New York Passes Rent Rules to Blunt Gentrification

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The New York City Council passed sweeping changes to the zoning code on Tuesday, compelling private developers to build low-cost rental units and handing Mayor Bill de Blasio a victory on the centerpiece of his efforts to blunt neighborhood gentrification.

The passage of the proposals capped more than two years of behind-the-scenes planning and organizing by the de Blasio administration, which developed a coalition of unions, business organizations, developers and groups representing older residents while wooing skeptical members of the Council.

In the end, the mayor’s plan, which changes zoning requirements across the city, survived opposition from community boards and building trades unions, as well as from New Yorkers concerned that the changes would encourage the very transformation of low-income areas they were meant to head off.

The vote was halted soon after it began, by a group of protesters on the balcony of the Council Chambers.

“City Council, vote no; M.I.H. has got to go,” they chanted, referring to one of the two proposals, known as mandatory inclusionary housing. As a few were guided out, others joined hands — possibly stuck together with Super Glue, Council officials said — and remained seated before being removed by police. At least two were carried away; the police said there were no arrests.

One man who was suffering from “back spasms,” according to Council officials, was taken to a nearby hospital.

The roughly 20-minute interruption did nothing to derail the voting. Each passed with at least 40 votes of the 51-member body.


Mayor Bill de Blasio was expected to hold a rally on Wednesday in Lower Manhattan.CreditHiroko Masuike/The New York Times

In the days leading up to the vote, Mr. de Blasio, a Democrat, took to the airwaves to frame the proposals as a robust attempt by city government to counter escalating rents that would leave a lasting, decades-long imprint on the city.

“Our plan mandates the creation of affordable housing,” Mr. de Blasio said on Monday. “It’s what is so powerful about it.” He is expected to hold a rally on Wednesday in Lower Manhattan.

Negotiations with the Council on the major points of the plan, which was made final last week, ensured the inclusion of units affordable to more lower-income residents — including those making 40 percent of the area median income or less — in new developments that benefit from zoning changes, a major concern in poor communities where the mayor’s plan is likely to spur development. The deal, which also includes neighborhood-specific changes to the zoning codes and the creation of housing for older adults, assured the plan’s passage on Tuesday.

City officials compared the adopted proposals to those in other cities, noting that New York’s plan went further by including mandatory creation of below-market rental units that are permanent and reach residents making well under the area median income of $86,300 for a family of four. The Council speaker, Melissa Mark-Viverito, called it a “landmark plan.”

Under New York’s plan, developers benefiting from rezonings for either residential growth or greater height and density are, for the first time, required to include units for those with earnings below the median income. The decision about what level of affordability to apply to a given development — between 40 percent and 80 percent of the median income — is to be determined by the local council member. The plan also provides for the creation of units for those making 115 percent of the median income, provided a portion be for those earning much less. The set-asides range from 20 percent to 30 percent of all of the new units.

Though the ultimate effect on the city will most likely not be seen for years, the de Blasio administration has already identified seven areas planned for rezonings that would fall under the new rules, including East New York, Brooklyn; Bay Street on Staten Island; parts of Flushing and Long Island City in Queens; Jerome Avenue in the Bronx; and East Harlem and Inwood in Manhattan.

It may be hampered by a lack of a property tax abatement, known as 421-a, that lapsed this year and can be replaced only by the State Legislature. Mr. de Blasio’s broader housing plan, aimed at creating 80,000 new rental units below the market rate, was conceived based on the existence of the exemption. Roughly 12,000 units are expected to directly come from the new zoning mandates approved by the Council through 2024, City Hall officials have said.

“While in the absence of an overall tax abatement program its effectiveness is diminished, it’s still a valuable tool in the belt of the mayor,” John Banks, president of the Real Estate Board of New York, said.

NYC passes Sweeping Plan to Create More Affordable Housing

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Many of New York City’s residential neighborhoods will feature denser and taller development as part of a sweeping housing plan that will mandate the construction of more affordable housing and rewrite the city’s decades-old zoning to enable more residential development.

The plan, a major political victory for first-term Mayor Bill de Blasio, was passed Tuesday by the City Council and intends to fundamentally reshape the way housing is developed in the nation’s largest city. It will link approval for increased development to the creation of more affordable apartments, and officials hope it will dramatically slow the tide of residents being priced out of their longtime neighborhoods.

