Sunday, May 31, 2009

Ratner's hardball pays off: construction resumes at the Beekman Tower

The construction workers cheering for Atlantic Yards on Friday probably don't embrace the developer's hardball tactics to reduce construction costs at two extant projects.

After all, FCR stopped work halfway through the construction process of the Beekman Tower in lower Manhattan, what the New York Times calls an effort to "desperately sought to cut costs on the project."

In an article Friday headlined Savings on Labor Allow Work on Residential Skyscraper to Resume, the Times reported that work resumed this week, just as abruptly as it stopped.

The key: a cut in labor costs and cheaper construction materials and appliances. Among the other projects helped by a new agreement with unions is the tower under construction at 80 DeKalb Avenue.

Depends on the price

While proponents of the new agreement say it's worth a 20% discount, the Times suggests that's under debate:
Still, some developers say the agreement is worth far less, perhaps only 8 percent in savings, and not enough to get some stalled projects moving again, especially in cases where they paid high prices for land.

“God bless them,” said Steven Spinola, president of the Real Estate Board of New York. “But I don’t think they’re going to save much money.”


That would seem to bode well for Atlantic Yards, given that land was not so costly.

The city gave Forest City Ratner $100 million for land acquisition and it looks like the developer will not have to pay (at least at first) the MTA the $100 million it pledged for the Vanderbilt Yard. And that $100 million was less than half the appraisal of $214.5 million.

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