Friday, May 27, 2011

LEDs replace 100-watt light bulbs nearing phase-out

Lighting companies are unveiling the first LEDs (light emitting diodes) that produce the same amount of light as the 100-watt traditional incandescent that will be phased out nationwide in January.

California-based Switch Lighting debuted its newest LED Tuesday at the 2011 Lightfair International Trade Show in Philadelphia. The bulb will cost a little more than $20 when it goes on sale this fall, but because it uses 85% less power than the incandescent it's replacing, the company estimates it will pay for itself in about a year, and all parts and components of the bulbs can be reused, recycled, or reclaimed so there is very little chance anything will end up in a landfill.

Osram Sylvania, a unit of Germany's Siemens AG, announced its own pear-shaped 100-watt-equivalent LED, but did not say when it will hit store shelves. Lighting Science Group Corp., a Satellite Beach, Fla.-based company, has several such prototypes on display at the trade show. Also, technology giant Samsung announced Tuesday that it's entering the U.S. LED market.

Dozens of other LEDs, halogens and compact fluorescent lamps (CFLs) have launched in the last two years. They aim to meet the requirements of a 2007 U.S. law that demands light bulbs use at least 25% less energy for the same amount of light. That bipartisan law, signed by President George W. Bush, will also phase out Thomas Edison's 75-watt bulb in January 2013, and his 60-watt and 40-watt ones in January 2014. It exempts appliance, three-way, colored and 19 other less commonly used incandescents.

Osram Sylvania plans to begin selling 75-watt equivalent LEDS at Lowe's in July, and Philips, the world's largest lighting maker, will have them in stores late this year for $40 to $45, reports the Associated Press.

By Wendy Koch / USA TODAY 

Thursday, May 26, 2011

Electric rate hikes zapped after law passed

The threat of a spike in electrical rates died a two-pronged death last week.

The Federal Energy Regulatory Commission had come under fire for its January decision to allow city power generators to enact a large increase for their rates during peak electrical times. The agency believed the power companies faced steep property taxes when in actuality they received significant abatements. The FERC ruling could have caused city residents’ electrical rates to shoot up by 12 percent.

Days after the state Legislature passed a law last week to prevent the planned hike from being passed to those residents, FERC undid its decision.

“I’m glad this misguided rate hike has been reversed and proud that the state took swift action to save ratepayers millions of dollars,” state Sen. Michael Gianaris (D-Astoria) said. “Gov. [Andrew] Cuomo deserves thanks for working closely with those of us who were alarmed by the FERC decision to resolve the problem."

For months lawmakers had been fighting FERC’s ruling, which could raised rates by 17.5 percent for businesses, Gianaris said. His district contains and lies adjacent to several major power-generating plants in Astoria.

FERC’s decision had been opposed by city and state officials. Mayor Michael Bloomberg wrote a letter in March to FERC Chairman John Wellinghoff against the commission’s ruling. About a week later, U.S. Sen. Charles Schumer (D-N.Y.) requested a hearing with Wellinghoff. The decision had also been criticized by utility Con Edison. The electric company supplies power but does not generate it and said the rate would interfere with the company’s attempts to keep its rates low.

Assembly Speaker Sheldon Silver (D-Manhattan) introduced a bill May 6 into the state Assembly that would prevent any of the planned rate increase from FERC to be reflected in consumers’ bills.

State Sen. Andrew Lanza (R-Staten Island) introduced a companion bill in the Senate five days later. The bill also set specific rules for how power-generating companies can receive property tax breaks. It passed in the Assembly with 60 votes and two excused and in the Senate by 33 to one with one abstention.

Governor Cuomo signed the bill May 18, at which time it became a law.

By May 20, the Federal Energy Regulatory Commission had reversed its decision.

By Rebecca Henely /
Thursday, May 26, 2011

Wednesday, May 25, 2011

Huge Domino Sugar plan clears last hurdle

Judge dismisses final major lawsuit against mixed-use development on Williamsburg waterfront that will include 2,200 residential units.

The New York State Supreme Court late Tuesday afternoon dismissed a lawsuit against the rezoning of the former Domino Sugar factory site in Williamsburg, Brooklyn that was crucial to the redevelopment of the site.

