Construction giant builds new platform

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It’s hard to miss Melissa Burch.

For starters, as a top executive at construction giant Lend Lease, she’s a woman operating in what’s commonly seen as a man’s world. Second, at six feet tall — without heels — the statuesque brunette stands out before even uttering a word.

“I still do a double-take sometimes when I see pictures of myself with other people,” she joked. “I forget how tall I am.”

Burch has always embraced her height, but she’s likely more grateful than ever before for the visibility it affords her.

That’s because in 2015, Lend Lease hired her away from Forest City Ratner to become its new executive general manager.

The company is aiming to leverage its hefty balance sheet and international experience to build a new development platform in the Americas. And New York is on top of its hit list of places to deploy its capital, followed closely by Boston and Chicago.

Burch, 39, will be at the helm of that new effort. The company — which in New York has exclusively focused on construction until now — undoubtedly has a leg up here, having built residential behemoths for other developers such as 432 Park Avenue and One57, as well as landmarks like the National September 11 Memorial & Museum and CitiField.

But despite its high-profile projects, it faces some significant challenges — from competing with its developer clients to going up against rivals who are increasingly tapping cheaper, non-union labor. That’s not to mention that this new push comes just a few years after the company settled a giant overbilling fraud scandal with U.S. prosecutors.

Plus, there’s the general difficulty of getting into the development game in New York, where the barriers to entry are high.

“No one has managed to do it yet,” Forest City Ratner’s CEO MaryAnne Gilmartin, Burch’s former boss, told The Real Deal. “That might mean it’s fertile ground — or it might not.”

Global giant

Founded in 1951, the publicly traded Australian firm, formerly known as Bovis Lend Lease, is a giant in the development business — just not in the U.S.

It’s developed massive projects all over the world, including Barangeroo, a $6 billion office-and-retail project on Sydney Harbour, and a $2 billion redevelopment in London’s Elephant and Castle neighborhood, which includes the construction of more than 3,000 new homes.

Its coffers are well lined. As of June 30th, its investment management arm had approximately $15 billion in property assets under management on behalf of pension funds, insurance companies and sovereign wealth funds.

“Globally, they have 12 projects at the scale of [Brooklyn’s] Atlantic Yards happening all over the world,” Burch said of Lend Lease. “They’re comfortable at a scale that’s quite significant.”

Three years ago, the company’s board pledged to expand its business globally. With the U.S. economy improving, New York and other major U.S. cities topped the list of prospective investment areas.

Michael Stern, CEO of the Manhattan-based JDS Development Group, which handles its own construction, said the shift into development is a smart one.

“You’re seeing a lot of developers go into the construction space, but why not the other way?” he said. “It makes sense.”

Burch said her company’s experience in construction will be a boon to its development goals, especially in an environment where construction costs are escalating faster than ever. In 2014, construction costs rose to $32.9 billion in New York City, up 5 percent from $28.2 billion in 2013, according to the New York Building Congress.

Burch argued that the company has an advantage when it comes to breaking into development in New York because it understands the construction process inside out.

“It means we can get much better information much earlier in the process of underwriting a deal,” she said. “I can make better assumptions about costs based off of real-time data on what’s happening in construction. Hopefully, that means the costs of my deals won’t migrate the way others’ have.”

Burch also contended that the company’s relationships with developers would help it source deals fast. That’s what happened at 281 Fifth Avenue, where it’s co-developing a $400 million, 52-story, 260,000-square-foot condo project.

Victor Group, its partner in the deal, was a longtime construction client. When Lend Lease’s executives learned that Victor was looking for a partner they quickly called their development counterparts.

That project not only shows how much its construction connections might feed its development operation, but is also an early sign of the kind of flashy deals it’s already going after.

The partnership has tapped starchitect Rafael Viñoly, who’s also behind 432 Park, to design the trophy tower, which is expected to have ambitious price tags.

Lori Golub, general counsel and COO of HFZ Capital, who worked with Burch at Forest City, said she expects big things from her former colleague.

“She’s taken a very big job,” Golub said. “The way for her to make her mark and let the world know that Lend Lease is now a player in this market was to do something splashy. That’s what she’s done.”

Challenging terrain

Despite its wealth of experience overseas, Lend Lease has challenges ahead, especially when it comes to squaring the priorities of its development and construction businesses, said Gilmartin.

“They need someone like Melissa to get contractors to think like developers,” Gilmartin said. “The DNA is typically just different between the two. In contracting, there’s an aversion to risk and an inability to take more of a long-term view on an investment. Development is more a labor of love. Those two things aren’t necessarily a good match.”

In a broader sense, the company also took a big hit in 2012 when it agreed to pay $55 million in fines and restitution to avoid criminal charges for overbilling government and private clients, among other scams. The former head of the company’s New York operations, James Abadie, pleaded guilty to his role in the scheme and was sentenced to two years of probation.

Melissa-Burch-quoteProsecutors said the case, which they deemed the biggest construction fraud scandal in New York City history, was emblematic of the widespread corruption in the construction industry.

But Lend Lease’s Americas CEO Denis Hickey said the company has moved beyond the scandal and implemented safeguards, including bringing on a professional ethics executive who must sign off on construction contracts, to ensure nothing similar happens again.

