Recession Keeps Chokehold On NYC Construction

BTEA: $5 billion in construction work shut down. City confirms “at least” 30 sites idled.

By Debra Wood
February 23, 2009

The sagging economy has left the city pocked with completely or partially excavated sites that now are sitting idle.

A new silence hovers over several New York City job sites, as construction activity comes to a halt.

The New York City Department of Buildings  has confirmed that work at least 30 construction sites has been idled, while the Building Trades Employers’ Association is reporting nearly $5 billion in delayed or stalled projects across the city.

“It's horrible,” says Louis J. Colletti, president and CEO of the BTEA. “I expect unless we make changes and decrease construction costs by 25%, unemployment could be as high as 50% by April or May.”

While high-profile mega-projects such as Atlantic Yards and Hudson Yards have hit the brakes, several other commercial projects have started to stall in recent months.

Developer Boston Properties of Boston recently suspended construction at the $980 million, 1 million-sq-ft office building at 250 West 55th Street after a major tenant backed out of its lease deal. At the end of December, Boston Properties reported the company had invested $425 million in the project. At that point, it was 22% leased. It was scheduled for completion in 2011, but now the company expects to reduce its capital commitments on the project through 2011 by $450 million.

Boston Properties also shut down development activity on its 840,000-sq-ft Eighth Avenue and 46th Street office project. It took a charge of about $23.2 million in land and air-rights losses, as well as forfeited contract deposits and planning and pre-development costs. Boston Properties held a 50% interest in that project.

Swig Equities of New York has halted plans to convert an office building at 25 Broad Street into condominiums and to build a mixed-use, 62-story hotel and condominium tower at 45 Broad after Lehman Brothers filed for bankruptcy.

Both developers, Boston Properties and Swig, sent written statements confirming work stoppage on the properties but declined to comment.

Multiple media outlets have reported that the 58-story 56 Leonard residential tower has stalled. The developer the Alexico Group of New York and contractor Hunter Roberts of New York declined to comment.

Residential projects are feeling the biggest pinch, leaving the city pocked with dug-out foundations and excavated sites that now sit dormant.

“Some will be put on hold while they wait to get financing,” Marylin Davenport, senior vice president of the Real Estate Board of New York told New York Construction earlier this month. “[But] they need financing to go vertical.”

In the Bronx, the New York Botanical Gardens has placed its parking garage on hold, according to architect Polshek Partnership Architect of New York. The Botanical Gardens did not return messages seeking comment.

The BTEA’s Coletti adds, “the trades are not feeling it yet, because there are still some jobs, such as Yankee Stadium and the Bank of America building, finishing up. I keep telling them to get ahead of the curve. When those jobs finish up, there is no other work to move to.”

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