Seminar Assesses Dim Prospects for Rental Projects

A construction industry group finds that increased land, construction, and labor costs in the New York real estate market are making new rental apartment developments unprofitable.

Panel Sees Overheated Residential Market

A recent Greater New York Construction User Council seminar held in Manhattan about the region's residential real estate boom featured extensive discussion about the increasing difficulty of developing new rental apartment buildings at current land prices.

Most of the speakers agreed that sales of condominium units could soften and that prospects for new rental buildings are even dimmer. The group also found that, in addition to land price increases, Manhattan construction costs have risen because of shortages in the labor and material markets.

Rae Rosen, senior economist and assistant vice president at the Federal Reserve Bank of New York, moderated the panel, which included: Angelo Cosentini, principal of On the Level, a New York-based developer; John Barkidjija, senior vice president at Corus Bank; Patrick Crandall, vice president and regional manager of Fremont Investment & Loan; and Allan Paull, first vice president for civil and structural engineering at Tishman Construction of New York.

Panel members said that trendy neighborhoods such as Williamsburg and Atlantic Yards in Brooklyn and Long Island City in Queens may suffer in the case of an economic downturn. Williamsburg may have topped out already at an average of $600-700 per sq. ft. on a net sellable basis, Crandall said.

The panelists also said that inexperienced or under-capitalized developers are making lenders more wary of new projects. Several speakers added that while "hot architect" projects still can sell quickly, they also drive up construction costs.

The panelists also discussed how construction costs are expected to keep rising as a result of a booming building market, especially with major projects on the boards, such as the Jacob K. Javits Convention Center expansion in Manhattan, new baseball stadiums set to begin construction in Queens and the Bronx, the redevelopment of Lower Manhattan, and the planned Atlantic Yards development that includes a basketball arena in Brooklyn.

Young Developers and Planners

The Urban Land Institute and the Brooklyn Chamber of Commerce recently hosted a real estate development competition for juniors and seniors from the High School of Telecommunication Arts & Technology in Brooklyn's Bay Ridge section.

In the inaugural contest, four teams were charged with responding to a hypothetical Request for Proposal for the redevelopment of a run-down neighborhood, with members from each team assuming the roles of finance director, marketing director, city liaison, neighborhood liaison, and site planner.

At the end of the three-week project, the teams had developed pro-forma and three-dimensional models of their plans and presented their proposals to a hypothetical City Council composed of Urban Land Institute members, who "awarded" the development contract. The groups plan to continue the program and allow other students at the school to participate throughout the year.

The contest is part of the institute's UrbanPlan Program, an initiative designed to educate the public on land use, strategic planning, and consumers' influence on the real estate development process.

IBEW Volunteers Renovate Homes

The International Brotherhood of Electrical Workers Local 164 based in Paramus, N.J., recently sent 20 volunteers to help renovate homes across New Jersey.
As part of Rebuilding Together Bergen County 2006, the local version of an annual nationwide event designed to help low-income, elderly, and disabled people fix up their homes, the union members joined with people from local companies, civic groups, schools, and congregations for one-day home renovation programs at 21 locations throughout Bergen County. The total value of repairs exceeded $150,000.

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