“We’ve put that well behind us,” he told TRD. “We spent a lot of time fixing it and it’s not a factor anymore.”

Still, when it comes to breaking into development, there’s also the unrelated uncertainty as to how Lend Lease’s clients might react to bidding against the company for a project. Can they trust Lend Lease to help them pencil out a deal when the construction giant may compete for the same deal or if there is an inherent conflict of interest?

At least some clients said it’s not a concern. “Given their history with development, they know what they are doing and probably won’t have a problem,” said Jordan Barowitz, a spokesman for the Durst Organization, one of Lend Lease’s frequent clients.

For Burch, Lend Lease’s dual business is all part and parcel of the industry.

“Developers are used to partnering with someone on one deal and then competing with them on another,” she said. “I’m sure there will be folks wondering how that might play … but for the most part, they’re also seeing that there’s opportunity there.”

Then there’s the question of what Lend Lease’s “construction DNA” means in an environment where developers are increasingly flirting with non-union construction. By the end of 2015, almost 50 percent of all New York City projects will have been built using some non-union construction, said Barry LePatner, an attorney and construction expert.

Yet Lend Lease’s in-house construction team is an exclusively union shop in New York, so it’s possible that Lend Lease may lose an edge in competing on deals.

“That’s something they’re going to have to work out internally,” said George Kruse of Equity Residential, a Lend Lease construction client. “The construction side is in the business of making money, after all, and they’ll bid exactly what they would for any other development.”

Hickey, a native of Australia, said the construction side of the business will not hold back the development side — or vice versa.

“If the project doesn’t fit a Lend Lease style of construction then we are open to using a third-party business,” he said. “We have done that elsewhere when it was the right thing to do.”

Either way, the road ahead is paved with risk for Lend Lease, LePatner said.

“If you’re going to compete with well-established New York City developers who’ve been doing this for years and also handle your own construction, you better know what you’re doing,” he said. “This is playing at very sophisticated levels.”

Climbing the ladder

Burch, a native of Columbus, Ohio, gave up her chance to lead some of the most hotly watched development projects in the city to write her own ticket at Lend Lease.

She landed an internship in 2002 at Forest City Ratner right out of Harvard Business School after cold-calling then-development chief James Stuckey.

Having worked in investment banking and later for tech start-up Urban Fetch, a delivery service, Burch’s decision to go back to business school was partly prompted by her interest in public-private partnerships. That’s what drew her to Forest City.

“I remember sitting in the waiting room for three hours,” she recalled of her internship interview.

Twelve years later, she had worked her way up to executive vice president of commercial and residential development, a position formerly occupied by Gilmartin.

Burch oversaw the development and construction of the nearly $5 billion mixed-used Pacific Park project, formerly known as Atlantic Yards, including its once-faltering experiment with modular construction. She was also managing the development of Cornell Tech’s new futuristic campus on Roosevelt Island.

Given her slate of high-profile projects, her departure at Forest City shocked some.

“She had one of the biggest jobs imaginable so I was surprised when she told me,” said Rick Cook, of COOKFOX Architects, who worked with Burch on Pacific Park. “But, in hindsight, it makes sense.”

“There’s an abrupt and abrasive manner that’s sort of considered okay in the construction industry,” he added. “She brings something completely different, an elegance and a composure, but still manages to keep command of the room. It’s really extraordinary.”

Source: http://therealdeal.com/issues_articles/construction-giant-builds-new-platform/

The Future of NYC real estate

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The Hudson Yards Culture Shed, a yet-to-be-built arts and performance space at 10 Hudson Yards, just might wind up being the Batmobile of buildings. Dormant, it’s a glassy fortress. Animated, it will be able to extend its wings so-to-speak by sliding out a retractable exterior as a canopy.

The design is a window into the future of New York City construction — and the role technology will play. This isn’t to say that a fleet of moving buildings will invade New York anytime soon, but the projects of the future will be smarter, more adaptive and, of course, more awe-inspiring.

“I think you’re going to start having more and more facades that are more kinetic, that react to the environment,” said Tom Scarangello, CEO of Thornton Tomasetti, a New York-based engineering firm that’s working on the Culture Shed.

For example, Westfield’s Oculus, the World Trade Center’s new bird-like transit hub, features a retractable skylight whose function is more symbolic than practical: It opens only on Sept. 11.

As a whole, developers are moving away from the shamelessly reflective glass boxes of the past, instead opting for transparent-yet-textured buildings as well as slender, soaring towers à la Billionaires’ Row.

They are already beginning to experiment with different building materials, such astrading steel for wood in the city’s first “plyscraper,” which is being planned at 475 West 18th Street. And, sources say, developers will continue to find new ways of using a building’s “skin” to do some of the expensive work of heating and cooling, partly by allowing buildings to “breathe” through ventilated facades.

New York’s future buildings will also take less time to construct and design —through 3D modeling — with the click of a mouse. 

On the most basic level, these innovations are being driven by a necessity to deal with the city’s aging office stock. Much of Manhattan’s office space was built before 1970, a fact the business community argues puts New York at a disadvantage compared to other global cities such as Hong Kong and London.

