Thursday, April 28, 2011

Projects Shelved in the Downturn Spring Back to Life

During the recession the developer Brookfield Office Properties shelved plans to build several office towers on a 5.4-million-square-foot property that runs from Ninth Avenue to Dyer Avenue, between West 31st and West 33rd Streets. But Brookfield did not ignore the project in the downturn.

The developer spent the last several years studying the engineering of a deck over the rail yards on the site, and says it has found a way to build it cheaper and quicker. It will start construction later this year, with plans to deliver a two-million-square-foot office tower designed by Skidmore, Owings & Merrill on the northeast corner of the parcel by 2015. There are plans to eventually construct as many as three towers. “We will start building the deck on spec but are confident that by the time we get around to building the tower, we will have found an anchor tenant,” said Ric Clark, the president and chief executive. While he declined to give asking rents for the tower, Brookfield has begun preliminary conversations with tenants and expects to be competitively priced with the Hudson Yards buildings the Related Companies is planning a few blocks west.

As rents rebound and vacancies fall in the New York office market, some developers like Mr. Clark who shelved projects in the recession are resurrecting their plans. Several buildings are in the pipeline, and nearly 9.5 million square feet could become available over the next few years — in addition to several million more square feet at the World Trade Center in Lower Manhattan and the Hudson Yards.

A number of factors are driving the trend. Commercial rents are rising in certain submarkets and have held steady in others. Builders who believe the market has turned are preparing sites now in the hopes their projects will come online when higher rents are firmly established.

The city’s aging office stock is another factor. Nearly 83 percent of the office buildings in Manhattan were built more than three decades ago, according to the real estate company Cassidy Turley, and just 6.6 percent have been built since 1990. Many tenants, particularly law firms and financial services companies, crave new space that can be more efficient and tailored to their needs. Finally, construction costs could fall as union contracts begin expiring over the next few months and contractors push to exclude costly labor rules.

“A year ago people were saying the market was so bad they wouldn’t contemplate ground-up construction,” said John F. Powers, the chairman of the New York tri-state region for CB Richard Ellis. “But now, there is upward pressure on rents in some segments of the market, and certainly there is no more downward pressure, so developers are beginning to run pro formas again,” he said, referring to the method of estimating a project’s cost.

In the first quarter of this year there were 15 office leases in Midtown at rents above $90 a square foot, compared with 23 for all of 2010, according to Cushman & Wakefield. At the same time the vacancy rate in Midtown has dropped to 10.3 percent, compared with 12.6 percent at this time last year. Tenants considering locking in new space now, before rents rise further, include Time Warner Inc., the financial services behemoth UBS and the law firm Mayer Brown. According to Cassidy Turley there are 446 tenants in the market chasing less than 28 million square feet of space.

Particularly well-poised are those developers who had begun preparing before the recession and can resume construction now at points further along. Pacolet Milliken Enterprises, the sister company of the textile firm Milliken & Company, demolished the building at 1045 Avenue of the Americas, a full block between West 39th and West 40th Streets, in 2009. The company has completed the schematic design for a 350,000-square-foot office building at the now-vacant lot, and has hired the Houston-based real estate firm Hines as a consultant.

“We feel very confident about the market and the location,” said Richard C. Webel, Pacolet Milliken’s president. He said the company had been speaking preliminarily with tenants, though it had not yet hired a broker. As for timing, “based on who we have talked to, the market should be there by 2015 or 2016, if not sooner,” Mr. Webel said.

Timing is critical as the market starts to revive, experts said. “The first buildings to be up and running will be most successful in grabbing an anchor tenant,” said Robert Sammons, the vice president for research services at Cassidy Turley. Boston Properties is banking on this as it revives construction on a 1-million-square-foot office tower at 250 West 55th Street; building stopped in 2008 after the foundation was poured. Since it is partially built, it will be a relatively short time — mid-2014 — until Boston Properties can deliver the building to tenants. Already, it is in lease negotiations with the law firm Morrison Foerster as an anchor tenant.

by By Julie Satow / The New York Times
April 28, 2011

Tuesday, April 26, 2011

Civic Group Says That Concessions Are Needed From the Construction Unions

A prominent civic group has joined builders and real estate executives in calling for major concessions from the unions that dominate the construction industry, saying cuts are needed to allow major projects to move forward. The group, the Regional Plan Association, is supported by corporations, including some connected to real estate, and by planning groups in New York, New Jersey and Connecticut. It is a respected organization known more for advocacy on transportation issues and large public works than for taking sides in labor matters.

But the association has quietly circulated a 51-page report saying that the expiration of 30 union contracts in June presents a chance to reform the $25 billion unionized construction industry by eliminating what the report calls obsolete work rules and featherbedding; by adopting a standard eight-hour day for all building trades; and by reducing benefit packages. Members of the association are scheduled to present the report, “Construction Labor Costs in New York City — A Moment of Opportunity,” to Deputy Mayors Stephen Goldsmith and Robert K. Steel on Monday.