Late last year, the Williamsburg Community Preservation Coalition sued the city and the project’s developer, Community Preservation Resources Corp., claiming that the City Council, the Department of City Planning and the developer failed to conduct the proper environmental reviews for the project and that it therefore should not have been approved. The decision was made immediately after arguments were heard in court from both sides on Tuesday. 

“We are gratified by the unequivocal and swift decision made in a rare bench ruling today by Judge Eileen Rakower in State Supreme Court to dismiss the lawsuit challenging the city’s approval of the New Domino,” said Susan Pollock, senior vice president of CPC Resources, in a statement.

Jeffrey Baker of law firm Young Sommer Ward Ritzenberg Baker & Moore, who represents the Williamsburg Community Preservation Coalition, could not be reached immediately for comment.

The developer said it is on track to begin construction of the $2 billion redevelopment of the 11-acre Domino Sugar refinery site along the Williamsburg waterfront. The plans call for mixed-use development with 2,200 residential units. CPC expects to break ground on the initial residential development on the upland parcel next year. The project will include 660 affordable units, with 100 set aside for families with income under $23,000. It will also include four acres of waterfront public open space.

This lawsuit was the final hurdle for the project, which had generated criticism over the past few years. City Councilman Stephen Levin dropped his opposition to the new Domino project when the developers agreed to decrease some building heights. He had argued that the project was too big and had too few low-income housing units.

“I applaud today’s decision by the Supreme Court to drop the litigation,” said Councilmember Diana Reyna, in a statement. “This is great news for our community; I praise the hard work and determination from the team at the Community Preservation Corporation as well as community leaders. The New York City Council was instrumental in ensuring that high levels of affordable housing and vast public space were incorporated while preserving the integrity of the design and viability of the project."

The redevelopment plan was approved last July by the City Council. The developers said they plan to redevelop the 100-year-old landmarked refinery building and its famed Domino Sugar sign. The new Domino project will take 10 years to complete.”.

By Amanda Fung / Crain's New York Business
May 25, 2011 5:59 p.m.

Monday, May 23, 2011

Big Brooklyn project gets go-ahead

A massive, federally owned building, vacant for 11 years, finally gets a builder to redevelop it. Advocates predict it will bring blue-collar jobs to the Sunset Park waterfront.

Salmar Properties has been selected by the city to develop a 1.1 million-square-foot warehouse in Brooklyn's Sunset Park, officials announced Monday. The Bloomberg administration hopes the project will spur the revitalization of the city's languishing manufacturing industry.

The project, which sources said will cost about $10 million, will eventually create 1,300 permanent industrial jobs and 400 construction jobs along the Brooklyn waterfront, according to the city's Economic Development Corp.

The federally owned building, known as Federal Building #2, has been among the largest vacant structures for sale in New York. It has been shuttered since 2000.

EDC President Seth Pinksy said in a statement that finding a developer “represents an important step forward in the Bloomberg administration's efforts to stabilize and expand the critical industrial sector.” Mr. Pinsky also said the city has plans to roll out additional industrial initiatives in the coming weeks.

Rep. Jerrold Nadler, a West Side congressman whose district also includes Sunset Park, has been pushing for action on Federal Building #2 for years.

“I am delighted that this major waterfront property will soon become a significant part of Brooklyn's revitalized manufacturing district,” he said in a statement.
 “I am very pleased that Congresswoman [Nydia] Velazquez and I have been able to assist in facilitating the long-awaited reincarnation of this federal building.”.

By Shane Dixon Kavanaugh / Crain's New York Business
May 23, 2011 3:30 p.m.

An Empty Warehouse Holds Dreams of Industrial Jobs

At 1.1 million square feet, Federal Building No. 2, is the largest vacant structure for sale in the city.

To hear it described by one broker, the football-field-long former Navy warehouse off the Brooklyn waterfront inspired awe from all but a few of the prospective buyers invited on a tour of the long-vacant site last month.

But that awe, said the broker, Chris Havens, the chief executive of Creative Real Estate Group in Brooklyn, quickly dissolved into skepticism as the financial realities of the World War I-era building became clear.

At 1.1 million square feet, the 94-year-old edifice in Sunset Park, commonly referred to as Federal Building No. 2, has one of the largest floor plates in the borough and may be the largest vacant structure for sale in the city. The city’s Economic Development Corporation is marketing it for the federal government, with the goal of filling it with light manufacturing operations.

Potential owners are realizing that with such superlatives come expensive challenges.