In addition, many of today’s aging buildings have antiquated heating and energy systems.

In 2014, Mayor Bill de Blasio announced that the city would aim to reduce its greenhouse emissions by 80 percent by 2050, building on Mayor Michael Bloomberg’s goal of 30 percent by 2030.

Vishaan Chakrabarti

From a marketing standpoint, it’s also increasingly difficult for outdated office inventory, usually featuring low ceilings and intrusive interior columns, to compete with today’s modern buildings. Companies — whether they’re law firms, banks or media firms — are often looking for high ceilings, open space and ample natural light. The buildings that will dot New York’s future skyline will incorporate these qualities, through new design and innovation, but some experts predict they will also return to old-school prewar aesthetics, like brick and operable windows.

“There’s a desire for these buildings not to be hermetically sealed boxes,” said architect Vishaan Chakrabarti, who previously worked at the Lower Manhattan-based architecture firm SHoP but just opened his own firm, Partnership for Architecture and Urbanism. “It’s kind of a back-to-the-future moment where we discover what was great about our buildings.”

With help from some of the city’s biggest developers, architects, construction executives and engineers, The Real Deal examined several key industry trends that will be the epicenter of change in the not-so-distant future. Think of it as an early rendering.

Onward and upward

Competing for height is in New York City’s blood.

Since the early 1900s, with the advent of steel frames, developers have attempted to set height records with their buildings.

The 792-foot Woolworth Building, which opened in 1913, was the city’s tallest tower until 1930, when it was surpassed by the Chrysler Building at 1,046 feet. That was followed by the Empire State Building at 1,250 feet in 1931, and then the first World Trade Center at 1,368 feet in 1973.

Today, Extell Development Company’s Central Park Tower is poised to be the city’s tallest — save, symbolically, for One World Trade Center — at 1,555 feet. But developers’ mad dash to one-up each other could lead to a new (and even taller) wave of supertalls.

Making it all possible are leaps in construction technology.

A rendering of the Culture Shed, a planned cultural venue at Hudson Yards

Reinforced concrete — a composite of concrete and a pliable material, often steel — has become stronger and allowed developers to move away from exterior support columns. This means the building’s core bears the bulk of the responsibility of keeping the building upright, while the facade can be entirely glass with unobstructed views.

JDS Development is incorporating concrete with a 14,000-pounds-per-square-inch compression strength at 111 West 57th Street, its “skinny” condo tower that’s set to top out at more than 1,400 feet. One World Trade Center also features concrete with the same degree of strength. By comparison, 10 years ago, the strongest concrete used in buildings in the city was 10,000 pounds per square inch.

Looking ahead five to 10 years, concrete and steel are likely to see a 50 percent increase in strength, according to Stephen DeSimone, who runs the structural engineering firm DeSimone Consulting Engineers.

This evolution will usher in towers that reach 2,000 feet or even 2,640 feet — a half a mile — DeSimone told Crain’s last July. That’s about two Empire State Buildings stacked on top of each other.

While it may sound outrageous, it’s not out of the question. Dubai’s mixed-used Burj Khalifa — which opened in 2010 and is currently the world’s tallest tower — rises 2,716 feet. And, Saudi Arabia’s planned Jeddah Tower is expected to best that at 3,280 feet.

“There’s really no technical limitation,” said Jason Gabel, spokesman for the Council on Tall Buildings and Urban Habitat. “Really, the limit is, is there going to be enough money for these projects?”

Indeed, just because it’s possible to build taller, doesn’t mean New York developers will do it. The demand for uber-luxury properties here is already not quite matching the supply, threatening an over-saturation of the market.

A rendering of Extell Development’s Central Park Tower, which will top out at 1,550 feet tall when it’s complete in 2019.

The other impediment is One World Trade Center. Extell’s original renderings for Central Park Tower whipped up controversy when they showed the project would likelyexceed the World Trade Center’s 1,776 feet. Following some heavy public backlash, the firm’s latest renderings dropped the project’s contentious spire.

“There’s kind of an unspoken agreement that One World Trade Center will not be surpassed in height,” Gabel said. Whoever attempts to dwarf it will have to have a pretty compelling argument, he said.

Joseph Maraia, executive vice president of construction giant Lend Lease, said that after 1,000 feet, other factors also come into play. For instance, it becomes more difficult (and expensive) to transport materials to the top of buildings during construction. While that and other challenges won’t necessarily deter New York developers from reaching greater heights, they mean that the buildings might not make financial sense.

“There comes a point of diminishing returns,” said Maraia, whose firm is working on several of the city’s under-construction supertalls, including 432 Park Avenue. “It remains to be seen if it will be cost effective to go above the 1,500 feet that we’re playing [with at] the latest rounds of supertalls.”

Of course, a central motivator for developers is the price that these stratospheric properties can fetch. Last January, a penthouse in Gary Barnett’s One57 busted the city’s record for priciest condo sale when it closed at $100.5 million.

Extravagant penthouses elsewhere in the world — like one listed for a reported $400 million in Monaco — could inspire developers to aim even higher.