“Given the wrenching changes in the real estate industry since the recession,” said Robert Yaro, the president of the Regional Plan Association, “a growing number of builders have found that they can no longer support high labor costs.”

“This is not about what union workers are paid,” he added. “It’s about work rules and productivity. Those are things that should be changed.” The labor negotiations come at a critical time for the construction industry, as a growing number of buildings in the city are being constructed with cheaper, nonunion labor.

The Building Trades Employers’ Association, a group that represents contractors, has paid for subway advertisements and a Web site directly appealing to union members to agree to concessions, angering union leadership in the process.

This month, 400 union construction workers held a noisy protest outside the Taj Pierre Hotel as Sam Zell, founder of Equity Residential Properties, arrived for a speaking engagement. Mr. Zell’s company is building an apartment building at 500 West 23rd Street with nonunion labor. The construction unions dismissed the report, saying its authors were antagonistic to labor unions. They were referring to Julia Vitullo-Martin and Hope Cohen, former associates of the conservative Manhattan Institute who now work at the Regional Plan Association and prepared the report.

“So individuals with longstanding right-wing, anti-worker associations and views want to blame labor for our economic problems,” said Paul Fernandes, a spokesman for Gary LaBarbera, president of the Building and Construction Trades Council, a union umbrella group. “This draft report is rife with factual errors and omissions that reveal its underlying ideology,” he added. “The only thing missing from this piece of garbage is the Koch brothers and the governor of Wisconsin.”

The once cordial relationship between Mr. LaBarbera, whose group represents about 100,000 workers, and Louis J. Coletti, president of the Building Trades Employers’ Association, has become strained. Mr. LaBarbera “won’t sit in the same room with Coletti,” said a union lawyer who insisted on anonymity because he was not authorized to discuss the matter.

Real estate and construction executives said they were not trying to create a “Wisconsin,” referring to political efforts in Wisconsin and elsewhere to strip union workers of bargaining rights. “This is about saving the industry,” Mr. Yaro said. “It is by no means an attack on the unions.” The Real Estate Board of New York, a powerful lobbying group that represents most of the city’s residential and commercial developers, the contractors’ group and now the Regional Plan Association have conducted a campaign to enlist City Hall, in the hope that the mayor would use his influence on their behalf. But the Bloomberg administration has thus far seemed unwilling to insert itself into the labor dispute.

The association’s report says developers and owners, who absorbed the higher costs of union labor during the real estate boom, are now under pressure to cut costs because of lower rents and stringent financing terms. But the report also says that leading developers and contractors are attached to union construction work, in part because “the best union labor continues to surpass nonunion in skills and productivity,” and because the jobs provide “a key channel of upward mobility for millions of Americans.”

The report describes as archaic various provisions that unions have succeeded in keeping around, in contracts that were also signed by employers. These include the required presence of master mechanics and oilers for heavy equipment like cranes, which have become technologically advanced enough that the mechanics and oilers have very little work to do; and rules that say steamfitters, electricians and plumbers must always be around to monitor heat, electricity and water service, which the report likened to an apartment building having a full-time plumber rather than simply calling one when a leak occurs.

The report also called for eight-hour shifts to officially begin when a worker reaches his station, not when he arrives at the ground level, an issue in tall construction sites where many men are using a few hoists to get to the floors where they are working.

“To keep union firms competitive, the ongoing labor contract negotiations — and reformed work rule practices — must bring the union-nonunion differential closer to 10 percent from the current 20-30 percent,” the report says. “If this does not happen, nonunion labor is likely to gain an ever-increasing share of the market, forcing union developers and contractors to accept open-shop arrangements or leave the construction business.”

By Charles V. Bagli / The New York Times
April 25, 2011

Saturday, April 23, 2011

"What happens if I work without a permit?"

The simple answer is: A $5,000 civil penalty, a violation from the Department of Buildings (DOB) for working without a permit, a hearing with the Environmental Control Board (ECB), more fines issued by the ECB which could be up to a few thousand dollars and a ton of paperwork to file to correct the violation.  Not so simple, eh?
Any time you disturb the existing building material or add something to a property (e.g. garage), you must obtain a construction permit from the DOB. Otherwise you are just one 311-call-by-a-neighbor from being visiting by a DOB inspector and issued a violation for working without a permit.

When don’t you need a permit?
Anytime you are doing cosmetic work such as following examples:
  • Painting 
  • Tiling 
  • Installing cabinets 
Unfortunately, no matter how big or small your job is you have to go through the entire job filing process with the DOB. That means obtaining signed/sealed plans by an architect, filing all the required forms with the DOB, meeting with the DOB staff to get your job approved, pulling the work permits and finally signing off the job when construction is complete.