“I love big, vacant buildings, and I think they’re exciting,” said Mr. Havens, who toured the eight-story structure with dozens of developers, brokers and curiosity seekers. “It’s dramatic, and you imagine what could happen in a building that size. The problem is it’s not worth anything, and one of the big brokers who was there that day actually said that it’s worth ‘less than zero.’ ”

Since issuing a request for proposals in December, the development corporation has received bids of $500,000 to $10 million from six potential buyers. Each has offered different ways to hurdle financial obstacles that include the building’s enormous renovation costs, a wide floor plate that limits light and air at the center of the structure, zoning limitations, and property taxes of $1 million a year, which the federal government is exempt from paying.

An earlier effort by the federal government to sell the building, in 2006, was derailed two years later after the winning bidder, Time Equities, pulled away in the face of economic turmoil. The group, which invested $1.5 million in engineering and architectural fees before abandoning its plans, did not submit a follow-up proposal, said the company’s chairman, Francis Greenburger.

“Our reading of the market hasn’t really changed,” Mr. Greenburger said, “and we just feel like it would not be appropriate for us to get back in when we didn’t have the conditions we need to move forward. Time Equities’ original proposal included the possibility of bringing a Target store to the site in addition to industrial tenants. “Our experience in the market today is there’s little construction financing available and, certainly for larger projects, it’s almost nonexistent,” he said.

But successful development of buildings like Federal No. 2 could help stem an exodus of industrial jobs in the city, which have fallen to about 100,000 in 2008, from a peak of 960,000 in 1959, according to the federal Labor Department. The recent rezoning of 50 blocks in Greenpoint and Williamsburg to residential from industrial left hundreds of businesses without a home in the city, said Leah Archibald of Ewvidco, a north Brooklyn business advocacy group.

“There are a lot of displaced industrial tenants right now,” said Nick Halstead, a project manager for the Economic Development Corporation, which is overseeing a multifaceted plan for Sunset Park that includes a new freight rail line. “Space gets expensive in certain submarkets so we’re trying to hold this down as one big area for affordable industrial use.”

Broadening the building’s appeal for prospective tenants has been a central challenge for the Clarett Group and Industry City Associates, two of the developers that submitted bids late last month.

Bruce Federman, a partner at Industry City, said that altering the concept of light manufacturing to include technology start-ups and art studios was needed to generate demand for a space that few expect will command more than $8 a square foot. Under the Industry City proposal, only 25 percent of the building would be immediately leased, and the remaining space would be marketed after further renovations — including larger windows to allow for more air and light, a new roof and the installation of up to 16 new elevator cars.

“It’s not what we used to know from the modern era of garment distribution,” Mr. Federman said of light manufacturing. “It has to include crafts, artisans, creative commercial users, graphic artists and computer users who use space in a manner not commonly fit into manufacturing.” .

The building was erected quickly during World War I as a Navy warehouse and later used as a uniform depot during World War II, according to city records. Before being shuttered in 2000, it housed Food and Drug Administration laboratories and a New York Police Department gang unit, among other government agencies. A few relics from before the building closed, like a photo of a young Bill Clinton and a 1988 Mets poster, are still tacked to the walls.

Initially, speculation that the building would be rezoned for residential use, as happened in former industrial sites in Williamsburg, drew intense interest from a handful of developers, said Yossi Hackner, managing director for Sholom & Zuckerbrot Realty in Queens. Those potential buyers fell by the wayside, however, after city officials renewed their vows to maintain the area’s M3-1 zoning, a narrow designation that allows for woodworkers, food and beverage distributors and medical supply companies, among other groups.

Josh Keller, executive director of the Southwest Brooklyn Industrial Development Corporation, said Sunset Park’s large population of Mexican and Asian immigrants were in need of jobs, not homes. According to his advocacy group’s research there were some 2,000 industrial businesses in Sunset Park and the nearby areas of Gowanus and Red Hook in 2005.

“Believe me, employment isn’t what it could be because of the circumstances nationally, and in New York, with its relatively high unemployment rate,” Mr. Keller said. “So if you ask me what we need right now, it’s employment and getting people back to work.”

By Jotham Sederstrom / The New York Times
Originally Published: March 30, 2010

Saturday, May 21, 2011

Manhattan developers push office construction

More than 25 million square feet of projects are planned for the next decade as appetite for modern, green buildings grows.

