Skip to main content

Featured Post

Atlantic Yards/Pacific Park graphic: what's built/what's coming + project FAQ (pinned post)

Flashback: how Forest City's then-CEO Gilmartin, on podcast, spun the arena as good neighbor, housing catalyst (plus Gehry renegotiation, NY Times lesson)

I recently listened to the 3/22/17 Leading Voices in Real Estate podcast interview with MaryAnne Gilmartin, then CEO of Forest City Ratner, to be renamed Forest City New York later that year. 

Most of the interview, by Matt Slepin, covered professional and biographical matters covered in other interviews/podcasts--real estate as "Rubik's Cube," comfort with uncertainty, "I always say 'I slay the dragon every day'"--but a couple of things stood out.

About the arena

After host Slepin asked placemaking, that gave Gilmartin entree to talk about "Pacific Park Brooklyn, which is a neighborhood that we've been creating for well over a decade... there's such responsibility on the part of the developer to build in one of the finest neighborhoods in the country at the confluence of some of the most historic and deeply diverse neighborhoods in Brooklyn."

She said that meant not just creating a "great place," but also "weaving this new place into the rich neighborhoods that surround it, landing an arena in the heart of historic Brooklyn and making it work in a way that it seems as if it was always there."

"These are very very difficult, difficult challenges, she said, "and so I'm really proud of the fact that the arena, which is a very good neighbor and a big part of this downtown Brooklyn experience now, has really done good things for the community despite the fact that it was feared and reviled by many."

Well, the arena didn't cause the carmageddon or deep ripple effects that people feared, but, as I've written that was in part because the arena was downsized, four towers were not built simultaneously, and New Jersey-based fans of the Nets, once expected to drive in robust numbers, fell away. It's certainly not been a "very good neighbor" to the immediate neighbors, given the widespread illegal parking and idling.

"There are many many ways in which that building could have failed the community, it could have failed the company," she said, "and it could have failed the basketball team it was both for, but in in in our commitment to great architecture, and our commitment to getting it built and finishing it and not cheaping out and not ignoring quality of life issues, we were able to deliver a world-class building with an exceptional experience for people in the building and outside the building."

To the latter, she said, "you can see the scoreboard from the subway entrance, when you pop up out of the subway, if you look through Barclays, you can see the score of the game. That doesn't happen in a typical arena in America." Nor did it happen at Barclays, really, since advertising has long obscured the view.

The big picture: arena helping housing?

Host Slepin asked about the justification for putting in extra money to make the arena work--did the "return come back," or did it come in the next phase.

Gilmartin first noted that "some public subsidy" helped with infrastructure--she didn't mention how it also helped with land acquisition--but suggested that "the brand of Brooklyn" helped deliver revenue, by signing Barclays as for naming rights sponsor, or raising "the value of the basketball team because it played inside of this building in this market." 

The latter, actually, helped Mikhail Prokhorov--who later sold the team and arena company to Joe Tsai at a huge premium--far more than it helped Forest City.

"We built a very successful arena," Gilmartin said, "I would tell you that, this is public information, we didn't make oodles of money, but in many ways that arena was the cornerstone of a project that would follow, which is the work of the day, which is the 6,430 units of housing, of which 2,250 are affordable, and so we didn't necessarily want to laugh all the way to the bank on the arena, it was really important to kick off the project, and in the subsequent verticals we're going to make some returns that we set out to make."

That was hubristic, given that Forest City had already seen its modular gambit fail, and sold 70% of the project going forward to Greenland USA at a loss, and would sell nearly all the rest to Greenland. And in 2017 Gilmartin had to be planning, or even negotiating, her exit from Forest City, announced in early 2018.

"So that's again about the long haul," she said, "and not thinking short-term and building a forgettable arena, because by building a high-quality arena with a beautiful green roof we've enhanced the value of all of the towers that we will build around it."

Wait--that "beautiful green roof" was more a rescue job, tamping down bass that was escaping from the building during bass-heavy concerts, than a restoration of a plan for greenery.

How 8 Spruce Street became, fee-free, "New York by Gehry"

Gilmartin brought up the saga of 8 Spruce Street, the 76-story Frank Gehry-designed residential tower in Manhattan's financial district. She noted that Forest City had contemplated stopping halfway to limit the company's financial exposure, but didn't mention how that was used to renegotiate with the unions.

She recalled telling Gehry of the possibility of decapiting his tower, and his willingness to try to make it work. She brought up the issue of his royalty: "And we were being basically charged for the benefit of using Frank's name if we were to include it in the name of the building."

"'So Frank, if you could give us your brand, and we could use that with reckless abandon, we might be able to help marketing,'" she recalled, "and he said, 'MaryAnne, I will babysit for people live at the top of that tower if you can do this.' So Frank really did deliver his part in making sure that that beautiful iconic building got built."

That's interesting. In his biography of Gehry, Building Art, Paul Goldberger wrote that Gehry's firm added a specific "design fee" for his personal involvement, but he didn't mention that 8 Spruce Street renegotiation. From the book:
After firing him from Atlantic Yards, [developer Bruce] Ratner was doing all he could to connect his name to Gerhry’s in a different way. He had called the new Lower Manhattan tower “New York by Gehry,” agreeing with his marketing advisers that he was selling Frank Gehry as much as anything else at 8 Spruce Street… There had never been a Frank Gehry apartment tower in New York before. There had never been a Frank Gehry skyscraper anywhere before, for that matter.
Learning from the New York Times

Gilmartin recalled winning the competition to build the new New York Times headquarters, the deal that vaulted her into prominence.

"Any time we had a milestone event, the New York Times would call us to the Eagle Room"--the executive dining room--"and they would toast the event, and we were always about 'what have you done for me lately?'... The New York Times taught us that you need to stop and mark the moments, and that that's what gives people the drive and the hope, and the inspiration to keep plowing forward..."

She continued: "They were the alpha partner, obviously. They were the New York Times. They were the Grey Lady. They had triple-A rated credit at the time... so when they called, we came. Bruce [Ratner] and I would head up town... They made it part of our ritual, and it's a ritual that I now follow with my team members, many years later."

Comments