Going Up

Downtown Work Continues Despite Snags, Slowdowns, and Question

Lower Manhattan still buzzing after a year that saw visible progress and frustrating setbacks at the World Trade Center.

By Tom Nicholson

Spurred by swelling population, growing infrastructure needs and the post-Sept. 11revitalization effort, commercial and residential building continues to surge in Lower Manhattan.

Deconstruction has resumed at the former Deutsche Bank building at 130 Liberty St. (third from left), which was damaged on September 11. Work was halted after a deadly fire in late 2007. (Photo by Tom Nicholson)

In the section of Manhattan south of Canal Street, which includes Battery Park City, Seaport, Tribeca and Financial District, about $22 billion in construction is under way on more than 170 projects, 95 of which are larger than 50,000-sq-ft or more than $25 million, says Robert Harvey, executive director of City of New York’s Lower Manhattan Construction Command Center.

The volume of construction and new starts in the pipeline is “unprecedented,” says Harvey, pointing to about 15 million sq ft of residential and 18 million sq ft of commercial construction currently under way south of Canal Street. “In addition to many street and park projects are infrastructure, transportation, commercial and residential projects,” he adds.

Construction includes high-profile jobs such as the Freedom Tower and rebuilding at the World Trade Center site; complex transportation infrastructure projects such as the World Trade Center Transportation Hub; high-rise commercial projects such as Goldman Sachs headquarters; and a spate of mixed-use, residential and hotel projects.

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The volume of construction puts Lower Manhattan on track to resume its rank as the third largest downtown district in the country, behind Midtown Manhattan and Chicago. The area was surpassed by Washington, D.C., after Sept. 11, Harvey says.

The construction projects at the World Trade Center site are no doubt the most talked-about in Lower Manhattan. Cost and schedule controversy continues to shroud the WTC projects, most recently as owner Port Authority of New York and New Jersey abandoned the projects’ budgets and schedules amid rising costs and ongoing construction delays.

PANYNJ executive director Chris Ward issued a report to New York Gov. David Paterson in July outlining a myriad of challenges to the WTC projects.

“Costs and schedules presented to the public were not realistic,” Ward said in the report. He attributed the delays to a lack of centralized leadership, unresolved stakeholder issues and inadequate cost analysis that failed to consider logistics and staging.

The 1.1 million-sq-ft Beekman Tower, designed by Frank Gehry, will be the largest mixed-use building in Lower Manhattan upon its completion. It will feature more than 900 residential units as well as 100,000 sq ft for office, school and retail space. (Photo by Tom Nicholson)

Ward said the 10 million sq ft of construction at the site is “as complex as any construction project in the world.”

New project timetables will be set by September, according to the authority.

The PANYNJ report “took courage,” Elizabeth H. Berger, president of Downtown Alliance, says. “It’s an important step to acknowledge the problems so we can collaborate to solve them.”

Harvey acknowledges it is “not uncommon” for public projects to face stakeholder or budget hurdles, particularly given the scope and complexity of the WTC site. “Private projects always go up faster,” he says.

According to the LMCCC, construction crews have reached several milestones on WTC projects this summer.

On the Freedom Tower, the pouring of the concrete slab base is complete and the first signs of vertical construction are emerging with the installation of new column sections.

Bolted to two of the structure’s 24 steel columns, the sections currently stand more than 80 ft high from the base, about 15 ft above street level. Currently, about 9,400 tons of steel—of the nearly 50,000 tons of steel required for the 2.6-million sq-ft tower—have been ordered.

According to the PANYNJ, about 90% of construction contracts on the project have been awarded. Current estimates put construction cost at more than $3 billion.

The National September 11 Memorial and Museum at the World Trade Center, for which costs have risen from $500 million to nearly $1 billion, foundation work and slurry wall reinforcement were completed this summer. Structural framework has started and will continue through the year.

Demolition and excavation work is proceeding on the 2-million-sq ft WTC Transportation Hub project, with construction under way on the West Street pedestrian underpass linking WTC with Battery Park City's World Financial Center. The project’s budget has fluctuated between $2.2 billion and $3.4 billion.

PANYNJ announced in July the retractable roof on the Santiago Calatrava-designed structure, a massive, winged dome intended to open to sunlight on each Sept. 11, was omitted from the design to trim the escalating budget on that project.

Deconstruction is continuing at the former Deutsche Bank building at 130 Liberty St., which was damaged on Sept. 11. Work has resumed after a stop order, which was enacted this spring by the city after fire broke out at the building, was lifted in May. The 40-story tower has been deconstructed to the 26th floor.

Excavation work for World Trade Center Towers 3 and 4 was completed earlier this year. PANYNJ removed nearly 400,000 tons of concrete, soil and rock; constructed the 80-ft-deep foundation and an 80-ft-deep slurry wall; and installed more than 240 steel tiebacks to reinforce the walls.

The project was turned over to Silverstein Properties to begin vertical construction, according to Richard Keilar, spokesman for New York-based Tishman Construction Co.

Costs and schedules for each of the WTC projects have shifted several times. Original completion dates were between 2009 and 2013, but are now extended pending PANYNJ’s analysis.

Although still a gritty construction zone, the 16-acre WTC site is a tourist magnet helping to drive an explosion of hotel construction, developers say. There are more than a dozen hotel projects currently under way in Lower Manhattan and as many in the pipeline. “We’ve never seen this many hotel projects in Lower Manhattan,” the Downtown Alliance’s Berger says. “There is certainly a change occurring.”