Play it safe and get the proper work permits before you start construction.


Friday, April 22, 2011

Copper Prices Set New Record

Comex copper futures set a new all-time high record, peaking at $4.42/lb on the yesterday morning. Fueled by steadily increasing orders from China and record high prices for all precious metals, speculators are shouting "buy, buy, buy!", while supplies of the metal rapidly dwindle.

Follow copper trading live at

Thursday, April 21, 2011

Why Copper Prices Are So High

At the end of the third quarter of 2010, copper prices were above $3 per pound, three times the price at the start of the year. The $3 price was caused by overly depressed prices from the worldwide recession, anticipation of a recovery in 2011, and huge Chinese purchases. While these were the reasons for the 2010 surge in copper prices, causes in the future could differ because many factors weigh on copper prices.

Price Trends: Long, Short and Medium Term

Copper prices are volatile. The trend of prices from 1970 to 2010 is generally down. The six-month trend is up, but the three- to five-year trend is erratic. The 2009 rise from $1 to $3 was preceded by a 2008 plunge from $4. Such upward and downward moves, by 30 percent or more within a two-year period, are not uncommon with copper prices.

Demand and Supply Factors

Commodity prices are principally determined by supply and demand. Too much supply of copper brings down prices while heavy demand brings up prices. Supply comes from inventories and production from copper mines. Demand comes from users and uses. The more volume and types of use for copper, the bigger the demand. Higher the demand combined with lower supply - the higher the price.

Users and Producers

Chile produces nearly one-third of the copper produced in the world. The United States, Canada and the former USSR combined, account for about half of world output. The largest users are the United States and China, followed by the former Soviet Union, Japan, the United Kingdom and Germany. Labor negotiations, strikes and other political and economic conditions in user and producer countries are big influences on copper prices.

Uses of Copper

Copper has uses in housing and automotive applications, but the biggest market by far is the electrical industry where, because of its conductivity, it is used as wiring and as parts in telecommunications and electronics. Because it is corrosion-resistant, it is used in plumbing, radiators, cooking systems and solar heating. Copper is strong, ductile, and malleable, and is used in producing brass and bronze, and can be alloyed with silver and nickel. It is also used in jewelry and coins.

Economic Recession and Growth

Because of copper's industrial use, it is consumed mostly by developed countries. Thus, the demand for copper is affected by the general state of the world economy, and by the particular state of the automotive, housing and electrical industries. With economic slowdowns and recessions, prices soften as demand declines. Prices go up with strong economies and increased use.

Other Determinants of Price

Seasonal factors sometimes affect copper prices, as do speculators and the status of the dollar. Prices tend to be up as the housing and automotive industries gear up for their spring and summer peak production, then soften in late summer and fall. Speculators have little permanent effect on prices, but can play roles in transitory moves. Because prices of copper are dollar-denominated, a weak dollar is generally good for copper prices.

Tuesday, April 19, 2011

New tennis stadium planned for Flushing Meadows

It’s "add-on" at the Billie Jean King Tennis Center.

Possibly as soon as the end of the year, the United States Tennis Association will be opening a new stadium to the Flushing Meadows Corona Park complex. “We always have a strategic vision about ensuring the National Tennis Center remains a world-class facility,” said Chris Widmaier, spokesman for the association.  

The new stadium would hold a modest 3,000 people — the Arthur Ashe stadium seats more than 22,000 — and would be specially designed for television broadcasts for the one time a year when crowds flock to the park to watch the US Open.

The stadium would be the fourth such “show court” at the facility and would go in the southeast corner of the tennis complex, according to Widmaier. 

In order to make room, Court 18, one of the public courts, would be torn down along with some storage facilities. But that is exactly what worries Patricia Dolan, president of the Flushing Meadows Corona Park Conservancy.

“We are very concerned about any kind of reconfiguration of the tennis center,” she said. “Going back to the time the center was built, the USTA made concessions to the community that there would be on-site parking and courts available to the public.” But according to Widmaier, Court 18 is the least used of all the 30 courts. And the new stadium would not the place of any parking spaces. “Right now the goal would be to have a very minimal impact on the courts,” he said.

And it will have no impact on the wallets of New Yorkers. “We have a history of investing our own money in the site and that will continue,” Widmaier said.

But the USTA still has to get approval from the city Parks Department and the Department of Buildings before construction of the stadium can proceed, according to a city employee, and that will not happen until it is in its final design phase. The stadium currently is in its preliminary design phase, according to the architecture firm Rossetti, which designed the structure. And the stadium is just part of a long-term vision for the center, a vision that the USTA hired Rossetti to help realize.