“Anytime there is a rezoning of a neighborhood or of a single building site, affordable housing will be required as part of whatever new is built,” said de Blasio, a Democrat. “For the first time, the rules of the game have been changed to really benefit the people and not just the real estate developers.”

The plan’s Mandatory Inclusionary Housing component – touted by administration officials as the most robust in the nation – presents developers with choices for construction in rezoned neighborhoods.

It works on a sliding scale, starting with an option for developers to reserve 20 percent of the units for families of three making $31,000 a year or less, which amounts to $600 for a studio or $775 for a two-bedroom apartment. Other options require that portions of buildings be set aside for families with slightly higher income levels, including some for those that make $90,000.

In exchange, developers can be allowed to build taller structures and obtain low-interest financing and tax advantages.

The program is more stringent than those in other U.S. cities facing similar affordability crises.

Some cities, like Boston and Chicago, feature voluntary inclusionary housing programs while some that have mandatory programs – like San Francisco and Washington – require developers to set aside much fewer units for low-income residents. Housing experts are uncertain if the program in New York – a city with far greater density that most other U.S. municipalities – could be replicated elsewhere.

The plan initially faced opposition from those who felt it didn’t do enough for the city’s poorest.

In November, nearly all the city’s 59 community boards opposed the rezoning proposal, which de Blasio had made a lynchpin of his call to preserve or build 200,000 units of below-market-rate housing by 2025.

But senior de Blasio aides reached out to community groups and won the support of key institutions like the AARP. The administration also hired an outside political group to help coordinate its plan and won the support of some real estate groups and labor unions. The mayor’s aides felt the tide turn after the City Planning Commission approved the plan in February.

Negotiations then began in earnest with the City Council, which had many members push for more apartments set aside for the city’s poorest. The mayor’s office agreed.

“The plan addresses the magnitude of our affordability crisis,” said City Council Speaker Melissa Mark-Viverito. “It will minimize displacement and protect character of our neighborhoods.”

The deal didn’t satisfy everyone.

Rents have skyrocketed in New York, climbing over 15 percent in the last decade while the median per capita income of renters has increased 2 percent, according to a recent study by New York University’s center for housing and urban policy. Some residents voiced concern that gentrification, even if slowed, would alter their communities.

“We are talking about the makeup of our neighborhoods. Where are these people going to go?” asked Anna Burnham, who works at a Bronx-based housing group. “This plan has gone through without buy-in from the people and without talking to the people about their needs.”

The deal is a key win for de Blasio, who has seen his approval ratings steadily rise in recent months. His team now aims to make the housing plan, as well as the new coalition formed to push for it, key components of his 2017 re-election campaign.


City Hall encouraging negotiations on Brooklyn hospital development

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Fearing a loss of potential below-market housing at a Brooklyn location that was central to his 2013 election, Mayor Bill de Blasio has dispatched top aides to strike a compromise for the future of the Long Island College Hospital site.

The administration is directly involved in negotiations among local politicians, the developer who owns the site — Fortis Property Group— and the Cobble Hill Association, a community organization that has continually spoken out against Fortis’ plans for a luxury condo tower.

“I would be irresponsible if I wasn’t trying to help come to a solution that would include affordable housing on a site that currently would be developed purely as market rate unless we intervened,” deputy mayor Alicia Glen said in an interview in December.

The mayor has previously voiced his preference for allowing Fortis to rezone the property, which would enable a series of community amenities and low- to middle-income apartments. Without the rezoning, which needs City Council approval, Fortis would build only luxury condos.


The administration hosted a meeting several days before Christmas inside City Hall to work out a deal for the site, which de Blasio represented when he was in the City Council and later visited as a mayoral candidate to protest the hospital closing. (The hospital has since shut its doors; only an emergency department remains.)

Among those who attended the meeting were Fortis executives Joel Kestenbaum and Terrence Storey; the developer’s lobbyist, George Fontas; administration officials Michael DeLoach and Peter Wertheim; three members of the Cobble Hill Association and elected officials who represent the area, including Councilman Brad Lander, state Senator Daniel Squadron and state Assemblywoman Jo Anne Simon, according to multiple sources involved in the talks.