However, David Farnsworth, a principal at global engineering firm ARUP who leads the firm’s tall buildings team in the U.S., predicted that 432 Park would hold the residential height record for at least the next 10 years.

jason-gabel-quoteOn top of the wavering demand, there’s a limited amount of Manhattan land that can handle supertall towers, since the taller a building soars, the more space it needs at its base. Farnsworth said developers are likely to continue to test the limits of slenderness and said buildings will continue to do “crazy gymnastics” to optimize space, like cantilevering over adjacent properties where the developer has scooped up air rights.

There are other challenges associated with height.

Buildings have been getting lighter, necessitating devices that hedge the swaying impact of wind on buildings. So-called dampening systems act as counterweights to a building’s sway and are being used on the city’s slender skyscrapers, like 111 West 57th, 432 Park and 220 Central Park South. A “tuned mass damper,” for example, is a steel or concrete weight mounted at the top of the building to resist the tower’s movement, while “slosh tanks” use tanks of water for the same purpose.

A rendering of B2 BKLYN

While dampers don’t make the headlines, they are key players in a developers’ quest for greater heights and will likely become even more commonplace in New York construction going forward.

Forest City Ratner, for example, is installing a new type of damper at B2 BKLYN, the first residential tower at the high-profile Pacific Park project, to counterbalance its lightweight, modular construction. The technology, known as a “fluid harmonic disrupter,” consists of a series of water-filled pipes at the top of the building. It was originally developed by NASA in 2009 to absorb vibrations strong enough to detach an astronaut’s retina. But in the real estate industry, it’s now being billed as a lighter and smaller solution to reduce wind-induced vibrations.

In some ways, the success of the city’s supertalls depends on these dampening systems: Residents at the top of these towers are the most affected by a building’s sway. And if there’s sway, they may not pay eight-or-nine-digit price tags — even if they get a spectacular view. “As buildings get taller, and also lighter, it makes the accelerations you may feel even more an issue,” said Thornton Tomasetti’s Scarangello, who is also working with Forest City on B2.

Skin in the game

A lot of the innovations in building design are being incorporated into exteriors — meaning that much of the city could have a far different look 10 or 20 years from now.

Over the past decade, low-iron glass has been used to create transparent buildings. Now, new features are making the exterior more integral to how a building functions.

“We’re seeing a lot of emphasis on getting more to happen at the building’s skin,” said Brian Stacy, principal at ARUP, whose work includes the Fulton Street Transit Center and Columbia University’s Jerome L. Science Center.

For example, at the Related Companies’ massive Hudson Yards development, low-emission coatings on glass are being used to maximize visible light while assuring that the buildings aren’t overheated. That means that during the summer, the glass ensures that heat is reflected from the building, while during the winter, it prevents heat from escaping.

A rendering of Hudson Yards

“It’s literally microns thin, but it makes a huge difference to us,” Stacy said, adding that he expects an increasing number of buildings to incorporate low-emission glass going forward.

Architects and developers are also being more strategic about where they’re using glass.

Skidmore, Owings and Merrill and Tribeca Associates flanked the north and south sides of the Baccarat Tower — the hotel and condo on 53rd Street — with glass facades while covering the east and west sides in metal panels.

TJ Gottesdiener, managing partner at SOM — which also designed One World Trade Center — said the glass was applied to the sides with the best views and the greatest amount of sunlight. Those types of strategies will become more popular in the future, he said.

Meanwhile, at the Culture Shed, which is still in the planning stages, Related is using a transparent plastic called ethylene tetrafluoroethylene that’s increasingly being employed in building facades instead of glass because it provides better insulation and is lighter and less expensive, according to Scarangello.

The building is also kinetic, meaning it can change its form to accommodate different kinds of performances. The structure, which includes both a stationary portion and a moveable portion, has a retractable roof that can roll out in order to create a larger space for film screenings, musical performances or art exhibits.

Rob Otani — who leads Thornton’s special-structures unit and is currently working on Cornell Tech’s new campus on Roosevelt Island — said that whole buildings are not likely to be kinetic since that would require considerable maintenance that few developers would be willing to take on. But kinetic facades will likely be incorporated into more designs, he said. This means exteriors that respond to the environment, shifting in response to the sun or blocking high winds. The Milwaukee Art Museum, for example, features a wing-like Brise soleil — a sun-shielding structure designed by Santiago Calatrava, the architect behind New York’s Oculus — that opens during the day and closes at night or during bad weather.

More (outdoor) play

While many of today’s new residential buildings incorporate private penthouse terraces or communal rooftops, they are just scratching the surface when it comes to constructing towers with outdoor space.

“There’s going to be a time in New York City where living without a substantial outdoor space is just going to be unacceptable. It’s going to be like living in the suburbs without a backyard,” Eran Chen, founder of ODA New York, told TRD. “All these towers that don’t have them are going to lose their value.”

Chen is already testing new ways to achieve that goal.

(Click to enlarge)

At the residential project at 303 East 44th Street that ODA is designing for developer Triangle Assets, it carved out open space by creating 16-foot-high gaps supported by ligament-like columns. The gaps contain private gardens for 11 units in the 41-story building, starting on the 23rd floor. The design maximizes outdoor space, while also achieving a striking (and futuristic) effect.

