. That was one of the reasons we got so aggressive and creative, Bruce and his team did in this Atlantic Yards project. We saw that land sitting there for this last 10 years, realizing it would be a great opportunity if somebody could turn it on."
Note that Bruce Ratner said "Residential was to make the economics work," without mentioning--at least in the published version of the interview--office space, which was a huge part of the original plan.

Asked if the criticism of Atlantic Yards ever got to him, he said it did, at the beginning, "because I wasn't used to being publicly criticized. As the Con­sumer Affairs commissioner you only do good."

C'mon, he was a developer for a long time, facing lawsuits from people in his path and also rivals, long before.

Missing from the Q&A, of course, are any questions about, say, selling the arena and team to Russian oligarch Mikhail Prokhorov, or selling the rest of the project to Shanghai government-owned Greenland.

Ratner mellowed

There's a valedictory feel to the interview, in which Ratner, asked what he'd do differently, says, "Every time I yelled at someone I would take it back. I wouldn't have yelled. I'm sorry."

Interesting. Does that include the not-so-mensch-like behavior toward one-time partner Skanska? Or the "screaming" at underling Bruce Bender? Or how, as the Times reported, he "loudly berated Rafael E. Cestero, then the housing commissioner, and Seth W. Pinsky, president of the city’s Economic Development Corporation, after not getting his way."

Asked about regrets, he said, "I have had to let lots of people go because of recessions," and cited especially long-time employees.

I'm not sure he can blame it solely on the business cycles. In some cases, it surely relates to his company's own decisions.

Asked at the end to a solution to people's economic fears, Ratner cited the trend in which companies like Facebook grow in value but have far fewer employees than typical valuable companies. No solution, though.

Finally, the interview states that he "currently lives in the East Village." Given that Ratner is known for living in an Upper East Side townhouse, presumably that's related to his marital split.

And more...

Check the Crain's Insider for an odd and kinda nasty way to link this:


Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

No, security guards can't ban photos. Questions remain about visibility of ID/sticker system.

The bi-monthly Atlantic Yards/Pacific Park Community Update meeting June 14, held at 55 Hanson Place, addressed multiple issues, including delays in the project, a new detente with project neighbors,concerns about traffic congestion, upcoming sewer work and demolitions, and an explanation of how high winds caused debris to fly off the under-construction 38 Sixth Avenue building. I'll have more coverage.
Security issues came up several times at the meeting.
Wayne Bailey, a resident who regularly takes photos and videos (that I often use) of construction/operations issues that impact residents, asked representatives of Tishman Construction if the security guard at the sites they're building works for them.
After Tishman Senior VP Eric Reid said yes, Bailey asked why a guard told him not to shoot video of the site, even though he was on a public street.

"I will address it with principals for that security firm," Reid said.
Forest City Ratner executive Ashley Cotton, the …

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlantic Yards/Pacific Park graphic: what's built/what might be coming (post-dated pinned post)

Click on graphic to enlarge. This is post-dated to stay at the top of the blog. It will be updated as announced configurations change and buildings launch. The August 2014 tentative configurations proposed by developer Greenland Forest City Partners will change, and the project is already well behind that tentative timetable.

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…