Manhattan developers are planning the city's biggest decade of office construction since the 1980s, betting on rising demand for modern space even with tenants unsigned and the availability of financing more limited.

More than 25 million square feet of projects are under construction or may be built in the next nine years, according to brokerage Cassidy Turley. Developers including Related Cos. and real estate investment trusts Boston Properties Inc. and Vornado Realty Trust are in talks with potential tenants as they step up plans for towers. Some, including Vornado, may proceed without lease agreements.

Builders and brokers say Manhattan is ready for the boom, citing corporate appetite for the latest in comfort, energy efficiency and technological capability in an area where more than 60% of buildings are at least half a century old. The risks for developers are that they are competing for tenants and may have to put up more money as banks are reluctant to fund new projects just three years after the credit crash.

“The developers anticipate improvement in the fundamentals that we haven't seen yet,” said Sam Chandan, adjunct professor at the Wharton School of the University of Pennsylvania and chief economist at real estate research firm Real Capital Analytics Inc. “The lenders that could support new construction remain circumspect. It's fair to say that developers will have to work creatively with lenders to line up financing.”

The Manhattan office-vacancy rate fell to 12.2% as of April 30, after peaking at 13.5% in March of last year, according to New York-based Cassidy Turley. That compares with a low of 6.7% in September 2007. Class A rents—rates at the highest-quality buildings that would be most similar to the new towers—rose for a seventh month in April to $59.65 a square foot. The record was $88.37 in May 2008.

Including buildings completed last year, Manhattan could see about 28.5 million square feet of new office space in this decade. Only 7.4 million square feet was built in the 1990s, and 18.5 million in the 2000s, according to Cassidy Turley. The 1980s had 47.2 million square feet of offices built.

Manhattan's 450 million square feet of offices makes it the biggest U.S. market.

“We're getting to the point where new construction is logical and the developers are ready to come out of the ground,” said Robert Sammons, Cassidy Turley's vice president of research. Property companies that stockpiled money during the recession now want to be “ahead of the curve,” he said.

Boston Properties, the largest U.S. office REIT, may be the first to start building, with construction of a stalled project poised to start in the fourth quarter. The Boston-based company is in the final stages of negotiations with law firm Morrison & Foerster to anchor the planned 1 million-square-foot tower at Eighth Avenue and West 55th Street, said a person with knowledge of the discussions. An agreement may be reached within weeks, said the person, who asked not to be named because the talks are private.

“We are working on the marshalling of resources to be in a position to start the project,” Boston Properties President Douglas Linde said. “There's been a fundamental shift in people's outlooks on where they're going and where they want to be, and the city of New York's availability of high-quality real estate.”

Mr. Linde declined to comment on discussions with Morrison or any other potential tenant. On a May 3 conference call, he said the company was in “active” negotiations with an unnamed tenant who would take about 20% of the building.

The company said it has invested about $480 million in the roughly $1 billion project, which was suspended in 2009 after another law firm withdrew as an anchor tenant. Foundations and below-the-street concourse floors are already in place, Mr. Linde said. The steel is sitting in a yard in South Carolina, and the makings of metal frames for the curtain wall are in storage outside of Boston, he said.

Manhattan's far West Side, the area roughly between Pennsylvania Station and the Hudson River, may be one of the biggest areas for development as Related and Brookfield Office Properties take the first steps to attract tenants and start construction on a potential 10 million square feet of offices. Penn Station is the busiest U.S. commuter rail hub, with its 590,000 passengers a day approximating the population of Milwaukee.

Much of the construction there will involve building platforms over railroad tracks throughout that area.

Financing new development may not be easy. Across the U.S., there were only a few large office-construction loans in the first quarter, Mr. Chandan said. One was for the 600,000-square-foot 600 Brickell Ave. project in Miami, which got a $130 million loan from Canyon Capital Realty Advisors in February.

Construction loans have fared the worst among all types of commercial real estate loans, according to Richard Parkus, a real estate debt analyst at Morgan Stanley in New York. Ninety-day delinquency rates peaked close to 19%, and have dropped “only minimally” since then, he said.

Commercial construction loans outstanding in the U.S. have fallen each quarter since early 2009, according to the Federal Deposit Insurance Corp. The fourth-quarter total of $163.2 billion is a little more than half the $297.9 billion it was when lending peaked in the first quarter of 2009. Those figures include retail, industrial and hotel loans as well as offices.

