Developing Creativity
Forest City is developing a number of projects across the country, from 120,000-square-foot community centers to town centers to master planning hundreds of acres involving all property types. Development is in the roots of this venerable company, and it is leading the charge to find new and innovative ways to change the business.
Randall Shearin

Garnering a good reputation in the shopping center industry isn’t easy. You have to develop a good product, and go into it with the attitude that you are going to own the development forever. For Forest City Enterprises, that attitude comes naturally: the company intends to own everything it builds for the foreseeable future. With more than $10 billion in real estate holdings, Forest City is one of the largest public real estate companies in the United States. And retail is its largest business.

Based in Cleveland, Forest City Enterprises has three business segments. Its commercial group handles all the company’s retail, office and hotel developments. Its residential division handles its multifamily properties. That division also handles large-scale projects, like the company’s masterplanning of large projects like the 4,000-acre Stapleton in Denver and 9,000-acre Mesa del Sol in Albuquerque. The residential division also handles the company’s military housing business, which includes the company’s largest project, a major development with the Navy in Hawaii. The third division is the land development group. That division purchases land and then sells it to home builders in different areas of the country.

“With our diversification strategy we think we can take major projects of any size,” says David J. LaRue, president of Forest City Commercial Group. “While we do these major projects, we are able to do that while we focus on our core business, which is retail development and operations.”

Forest City is underway with many retail developments across the U.S. It is also working hard at being a responsible developer; it has created a sustainability department to develop best practices that reach out to all in the company. Expanding beyond our shores, Forest City is also looking to Europe and Asia for future growth.

East Coast

Forest City opened The Promenade Bolingbrook in April 2007 in Bolingbrook, Illinois. The 700,000-square-foot center is anchored by Macy’s and Bass Pro Shops.

Forest City’s East Coast division is just coming off the successful opening of The Promenade Bolingbrook, which opened in April 2007 in Bolingbrook, Illinois. The 700,000-square-foot center is anchored by Macy’s and Bass Pro Shops, and also contains more than 450,000 square feet of small shop retail and restaurants. While it’s the most recent center to open, it is one of a number that Forest City has been working on in recent years.

Forest City currently has three projects under construction east of the Mississippi. The first one to open will be The Shops at White Oak Village, in Richmond, Virginia, which will open this fall. This center will be a sister center to Forest City’s Short Pump Town Center, a regional outdoor mall the company opened in 2003.

“The Richmond market was really underserved before we came to town,” says Brian J. Ratner, president, Forest City Commercial Group, East Coast Development. “The close-in market, which had great demographics, was vastly underserved. We started talking with retailers and realized the opportunity.”

The Shops at White Oak Village is a combination of a lifestyle center and a power center. JC Penney, Lowe’s Home Improvement Centers, Sam’s Club, Circuit City, Target and Ukrop’s will anchor the retail portion. A Hyatt Place hotel will also be located at the center, which is currently 93 percent pre-leased.

Next, the company is focusing on The Shops at Wiregrass, a new regional center developed north of Tampa, in Wesley Chapel. Macy’s, Dillard’s and JC Penney will anchor the center. JC Penney opened several years ago, and the rest of the 350,000-square-foot center will follow in October 2008.

Forest City will open The Village at Gulfstream Park in Hallandale, Florida, in February 2009.

“Florida is a very desirable market, given current conditions in the housing markets,” says Brian Ratner. The company plans to open The Village at Gulfstream Park in February 2009. Located at U.S. 1 at Hallandale Beach Boulevard in Hallandale, Florida, the 350,000-square-foot center is comprised mainly of small shops adjacent to the Gulfstream Park thoroughbred horse racetrack. Gulfstream Park is owned and operated by Magna Entertainment, who is Forest City’s partner in the project. There is also a hotel component to the project, and a residential tower is planned in the future. While specific retailers haven’t been announced, Forest City is planning a cinema and an upscale grocery store. Forest City also holds entitlements that will allow it to eventually build 750,000 square feet of retail and 1,500 condominium units, and hotel and office space.

A rendering of The Village at Gulfstream Park. Forest City is developing the project next to a thoroughbred racetrack in Hallandale, Florida.

“The area has a high demand for restaurants and better retail,” says Emerick J. Corsi, executive vice president of development for Forest City’s commercial division. “Most of the small shops will be occupied by upscale retailers.”

“We think we are going to get a good combination of some of the better lifestyle tenants and international tenants because the project is located in such a dynamic area,” says Brian Ratner.

