Follow Us On
Issue: November/December 2010
Business Hall of Fame: Tower Power
Charles Ratner worked his way up through the family business to lead Forest City Enterprises to new heights.
The little boy from University Heights had always thought of downtown’s 52-story Beaux Arts-style skyscraper as a special place. Rising over Public Square, the Terminal Tower was an icon of the time, lauded as the tallest building outside of New York City.
It was where young Charles Ratner accompanied his mother and three brothers to Higbee’s department store, which was connected to the building’s main lobby, to shop for clothes and eat at the Silver Grille. But one summer day in 1948, the Terminal Tower was the starting point for a more enduring memory. That day, Ratner descended to the tower’s lower concourse, said goodbye to his parents and boarded a train with more than a dozen other boys bound for Camp Tall Timbers in Maine.
“We slept on the train overnight and had squirt gun fights,” recalls Ratner, who was 7 years old at the time. “It was a wonderful adventure.”
⊲ Being in a family business raises lots of issues. Is the success yours, or is it the family’s? Will you have a chance to be your own person, or will you be consumed by the family culture? I had lots of opportunities to accomplish things, and I felt I was judged by what I did, not by who I was.
⊲ America has to urbanize. We can’t keep sprawling.
⊲ I’ve found that one of the biggest challenges in a big company is to keep an open environment, where people feel free to exchange and express their ideas.
⊲ Our people have the freedom to make a mistake and still continue to carry a position of responsibility and grow. Everybody makes mistakes. You don’t develop this quantity of real estate without making them.
⊲ When I go out on a road show to speak to investors, banks or analysts, what’s really important isn’t the speech. What’s really important is to listen to the questions, respond and listen to the questions again.
⊲ Philanthropy is an insatiable mistress. It can take as much as you can give.
Now 69, Ratner still shows his affection for the Terminal Tower as he tells the decades-old story in a private conference room on the building’s 11th floor. The property is now part of an impressive national portfolio of real estate developed, managed and owned by Forest City Enterprises, the publicly owned business Ratner’s Polish immigrant uncles started as a lumberyard almost 90 years ago.
It’s also the company’s headquarters, meaning Charles Ratner’s first great adventure and the adventure of his life — serving as Forest City’s president and CEO — meet here, inside the most recognizable building in the city.
Despite the lofty corporate position and a family name that is as nearly synonymous with Cleveland as the Terminal Tower itself, Charles Ratner’s surroundings are relatively modest. His office and conference room, both papered in a subtle gold print, are just big enough to judiciously accommodate the basics. Ratner himself could be mistaken for a middle-management employee in his Friday business-casual ensemble of a light blue Ralph Lauren Polo dress shirt, navy slacks and slightly worn brown loafers. That lack of ostentation, coupled with his friendliness and sense of humor, makes him instantly likable. But he also demonstrates a fierce business prowess that has increased Forest City’s assets from $2 billion to $12 billion since he took over the company’s top position 15 years ago.
Forest City co-chairman Albert Ratner credits his cousin with continuing a trend of developing bigger, better properties such as Stapleton, the much-publicized redevelopment of the former Denver airport into a 3,000-home community with retail and office space, and Atlantic Yards, 22 acres of Metropolitan Transit Authority land in Brooklyn, N.Y., that is being converted into residential, commercial and office space, including a new arena for the NBA’s New Jersey Nets.
“As I was leaving office, I came up with what I called a city strategy,” says Albert Ratner. “But Chuck is the one who pushed it forward, managed it and brought us to the point where we are today.”
There are places of professional significance that Charles Ratner mentions in the same breath with the Terminal Tower. He speaks of a building at Tiedemann and Brookpark roads that today houses a Home Depot store. The location was once the home of Forest City’s largest do-it-yourself home-improvement store before the chain was sold to Handy Andy Home Improvement Centers in 1987.
He also talks about the site of the former Forest City lumberyard at East 179th Street and St. Clair Avenue, where his father Max served as president of the family lumber business. Ratner was spending weekends unloading boxcars in the lumberyard by the time he was 14.
“I just loved being around the place,” he enthuses. “There was an interesting group of people who worked in the yard itself: World War II veterans and refugees, African-Americans, guys who had come north from places like West Virginia and Virginia. It was cool working in my father’s business, doing physical labor.”
Ratner later worked as a tallyman in the home-improvement store, fetching customer orders for lumber, and as an apprentice to carpenters building homes in the burgeoning suburb of Parma. But by the time he entered Colgate University, the oldest of Max Ratner’s four sons still wasn’t sure he wanted to join the family business.
“There was a period of time when I believed the only thing that you could do that would really make a difference was to be in some helping profession — you had to be a doctor, teacher, clergyman or social worker in order to really give back,” he explains. “The culture and faith tradition I grew up in were very philanthropic. It wasn’t just about giving — it was about responsibility.”
By the time he graduated with a bachelor’s degree in political science, Ratner had changed his mind, the result of continued exposure to the family business.
“I had worked almost every summer in the business during college, and I really liked it a lot,” he says. After earning a law degree at New York University — what Ratner calls a “delaying tactic” in making a professional commitment, but one his father believed would benefit him — he returned to Cleveland to take a job as assistant director of stores in Forest City’s retail division. A decade passed, however, before he truly viewed prudent real estate development and management as crucial to maintaining “a robust society and quality of life.”
“I came to this conclusion most acutely when I went [with a Jewish Community Federation group] to visit Jewish refuseniks in the former Soviet Union [in 1987],” he explains. “You would visit people in their apartments, and their apartments were immaculate. But the buildings were falling apart around them because they were so poorly built. There was none of the communal infrastructure that Forest City has been able to make happen in cities all across America.”