Spending on U.S. office construction fell to $24.4 billion in 2010, down 36% from 2009, and 56% from the peak year of 2008, according to the Census Bureau.

Prudential Financial Inc., an investor in about $60 billion of U.S. property since 1999, is concentrating on funding apartment construction, and isn't yet seeking to finance offices, said Kevin Smith, senior portfolio manager at Prudential Real Estate Investors, the property-investment unit of the Newark, N.J.-based life insurer.

Prudential provided most of the equity on SJP Properties Inc.'s 11 Times Square, a 1.1 million-square-foot tower at Eighth Avenue and 42nd Street that remains more than half unrented more than a year after its completion.

These days, Prudential prefers buildings “that are up and leased,” Mr. Smith said. “Talking about financing new construction, that's a whole different kettle of fish.”

Rents in New York haven't risen enough yet to entice banks to write new loans, said Greg Reimers, northeast market manager for real estate banking at New York-based J.P. Morgan Chase & Co., the second-largest U.S. bank by assets.

“If a banker gets a call from someone who owns land, the first question he's going to ask is, ‘Who's your tenant?'” Mr. Reimers said. “Twenty percent pre-leased for an office building is not going to be sufficient to get a non-recourse construction loan. Twenty percent leased is another way of saying 80% vacant.”

Publicly traded REITs such as Boston Properties, having accumulated cash and raised equity during the worst months of the recession, are in a better position than private developers to self-finance their building pipelines, Mr. Chandan said.

Boston Properties is prepared to use cash and access to unsecured credit to start its 55th Street project, Mr. Linde said. In its most recent quarterly report, the company said it had $747.3 million of cash and equivalents, and $1 billion of undrawn credit.

“I was with a major New York City bank last week, and they encouraged us to talk to them about doing a construction loan, if we wanted to go in that direction,” Mr. Linde said. “This was an inbound call to me, not an outbound call to them. I feel very comfortable with my liquidity. I feel comfortable with my availability of future cash to build the building.”

Vornado has two midtown projects in the works. One is 15 Penn Plaza, a 2.8 million-square-foot tower planned for the site of the Hotel Pennsylvania, across Seventh Avenue from Penn Station. Anthony Malkin, operator of the Empire State Building, last year fought to stop the building, saying the 1,215-foot skyscraper was too close to his and would mar the view. The New York City Council approved the project anyway.

Vornado Chairman Steven Roth said in an April 15 letter to investors that the company won't proceed on that tower without a major tenant.

He said at a luncheon last month that the other project, a 1.5 million-square-foot tower that would be constructed on top of the Port Authority Bus Terminal at 42nd Street and Eighth Avenue, may start without a signed tenant, a practice known as building “on spec.”

An unidentified Chinese investor agreed to put $500 million to $700 million into the project. The bus terminal was built in 1950 with footings strong enough to support a skyscraper.

Roanne Kulakoff, a spokeswoman for New York-based Vornado, declined to comment.

Mr. Roth isn't the only New York developer considering building on spec. Edward Minskoff, who as an executive of now-defunct Olympia & York Developments helped build downtown's World Financial Center, said he will erect a 413,000-square-foot, 13-story office building at 51 Astor Place, across from the Cooper Union engineering school, from whom he leases the ground.

“There's 26 million square feet of leases rolling in 2013 and this building will be operational April of 2013,” he said. “There are no blocks of space in any brand-new, A-plus building that are going to be available in that same time frame.”

Mr. Minskoff declined to give the cost of the building or detail its financing.

“We'll go conventional financing and my personal equity,” he said. “It'll be one of the big major banks that are sophisticated and understand how to finance construction loans.”

Related, led by billionaire Stephen Ross, has been marketing the $3 billion-plus first phase of the Hudson Yards development. The company a year ago lined up the Oxford Properties, a real estate investment unit of Ontario Municipal Employees Retirement System, or OMERS, to serve as an equity partner in the 26-acre development, Manhattan's largest unbuilt space. Related has declined to say how much the Canadian pension fund is investing.

It's “always been our expectation” that Related and its partners would supply at least two-thirds of the cost of the first phase, said Jay Cross, president of the Related unit overseeing the site. They would seek more equity once they've signed their first anchor tenants for the project, which may be as much as 4.5 million square feet. After that, they would try for a construction loan, he said.