West Coast

Forest City has been working just as hard in the west as it has in the east. The company has opened several retail and mixed-use projects over the past 3 years. Each one has helped further Forest City’s commitment to the industry by forging new innovations.

Forest City’s Victoria Gardens project in Rancho Cucamonga, California, has been lauded for its mix of retail and civic uses in an open-air format.

Victoria Gardens, a mixed-use town center in Rancho Cucamonga, California, has helped Forest City earn a reputation as a leader in open-air centers. Victoria Gardens is a 1.2 million-square-foot open-air mall that combines its retail and restaurant uses with civic uses like a library, police station, and performing arts theatre.

In 2006, Forest City also opened Simi Valley Town Center with Corti-Gilchrist Development in Ventura County, California. The open-air center is anchored by two department stores, as well as restaurants and small shop space.

Forest City teamed with Westfield on the development of Westfield San Francisco Centre in downtown San Francisco (pictured). The two developers are also teaming to redevelop Metreon, a nearby center.

Forest City teamed with Westfield to develop Westfield San Francisco Centre, a major urban retail destination in downtown San Francisco. The multi-level center features state-of-the art retail design, a food court, upscale retailers and is anchored by an AMC Theatre, Bloomingdale’s and Nordstrom. In Temecula, California, Forest City redeveloped The Promenade at Temecula in 2002. In 2009, it will open a significant expansion of the center, which is currently anchored by Sears, JC Penney, Macy’s and Edwards Cinemas. The expansion, which provides an open-air lifestyle wing for the center, will add 126,000 square feet of retail and restaurants. Forest City also opened The Shops at Northfield at Stapleton in Denver in 2006. The center was the first core and shell LEED silver certified town center project in the country.

Forest City will be opening The Orchard Town Center in Westminster, Colorado, this spring.

Forest City is opening its newest western project, The Orchard Town Center, in Westminster, Colorado, this spring. A lot of what the company learned at Victoria Gardens is being applied to this center. The 1 million-square-foot center is anchored by Macy’s, JC Penney and Target, as well as a 12-screen AMC Theatre. Designed by a team of architects including Cleveland-based KA Inc., Field Paoli, and Elkus Manfredi, the center uses prairie architecture.

“Every project is unique, so you can’t repeat any project,” says Brian M. Jones, president and chief executive officer, Forest City Commercial Development, West Coast Division. “You try and take what you can from the successful projects and improve upon them, but make sure each center is different.”

Forest City has again teamed with Westfield to purchase the Metreon, an urban entertainment center in San Francisco, located one block from San Francisco Centre. The two companies are in the planning phases of the remerchandising of the center.

To add to its western pipeline, Forest City has a partnership going with a landowner in Calimesa, California, to develop a regional center in the future. In Hawaii, Forest City is in the planning stages for an open-air center on Oahu. Forest City is working with a large landowner to create a town center site. The site is just off the H2 Highway, north of Pearl City. As well, in Texas, Forest City is working with General Growth Properties to develop a 1.5 million-square foot regional open-air project in Frisco. The partnership came about when the two companies had options to develop centers on adjacent sites.

“Frisco has one of the best demographics in the Dallas area,” says Jones. “We decided it would be better for us to have a partnership rather than compete. The multi-use center that we’re going to build will include the elements of a regional shopping center, power center, offices and residential.”

Washington, D.C., Region

Forest City became active in the Washington, D.C., area in the 1980s, doing HUD housing projects. The first retail project the company was involved with in the area was Ballston Common Mall in Arlington, Virginia, which opened in 1986. The company then switched gears back to residential, developing a number of assisted living facilities. In the late 1990s, the company realized how underserved the Washington market was from a retail perspective and began looking at mixed-use as a viable property type for development.

Forest City is reusing an historic boilermaker building at The Yards in Washington, D.C., to create retail space.

In 2002, the company became involved in a 42-acre site on the Anacostia riverfront, now known as The Yards. The company plans a massive mixed-use project, including office, retail, residential and other commercial uses, for The Yards. Forest City has already signed 500,000 square feet worth of office leases for the project, which began construction on the infrastructure in 2006. The Yards is located next to the new baseball stadium for the Washington Nationals. There are two residential buildings under development at The Yards. One, which is an adaptive reuse of a building formerly occupied by the U.S. Navy, will contain 170 luxury apartments. The second building, also an adaptive reuse of an historic building, will contain 271 condominium units. A third building will be completely used for retail and restaurants. The first three buildings will begin construction this summer and more than likely open during the third quarter of 2009.

