On a bright Monday in mid-May 1992, a group of young developers filed plans with the New York City Buildings Department for their first skyscraper.
On its face, the proposal for the 47-story structure was nothing special: one more tower in a city of towers. The major sticking point with neighbors, a post office with loading dock included in earlier plans, had disappeared. The department issued a building permit in a matter of days.
But in short order, the developers, Millennium Partners, leveled the site, added back the post office, and began slapping up steel for what turned out by conventional measure to be 56 stories, not 47.
“They were so quick out of the box that by the time the community understood what was happening it was already too late,” said Edward C. Wallace, a lawyer and former New York City council member who represented opponents of what is now a three-tower development along Broadway near Lincoln Center on Manhattan’s West Side.
“Lots of people try to steamroller the community, but most of them lose because they make a slip that the community can exploit,” said Wallace. “Not these guys. They leave no loose threads”
Older, more sophisticated, and vastly wealthier, Millennium Partners is now looking to Boston. It wants to erect two huge developments, one in the city’s languishing downtown retail district and a second over the Massachusetts Turnpike at the end of the posh Newbury Street shopping area in the Back Bay.
If built, the projects together would have greater square footage than the city’s Copley Place and Prudential Tower combined and, perhaps more than any other construction in a decade, would recast the look, feel, density, and use of two of the city’s signature neighborhoods.
Millennium’s track record in New York, Washington, San Francisco, and elsewhere finds a developer with a knack for landing high-tone tenants like Sony and Reebok, and melding different and potentially clashing operations like hotels, health clubs, movie theaters, stores, and apartments into single soaring structures.
Indeed, many in the real estate industry credit Millennium Partners with inventing the “Next Big Idea” in development after the suburban mall and the historic restoration retail of a Faneuil Hall Marketplace: the “urban entertainment center,” a kind of theme park-like melange of movies, high-tech outlets, and public attractions like multimedia displays.
But critics also point to a firm that, through mining weak points in local ordinances, playing government agencies off each other, and carefully controlling the release of information, has often escaped the public reviews and constraints that are designed to limit developers. The firm makes no secret of its readiness to use its considerable financial clout to beat opponents.
“The most effective tool of resistance to development is to file a lawsuit,” said Christopher M. Jeffries, the gray-haired and carefully tailored lawyer who is widely described as the conceptual and financial brains behind Millennium. “Recognizing that a long time ago, we devised a financial mechanism that is strong enough so we can build through the resistance.”
Although Millennium’s finances grew substantially stronger this summer when a group that includes billionaire currency trader George Soros invested $300 million, its top executives asserted in recent interviews that they have not used, and will not use, money to trample legitimate local interests.
As evidence, they cited their Lincoln Center development, known as Lincoln Square, which they say they adjusted to meet some public criticism, and which is now credited by many people with having enlivened a somewhat dowdy New York neighborhood.
They also pointed to their recent work in San Francisco, where they have made several design changes in one of their projects to meet public concerns, and in Boston, where they agreed to build downtown as well as in the Back Bay in no small measure to satisfy the demands of Mayor Thomas M. Menino.
“We’re prepared to look at the needs and issues of individual cities on a case-by-case basis,” said partner Philip E. Aarons, a former New York City development official who often plays the role of conciliator to Jeffries’s calculating–and at times politically incorrect–master builder.
Perhaps. But the record suggests that Millennium differs from traditional developers in ways that are likely to limit its ability–and willingness–to accommodate its Boston critics, and could expand, rather than contract, the areas of disagreement with its would-be neighbors.
“They created more controversy with a single building than anybody in years,’ said Richard Schaffer, who was chairman of the New York City Planning Commission during the period when Lincoln Square was built. “These are guys who will push the edge of the envelope any way they legitimately can. It’s up to other people to push back.”
Millennium’s first tower is now just five years old. But its success has convinced the partners that they can go national. Their drive to do so is composed in equal parts of a belief they have found the formula for downtown development in the 1990s, and raw ambition.
Millennium is nothing if not ambitious in Boston. For example:
– Its downtown project could eventually involve three 35- to 40-story towers, rather than just the two publicly discussed so far. The developers have won an 18-month option on a parking lot across Washington Street from the site of the first towers. Jeffries said the firm is considering an office building.
– Its first downtown tower is slated to include an 18-screen, 4,900-seat Sony movie complex that is bigger than any cinema now operating either in Boston or New York, with more seats than all of the other movie theaters in Boston combined.
– Its Back Bay project is tentatively slated to include a 400,000-square-foot Sony “retail entertainment center” similar to one Millennium is building in San Francisco that would include another huge movie complex, “virtual reality” facilities, retail outlets, and restaurants. San Francisco officials estimate that their city’s center will attract 5.5 million people a year. By comparison, Copley Place attracts 3 million to 5 million.
The partners’ ambitions are even grander beyond Boston. In San Francisco, they have already begun the Sony center, are about to begin a 40-story hotel/health-club/condominium tower, and are negotiating for two other sites. In Washington, they are seeking approval for a pair of condo projects. In New York, they are outbidding the competition for one of the crown jewels of Manhattan real estate, the New York Coliseum, on which they propose to build a $1 billion skyscraper.