Scarangello said keeping the inside of the space efficient is key when adding outdoor space. “People want to live in apartments and work in offices where the interior is very functional,” he said. “So I think what we’re seeing is people are using the facade to create drama, [but] not twisting the building into a pretzel in order to create drama.”

Eran Chen

And going forward it will not just be residential buildings getting serious outdoor space. It will eventually become the norm for office towers, sources say.

Michael Samuelian, vice president of Related, said almost every major office tenant at Hudson Yards will have their own outdoor terrace. Other office buildings are likely to follow suit. “We haven’t really been keeping pace with the rest of the world when it comes to creating new office space in New York,” Samuelian said. “Hudson Yards represents the future of office space in New York.”

Rick Cook, founder of the architecture firm CookFox, which is designing 550 Vanderbilt in Pacific Park, said architects will increasingly turn to biophilic designs, which emphasize the bond between humans and nature. Green walls and roofs, covered in vegetation, can help collect and store rainwater, cool a building or shade glass curtain walls and cut down a building’s overall carbon footprint, he said.

The roof of CookFox’s Chelsea office, for instance, is a sea of greenery. Employees harvest their own honey at the office’s private beehive.

“It’s just an amazing thing to watch when you create a framework for nature to take off,” Cook said. “You’re not going to see any tech that’s more complex than what nature does in front of our eyes all the time.”

Speed = consolidation

As developers seek out bold innovations, there’s a huge challenge hanging over the industry: Will there be enough construction workers to carry out these new high-tech designs in the future?

“There are just not enough contractors and skilled workers to go around,” said Bob Barone, senior managing director of CBRE’s valuation and advisory services construction management group. “Anytime we’re in a deep recession there’s a percentage of people who leave and leave forever.”

The 2008 housing crisis, coupled with the earlier economic downturn in 2001, quashed new construction in the city, forcing many experienced designers and construction workers to flee the industry, said attorney Barry LePatner, who specializes in construction.

Construction employment hit a 13-year low in 2011. After three years of consecutive growth, it’s now slowly recovering, with the New York Building Congress reporting 121,200 private-sector jobs in the first quarter of 2015, compared to 128,300 in the first quarter of 2008.

Still, as a deluge of new projects floods the market, there is a dearth of experienced professionals.

“Today we see a shortage of people with seven to 15 years of experience at every level of the industry,” LePatner said. “We’ve lost almost half a generation in the design and construction world that has not been made up.”

That labor shortage is one of several issues that have prompted developers to acquire construction companies and suppliers, such as glass and crane firms. Doing so not only allows developers to assert more control over their projects, in terms of cost and available resources, it also means they will always have workers on hand.

Developers are seeking to “control their destiny by controlling the supply chain,” said Maraia, of Lend Lease, which is itself getting into the New York development game (see related story on page 50).

“I think a lot of the big developers have gone down that route, and I would expect that we’d see others follow in their footsteps,” he said.

These cross-industry consolidations are a mounting trend that experts say will redefine how the New York development and construction industries operate. A developer will likely wear many hats — construction manager, manufacturer and designer.

It’s already happening. Related opened a facility in Pennsylvania this summer that will produce the curtain walls being used at Hudson Yards and its other projects. The move was a response to months of delays on glass panels intended for the developer’s Hunter’s Point South project in Long Island City.

“With the logistical issues, small number of producers and growing costs, we’d rather bet on our ability to domestically produce and control the supply,” Bruce Beal, Related’s president, recently told the Wall Street Journal.

In other words, who needs to hire a company when you can just buy one or create one?

Joe McMillan, the CEO of DDG — which has developed projects such as 345 West 14th and 12 Warren streets — and JDS’s Michael Stern also said they believed that developers would continue to buy more construction-related companies in the future. Both firms are ahead of the curve on that front.

ODA-terrace

For the last six years, DDG has designed, developed and built all of its own projects. McMillan said doing so gives the firm control over the “whole life cycle of the project.”

Similar to DDG’s model, JDS does all of its construction in-house. “There’s an efficiency to it,” Stern said. “We like having the same people at the design table who are going to build the building.”

Technology is also enabling developers to plan and envision their buildings in a more detailed fashion as well as better estimate a project’s bottom line. The industry is increasingly using Building Information Modeling, a process that involves creating 3D digital representations of projects that test materials and designs to provide a clearer picture of a building’s potential cost and appearance.

At the Barclay’s Center, for example, digital modeling enabled the designers and developers to figure out the dimensions of thousands of glass panels without having to draw each individually, said Chris Sharples, principle at SHoP, which designed the stadium. Since it’s digital, there is more real-time communication, McMillan said.

“The days of paper planning are largely behind us,” he said.

Modular’s mission

Asked about the future of modular, Susan Hayes, head of Forest City’s modular division, recently told TRD, “I feel like I’m sitting at the base of a rocket ship here. People are looking for something new and better.”

It’s a bold statement considering the circumstances. As a construction trend, modular has gone from being a possible savior to at risk of being an overhyped fad.

