Atlantic Yards discussion with Forest City Ratner

Just three weeks into the summer semester, the MSRED Class of 2012 spent the afternoon in Brooklyn with Bruce Ratner (CEO Forest City Ratner) and MaryAnne Gilmartin (EVP), overlooking the currently under construction, Atlantic Yards.  Situated at the corner of Flatbush and Atlantic Ave is the centerpiece of the former 22-acre rail yard, the Barclays Center.  Starting next season (2012-2013), the Barclays Center will be home to the relocated NBA franchise, the New Jersey Nets.

Bruce Ratner and MaryAnne Gilmartin discuss the Atlantic Yards development to the MSRED Class of 2012

Bruce Ratner and MaryAnne Gilmartin spoke at length of the challenges and highlights of the Atlantic Yards development process.  In addition to being the largest single development of affordable housing in New York City history, the highly complex Atlantic Yards deal constituted of buying and relocating a sports franchise, contributing $50 million to the renovation of the subway station, and a last-minute road show in China to secure an enormous amount of funds which eventually proved to be a turning point in the development.

MSRED Class of 2012

In addition to the complexities of the deal, Bruce and MaryAnne were very proud of their innovative progress of modular high rise construction.  According to Bruce and MaryAnne, this technique could reduce hard costs by 20 to 25%.  While it is unclear whether or not this feat of architectural engineering will be implemented for the Atlantic Yards construction, when and if perfected, the prefabricated modular high rise could be the future of real estate development.

Coincidentally, Greg Pasquarelli, a founding partner of SHoP Architects, made a surprise guest appearance.  SHoP recently replaced Frank Gehry as the architect for the Barclays Center and was recently awarded the design of the first residential tower at Atlantic Yards.  While Greg addressed the class only briefly, he gave a much more detailed presentation only a few weeks later as a guest lecturer for the MSRED Envisioning Studio class.

-by Immanuel Gilen & Brad Long

NY State Association for Affordable Housing (NYSAFAH) comes to campus

Matt Gross (’05, Columbia, M.S.RED) came back to campus and moderated a development-oriented discussion with other leaders of NYSAFAH, on Affordable Housing in New York City.  The well-rounded panel provided diverse perspectives, representing the major food groups of real estate development: lending, legal, capital markets, and public and private sector developers.  The panel members were: Ashley Hartsook from Raymond James, Rick Gropper from L&M Development Partners, Anthony Richardson (’05, Columbia, SIPA) from NYC Department of Housing Preservation and Development (HPD) and Adam Verstandig from Jones Day.

Matt Gross (MSRED '05) runs through the Sources & Uses.

The demand for affordable housing in New York City is extraordinary.  Roughly 180,000 public housing units have an 8-year waiting list, 130,000 people are waitlisted for tenant-based voucher assistance, and 90,000 privately-owned project-based units also have waitlists.  Even more extraordinary is the city’s efforts to support affordable housing.  Bloomberg’s $7.5 billion plan to create 165,000 affordable housing units by 2014 is nothing less than the largest municipal affordable housing plan in the nation’s history.  According to Anthony Richardson, the city is on pace to meet these goals and complete 15,000 units during 2011.

As the government continues to support affordable housing development, it comes as no surprise that more players are entering the industry.  Fortunately, some of this added competition comes within the capital markets which directly benefits developers.  Ashley Hartsook explained that companies such as Google and Goldman Sachs’ Urban Investment Group are providing equity for affordable housing development through the tax credit syndication market.  Essentially, the tax credit investors provide equity for the deal, but instead of becoming a partner and receiving the benefits of real estate ownership, they receive benefits of reduced tax liability, usually for a specified amount of time (15 years for example).

Overall, the on-campus NYSAFAH event was a success.  Students learned the intricacies of an often overlooked segment of the real estate industry and were able to speak at length after the program with leaders of the industry.

-by Brad Long