“Thanks to the good organizing of the Cobble Hill Association, the voice of the people I think was heard at City Hall and by Fortis and the mayor’s team then reached out and people are sitting down again to try to develop a proposal that everyone can live with,” Lander said in an interview this week. “We’re not there yet, but it’s a good development to have people sitting down and trying. And the idea would be to have a proposal that reflects some of the benefits that were associated with the rezoning proposal … but without such a massive increase in density.”

He said the developer “indicated an openness to talking about an alternative that was less massively dense,” but cautioned that “this is not easy and I’m not at all sure we’ll get there.”

The sides were at a stalemate after Lander announced in November that he would oppose the developer’s plans to apply for a rezoning of the land because the Cobble Hill Association opposed it so vigorously.

Residents have expressed numerous concerns, with the height of the proposed buildings topping the list.

With the rezoning, Fortis would build a 37-floor residential tower, low- to moderate-income apartments, a public school, more parking space and other neighborhood perks. Without it, the company would just build the condos in a 35-floor building and forego the rent-regulated apartments or other amenities.

Both plans include a new medical facility operated by NYU Langone.

Some Cobble Hill residents have complained recently that Fortis’ plans for a public school, which the de Blasio administration and other residents support, would add crowds and traffic, according to several sources.

Fortis has said it is willing to continue negotiating because it would prefer to get the land rezoned, a process that would allow additional residential space to be created and, therefore, more revenue for the developer.

“We continue to work with the community, local elected officials and City Hall to craft the best possible redevelopment plan for the former LICH site — one that includes important community benefits like a new public school, affordable housing and increased park space,” Fortis spokesman James Yolles said.

Buzz Doherty, a leader in the Cobble Hill Association, said members of the organization made clear at the December meeting they need further information on the proposed redevelopment.


2016 Forecast: Insiders predict boom and bust in varying degrees

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Depending on who you ask, residential real estate in 2015 was either the apex of a continuous rise — or the start of a downward slide.
The headlines were devoted to some of the biggest deals in the city, such as the penthouses in Extell’s One57 tower and the $30 million condos scattered along Park Avenue.

However, with it came worries over the supposed thinning ranks of $10 million-and-above condo buyers.
There were also external worries from the strength of the US dollar, which experts say makes New York real estate less attractive to foreign buyers, and the Federal Reserve’s recent 25-basis point rate increase, which pushes up mortgage rates.
The outlook is similarly mixed for the next year.
We spoke to some of the city’s top real estate executives, and the prevailing tone is that of cautious optimism.
There was confidence over the strength of the New York City market, particularly based on the performance of the outer boroughs, matched by fears over the weakening appeal of the luxury real estate market. We’ll see who’s right over the next 12 months.

Dottie Herman, President & CEO,
Douglas Elliman

“It will be a repeat of this year: healthy, strong (and with) sustainable growth.

“Because of all the wars and things that are happening all over the world, when things like that happen, people tend to find refuge in their home and then their neighborhood. And theyʼre more likely to travel inside the States than outside.

Dottie Herman

“I think that second homes are going to continue to rise because I think people are going to feel like they want their family around them.

“I kind of saw this after 9/11, when people would call me and say, ‘You know what, I have this home, can you get me another place. I want to build a home that my family can come too.ʼ Many people want to have their kids and their grandkids visit them, so they tend to go to places where their kids would want to come to, so New York City, Vermont, Miami, things of that nature. It’s always been the American dream.

Ian Bruce Eichner, Founder & Chairman,
Continuum Company

“I think you’re going to see more demand for products in the middle market, $1,800 to $2,500 per s/f, as

Ian Bruce Eichner

opposed to only super-luxury. And I think you’re going to see an adjustment of the product that’s coming

to the market to match that demand. I think you’re going to see a stable stream of purchases, but not a frantic rush like we saw in certain parts of 2015.

“I believe thereʼs a certain number of buyers that will stay in the (high-end) market. But I think in the New York area, every developer wanted to develop ultra-luxury. And so I think that there’s a bit of oversupply of product in that super-luxury market. Thereʼs strong fundamental support in the New York market, but I think weʼre overbuilt in super-luxury.ˮ

Jonathan Miller,
President & CEO,
Miller Samuel, Inc.