Brookfield, owner of downtown's World Financial Center, is seeking to start its 5.4 million-square-foot Manhattan West project a block east of the Hudson Yards site. The New York-based company shut down preliminary work on the project in 2008. The company envisions two towers, one of them exceeding 1,200 feet in height.

“We could have the first tower up and a tenant in by 2015,” Chief Executive Richard Clark said on a conference call last month. “Our hope is as we turn the year, we'll be able to get out there and start to do the work.”

Melissa Coley, a Brookfield spokeswoman, declined to comment beyond Mr. Clark's public statements.

About 64% of Manhattan's office buildings are more than 50 years old, according to CB Richard Ellis Group Inc. That means most are incapable of satisfying the desires of financial, media and technology industries for wide-open, high-ceilinged space with the latest environmentally conscious technology, said Lawrence Longua, director of the REIT Center at New York University's Schack Institute of Real Estate.

If building gets ahead of demand or the economic recovery stalls, rents may fall and vacancies may increase, said Stuart Saft, a real estate attorney with Dewey & LeBoeuf in New York. Without an influx of outside renters, tenants may simply shift from existing offices to newer ones, as has happened in previous construction booms.

“Businesses want the newest buildings,” Mr. Saft said. “The problem is each time you build a building and seduce people over to it, then you empty out a Class A building, potentially making it a B building if you don't upgrade it.”

Many companies also have been cutting back on space due to telecommuting and shifting employees from offices and cubicles to open floors, he said.

After developer Gary Barnett's 750,000-square-foot International Gem Tower in the Diamond District opens next year, a new building isn't scheduled to be finished until 2013, when Mr. Minskoff's project and World Trade Center towers One and Four are completed, according to Cassidy Turley.

Developers stretching to make office projects happen are “making a good bet,” said Douglas Hercher, who brokers capital for commercial-property deals as executive vice president and principal for Cushman & Wakefield Sonnenblick Goldman.

“They're looking at it and saying that, given where land prices are today and construction costs are today, we can build cheaper than we can buy,” he said. “And we'll be well- positioned if we build brand new state-of-the-art office in great locations. When those buildings open in three to four years, we'll be sitting pretty.”.

By Bloomberg News
May 20, 2011 11:30 p.m.

Friday, May 20, 2011

290-room hotel set for Lower East Side

The Lower East Side is about to sprout a new hotel.

New Hotel Indigo to open on Orchard Street in 2013, featuring retail space and parking; joint venture pays $46 million for the property.

A joint venture between Brack Capital Real Estate and IHG bought 180 Orchard St. for approximately $46 million and plans to turn the stalled development project into a 290-room hostelry with retail space and parking.

The property will be a Hotel Indigo, a boutique brand that is part of a vast IHG stable, which includes InterContinental Hotels & Resorts, Crowne Plaza Hotels & Resorts and Holiday Inn Hotels & Resorts. The new property is scheduled to open in 2013. It will boast such amenities as a restaurant, bar, state-of-the-art fitness center and outdoor pool.

“This prime development site presents an untapped opportunity to create a project that will benefit neighborhood residents while adding value to the area overall,” said Issac Hera, chief executive of Brack Capital Real Estate, in a statement.

This will be the second hotel that Amsterdam-based Brack is developing. It is also working on a boutique property in Times Square.

Brack has developed more than three million square feet of office, hotel and retail space as well as 3,000 residential units internationally. The company’s New York portfolio includes properties such as The James New York Hotel, at 27 Grand St.; The Greystone Hotel, at 212 W. 91st St.; The Olcott, at 27 W. 72nd St.; the Element, at 555 W. 59th St.; The Hilton Garden Inn, at 63 W. 35th St.; and both 15 Union Square West and 90 West St.

There has been tremendous interest in Manhattan’s hotel market as occupancy rates fall and room rates increase. On Thursday, the Wall Street Journal reported that a deal had been struck to sell the Palace Hotel on Madison Avenue for $400 million, roughly $445,000 a room.

By Theresa Agovino / Crain's New York Business
May 20, 2011

Tuesday, May 17, 2011

Fewer Towers On The Horizon

Office construction down from previous decades.

The office skyscraper is one of the New York City's defining features. But developers aren't churning them out the way they used to.