Forest City plans to allow public access to the waterfront along the Anacostia River at The Yards in Washington, D.C.

“Because the first three buildings in the first phase of the Yards are adaptive reuse, they will have history, and they will feel real from day one,” says Deborah Ratner Salzberg, president of Forest City Washington, Inc., a subsidiary of the company’s commercial division. “There will be a real mix of old and new. It will feel like a city.”

The retail portion is located throughout the site, from kiosks in the park, to restaurants and retail shops in the base of office and residential buildings. In all, there will be in excess of 300,000 square feet of retail at The Yards. Forest City is in negotiations with a grocery store and bookstore to locate at The Yards.

Forest City’s Waterfront project in Washington, D.C., is providing retail and office space.

For Forest City, the opportunity to develop the Yards has been an opportunity to add to the history of Washington. Two of the buildings that will be part of the Yards are historic structures, including a boilermaker shop.

“The site hasn’t been open to the public since the 1800s,” says Salzberg. “It has been part of the Navy or U.S. government for many years. Because of the historical nature of the site, we have to have an archaeologist on site. If we find something, proper care of it must be taken.”

Forest City is developing a 5-acre park along the riverfront, and restaurants will locate directly across from the river. Since most of the riverfront in Washington, D.C., is owned by various agencies of the federal government, few parcels are accessible to citizens and visitors.

“The river, long term, is a tremendous draw for the retail and residential projects,” says Salzberg. “We want to bring the public to the river. No one has had access to it for decades.”

Future phases of the project will take it to 1.8 million square feet of office, 2,800 residential units and further retail development. Forest City is developing the $1.7 billion project in a public-private partnership with the Government Services Administration (GSA), the real state arm of the federal government.

“Forest City’s reputation throughout the country is that we have the ability to develop these public-private partnerships,” says Salzberg. “Our public partners respect us. We have a tremendous reputation for integrity and creativity. We also have the ability to deliver these large-scale projects.” 

A rendering of Konterra Town Center, a new mixed-use development that Forest City is in the midst of planning in Prince George’s County, Maryland.

Forest City has another large project underway in the Washington area called Konterra Town Center. The town center is a mixed-use environment that’s part of a larger development called Konterra, just off Interstate 95 in Prince George’s County, Maryland. Forest City is developing the project in conjunction with the landowner, the Gould family. Forest City is charged with building the mixed-use town center, which is currently in the planning stages. Salzberg expects the center will be something along the lines of Forest City’s Victoria Gardens project in Rancho Cucamonga, California. Like Victoria Gardens, Konterra Town Center will serve as a community focal point for its area. Currently, Forest City is in the process of talking to anchors and retailers about the project. Forest City also anticipates residential, hotel and office space as well.

An overview of the Konterra mixed-use project in Prince George’s County, Maryland. Forest City will be co-developing the town center portion of the project with the Gould family.

“Victoria Gardens is a great model for Konterra Town Center,” says Salzberg. “Victoria Gardens had residential around it and really was filling the hole in the middle of the doughnut; at Konterra, we’re starting with the hole and working out.”

Though Konterra Town Center won’t open until late 2011 or early 2012, Forest City is currently in the process of speaking to anchors and retailers about the center.

“We will have some of the best department stores in the country, supplemented by more than 550,000 square feet of small shop space,” says Corsi. “In addition, the office and hotel component of the project is allowing us to take all our expertise at Forest City and creating a city in Konterra. It will, effectively, be another city between Baltimore and Washington, D.C.”

Between the town center and the rest of the masterplanned Konterra project, there will eventually be 12.5 million square feet of development. Forest City’s agreement with the Gould family allows it to develop a maximum of 4 million square feet.

Forest City Ratner

While it acts as a separate entity from Forest City’s commercial division, Forest City Ratner, the company’s New York City-based arm, is incredibly active in retail. The company currently has three major projects underway in the New York area.

For the last 10 years, Forest City Ratner has been known for its work in bringing community and big box retail to the boroughs. The company also received a lot of attention for its revitalization of Times Square in Manhattan. Now, it is applying a combination of its knowledge learned in the boroughs and in Times Square for an exciting project on Manhattan’s Upper East Side. The company is in the process of developing, along with Blumenfeld Development Corporation, on East River Plaza. The 500,000-square-foot vertical power center will be located at 116th Street and FDR Drive. The center will have five stories of retail located on 6 acres. The project will feature Manhattan’s first Target store. Other anchors include The Home Depot and Best Buy. The center will open in 2009.