“New development entering the market will likely match the volume we saw in 2015, so expect a more

Jonathan Miller

polarized environment, with more developers negotiating to keep sales moving while a smaller subset will continue to sell without discounts. Existing inventory will continue to remain low as mortgage

lending conditions will largely remain unchanged (tight).

“I would expect the continued sales expansion of the suburbs as the emerging alternative to those challenged by the city’s shrinking affordability. Look for continued growth in Queens and a lot more rental development in the Bronx.ˮ

Sherry Tobak, Senior Vice President,
Related Companies

“Due to the continued strength of the US economy, there will certainly be more and more foreign investors seeking a safe haven for their money.

Sherry Tobak

“We are seeing a more diverse, cross generational and sophisticated population of buyers than we have in recent years, but these buyers now have more options than ever before.

“Whereas traditionally prices are driven by a shortage of supply, the tremendous influx of super luxury developments in New York is pushing prices to new levels causing some concern for 2016.
“However, I agree with the optimistic economists and predict a robust and very energetic market in 2016.”

Aleksandra Scepanovic, Founder & Managing Director, Ideal Properties Group

Aleksandra Scepanovic Headshot

“In the residential market, I think the market is picking up steam. What I think is going to happen is that prices will definitely continue to increase. and we’re going to see the pace that we have seen over the last few years, especially the last two years. So we’re probably talking about a smaller rate, but still, we’re going to be seeing an increase in price.

“The only thing that I would exclude from this is the high-end [and] single-family townhouse market, because that market is so specific and there is such a shortage of supply. If it’s a really nice renovated townhouse that happens to be a single-family townhouse hits the market, it’s going to command a real high price. I’m thinking that’s where we’re going to be seeing a lot of aggressive brokers.

“I expect Brooklyn to continue to become steep. Again, not as steep as the last few years we have seen. But we would still be seeing high prices, lots of transactions.

“Williamsburg and Park Slope will continue to have a very high number of transactions happen compared to the other markets around them.

“In terms of the residential development, there is this really strong push, with people having already bought their homes in Brooklyn, for that to be complemented by commercial development. So I think we’re going to be seeing an increased demand for a lot of new offices, a lot of commercial spaces.ˮ

Robert Nelson, President, Nelson Management Group

“I think that it’s going to be a little bit more tepid than it has been over the last 12 months.

Robert Nelson

“We’re already starting to see signs of that. These multi-million dollar apartment sales seem to not be faring so well, and rent seems to be slowing in terms of growth.

“If you look at some of the reports that have come out recently, rents are not moving as much as they were over the last 12 months. It seems that things are slowing down.

“ And interest rates that are going to go up, as far as that is concerned, certainly seems to suggest that we’re going to have a more tepid market.ˮ

Larry Link, President, Level Group

“2016 is sure to be an exciting year for the residential real estate market.  Of course rising interest rates are on the top of everyone’s mind right now and this will play a major factor in the upcoming year.  Interest rates have been either flat or dropping for most of the last decade, so I expect an environment of increasing interest rates will begin to change the dynamics of residential transactions by limiting slightly what buyers can afford.  This will lead to a psychological impact on the market as sellers begin to feel less confident about the relatively high asking prices which have been the norm for the last several years.  The impact of this psychological shift will be most prominent for luxury properties where pricing has seemed to know no bounds.Larry Link

Another trend in 2016 will be the continued rise of the “Wellness Building”. Traditional amenities like doormen, gyms, elevators and outdoor space will continue to be in demand, but buyers will also be expecting systems that contribute to their wellness in unique ways.  These systems may include water and air purification systems, more robust soundproofing of walls and windows, and lighting systems within apartments that consider the impact of circadian rhythms.  Advances in technology and materials also offer the promise of safer living environments.  For example, expect certain buyer to demand their entire apartment to be constructed of materials with zero VOC’s with no off-gassing, which is possible now, or at least much closer to reality than it was previously.
Technology will continue to have an impact on residential real estate and brokerage companies in particular will have to keep up.  Firms that continue to do things in the same way, offering the same model for marketing property to both their agents and their customers will fall by the wayside. Since so much property information is available directly to customers now, the search for a new home has become a “tag-team” effort; agents and buyers searching together for the right property and sharing information across multiple platforms and communication methods.  This trend will continue and agents will naturally migrate to more forward thinking companies that offer more flexible ways of working and higher payouts for those efforts. “


Despite warning signs, city’s economy will keep humming

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This column should be forecasting a slowdown in the city economy, in line with most of the experts who track New York.