So far this decade, less than 6 million square feet of new office space is under construction in the city. Between 1950 and 1960, developers built an average of about 53 million square feet of office space per decade, and since 1990, the average dropped to 14 million per decade. Some government and industry officials are concerned that New York will have a harder time competing against other global cities.

The Wall Street Journal
May 16, 2011

Thursday, May 12, 2011

Electric Makeover for Port Authority Bus Terminal

The world's busiest bus station is finally getting a facelift, and it's going glam.

A corner of the drab Port Authority Bus Terminal will soon be covered in a bright, 170-foot LED display, a look that's a little more Times Square than aging bus station.

The panel is set to be finished by mid-June and will mainly display ads. It will wrap around the building's corner at 42nd Street and Eighth Avenue, covering up a portion of the signature but utilitarian X-shaped tresses. LED lights that complement the ad panels will grace the rest of those facades.

The permanent display is made of something called Mediamesh, a woven steel mesh embedded with LED lights, which are invisible from inside the building.

For some New Yorkers, the makeover is long overdue. "It looks like a jail right now," said Angela Malave of the Bronx, who works across the street. "It just looks like an abandoned building... Some bright lights up there would definitely help.

Tony Ward of East New York, agreed. "The area could use some sprucing up," he said. "The building just looks like a parking garage, not the world-famous Port Authority. It's time for an update."

Ad revenue will be split between the Port Authority and A2aMedia, which will pay for, install and run the display. A Port Authority spokesman said the money will likely be used for repair and work on the bus terminal.

By Tim Herrera / AM New York
May 10, 2011

Monday, May 9, 2011

City seeks developers for Willets Point revamp

Grand plans inch forward for 62-acre Queens that's been the subject of a lengthy legal battle between the city and some of the local businesses that would be displaced.

The city moved another step forward Monday with its hotly contested plans to redevelop Willets Point, Queens. The city's Economic Development Corp. issued a request for proposal seeking a developer to build out the first portion of the 62-acre site, a parcel of land located next to Citi Field.

The request for proposal comes just days after the city was given the green light to begin the public review process for two proposed highway off-ramps for the Van Wyck Expressway, which are crucial to redevelopment of Willets Point.

According to the city, plans for phase one includes up to 680,000 square feet of retail space, up to 400 units of housing (35% of them affordable), a hotel, two acres of open space and parking.

Opponents of the city's plan, led by Willets Point property owners, argue that the RFP issuance is too hasty since the highway off-ramps have not been approved by the state or the federal government. But the city claims that the ramps are not essential to the first phase of redevelopment, which involves developing 12.7 acres of land and transforming the parcel “into a mixed-use, sustainable community and regional destination."

“Selecting a developer will put us one step closer to realizing the goal that the community created, leaders across Queens have envisioned for decades, and a project that the City Council overwhelmingly approved: making Willets Point New York City's next great neighborhood,” EDC President Seth Pinsky said in a statement.

“We think this is premature,” said Michael Gerrard, senior counsel of Arnold & Porter, who represents 10 businesses that have been fighting for years to halt the Willets Point redevelopment. Some of Mr. Gerrard's clients are actually located in the first phase, he noted. “The project is still in legal limbo due to continuing uncertainty over whether the city will receive approval for the Van Wyck ramps that are essential to the project, which was approved as a whole, not something that could be broken into chunks or phases.”

The RFP comes two years after the city issued a request for qualifications for phase one, which is used by local governments to determine if private developers would be interested in developing a site. The city received 29 responses. Submissions to the latest request for proposal are due Aug. 12 and respondents are required to include a concept plan for the entire redevelopment of 62 acres.

According to the city, plans for phase one includes up to 680,000 square feet of retail space, up to 400 units of housing (35% of them affordable), a hotel, two acres of open space and parking. The city also said the first phase will create 1,800 permanent jobs and 4,600 construction-related jobs. The city owns and controls roughly 90% of the land in phase one.

By Amanda Fung / Crain's New York Business
May 10, 2011

Saturday, May 7, 2011

Comex Copper Prices Fall 8% for Week

The price of copper was down again Friday on new data that outweighed concerns about tight supplies.

July contracts for copper dropped 3.4% to $3.97 per pound Friday in New York trade, as the metal used in construction and manufacturing fell 8.3% for the week. Additionally, contracts for Aluminum declined accordingly.

