Forest City goes one for two with Gehry

Frank GehryFor the megadeveloper Forest City Ratner Companies, the last few months can be seen as a tale of two projects.

The worst of times seems to have taken hold at Atlantic Yards, the proposed 22-acre development of apartments, offices and a basketball arena in Brooklyn. In June, Forest City dumped architect Frank Gehry, whose eye-catching designs helped generate much of the project’s initial excitement.

And last month, the Empire State Development Corporation, the state authority backing the project, had to face the state’s Court of Appeals in a case about the legality of its eminent-domain actions after being sued by a community group.

But in Manhattan, after a rocky start, it seems to be the best of times — or at least somewhat more favorable ones, for Beekman Tower at 8 Spruce Street in the Financial District.

The 76-story rental tower will be the tallest residential building in New York. Unlike at Atlantic Yards, Gehry’s design (his first residential project in New York) is getting built, despite its stumbles.

In fact, the building, which looms large two blocks east of City Hall, is going up fast. In the middle of last month, 80 percent of its windows were in place.

Beekman Tower, which is reportedly costing about $700 million to build, had a challenging spring.

Forest City had halted construction and threatened to cut the building’s height in half, but then in March, as The Real Deal reported, it closed on a key $680 million construction loan, from a consortium of lenders led by Eurohypo AG.

The firm also struck an unusual deal with its unions to save labor costs. And earlier, acknowledging new economic realities, the developer switched the Beekman from condos to rentals, as it did with Atlantic Yards.

It remains to be seen if the roughly 900-unit building, which will reportedly open in winter 2011, will hurt itself by oversaturating the Financial District with luxury units, which have sprouted up there in massive numbers in recent years.

As it is, the Financial District saw a 48 percent plunge in rental activity from the third quarter of 2008 to 2009, according to StreetEasy, the real estate data company. Rents in the neighborhood dropped 21 percent during that same time.

Still, relatively speaking, Beekman is no Atlantic Yards, said Gary Malin, the president of Citi Habitats, which has been in discussions with Forest City to be the exclusive broker for the building. (Citi Habitats currently represents Forest City’s 354-unit 80 DeKalb Avenue in Brooklyn, a new apartment building where leasing is slated to begin this month.)

“It’s something beautiful and different,” said Malin, who downplayed any dampening effect the glass-and-stainless-steel tower will have on the market. “I know it sounds like a lot,” he added, “but when you consider a city of our size, is 900 units that enormous?”

Forest City did not return calls for comment.

Gehry’s imprimatur — which is visible in the grooved metal ridges, resembling bicycle chains, that twist up the facade — will be a strong selling point, said Jim Stuckey, the new dean of NYU’s Schack Institute of Real Estate, who worked for Forest City from 1994 to 2007, and did some preliminary planning for the Beekman.

“I think people will pay extra to live in this building,” Stuckey said, estimating the premium at 15 percent.

What’s less clear is if residents will want to live on Spruce and Nassau streets in a corner of the Financial District that’s still lacking a variety of retail and nightlife, despite having added a few high-end conversions in recent years, like 150 Nassau Street, a granite-trimmed Beaux Arts office building turned condo next door.

Nassau Street itself features a hat and shoe store, while Beekman Street — which the building backs onto and which it is named for — has chain restaurants, plus the eponymous Beekman, a wood-faced Irish restaurant. (Another Beekman, the Beekman Tower Hotel, is in Turtle Bay, in an Art Deco high-rise.)

The sidewalks of Spruce Street, meanwhile, are often dotted with students from nearby Pace University, and skateboarders headed under the Brooklyn Bridge.

Still, the Beekman’s upper floors should command breathtaking views. The building will surpass the Trump World Tower by the United Nations as the city’s tallest residential building.

With Atlantic Yards, much of the debate regarding eminent domain revolves around what public benefits, if any, are offered by its arena, which is to be the new home of the New Jersey Nets. With the Beekman, though, Forest City appears to have neutralized potential criticisms over height by creating community facilities.

That’s largely because the tower’s orange-brick base will include a wing for the adjacent New York Downtown Hospital. It will also house a new public school — the Spruce Street School, for kindergarten to fifth grade — in a neighborhood that sorely needs one, said Michael Levine, director of planning for Manhattan Community Board 1.

In addition, Forest City is building a narrow park, lined with benches and trees, that will connect Spruce and Beekman streets on the building’s north side, Levine added.

Indeed, while lawsuits continue to dog Atlantic Yards, the Beekman’s neighbors seem relieved that a project that did not have to contribute to the community, because it was as-of-right, did so anyway — even if some are disappointed that the school’s opening has been pushed back a year. “We’re grateful they gave us amenities,” Levine said. “We wish every developer would do that.”