After all, the now seven-year economic expansion would normally be coming to an end—it is unprecedented in duration and strength, as the Independent Budget Office said in late December. Wall Street firms from Morgan Stanley to Citigroup announced year-end layoffs. And signs of trouble are emerging in the real estate markets: Apartment rents have weakened in recent months, and residential developer Toll Brothers is lowering prices and reconfiguring one of its ultraluxury towers, a sign that this small but high-profile sector is headed for problems. Retail rents have softened as well.

Even tourism faces trouble, with a strong dollar making New York more expensive by anywhere from 20% (for Europeans) to more than 50% (for Brazilians).

But I’m going to go against the conventional wisdom and predict another year of record or near-record growth. Here’s why.

Wall Street is highly resilient. As of November, the financial sector had added a surprising 8,000 jobs in the previous 12 months. Although the cutbacks at the big-name firms get all the attention, expansion is the order of the day at hedge funds, ­private-equity shops and M&A boutiques. Pay is rising again, too. A comprehensive October report from the state comptroller showed that average annual Wall Street compensation topped $400,000 in 2014 for only the second time ever.

It’s a new world because of technology. To understand that the city’s economy has fundamentally changed, look at the very strong job gains in advertising, which is booming because it is at the center of the tech revolution in marketing. That is only one example of the multiplier effect from the robust activity in Silicon Valley.

Construction is still gaining momentum. “Duh,” will say anyone who has walked the city’s streets. Whether it is the mixed-use buildings going up at Hudson Yards or the 50,000 apartments permitted last year (to beat the potential expiration of the 421-a tax break) or the work from the newly financed Metropolitan Transportation Authority capital plan, this crucial sector isguaranteed to grow for the next two or three years.

Tourism may be immune to the dollar’s rise. Despite the decline in foreign currencies, the city set a record for visitors last year. International tourists keep coming because so many hotel rooms have been added that the industry cuts rates to fill them, and that makes the city affordable. Domestic visitors benefit from those discounts as well. Airbnb may just make this state of affairs permanent. This isn’t good for hotel owners but is great for tourists and the city as a whole.

We’ve seen this story before. Cautious economists have spent the past several Decembers suggesting a slowdown was inevitable. At some point they will be right. But not in 2016.


NYC solar project provides renewable energy bridge from Queens to Manhattan

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EnterSolar, a leading New York City-based provider of solar solutions to commercial enterprises, recently announced the launch of a landmark project in the New York City solar landscape.

The Bloomberg–JFK Airport Park Solar Project, a state-of-the-art large-scale solar photovoltaic (PV) project, will enable Bloomberg L.P.’s global headquarters in midtown Manhattan and its downtown data center to partially convert to clean solar energy.

“This marquee solar initiative is a tangible demonstration of the power of partnership,” Peyton Boswell, managing director for EnterSolar, said in a press release.

In addition to being the largest remote net metered project in New York City, the project is the first to use remote net metering to power a midtown Manhattan skyscraper with a remotely-sited solar PV system.

While New York has been a pioneer in its support of using renewable energy, the JFK Airport Park project is a particularly innovative for New York due to its use of remote net metering (RNM), which allows sites with poor solar characteristics but significant onsite load to benefit from solar systems installed on an alternative site with excellent solar characteristics.

The project is comprised of a 1,500 kilowatt solar installation across three adjacent logistics facilities at the JFK Airport Park in Springfield Gardens, Queens. The multi-building system, with more than 5,500 solar panels, is the largest rooftop solar array in Queens and is among the largest rooftop solar projects in New York state. The power generated will be converted to energy credits and applied to Bloomberg’s offices in New York City.

On an annual basis, the project will generate 1.8 million kilowatt hours, enough clean renewable electricity to power more than 244 typical homes. The solar PV systems will provide significant environmental benefits to both Bloomberg and the NYC community, including the avoidance of almost 1.1 million pounds of carbon dioxide per year.


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.”


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.


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.”


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.”


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.