NYC PLAs Divert Disaster
Wall Street's affect on the middle class, with respect to the financial meltdown of last year, can be felt in the farthest corners of the USA still today. But, you don't even have to go outside the city of New York to see and hear what it was like - and how a disaster was diverted.
From the NY Times:
Two months ago, work stopped abruptly at the 37th floor of the 76-story Beekman Tower as the developer Bruce C. Ratner desperately sought to cut costs on the project, a glass and stainless steel apartment building in Lower Manhattan.
Just as abruptly, work resumed this week on the tower, which will be the architect Frank Gehry’s first skyscraper and the tallest residential building in the city.
The developer, who had threatened to cap the building at 40 stories, said he was able to retain Mr. Gehry’s distinctive wavy-wall design and the tower’s full height, while paring labor expenses and taking advantage of falling prices for construction materials and appliances for the tower’s 900 apartments.
Mr. Ratner, chief executive of Forest City Ratner Companies, is one of a dozen developers who have approved a long-awaited and unusual project-labor agreement in which the city’s construction unions backed a series of concessions on work rules that proponents said would save builders as much as 20 percent on labor costs. Although some developers heatedly debate the exact value of the agreement, it is part of an effort to keep the building boom from running out of steam in the face of falling real estate prices and a severe recession.
“We’re thrilled to be going back to work,” said MaryAnne Gilmartin, an executive vice president of Forest City Ratner. “It’s a great project and a great building.”
Gary La Barbera, president of the union alliance, the Building and Construction Trades Council of Greater New York, and Louis J. Coletti, president of the Building Trades Employers’ Association, said the labor agreement was unprecedented and a first step in restructuring the New York construction industry. Already, they said, 12 projects representing more than $2 billion worth of construction activity and 10,000 jobs have applied for and received tentative approval.
“This agreement will help our industry and the city get back on its feet and working men and women back on jobs sites,” Mr. La Barbera said.
Other projects affected by the agreement include a hotel under construction at Eighth Avenue and 44th Street; a second Ratner tower under construction at 80 DeKalb Avenue in Brooklyn; and Tower 111, a new 47-story building on West 32nd Street. Few of the 12 projects had actually stopped work, but the officials claimed that the agreement would allow the developments to proceed on a sound economic footing or to begin work. They said two dozen more projects are under consideration for the agreement.
In a statement released by his office, Mayor Michael R. Bloomberg said: “New York City’s construction industry faces real challenges today, but labor and management in the industry are not content merely to wait for a national rebound. Instead, they are taking measures to do something about it now.”
Still, some developers say the agreement is worth far less, perhaps only 8 percent in savings, and not enough to get some stalled projects moving again, especially in cases where they paid high prices for land.
“God bless them,” said Steven Spinola, president of the Real Estate Board of New York. “But I don’t think they’re going to save much money.”
The history of the Beekman is a barometer of the undulations in the city’s real estate market. The project was conceived in 2007, at the height of a construction boom. The luxury tower, which will stand 867 feet high, or slightly taller than Trump World Tower, near the United Nations, will include a public school on the first four floors and an ambulatory care center for New York Downtown Hospital.
But by the time the site, south of the Brooklyn Bridge, had been excavated, Mr. Ratner, like many other developers, was unable to obtain a construction loan, and work halted in December 2007.
It took the developer three months to raise $680 million for construction. In a nod to the softening market, Mr. Ratner switched from condominiums to rentals and modified Mr. Gehry’s design, using a standard curtain wall instead of one with a gently wavy surface on one of the tower’s eight sides.
But the market continued to sour as apartment rents fell amid a glut of expensive units, especially downtown. Bankers and government officials say that annual rents downtown are about one-third less today than the $80 per square foot that Mr. Ratner and other developers had expected.
As a result, Mr. Ratner stopped work again in late March.
Ms. Gilmartin, of Forest City Ratner, acknowledged that the rental market had declined, but she said that Beekman Tower’s design and high-end finishes would put it in a class by itself.
“The savings we achieved go a long way toward insulating the project from any dip in rents or any protracted period of time required to lease up the building,” she said. “We’re really bullish on this building.”