When Forest City announced in 2012 that it would build the world’s tallest modular steel tower at Pacific Park, then named Atlantic Yards, the company said it had “cracked the code” of prefabrication, a construction method that could halve construction costs and shave at least six months from building schedules.

It was also billed as a boon for the city, since it would bring affordable housing units — 50 percent of the 363 apartments in B2 BKLYN — to market quickly.

But things didn’t go as planned.

Construction halted in August 2014 after only 10 floors had been installed. In dueling lawsuits, Skanska — who co-owned the modular factory with the developer — and Forest City blamed each other for tens of millions of dollars in cost overruns.

Forest City ended up buying out Skanska’s stake in the factory. It commenced construction on the tower in December 2014, the month it was initially supposed to be finished. B2 is now slated for completion in the third quarter of 2016.

More ominously, Forest City recently announced it might have to lay off more than 200 employees from its modular division if it isn’t hired for additional projects over the next few months.

Hayes, however, said the warnings about potential layoffs are not an “indication of a lack of interest” in prefabrication but are just part of the natural “ebb and flow” of business. She anticipates that modular construction will become a mainstream method for multi-family homes, hospitals and dormitories in the next five to 10 years.

While many agree that the building method is far from dead, the verdict is still out on how widely used it will be in New York.

Experts who spoke to TRD seemed confident that modular construction has a future in the city, if not for entire buildings then for parts of projects.

Lend Lease’s Maraia said prefab bathrooms could be 10 percent cheaper than constructing a bathroom from scratch. But, he said, the difficulty in transporting large prefabricated materials throughout the city will likely impede the proliferation of full-building modular construction.   

Other developers are taking a wait-and-see approach.

“I think modular construction is very interesting, and I think on a certain scale, you’ll see it become more popular,” Stern said, adding, “I’m definitely intrigued by it, and I think I’m going to keep an eye on it, but I’m not going to be the pioneer.”

Source: http://therealdeal.com/issues_articles/the-future-of-nyc-real-estate-2/

Public Advocate Letitia James introduces bills that would better equip city to deal with criminal, negligent landlords

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The city would get more power to go after bad landlords under new legislation Public Advocate Letitia James announced Tuesday.

Under one bill, the Department of Buildings would have to deny building permits to owners with too many open hazardous violations in their apartments.

The ban would kick in when a building averages at least two to three serious problems per unit — things like rats and roaches, holes in walls, broken locks, and lack of heat and hot water.

Another bill would expand the city’s public nuisance law to let officials sue negligent landlords.

“These conditions are dangerous to any person’s health or safety, and this new law would give us the ability to step in and act in such a situation rather than waiting for the landlord who has shown they don’t care,” said James, who will introduce the legislation at Wednesday’s City Council meeting.

One of the new bills would help the city deal with landlords that allow tennants to live in unsanitary conditions.FARRIELLA, CHRISTIE M,, FREELANCE NYDNEnlarge
Mold and broken fixtures are an issue in many apartments owned by negligent landlords.NEW YORK DAILY NEWSEnlarge

One of the new bills would help the city deal with landlords that allow tenants to live in unsanitary conditions, like mold covered homes or in apartments with broken fixtures.

The current nuisance law is used to go after drug dealing, prostitution, gambling and other public nuisances. It would expand to include housing nuisances including unsanitary conditions, improper ventilation, and overcrowding.

The public advocate releases an annual list of the city’s worst landlords — with a hundred owners making the latest list that came out in November. Many of them could face punishment under the new legislation.

“It’s been a mystery to all of us that the landlords who are the most incapable of correcting basic conditions in a client’s apartment turn out to be perfectly capable of engaging in the most expansive and intrusive construction projects in the building when it’s to their advantage to drive out tenants with dust, debris and noise,” said Ed Josephson, director of litigation at Legal Services NYC.

“If you are capable of doing construction renovations, then you can certainly first address the deficiencies in the apartments.”

Source: http://www.nydailynews.com/new-york/manhattan/letitia-james-introduces-bills-target-nyc-bad-landlords-article-1.2487245

Iconic New York City hotels promise to go green

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Some of New York’s most iconic hotels, comprising more than 11,000 guest rooms, promised to cut their carbon footprints Dec. 29 and join a city effort to improve the energy efficiency of buildings.

The famed Waldorf Astoria, The Peninsula New York, and The Pierre are among 16 well-known, high-end hotels that committed to reducing greenhouse gas emissions by at least 30 percent in the next 10 years, according to the Office of Mayor Bill de Blasio.

Officials said they hope the move by the ritzy hotels, whose reputations are global, will inspire others to follow suit.

“If some of New York’s most iconic hotels can significantly reduce their carbon footprint, anyone can,” said de Blasio in a statement.

The efforts to go green could include retrofitting buildings with updated, efficient equipment for heating and cooling, replacing boilers, improving lighting, and adding insulation.

Meeting the pledge at the glitzy Waldorf Astoria means updating a building that is 84 years old. It has hosted Marilyn Monroe, Fidel Castro and Soviet leader Nikita Khrushchev as well as US presidents who stay in a special suite designed to evoke the White House.

Cutting emissions follows the hotel’s motto of “the difficult immediately, the impossible takes a bit longer,” the Waldorf Astoria management said in a statement.