In almost every instance, what the partners want to build and how they want to build it follows a formula that they first employed at Lincoln Square. The story behind that project is instructive for Bostonians who want to know what Millennium is likely to do there and for those who hope to influence what it does.
Before Lincoln Square, it would have been hard to predict the partners’ warp-speed success by looking at them or their work.
It certainly would have been hard in the case of Aarons, 46, a slightly overweight lawyer, who grew up in Newton, Mass., the son of a Boston University astronomy professor and a school librarian. He majored in art history and was still working for city government as late as the mid-1980s.
Despite careful tailoring and a cultivated manner, it also would have been hard for Jeffries, 47, who started as the son of a telephone repairman outside of Flint, Mich., although he moved up fast.
“Chris came from virtually nowhere,” said Charles F. Lowrey, a managing director with J.P. Morgan & Co., an early Millennium backer. “He was not well-known beyond a small circle and put his first deals together on a shoestring working out of a closet.”
(Philip H. Lovett, 36, a Harvard and Harvard Business School graduate, is Millennium’s third– and seemingly silent– partner.)
Jeffries’ and Aarons’ early work was unglamorous. Mostly it consisted of building low-income housing to earn city zoning bonuses, then sold to big-time developers. The big break didn’t come until the real estate collapse of the late ’80s and early ’90s.
The collapse eliminated virtually the partners’ competitors. And with almost no one building, buying or financing, it forced them to come up with a development strategy that turned conventional methods on their head.
Among the elements: targeting big-space users like movie complexes; putting the weak points of local ordinances to maximum use while minimizing public review; financing projects through interested parties like prospective tenants and public agencies; and, finally, plowing ahead even in the face of bitter public opposition.
Jeffries and Aarons realized that when most of America was bemoaning a real estate glut, there was a shortage of a certain kind of structure, and therefore a potential market for Millennium.
New York, like many cities, is a big place with small spaces. It didn’t have the kind of big-box interiors that were the standard for major suburban retail stores by the early 1990s, and were quickly becoming the standard for multi-screen movie theaters.
Part of the reason was the astronomical cost of downtown land. Part was that nobody had figured out how to combine big-box uses at the bottom of a tower with other uses above. But the partners began telling retailers and entertainment companies they could deliver the space needed.
They snagged Sony Corp., the Japanese electronics, theater and movie giant, and Reebok International Ltd., the Stoughton, Mass.-based sneaker company.
The partners and their architect, Gary E. Handel, who is also designing the Boston projects, effectively produced two buildings in one: a huge base with separate entrances on opposite sides for a 13-screen theater and a 140,000-square-foot health club, and a tower reached through still other entrances on a third side.
They managed to do all this and stay within the city’s zoning code, that the structure required no special permits or reviews. As a result, when the project sparked controversy, opponents found that they had almost nothing to grab on to to change or block it.
Jeffries and Aarons discovered that New York’s zoning code, which almost everybody including Schaffer thought gave the city power over projects such as Millennium’s, gave it little. Though Boston’s rules are more stringent, the partners appear to have found similar openings there.
In the case of the downtown Boston project, Millennium is arguing that its plans for the first two towers do not need extensive review because they fit within the envelope of an approved project that was never built.
In the case of the Back Bay project, which would be built in air rights over a turnpike, the firm is almost certain to argue that review should be governed by a recent “memo of understanding” between Menino and Turnpike Authority Chairman James J. Kerasiotes that even some supporters say leaves much to be desired and calls for far too speedy a decision by citizens’ groups and the city.
To appreciate the partners’ achievement in New York requires understanding the city’s zoning code.
The code regulates the “floor area” or square footage of a new building. It says that (absent zoning bonuses) developers can put up structures that are so many times the floor area of the lot on which they are building.
Except in a few cases, the code does not explicitly regulate the height of a building, and has only a few things to say about its shape. But city officials assumed that regulating floor area gave them control over these others aspects of a structure because they assumed that developers would pick a traditional shape for a building–short and squat, tall and thin, or some combination–then put up as many, evenly spaced floors as possible.
What Jeffries and Aarons realized, however, was that nothing in the code required them to pack in as many floors as possible or to space them evenly.
That meant they could meet Sony’s needs for theaters in a base of the building that, while it would jut more than 10 stories up from the street, would contain only three, high-ceilinged floors, and therefore count little against their “floor area” allotment.
It also meant that with so much of their allotment thus saved, they could push their condo tower much further into the air than anybody thought possible, commanding more spectacular views and much higher prices.
“We tried everything we could think of to stop them,” said Arlene Simon, president of Landmark West, a Manhattan preservation group. “We rallied the community. We wrote our public officials. We were finally forced to sue them.”
Perhaps more than anything, the reason Millennium could hang so tough was the nature of its financing.
Jeffries and Aarons were forced to turn to their future tenants for financing because, with real estate in recession, banks and other traditional investors like insurers weren’t lending. But the arrangement meant their money was coming from sources with a vested interest in seeing the project completed rather than ones that were likely to balk in the face of any controversy that threatened loan repayments.