Hotel occupancy rates for hotels in the area regularly hover around 85%. There are currently 10 hotels in Lower Manhattan, totaling 2,197 hotel rooms, with new construction representing an additional 2,800 rooms scheduled to open in the next two to three years, according to LMCCC.

For now, hotel developers see plenty of room in the market for the number of hotels going up, says Gary Wisinski, chief operating officer at Great Neck, N.Y.-based McSam Group, which has five hotel projects under way in Lower Manhattan, says, “The World Trade Center site has become a major tourist attraction, and the closing of the fish market near South Street Seaport has encouraged tourism there.” Wisinski says he expects the hotel boom to last through next year.

McSam Group’s hotel projects represent about $1 billion in construction to be completed in the next two years. The firm is developing hotel properties for Holiday Inn, Hyatt Place, Crown Plaza and independent hoteliers. It recently sold two hotel project sites in Lower Manhattan to Rhode Island-based Magna Hospitality Group. The buildings range in height from 20 to 40 floors.

“Every major hotel chain in the world is coming to Lower Manhattan now. We are looking at a very robust market,” says Wisinski “Hotels in Lower Manhattan are sold out five and a half days of the week. The hospitality industry is not serving Wall Street very well.”

The Trump SoHo building (left) is one of a slew of luxury residential facilities being built in the re-imagined downtown area. The topped-out Goldman Sachs tower (right) is the first major headquarters project in Lower Manhattan in 20 years. (Photos by Tom Nicholson)

The surge of hotel construction is accelerating in tandem with mixed-use residential and commercial projects, some of which include condominiums and hotel space in the same tower.

One example is the 175-room, 694,000-sq-ft Four Seasons hotel tower with 143 condominiums being built by Silverstein Properties at Church St. Foundation work started in June with completion planned for 2010, Tishman’s Keilar says.

The spate of residential construction in the financial district represents shifting demographics, developers say. “The financial district used to be exclusively the domain of financial services businesses,” Berger says. “But now there is an explosion or retail, commercial and residential construction there.”

According to a report by Manhattan borough president Scott Stringer’s office this year, based on the amount of new residential construction, the population in the financial district is projected to increase by 20% in the next five years, making it the most populous section in Lower Manhattan.

“There are many companies that want to locate their businesses downtown,” Harvey says. “And there is a demand for residential construction because people want to live where they work.”

Avi Shick, chairman of Lower Manhattan Development Corporation, says the changing nature of the Financial District will continue to spur construction. “We are working to change Lower Manhattan from a strictly financial district to a 24/7 community,” Shick says. “We need to create all the amenities for neighborhoods where people live, work and play.”

Much of the residential projects are mixed-use structures, and some of them are “startlingly large,” Harvey says. It is an apt description of one of the largest mixed-use towers being erected in downtown: the Frank Gehry-designed, 76-floor, 1.1-million-sq-ft Beekman

Tower at 8 Spruce St.

The glass and titanium-skinned, cast-in-place reinforced concrete tower will house 903 residential units and will devote 100,000 sq ft of space to a public school, hospital offices and retail space, according to New York-based developer Forest City Ratner Cos. Currently, steel superstructure work on the $660 million building is complete to the sixth floor, according to Susi Yu, senior vice president at Forest City Ratner Cos.

“There was little residential construction in downtown in the ’90s, but now condominiums and mixed-use buildings are the right product,” Yu says.

Much of the construction dotting downtown’s skyline is the result of about $8 billion in government incentives provided for post-Sept. 11 reconstruction, Yu says.

Incentives include tax abatements offered by the city for developers to convert office space to residential units.

Goldman Sachs’ $2.4-million-sq-ft, 43-floor headquarters building at West and Vesey streets is topped out and on track for completion next year, according to LMCCC. City officials who wooed Goldman Sachs with incentives and Liberty Bonds to locate the tower adjacent to the WTC site are now in negotiations with the New York-based banker to avoid $320 million in contractual penalties because of delayed infrastructure projects at the WTC site, according to city officials.

One of the largest infrastructure projects in Lower Manhattan is the Fulton Street Transit Center, owned by Metropolitan Transportation Authority. The center will connect 12 subway lines converging in Lower Manhattan when complete.

The below-ground project was scaled back earlier this year after the budget soared nearly $45 million over its $800 million estimate. To rein in costs, MTA cut from the design the glass dome originally intended to be built above ground at Fulton Street and Broadway. The revised cost of the below-ground work is now $910 million and it is expected to be completed in 2010.

Construction continues on the Dey Street Concourse and the restoration of Corbin Building, which will serve as an entrance to the station.

Of the dozens of other projects proliferating downtown, Harvey says most are on track for some level of LEED certification.

One such project is New York Marriott Downtown’s installation of a “microturbine farm” at its hotel at 85 West St. The 11 gas-fired microturbines will reduce the building’s power use by 80%, according to Marriott Hotels.

“The next chapter calls for the public and private sectors to partner in support of Lower Manhattan’s growth and revitalization beyond the borders of Ground Zero—and to strike the appropriate balance between the commercial uses planned for the World Trade Center site and the need to develop a viable, full-service community,” Manhattan Development Corporation’s Shick says.