Ridge Hill Village in Westchester County, New York, will contain 1.2 million square feet of retail, including anchors Whole Foods, National Amusements and L.L. Bean. The center is scheduled to open in the fourth quarter of 2009.

The company is currently under construction with Ridge Hill Village, a mixed-use project in Westchester County, New York. The center will contain 1.2 million square feet of retail, including anchors Whole Foods, National Amusements and L.L. Bean. The center is scheduled to open in the fourth quarter of 2009. The demographics of Westchester County speak for themselves. As one of the most affluent counties in the United States, Westchester County boasts 12 zip codes with an average household income of greater than $230,000, according to the February 2008 issue of Northeast Wealth Management Business.

“There is a large gap of retail dollars leaking out of the area,” says Richard S. Pesin, executive vice president of Forest City Ratner. “The type of sophisticated retail that the area demands is not yet in this market.”

Forest City will open Ridge Hill Village, a mixed-use project in Westchester County, New York, during the fourth quarter of 2009.

Both Ridge Hill and East River Plaza represent more than $1 billion in cost. When developing in dense areas like Manhattan and the other boroughs, Forest City Ratner looks for density and customer access as its primary site locators.

“We also want to go to areas where we can get a site approved,” says Pesin. “While we look at density, we’re looking at sites with good access that can be improved and are affordable.”

Forest City Ratner’s third retail project is a little while from development. The company is working on a project in Mill Basin, Brooklyn. The project is a 120,000-square-foot community center.

Another future project may have some retail. That is the Atlantic Yards project in Brooklyn. That project will contain a new stadium for the New Jersey Nets that will also contain residential space.

Going Green

One focus that Forest City has for the future is sustainability. The company has created an entire division whose mission is to develop ways that the company’s projects — both new and existing — can be more environmentally friendly. Forest City has a triple bottom line approach to sustainability. The company wants to take into account not only the economic position of going green, but also the environmental and social impacts.

The project that got Forest City on the way to sustainability was Stapleton. After all, the project itself was the redevelopment of a former airport. As Forest City began to get involved with the project in the late 1990s, it became more comfortable with the level of sustainability that the city of Denver required in a developer.

“As an organization, we tried to build what was happening at Stapleton, says Jon Ratner, the company’s director of sustainability initiatives. “We created an intra-company council, where we brought in 25 people across the organization to focus on the topic of sustainability that was emerging in Stapleton and our new projects.”

The department of sustainability was created from that initiative. It was created to organize and foster the company’s internal plans around sustainability. The department looks at what each development team is doing with sustainability, and communicates that information across the company so that other development teams can incorporate those ideas into projects.

“We think sustainability crosses a lot of platforms, like quality, durability, safety and performance,” says Jon Ratner. “All of those are elements of our standard approach to development that we’ve been doing for more than 80 years.”

With all of the urban, in-fill, public-private partnerships and economic revitalization projects that Forest City is working on today, it is a natural fit that Forest City also looks to sustainability.

“Since we’re a long term owner, it’s also in our best interest to create the best possible project that we can,” says Jon Ratner. “We feel that building a sustainable project will give us a development that is of the highest quality available, and it will run the most efficiently.”

Forest City has three main goals with regard to sustainability. The first is to incorporate a green building process to its new developments to the highest practical degree. This is largely being accomplished by making sure that new projects are designed using LEED guidelines. The Promenade at Bolingbrook is the latest center that Forest City has opened that was awarded LEED certification. The second is to track, monitor and improve the utility profile of the company’s current portfolio. The third is to make sure that the company is also improving its internal operations so that it is “walking the talk” of being green.

Designing with LEED in mind, Forest City is watching things like storm water runoff, plumbing fixtures, energy performance and building management control.

Forest City will open The Shops at White Oak Village this fall in Richmond, Virginia. JC Penney, Lowe’s Home Improvement Centers, Sam’s Club, Circuit City, Target and Ukrop’s will anchor the retail portion of the project.

On a larger scale, Forest City looks at reusing buildings or facades, as it did in San Francisco Centre and is doing at The Yards. Even in new development, Forest City is able to reuse materials. At the Shops at White Oak Village in Richmond, for instance, the company demolished some old structures at the site, breaking down the masonry and concrete so that it could be reused as road fill. When it buys new materials, it buys them with the highest level of environmental sensitivity. Forest City views the costs of this plan outweighed by the efficiency that is gained in the operation of the finished property over time.

