The Real Deal New York

The partnership that wasn’t: Forest City never invested in JEMB’s 420 Albee Square

REIT just consulted on project
By Kathryn Brenzel | January 26, 2018 07:30AM

Rendering of One Willoughby Square

In September 2016, Forest City heralded its latest project, an office tower in Downtown Brooklyn it was co-developing with JEMB Realty. The announcement touted the project — 420 Albee Square, now marketed as One Willoughby Square — as a “game-changing commercial tower.” At the time, JEMB Chairman Morris Bailey declared Forest City the “perfect partner.”

Turns out, that “perfect partner” wasn’t much of a partner at all.

According to sources familiar with the project, Forest City never took an equity stake in 420 Albee. Instead, it provided “development services,” for a fee, according to Jeff Linton, a spokesperson for the real estate investment trust. That arrangement ended in September, and Linton said the REIT never announced its exit and wasn’t required to do so because the investment wouldn’t “have been material to the company.”

Representatives for JEMB said Forest City worked as a consultant on the project despite earlier announcements by both companies that the REIT took an equity stake. JEMB would not comment further. In August, it announced that Dennis Rauchet, a senior director in Colliers International’s project management group, had joined JEMB to oversee the ground-up development.

Forest City’s exit from 420 Albee coincides with the surge in activity at the project in September. That month, JEMB filed plans for the tower, revealing a new architect, renderings and specs for the development. Two months later, the architect, FXFowle (now called FXCollaborative), announced that it planned to lease 40,000 square feet in the tower. The developer filed an application for excavation work on the site in December, which has yet to be approved.

Since 2014, the project has several gone through several iterations. JEMB initially proposed a 678-foot-tall residential tower for the site — a height that, at the time, would’ve made the project one of the borough’s tallest. The developer then shrunk the project 389 feet in March 2015. In November 2015, JEMB announced that the tower would instead be dedicated to office use. The change of heart was instigated by the city’s Economic Development Corporation, which sold JEMB 120,000 square feet of air rights on the condition that the project feature office space instead of residential.

The latest permit application filed with the city call for a 36-story, 385,000-square-foot office building, but JEMB has marketed the tower as 500,000 square feet (presumably due to the air rights or loss factor).

Forest City’s decision not to partner on the project may not come as a surprise, given the REIT’s recent retreat from ground-up development. Earlier this month, the company sold 25 percent of its remaining 30 percent stake in Pacific Park to Greenland USA. It also lost the CEO of its New York division, MaryAnne Gilmartin, who left to launch her own development firm.