“We pride ourselves in the ability to embrace a challenge,” said Michael Hoffmann, the hotel’s managing director, in the statement.

The 16 hotels, totaling more than 11,000 rooms, should cut greenhouse gas emissions by 32,000 metric tons to live up to their pledge, according to city projections.

The hotels’ pledge is part of a wider municipal initiative to reduce greenhouse gas emissions 80 percent by 2050.

Buildings make up nearly three-quarters of citywide emissions, authorities said.

At current rates, the pledges citywide to curb greenhouse gas emissions could yield results that compare to removing more than 100,000 cars, according to authorities.

• Reporting by Sebastien Malo, editing by Ellen Wulfhorst. This story originally appeared on the website of the Thomson Reuters Foundation, the charitable arm of Thomson Reuters that covers humanitarian news, women’s rights, trafficking, corruption, and climate change.

Source: http://www.csmonitor.com/World/Making-a-difference/Change-Agent/2015/1230/Iconic-New-York-City-hotels-promise-to-go-green

City Hall to preserve some community gardens, build housing on others

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The de Blasio administration is ending 2015 by addressing a long-standing controversy over the fate of 43 community gardens on city-owned land with a decision that has prompted mixed reactions among New Yorkers close to the divisive issue.

The administration is preparing to build more than 800 below-market-rate apartments on nine gardens — including two unused ones —while preserving another 34 gardens, according to several sources briefed on the plans.

City officials gathered representatives of the gardens at a meeting in City Hall on Wednesday afternoon to reveal the plans and distribute a list of which spaces will be preserved and which would be turned into development sites.

The city promised that when it builds on current gardens, it will create a new gardening space within a quarter of a mile of the original, but it is unclear whether the new spots would be the same size.

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The two sites already being prepared for low- to moderate-income housing are Sparrow’s Nest Community Garden in Queens and A Small Green Patch in Brooklyn. The other seven include one on East 111th Street, another in Coney Island, the Pleasant Village Community Garden II, Jackie Robinson Tenant Association, Mandela Community Garden, New Harvest Garden and space at Van Siclen Warwick, according to a list distributed at the City Hall meeting and obtained by POLITICO New York.

The city is promising that all apartments built on these sites will be entirely below-market rents.

Reactions to the news were predictably mixed: Those whose gardens are being saved by being given to the parks department for its GreenThumb Program were pleased, while those whose green spaces will be developed on land owned by the Department of Housing Preservation and Development were upset.

“They just walked in with a list of nine gardens that they were going to close and 34 that they were going to save. We don’t really know how that translates in terms of acreage,” Rene Calvo, leader of the Mandela Community Garden in Harlem, said in an interview after leaving the meeting.

He said city officials promised more engagment with community gardeners through the process. “Basically what they said is we’re taking this land back from the community and we’re going to hold your hand while we’re doing it,” Calvo added. “That’s how they’re better than the other administration.”

The Mandela Community Garden is about 10,000 square feet behind the famed Apollo Theater and has been in existence for a year. Calvo said the community was hoping to make it a permanent space through the parks department.

City Councilman Robert Cornegy, who has several community gardens in his district whose fates were in question, was pleased by the news.

“Preserving community gardens and increasing affordable home ownership opportunities are both priorities for Central Brooklyn’s rapidly changing communities and the two need not be in conflict,” he said in a prepared statement after the meeting. “Today’s decision is what I have asked for — that a balance be struck between those goals.”

He said six of the seven gardens threatened in his district will be preserved and the seventh, located on the largest space, “will be used to develop new affordable units, accessible to families eager to secure their roots in a community where homeownership is highly prized.”

Under the city’s housing department, which owns the land housing the gardens, home ownership is offered through a program for certain tenants.

Corney also said he was pleads that the city used “objective criteria to reach this decision.”

When asked how the administration determined which spaces to develop, a city official speaking on background said the housing agency assessed the popularity of each garden and the size of the space on a case-by-case basis.

Councilman Mark Treyger, who represents Coney Island, said he is awaiting further information from City Hall about plans for his district, where a garden is on the shorter list for sites to be turned into housing.

He said the garden serves as a popular gathering spot for local residents, but emphasized a pressing need for more commercial tenants along the nearby Mermaid Avenue as well.

“I understand that the mayor and this administration have a housing plan but my job and the job of local members is to represent and fight for the needs of our local districts and for me, Coney Island has many, many pressing needs,” he said.

Treyger said he was informed in recent days about the decision by a member of the mayor’s staff, and was told he would meet with city officials in the next week.

Community gardens have long been subject to emotional debates in New York City.

Controversy ensued when the Giuliani administration tried to build housing on these city-owned lots. During Michael Bloomberg’s first year in office, after then-attorney general Eliot Spitzer sued to preserve the gardens from being auctioned off to the highest bidder, the mayor agreed to preserve about 500 of them and use the others to build more than 2,000 apartments.

Mayor Bill de Blasio issued a public request last year for developers to submit ideas about building affordable homes on the gardens and other city-owned lots.

The bid spurred a protest, with some gardening aficionados in sunflower costumes. One person demonstrated on the steps of City Hall dressed as a human carrot.