By the late 1970s, the grand Terminal Tower Charles Ratner remembered from his childhood no longer existed — it had fallen into terrible disrepair.
“There was the Choo-Choo Lounge and lottery ticket [sales],” he recalls. “But other than that, there wasn’t much to the property. It was an office building, but not one of particular distinction.”
In 1980, Forest City deployed a plan to return the tower to true landmark status. The company entered a partnership with the building’s owner, U.S. Realty, to purchase all retail space and parking U.S. Realty didn’t already own. Five years later, Forest City bought out U.S. Realty’s interests and began redevelopment of the acquired land. Tower City Center, an upscale three-story shopping mall flanked by a Ritz-Carlton hotel and new high-rise office, opened in 1990. The project was an example of the high-profile projects Forest City had begun developing from New York to California while Ratner was working his way through the retail division.
Under his direction as division president, the retail chain had grown to 30 locations in Cleveland, Akron, Detroit and Chicago. But the volume of real-estate business trumped that generated by the stores.
When Forest City decided to sell the stores to Handy Andy Home Improvement Centers, Ratner says he felt good about the move, even though the company was divesting itself of something he’d spent two decades building. “We didn’t have the financial or human capital to grow in both businesses,” he explains. “We were more likely to be competitive and had a better skill set in the real estate development business.”
After the sale, Ratner was made vice president of Forest City’s real estate operating group and oversaw a rapidly growing management portfolio of shopping centers, apartment buildings and commercial properties across the country. He was named COO in 1993 and president and CEO in 1995. Albert Ratner says the board of directors and nominating committee chose “young Charles” because he was a detail-oriented man who knew all aspects of the business and had participated in making many key decisions, including the hiring of several employees who had become key executives.
Perhaps more importantly, he had proven to be a well-liked leader who could work with disparate entrepreneurial personalities. “He’s cheerful all the time, very kind, never really shows his true feelings in dire circumstances,” says Forest City co-chairman and treasurer Sam Miller. COO David LaRue describes his boss as “a consensus manager” who encourages discussion of strategies to build agreement. That style perpetuates a culture where professionals are encouraged to voice their opinions, even if they’re dissenting ones.
“You can yell at people,” Albert Ratner says. “But when you’re done yelling, you shake hands and smile.”
Charles Ratner cites the current economic downturn as the biggest challenge he’s faced in his entire 44-year-career. He offers the fate of a multianchor shopping center in Simi Valley, Calif., as an example of the devastating effect it’s had on his business. Sales and tenants have dropped to the point that the lender is looking to sell its note on the property.
“We were developing a lot of new real estate, more than we had ever developed before — our construction pipeline got up to over $2 billion,” he says. “[Then] the markets suddenly started to decline. The finance markets almost dried up. We were in the wrong place for a while, one could argue.”
Forest City management responded by cutting $80 million in overhead, killing promising projects, and selling stock and property. The move Ratner found hardest to make was laying off approximately 500.
“We’d never been through anything like that before,” he says in a low voice. But he believes the company has a good balance sheet as it moves forward. “I cannot say with any honesty that the last 24 or even 30 months have been fun. But I will look on this time with satisfaction and a sense of accomplishment that we’ve done what we needed to do.”
Of course, Ratner could escape the pressures of his position by retiring and devoting his days to another favorite activity: community service. Over the years he’s developed a reputation as a philanthropic powerhouse.
“He comes from a family where that is almost part of the DNA,” says Steven A. Minter, a former president of the Cleveland Foundation who now serves as interim vice president of advancement at Cleveland State University and executive director of the Cleveland State University Foundation. “This is someone who has a very deep moral and ethical sense of himself and a commitment to trying to make a difference.”
Ratner’s charitable efforts extend past Northeast Ohio. He continues to co-chair the board of CEOs for Cities, a Chicago-based organization he co-founded that serves as a civic laboratory for urban leaders. He is also on the board of governors of the Jewish Agency for Israel, a nonprofit that provides services to Israel and the global Jewish
Ratner, however, has no plans to retire and vacate his Terminal Tower office. “I’ve grown up in a family where that just wasn’t done,” he says. He points to his father and his siblings, all of whom worked their entire lives, and his cousins, Sam Miller and Albert Ratner as examples.
“They’re here every day, doing deals,” Ratner says with admiration. “We have a business, thank God, that provides lots of opportunities. There’s lots to do.”
1955 Forest City Lumber began converting its lumberyards into do-it-yourself home-improvement stores. Ratner began working weekends in the business. “It was a very family-oriented place, and it was my father’s life. He worked six, sometimes 6 1/2 days a week.”
1960 Forest City Enterprises incorporated. The company sold 19.5 percent of the company in an initial public stock offering. “When we went public, 80 percent of our revenues were from the lumber business, very little from real estate.”
1966 Graduated with a law degree from New York University and went to work as assistant director of stores in Forest City’s retail division. “Had I known then what I knew later, I would have gone to business school instead,” Ratner says. “It would have been a lot better to learn corporate finance than torts.”
1987 Forest City sold its retail stores to Chicago-based Handy Andy Home Improvement Centers. Ratner became vice president of the real-estate operating group.
1990 Terminal Tower redevelopment officially opened as Tower City Center. “It was really something very, very special,” Ratner says. “The sense was that we were both contributing to the community and the renaissance that was about to take place in Cleveland.”
1993 Named chief operating officer.
1995 Named president and CEO.
1997 Forest City moved its headquarters to Tower City Center.
2010 Forest City announced agreement to sell approximately 16 acres adjacent to Tower City Center to Rock Gaming, a business entity of Quicken Loans and Cleveland Cavaliers owner Dan Gilbert, for construction of a Cleveland casino. “[The casino] will create jobs and excitement and help bring people downtown,” Ratner says. “Those are all good things.”
This record has been viewed 1629