At Cornell’s 37th Real Estate Conference, placemaking was part of many conversations throughout the day. In fact, there was a panel specifically dedicated to placemaking joined by esteemed industry guests Ben Bernstein, Co-founder and Principal of Redsky Capital, Adam Flatto, President and CEO of The Georgetown Company, Maryanne Gilmartin, Co-founder and CEO of L&L MAG, and Saul Scherl, New York Tri-State Region President of Howard Hughes Corporation. The panel was moderated by Alan Tantleff, Senior Managing Director of FTI.
As the group kicked off their discussion, each panelist revealed their vision for the future in the context of their past experiences with placemaking.
Maryanne Gilmartin launched L&L MAG two years ago to develop ground-up projects of scale in the New York City that not only deliver value to investors but also add value for the surrounding community. Gilmartin wants to do that with a diverse team that resembles the city and neighborhoods where her projects take place. Prior to Gilmartin’s founding of L&L MAG, Gilmartin played a pivotal role in many of the significant projects at Forest City Ratner Companies that took place over her fifteen-year tenure including The New York Times Building, this year’s venue for the Cornell Real Estate Conference. Gilmartin specifically highlighted the development of The New York Times Building as an example to showcase how a successful project can act as a catalyst that transforms a neighborhood in a positive way. Gilmartin also touted the fact that most people would not have believe that a building in that location would have commanded $100 per SF at the time it was being proposed but that it is possible to create a marketplace when you take the time to understand your tenant’s needs.
Adam Flatto’s focus remains on creating neighborhoods from scratch around the country in line with The Georgetown Company’s track record. Over the span of more than a decade The Georgetown Company has created a very successful “mixed-use town center” called Easton in the northwest corridor of Columbus, Ohio metropolis. This large-scale development truly attracts business from all over central Ohio and largely functions as an independent town. A total of more than 9.5 million square feet of mixed-use development has been completed to date at the Easton project which includes retail, office, hotel and residential properties. Earlier in the year, The Georgetown Company announced that it wants to add additional 350,000 square feet of class A office space to couple with its successful retail and residential development so that it can create a “Live, Work, Play” neighborhood.
Saul Scherl of Howard Hughes Corporation has an individualized strategy that is specific to each of the assets that he inherited from the bankruptcy workout of GGP, owner and operator of shopping malls, during the Great Recession. During the restructuring of GGP, all non-core assets on GGP’s balance sheet were spun off as a new company that became known as Howard Hughes Corporation. Due to the nature of Howard Hughes’ founding, the company is comprised of a mixed pool of assets that each require a different strategy to unlock the true potential of Howard Hughes’ portfolio. For example, Downtown Columbia project is a master planned development of an “entire town” that is comprised of 2300 residences, 250 room hotel, 1.5 million square feet of class A office space, and 314,000 square feet of street retail. By contrast, Seaport District’s primary focus is experiential and destination retail experience. To attract shoppers to Seaport’s 450,000 square feet of retail space Scherl’s team has gone to great lengths including attracting top restaurants and installing a new concert venue.
Finally, Ben Bernstein of Redsky Capital remains committed to his first love that is street retail. As Bernstein put it, he started his company in 2006 right as he graduated (from Cornell) because he believed that residents of Brooklyn who were paying ultra-high prices for apartments should have more than just “liquor shop, nail salon, and photo shops.” Redsky now owns and operates more than two billion dollars’ worth of real estate and Bernstein remains committed to his qualitative in lieu of quantitative approach. Bernstein emphasized that his investments in both Brooklyn and Williamsburg have benefited by looking beyond an immediate opportunity to maximize proformas. According to Bernstein when you treat retail space as an amenity, you can elevate the surrounding buildings and neighborhood.
Immediately after introductions, Tantleff asked the group to define the word “placemaking,” which kicked off the discussion that lasted for most of the hour. The conversation quickly revealed that each panelist had a slightly different notion of what constituted placemaking as the group struggled to come up with the single definition. Their discussion reveled that placemaking does not have to be uniform, but that it should be specific and individualized effort that is designed for the neighborhood where the project or investment takes place. The panelist also shared that you will just know that the development was truly something special and worthy of the label “placemaking development” once the project is done and its impact is palpable.
Despite all the complexities and wide range of perspectives, the panelists shared two key lessons that all developers can employ as they think about good development. First is that it is not only important but also beneficial to involve the community during the development process, and second is that it is best to consider the entire project or neighborhood cohesively instead of compartmentalizing spaces by usage type.
When it comes to community involvement Gilmartin shared that each community and neighborhood will be different. Gilmartin continued that when you involve the community early in the process, you gain deeper understanding of the neighborhood where the project is to take place. Furthermore, you can parse out what true opinions and concerns are instead of who the loudest critiques are of your project. Gilmartin specifically cited her projects in Brooklyn that seemed awfully controversial even though she had overwhelmingly large support of the community because a small group had utilized social media to amplify its negative opinions. Scherl also cited an interesting example that by engaging with the community surrounding Seaport District project he realized that the community was irked by the simple omission of the word “historic” from “Seaport Historic District.” And that this would be a simple change that could go a long way in winning over the crowd.
The second lesson evident throughout the conversation was that developers often make the mistake of compartmentalizing or neglecting the first floor of the building. Gilmartin citied how much thought they put into creating a lobby of The New York Times Building and that it is often an overlooked amenity that can kill more than million square feet of commercial space that come above. Gilmartin then generalized this notion by concluding that retail space is not meant for maximizing that space’s proforma, but that it is an amenity if used currently would create higher rents throughout the building. Bernstein echoed Gilmartin’s sentiment and stated that the same idea can be applied at the neighborhood level. Bernstein emphasized that if you are willing to acquire the best retail tenants to meet the needs of the neighborhood, and not just the ones willing to pay the highest rents, then you can create even more value in all of the surrounding assets then previously possible. Bernstein shared that it is important to find equity partners who would support this process of creating value at the neighborhood level and not just ones who are focused on immediately monetizing the assets by acquiring tenants willing to pay highest rents. Too often the focus is on highest and best use for the specific retail location or space in the building.
As the hour came to close, panelist spoke about how they view their role as “placemakers.” During these conclusionary remarks, there was a central theme in the message from all panelist that they treat their role of placemaker with a great deal of responsibility as they toe the line between bringing new development to the neighborhoods while preserving the authenticity of the neighborhood and the surrounding community with care and respect.