A former parks commissioner under Bloomberg, Adrian Benepe, who now works at the Trust for Public Land, applauded the latest news.

“It sounds like a good Christmas present for the community gardening people,” Benepe said in an interview.

And in a prepared statement, housing commissioner Vicki Been described the move as a balance between finding space to build affordable housing in a city whose government owns a diminishing amount of land and a desire to protect open space.

“In trying to strike the right balance, HPD with the parks department crafted a plan that protects a tremendous number of gardens in perpetuity and provides support to gardeners, while ensuring that working families can afford to stay in their neighborhoods,” she said.

Not everyone shared her view.

“The gardens are what creates a community. Parks don’t create a community,” Calvo said. “The people who know each other in the neighborhood, the majority of them meet through the garden.”

Source: http://www.capitalnewyork.com/article/city-hall/2015/12/8586679/city-hall-preserve-some-community-gardens-build-housing-others

NYC Construction-Related Accidents and Injuries Surge in 2015

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The number of construction-related accidents and injuries each climbed roughly 40 percent this year, according to data prepared by the New York City Department of Buildings for Commercial Observer.

There were 323 accidents (which can include multiple injuries and/or fatalities) this year compared with 231 accidents in calendar year 2014, the data indicate, a 39.8 percent spike. The number of injuries rose to 356 from 246, a 44.7 percent difference.

All boroughs saw increases in accidents and injuries, but for the Bronx which had one less accident in 2015, at 10. Of the five boroughs, Manhattan had the greatest number of accidents and injuries in both years. This year, the borough’s accidents increased 30 percent to 221 and injuries climbed 34 percent to 236.

DOB Commissioner Rick Chandler said in a prepared statement that many of this year’s construction-related accidents “were avoidable” and that “in response, the department has developed an ambitious plan to improve safety at construction sites.”

He further noted: “This year, we began an unprecedented effort to revoke or suspend the licenses of firms that repeatedly violated the city’s construction code, shutting down hundreds of job sites run by contractors who weren’t prioritizing safety.”

Between 2014 and 2015, the number of fatalities increased by one to nine, the DOB data show.

After a string of construction worker fatalities, 44 construction companies in May called for greater safety efforts at construction sites in the U.S. during the second annual Safety Week, as CO previously reported.

Meanwhile, with the New York City real estate market still going strong, the DOB issued more permits for new building construction (2,404 versus 2,035), major alterations (3,170 compared with 3,080) and building demolition jobs (1,882 versus 1,660) compared with last year.

“In 2015, New York City saw another year of strong growth in construction, including an 18 percent increase in permits issued for new buildings over last year,” Mr. Chandler said. “Increased development grows our economy, creates additional affordable housing, schools and business space, and provides tens of thousands of jobs throughout the five boroughs.”

Source: https://commercialobserver.com/2015/12/nyc-construction-related-accidents-and-injuries-surge-in-2015/

Real Estate Group Rebuffs Idea of Height Limits for Tall Towers

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The Real Estate Board of New York has slammed reports that it needs to restrict the construction of supertall buildings, Real Estate Weekly reports. The retort comes following a report issued by the Municipal Arts Society of New York (MAS) that criticized the city’s zoning laws.

In its report MAS called for a halt on the construction of towers over 600 feet tall before extensive public review processes are undertaken for the construction. REBNY counters that all the construction operates completely within the law and that the economic advantages to the city outweigh the concerns.

“The latest generation of tall, slender and mostly residential towers positively contributes to our city architecturally, economically and environmentally,ˮ John Banks, president of REBNY, told REW.

MAS has focussed its attention for the most part on the supertall buildings under construction along 57th Street overlooking Central Park. Their principle grouse is the fact that some of the building codes that allow for the construction of these supertalls are over 50 years old, and that the public does not have enough of a voice in their construction. MAS is not against the construction of supertall buildings, but more about checks on the number of structures and the height.

Recently MAS released a ‘corrected’ list of city’s skyscrapers where the views these buildings offered have changed due to the other buildings coming up around them.

· REBNY dismisses demand for supertall building moratorium [Real Estate Weekly]
· See ‘Corrected’ Renderings of Midtown’s Supertall Buildngs [Curbed]

Source: http://ny.curbed.com/archives/2015/12/30/real_estate_group_rebuffs_idea_of_height_limits_for_tall_towers.php

New York’s Future Tallest Tower Begins Its Skyward Ascent

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When we last checked in on the construction progress at Extell’s Central Park Tower, the forthcoming tallest residential tower in New York City, it was little more than a hole in the ground. But a few months have passed and work on the supertall is plugging away, as a new series of photos by NYConstructionPhoto shows; in fact, it’s finally risen above street level, with some of the steel support structure and actual floors visible. But that still doesn’t offer a clue as to the building’s final design: We know it’ll be 1,550 feet tall, and that its spire has been cut off, but the rest remains a mystery.

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· NYConstructionPhoto: 225 W 57th Street (Central Park Tower) [Flickr]
· All Central Park Tower Coverage [Curbed]

Source: http://ny.curbed.com/archives/2015/12/31/new_yorks_future_tallest_tower_begins_its_skyward_ascent.php