Reports that China will continue to tighten monetary policy in an attempt to rein in inflation, could result in declines in copper demand.

Also contributing the price decline was a report from a private company showing that the US private sector added 179,000 new jobs last month, fewer than the 200,000 new jobs analysts expected would be added to the economy, while in a separate report the Institute for Supply Management reported that its non-manufacturing index was at 52.8 last month, down from 57.3 in March, showing that the US services sector expanded at its slowest pace in 8 months in April.

By Peter Coyne / TheElectricWeb 

Wednesday, May 4, 2011

Lehr Construction execs accused of $30M fraud

Manhattan D.A. indicts four executives of bankrupt Lehr Construction Corp., alleging they schemed, via faked contractor invoices, to steal millions from the company's clients.

Lehr Construction Corp. and four of its executives were indicted on charges of defrauding construction management clients of at least $30 million over the past 10 years, Manhattan District Attorney Cyrus Vance announced Wednesday.

Lehr allegedly stole money from its Manhattan clients from 1998 to 2010 by secretly shifting costs from the firm's general-contractor projects to its construction-management projects, according to the Manhattan D.A.'s announcement.

“This construction company was corrupt at all levels,” Mr. Vance said in a statement. “Its executives developed—and successfully executed—a scheme to steal millions of dollars from their clients. Simply put, they used an over-invoicing scheme to steal from their construction-management clients, and then used general contractor jobs to recover the stolen funds.”

A spokeswoman for Lehr would not comment beyond the following statement provided by the firm's attorney, William Schwartz, of the law firm Cooley LLP: “Having recently sought the protection of the United States Bankruptcy Court, Lehr Construction is confident that it will complete all of its projects and be able to pay all of its creditors and subcontractors notwithstanding these charges.”

Lehr, a 32-year-old firm, filed for Chapter 11 bankruptcy in February, citing the tightening of the credit market and the overall decline in the real estate market having an adverse affect on its business.

By Amanda Fung / Crain's New York Business
May 4, 2011

Monday, May 2, 2011

Union leaders' tough choices

Must choose between competing with nonunion labor or maintaining wage levels for a shrinking number of workers.
I was being given a tour of a renovated midtown office building the other day when a group of construction workers piled into the elevator. “The roofing crew must have just quit for the day,” said the owner. “So you use nonunion labor,” I said—an obvious conclusion, since none of the workers were speaking English.
“I just don't understand the construction unions,” the owner replied. “The cost differential is so great, unless something changes, the unions will be left with only a few sectors of the industry.”
New York state appears to be a labor stronghold, with one in every four workers belonging to a union. The figure is misleading, however. The state ranks so high because an astounding 71% of public-sector workers are unionized. Private-sector unions are in crisis, and union leaders appear to be having great difficulty figuring out what to do about it.
Construction unions know that unless they reduce the cost differential between union and nonunion labor, the percentage of projects being built nonunion will continue to rise. Yet it has been reported that Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, an umbrella labor group, won't even sit in the same room with Lou Coletti, who represents the contractors. It seems absurd to allow such passions to get in the way. The builders can always go nonunion. What will the union members do if there are no jobs for them?

Hotel union chief Peter Ward seems to be obsessed with restaurateur Dean Poll, who refused to meet the union's demands for a contract at Tavern on the Green. He's focused on making Mr. Poll's life as miserable as possible by trying to organize his Boathouse restaurant in Central Park. Meanwhile, limited-service hotels, most of them nonunion, are opening throughout the city, undermining the union's position in the marketplace. What does the Boathouse tell those hotel owners about doing business with the union?
The retail workers union is engaged in the equivalent of Custer's last stand in its effort to keep New York City Walmart-free. So far, there are no signs that the effort has created momentum for legislation to bar the company from the city, or intimidated landlords into refusing to lease space to the nation's largest retailer. In fact, the louder the union shouts, the more landlords enlist in the Walmart camp, sure that a union success will make New York more inhospitable to potential tenants. What do the union leaders think they will be left with if Walmart opens stores in the city?
The first of the questions will be answered in the next two months, when the construction contracts are decided. Union leaders will be choosing between defending their place in the city by competing with nonunion labor, or maintaining wage and benefits levels for an ever-shrinking number of workers.

by Greg David / Crain's New York Business
May 2, 2011