Market Focused

How does Forest City keep finding places to build projects? It looks for markets with opportunity.

“Our strategy is that we go where growth is,” says LaRue. “We’ve been able to be opportunistic based upon where a particular market is growing and where the population says there is demand for the product we deliver, which is retail real estate.”

The Shops at Wiregrass will open in October 2008 north of Tampa, in Wesley Chapel. Macy’s, Dillard’s and JC Penney will anchor the center.

“We look for three types of opportunity,” says Brian Ratner. “We continue to look for markets where you can project future growth. These are markets where we can carry the land for a period of time until the market develops. The Shops at Wiregrass is a great example of this. We’re also looking at infill markets. White Oak Village is a good example of this; there is still growth in that market, but the existing market has great demographics and a lack of retail space. We’re also urban developers in major U.S. cities.”

One of Forest City’s true talents, says Brian Ratner, is that the company can bring every development discipline to a development. If residential is required for a project, Forest City calls on another division to develop it, not another company.

Forest City opened The Shops at Northfield at its Stapleton development in Denver in 2006.

“We develop every type of property other than single family homes,” he says. “That does distinguish us. It gives us the ability to bring to the table almost every discipline there is in real estate development.”

As time goes on, because of what the company brings to the table, Forest City can now develop a number of uses on a site, not just retail.

“As where another developer would look at a site and say ‘this is going to be retail,’ we’re able to look at the site and, because of our diversified skillset, say that it would be better for multi-use or mixed-use,” says LaRue. “We don’t confine what the best opportunity is by assuming a specific product type is going to be the driver.”

A rendering of the lifestyle addition to The Promenade Temecula in Temecula, California.

Forest City takes a long range view on a lot of projects because it sees the potential in the markets and the opportunities in the sites. When the company won the RFP to masterplan site of the former Stapleton Airport in Denver, it figured a 10-year build-out. It has now been 9 years, and Forest City’s projection is nearly accurate. Since 1998, when Shopping Center Business first reported on Stapleton, Forest City has developed several retail centers, including The Shops at Northfield at Stapleton, in addition to selling many lots to homebuilders for single-family and townhome communities. Over the past 3 years, Forest City has been the masterplanner of Mesa del Sol, a development that will span 9,000 acres in Albuquerque, New Mexico.

“We have a tremendous benefit in that Sam Miller [co-chairman of the board and Forest City icon] is still working here,” says LaRue. “He has a saying: ‘you make money when you buy land, you don’t make money when you sell it.’ We invest for the future and we make the profit as the real estate matures within the market. We have to plan as we go. We know that there will be additional investments before there is profit. You can’t buy land in 3,000-acre blocks and expect to turn profits in 1 or 2 years.”

The lifestyle expansion to The Promenade Temecula will add 126,000 square feet of retail and restaurants in an open-air environment.

Another strength the company has is its reputation among the nation’s municipalities. When pitching a project anywhere in the county, the mayor of that town can call the mayor of San Francisco, Rancho Cucamonga, Albuquerque, Denver or any other city where Forest City has done major deals, and get a positive review.

“We can point to a great record of success in terms of what we bring to communities,” says Brian Ratner. “Albert Ratner, my father [and co-chairman of the board], always said, ‘The cities are our clients.’ We are successful because we are able to work with jurisdictions, from New York City to Temecula.”

Heading East

Forest City is heading international. The company opened an office in London in 2007 in an effort to search for investments in Europe and Asia.

“When we look at the U.S., we see that we have a tremendous opportunity to continue to grow our portfolio,” says LaRue. “But as we increase our size, it almost becomes essential for us to go international.”

Forest City has hired Brian Garrison to head up its international division. As managing director, he is currently researching where Forest City’s expertise as a developer can be applied in Europe. Forest City has several letters of intent on deals in Europe, including a project in El Reno, Spain. There, Forest City will be developing the retail component of a masterplanned community. On a larger scale, Forest City has also looked at investment in India. The company is also pursuing investments there as well.

“We’re taking a thoughtful, if not cautious approach to international development,” says LaRue. “We’re looking at the same factors we look at in the U.S. We need to understand the market. We’re going to be cautious about how we invest capital, but we believe, based upon the growth in India and Southern Europe, that there is an incredible opportunity to create value for our shareholders there.”