FEATURE ARTICLE, DECEMBER 2004

THE VISION OF NEW YORK RETAIL
Forest City Ratner is creating new opportunity for retailers.
Jaime Lackey

In New York City, big box retailers are becoming more and more flexible in order to squeeze themselves into the biggest retail market around. They realize the value of the demographics that New York City offers. Developers and brokers are working with retailers to make unlikely sites work.

Forest City Ratner built a platform over several New York rail lines in order to develop Atlantic Yards in Brooklyn.

One developer in particular — Brooklyn, New York-based Forest City Ratner Companies — is taking creative development to a new level in New York. In Brooklyn, Forest City Ratner is creating space for retailers out of thin air.

The company recently built Atlantic Terminal, a retail and office development located over six active rail lines. The company built a platform over the tracks and then built Atlantic Terminal on the platform. Swanke Hayden Connell and Hugh Hardy of Hardy Holtzman Pfeiffer designed the project, which opened in July and features 470,000 square feet of office space over 370,000 square feet of retail space.

“We had to work with the MTA/LIRR [Metropolitan Transit Authority/Long Island Railroad] to do construction work above active rail lines and basically create the land,” says Richard Pesin, executive vice president and director of retail development with Forest City Ratner. “It is the same thing with Atlantic Yards. The land didn’t really exist.”

Atlantic Yards, which is adjacent to Atlantic Terminal, is a $2 billion project that will feature a 20,000-seat arena for the NBA Nets in addition to residential and office uses. Frank Gehry is designing the project, which is scheduled to open in 2008.

Ridge Hill Village in Yonkers, New York, will feature 1.2 million square feet of retail space and 800 residential units beside 150,000 square feet of existing office space.

The location is excellent. This is where the Long Island Railroad meets 10 subway lines. Brooklyn has approximately 2.5 million people, and more than 30 million passengers pass through Atlantic Terminal in a year. The demographics around Atlantic Terminal and Atlantic Yards are impressive and improving. There are more than 130,000 people in a 1-mile radius; in 2004, the average household income within that 1-mile radius was $73,342, up from $41,764 in 1990.

In addition to growing demand for retail, Pesin notes that the outer boroughs have been underserved for years. He notes, “Brooklyn in particular has had a great influx of new housing and strong growth in incomes and population. It has been tough for retailers — especially the larger format retailers we deal with — to understand that [Brooklyn] is where they should be. Once they realize they should be there, it is hard to find the sites.”

Bank of New York occupies the office space at Atlantic Terminal and retail tenants include Target, Daffy’s, DSW, Chuck E. Cheese, The Children’s Place and The Men’s Warehouse. Atlantic Terminal’s Target is the second Target in Brooklyn and the closest Target to Manhattan; there are also two in Queens.

While Pesin admits that difficulties with environmental issues, structural issues and approvals are sometimes magnified in an urban setting, he says that the projects are definitely worthwhile. “We think [urban retail development] has been a neglected niche. It is an underserved market and we’re filling a void. We think there are strong barriers to entry that protect us. This is our neighborhood. We know it well. It is very expensive to get into this. Now, we have a lot of experience at it.”

He also stresses, “Retail has to be designed more efficiently to cover the cost of land in an urban setting. You just don’t have as much spare land to deal with. Structured parking is necessary.”

In addition to the Atlantic Yards project, Forest City has several New York projects underway.

Forest City Ratner and Blumenfeld Development are developing East River Plaza, which will be the first big box center in Manhattan.

In conjunction with Phillips International, Forest City Ratner is developing Mill Basin Center at Flatbush Avenue and Belt Parkway in Brooklyn. The power center will feature 120,000 square feet of retail space. The center will break ground in late 2005 and will open in 2006.

In Manhattan, Forest City Ratner is making use of the current adaptive reuse trend to create space for retailers. In a joint venture with Long Island, New York-based Blumenfeld Development Group, Forest City Ratner is developing the former site of the Washburn Wire factory. The project, which will be named East River Plaza, will be located on FDR Drive between E. 116th Street and E. 119th Street. Featuring 490,000 square feet of retail space in five levels on 6 acres, East River Plaza will be the first big box retail center in Manhattan. An attached parking garage will feature 1,248 parking spaces. Tenants at the center will include a mix of national big box tenants.

In Yonkers, Forest City Ratner is developing an 80-acre site at Interstate 87 and Sprain Brook Parkway. The town center development, called Ridge Hill Village, will feature 1.2 million square feet of retail space and 800 residential units beside 150,000 square feet of existing office space. Part of the existing office space will be converted to retail space. The retail portion of the project will open in late 2006. Pesin says, “The retail component will have a movie theater, probably a Target and a department store, restaurants, a handful of large retailers and many small retailers that you’d find in upscale lifestyle centers around the country.”

Forest City Ratner is master-planning the development and will develop the retail component but may sell the residential component to a condo developer.

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