“We designed the original project in the late ’90s, then have come back multiple times to assist them with the upgrades and master planning needs,” said Leslie Genest, marketing manager for the firm. The firm’s web site said the long-term plan extends for 20 years and will help the site with structural updates as well as service, retail and sustainability issues.

Monday, April 18, 2011

Relationship between city's construction unions, contractors getting ugly

The happy building-boom marriage between the city's big construction unions and its major contractors is over - and the divorce is getting ugly.

In an industry hit hard by recession, contracts that affect 60,000 hardhats in 30 unions across the five boroughs are set to expire June 30. Gone are the days when jobs were so plentiful that contractors and unionists referred to themselves as "cooperating partners."

Since the boom went bust, some unionized construction trades face joblessness as high as 25% - compared with 8.9% citywide. Developers are burdened with 52% more stalled projects this year than last.

Formal contract talks don't begin for most trades until May, but contractors have taken up arms, launching subway ads and a website exhorting union workers to "face the facts." In one video, Building Trade Employers Association President Louis Coletti urges union workers to "embrace difficult changes that are needed." The group, which represents contractors in the 28 trade associations that negotiate with unions, bolsters the message with pictures of more than a dozen big construction projects that recently went to nonunion labor.

A subway ad that ended last week featured posters depicting a hardhat and his family with the words, "Today 30% of union construction workers are unemployed." The website claims union work costs 25% more than nonunion and if union workers don't want their jobs to go to "the enemy," the BTEA says, labor costs must drop.

"The economy is pushing us over a cliff," Coletti said. "Our members are willing to pay an 8%-10% premium for union labor, but they can't afford the 25%-30% premium."

Contractors are using the bad news to try to force concessions, including reducing benefits and allowing tools that cut back the number of necessary workers. "We're saying that all work rules have to be productive, all jobs have to be productive," Coletti said. "I'm not prescribing specifics - different trades have different issues - but things have got to change."

Labor leaders are fuming.

Gary LaBarbera, president of the Building and Construction Trades Council, an alliance of 15 unions, called the pre-negotiation tactic "a real breach of trust" and "an attempt to circumvent collective bargaining." At the same time, unions are aware that the old team spirit between management and worker evaporated when the housing market collapsed. Bobby Bonanza, business manager of the Mason Tenders District Council, said the economy "went sour and along with it the relationship with the contractors got sour."

Bonanza insists his members "have made plenty of concessions." In recent years, he said, unions agreed to work rules that reduce nonproductive downtime, including staggered starting times and standardized holidays. Outside Manhattan, he noted, most unions routinely grant so-called project labor agreements that cut costs by 20%.

There's only so much the rank and file can sacrifice, Bonanza said. "They're looking for 20%-25% reduction in hourly costs, and I don't believe that is going to happen," he said.

Story by Brian Kates / New York Daily News
Monday, April 18th 2011

Monday, April 11, 2011

NYU’s Updated Expansion Plan Revealed

New York University updated details on its proposed expansion at Washington Square in hopes of quelling public criticism of plans to re-imagine two superblocks. In November, NYU abandoned efforts to build its controversial 400-ft-tall Fourth Tower, which critics claimed would have dwarfed the I.M. Pei-designed Silver Towers on the site. New plans aim to meet academic space needs without exceeding the height of the Silver Towers and without use of eminent domain.  

Plans include construction of a new seven-story public elementary school topped by seven stories of student residences. It would be located at the corner of Bleecker Street and LaGuardia Place, which was the proposed site of the Fourth Tower. Other aspects include creating three acres of open space, community-based playgrounds and dog runs.  

The strategy for NYU’s plan was released last spring and is an outgrowth of its master plan, NYU 2031: NYU in NYC, which envisions the addition of as much as 6 million sq ft of space over more than two decades. Half of that space would be spread out on three locations, including Manhattan’s East Side health corridor in downtown Brooklyn, on Governor’s Island and half around the university’s main location.

The proposal will be reviewed through New York City’s Uniform Land Use Review Procedure. The portion of NYU 2031 up for consideration through the ULURP focuses on NYU’s superblocks in Greenwich Village and includes two new academic buildings containing an academic department and faculty offices on the Washington Square block, a 14-story building on the west side of Mercer Street, enhancing LaGuardia Place’s open space, the construction of an eight-story building that has shifted off the LaGuardia Place strip and the addition of extra classroom and student space that will be built below-grade beneath and between the two new academic buildings.  

A new mixed-use, 800,000-sq-ft building that will be located on the site of the current Coles Gym is also part of the superblock plan. This building will have an approximately five-story podium and a series of towers ranging from 27 stories on the corner of Mercer Street and Houston Street, which will match the height of the existing Silver Towers, to eight stories in the middle of the block.

April 11, 2011
ENR New York