A Family Company, Forest City, Sets Out to Transform the District

A five-minute car ride away in Southwest, the company and two partners -- Charles E. Smith of Crystal City, which is a unit of Vornado Realty Trust, and Bresler and Reiner of Rockville -- plan to turn the tired-looking Waterside Mall into 1.5 million square feet of offices, high-rise housing and retail in a project that will cost $800 million. Two city agencies recently said they are going to lease 500,000 square feet of office space there.

Forest City's projects are helping to transform areas of the city that have been cut off from other neighborhoods since the Southeast Freeway was built in the 1960s. Other developers describe it as an enormous task.

"They'll establish an anchor" for future development, said Ray Ritchey, executive vice president at Boston Properties, a competing development company.

"I'm glad they have [the projects] and not me," said John E. Akridge III, another major developer in the District. "But I think they can chew it up and swallow it."

With annual revenue of $1.2 billion, Cleveland-based Forest City is one of the largest publicly traded real estate companies in the country. The company's stock has traded over the last year between $36.47 and $59.67 per share.

Forest City was started in 1921 by the Ratowczer family, whose members changed their name to Ratner after emigrating from Poland. The family started in the lumber yard business. It got into real estate in the 1930s and 1940s, buying its first apartment building and building strip malls. Today Ratner family members own most of Forest City, and five of the top executives are cousins.

Its major projects under development in New York include a 52-story office building in Manhattan that will be the headquarters of the New York Times. A controversial $4 billion mixed-use development in Brooklyn will include an arena for the New Jersey Nets -- a team owned by a group of investors led by Forest City executive Bruce C. Ratner. The rest of the Forest City empire includes projects in Pittsburgh, Cleveland, Boston, Baltimore, Richmond, Los Angeles and San Francisco.

"They have the biggest development pipeline for their size in the real estate world," said Richard Moore, a managing director at RBC Capital Markets in Cleveland. "They're the only ones who do this level of mixed-use development and the only one who does projects of this size."

The company has succeeded in getting hundreds of millions of dollars in tax credits and public money to subsidize its projects across the country. In the District, it has received about $135 million in city and federal monies to pay for such things as roads, sidewalks and utilities at its projects.

The company was selected from a group of 11 developers for the right to redevelop the Southeast Federal Center site. Congress had to pass special legislation for it to buy the land, which is owned by the federal government. It is still settling on the deal to buy the land.

Walking through a dusty warehouse, Salzberg gazed up at the rafters. "You've got a lumber shed here with unbelievable bones," she said. "It's got corrugated steel but you could make it more transparent with glass and give it openness. It would be a terrific spot for entertainment, theater groups, concerts or a restaurant with entertainment."

Henneberry added: "Think restaurant with kitchen in the back, seating overlooking the water."

They envision workers at the nearby Navy Yard buying houses on their land.

"This can be for people who want to roll out of bed, run along a waterfront trail, walk to work or hop on the Metro and go out to restaurants in the evening," Salzberg said.

"All for the price of $1.6 billion," Henneberry added.