(Corrects name of TEAM Academy in ninth paragraph; corrects relationship of Goldman Sachs to Teachers Village)
Nicolas Berggruen, better known as the homeless billionaire, is not someone you would expect to see in Newark, N.J. He spends his time in the world’s most cosmopolitan cities, where he generally stays in five-star hotels. When Berggruen is in the New York area, he stays at the Carlyle, on the Upper East Side. It couldn’t be more distant from Newark, which is more renowned for its poverty and high crime rate than its hotels.
Last week, however, Berggruen stood at the corner of Hasley and Williams streets in downtown Newark. He wore a finely tailored blue suit, brown loafers, and sunglasses. His white iPhone headphones dangled from his jacket pocket. He looked a bit out of place. But then so did the sleek modern buildings that had risen, thanks in large part to his largesse, on a block that had once been dominated by vacant lots.
Berggruen, a 52-year-old private equity investor and think-tank proprietor, had come to Newark to give a tour of Teachers Village, a six-building complex he has financed along with a group of other high-net-worth individuals and investment banks. Only two of the buildings are completed so far, one with an stylish white exterior designed by architect Richard Meier. “They are beautiful buildings,” Berggruen said proudly. “I mean, they would be very happy in Manhattan.”
Teachers Village houses three charter schools and will also include 205 apartments for both charter school and public school instructors. Berggruen’s private equity firm, Berggruen Holdings, is the largest equity investor. Other financial partners include Goldman Sachs (GS) and Newark’s Prudential Insurance (PRU).
Bergrruen’s goals for $150 million Teachers Village are lofty. He wants to rejuvenate Newark’s downtown with glamorous buildings and turn a profit. He has a contrarian’s view of New Jersey’s largest city. For the most part, commercial developers have stayed away from Newark because of its seemingly intractable problems. Berggruen thinks this has created an opportunity for value prospectors like himself. “It’s the fantastic location,” he said. “This is located right next to New York.”
The homeless billionaire’s plan to resurrect Newark’s center began nearly a decade ago, when Warren Lichtenstein, one of his hedge fund pals, introduced him to Ron Beit, a New Jersey developer who was with him last week in Newark. Beit lacks Berggruen’s polish but has just as much zeal for Teachers Village. He says he told Berggruen one night over dinner in Manhattan there were opportunities in Newark. “Nicolas was like, ‘Let’s go take a look,’” Beit recalls. “The next day, we walked around here, and he said, ‘Buy it all.’”
Beit started buying land in 2005 with money from Berggruen, Lichtenstein, and some of their other friends. It was a year before Cory Booker was elected Newark’s mayor and the national media started to write about the potential rebirth of the city. “We were a little bit crazy,” Berggruen laughed. “We came in before all the jazz about Cory Booker or Chris Christie.”
Berggruen and his partners ultimately acquired 17 acres of land downtown. “We’ve assembled, like, 77 or 79 blocks and lots at this point,” says Beit. “It was like 30 separate transactions.” Meanwhile, Berggruen focused on aesthetics. He felt strongly that the city deserved buildings as beautiful as those in New York or Paris, and he recruited Meier, who was born in Newark, to work on them.
To hear Berggruen tell it, this was a matter of social justice: “Listen, you’re in a wealthier neighborhood, therefore you deserve better architecture? You’re in a less privileged neighborhood, you shouldn’t have it? I think that’s 100 percent wrong. I think that all neighborhoods deserve good architecture.”
Beit came up with an unusual plan to fill the buildings. Newark’s unemployment rate may be high, but there is at least one growth area in the city: charter schools, which are siphoning students away from the ailing traditional public schools. There were three—Discovery Charters School, Great Oaks Charter Schools, and TEAM Academy—that were willing to lease space in Teachers Village.
The first two buildings In Teachers Village opened in late September. They were filled with 800 uniformed students attending classes. Edward Gibbs, a math teacher at Great Oaks, was tutoring a group of them in one of the buildings. He said he much preferred Teachers Village to the school’s previous digs in an old Newark public school building. He said his students felt similarly. “They’re easier to teach because they are happier here,” Gibbs said.
Beit has yet to finish the apartments, but he doesn’t anticipate any rental problems. He says there is already a waiting list of 40 applicants. The developer is also signing leases with banks, restaurants, and other tenants interested in the street-level retail space in Teachers Village. Beit says he lured many of them from Newark and others from Harlem. “The Newark operators obviously understand how to survive in Newark,” Beit says. “And we felt the Harlem operators coming fresh out of gentrification would understand the benefits of securing a location [like this] early.”
Berggruen said he and his partners plan to develop more land that they own in the city. He hopes the early success of Teachers Village will inspire others to follow his lead. “The more there is, the more it will reenergize the neighborhood,” he said. “If there are people, especially young people, who are interested in coming into Newark, you’ll begin to have immigration. That’s the key: immigration into the city.“
This may not sound like a radical concept, but in Newark, it unfortunately is. Residents are often suspicious of outsiders. Despite Booker’s efforts, crime is still a major problem. The homeless billionaire isn’t worried. “If we succeed here, we will have revived one of the most difficult places in America,” he said. “This place has a chance against a lot of odds. Or let’s say, not against a lot of odds; let’s say, a recent poor history. It has a good chance.”
Then he got into an enormous SUV, and his driver took him back to Manhattan.
