Skip to main content

With bank and unions on board, Forest City ready to test modular constrution; Times scoop doesn't point out that number of jobs likely cut more than 50%

So much for those consistent claims that Forest City Ratner "hadn't decided" whether it would build the first Atlantic Yards tower using modular technology--claims that, as I reported last month, were highly questionable.

Now that a bank is on board, as are unions, so the news is ready to be released.

And the New York Times scoop, which describes a 25% wage cut, does not offer a comparison between the long-promised claims of Atlantic Yards total construction jobs and the potential now--though, as I describe below, there's a significant gap, greater than 50%.

Nor does the article describe what the new figures--both in terms of wage cuts and fewer jobs--do to calculations of Atlantic Yards' fiscal impact. And the construction unions offer Ratner a bye, no longer pointing out that Ratner has reneged on promises.

The news

In At Atlantic Yards, Ready to Test Plans for Prefab Tower, the New York Times's Charles Bagli reports:
In a warehouse deep inside the Brooklyn Navy Yard, a small team of carpenters, electricians and engineers have secretly labored for months on an assembly system for turning tubular steel chassis into fully equipped apartments that can be stacked and bolted together at a construction site.

On Dec. 18, they will be put to the test, as Bruce C. Ratner, chief executive of Forest City Ratner, breaks ground for the world’s tallest prefabricated, or modular, building, a 32-story residential tower at Flatbush Avenue and Dean Street. It is the first of 15 planned modular buildings at the $4.9 billion Atlantic Yards site; some are to rise to 50 stories.

If it works, Mr. Ratner and his partners say, they will be at the forefront of a new industry.

It is an ambitious and risky undertaking, more so than the $1 billion Barclays Center arena that Mr. Ratner opened there three months ago.
Savings passed on?

The Times reports:
If Mr. Ratner has, as he claims, “cracked the code,” it could lead to more affordable housing, or it could simply mean greater profits for the developer.
Note that executive MaryAnne Gilmartin told investment analysts last month, "We believe if we go modular, it would be invisible to the consumer. This building should perform at the level of finish, fit and feel commensurate with a conventional building, so it is priced accordingly."

New partnership

The Times describes "a financing commitment from Bank of New York" and "a partnership with Skanska," a Sweden-based construction company operating the factory in the Navy Yard. 

Union deal

While unions had expected to earn $85 an hour in wages and benefits, it won't be the same:
Gary La Barbera, president of the Building and Construction Trades Council, acknowledged that the unions had lost ground to nonunion residential contractors in recent years and were largely absent from the affordable housing field.
Under the new agreement, Mr. La Barbera said union factory workers would earn $55,000 a year, 25 percent less than the average union construction worker. But, he said, the trade-off is that the factory worker will work steady hours throughout the year, regardless of the weather.
We see this as an opportunity to get into markets we’re not in,” Mr. La Barbera said. We can’t ignore an emerging industry. We see it as creating more job opportunities in residential construction.”
That of course is something of a pivot. Atlantic Yards was promised as union-build, affordable housing construction. 

So if the implication is that, however much they lose on this project, they'll make it up another way, that wasn't what the unions signed on for.

How many jobs?

The Times reported that there would be 125 workers at the factory--a number once 190--with 60% of the work done there, saving the developer "as much as 20 percent on construction costs and cut the delivery time to 18 months, from 28 months." Savings would increase on the rest of the 15 towers.

How many jobs were there be--could there be 15,000 construction jobs (in job-years) as once promised, or 17,000 job-years, as detailed in some official documents?

Not even close.

If 125 workers represent 60% of the work, that suggests there would be about 208 workers total. If they all work 18 months straight--not likely for those in the field--that means the first tower, with 363 units, would require 312 job-years.

The number of job-years is about 86% of the total number of units.

That implies that the total 6,430 units would generate some 5,530 job-years. Add in an office tower, on long-term hold, and the total might go up, say, 10-15%. 

But that's still way off the original promises. Even if there are 6,500 total job-years, that suggests a total of 43.3% of 15,000 job-years and 38.2% of 17,000 job-years.

What's affordable?

The Times reports:
(Half of the 363 apartments in the first building will be for poor and working-class families.)  
Not so. Moderate-income subsidized units are hardly for "working-class families." Who can afford $2,700 a month--surely more when the building's done--for a two-bedroom unit?


  1. Anonymous10:28 AM

    Er, your math is way off. The 125 are the number of factory jobs needed to build the modules. The modules will still need to be installed, braced and connected on site, in addition to on site foundation and finish work. I realize that you don't like Ratner, and the number of jobs realized will fall far short of early predictions and ongoing promises. However, what is taking place is that Ratner and the unions (to their credit) are recognizing economic reality. The old ways of construction in NYC are far to expensive. Modular building will lead to a development boom in NY, and credit thousands of jobs that don't presently exist. This is a net gain, and the future. Better to realize that than tilt at windmills.

  2. Maybe my math is off. But based on the numbers we have, I explained how we get there.

    If you have a more authoritative source and current numbers, please explain.

    Keep in mind that the number of estimated factory jobs has already been lowered.


Post a Comment

Popular posts from this blog

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

Revising official figures, new report reveals Nets averaged just 11,622 home fans last season, Islanders drew 11,200 (and have option to leave in 2018)

The Brooklyn Nets drew an average of only 11,622 fans per home game in their most recent (and lousy) season, more than 23% below the announced official attendance figure, and little more than 65% of the Barclays Center's capacity.

The New York Islanders also drew some 19.4% below announced attendance, or 11,200 fans per home game.

The surprising numbers were disclosed in a consultant's report attached to the Preliminary Official Statement for the refinancing of some $462 million in tax-exempt bonds for the Barclays Center (plus another $20 million in taxable bonds). The refinancing should lower costs to Mikhail Prokhorov, owner of the arena operating company, by and average of $3.4 million a year through 2044 in paying off arena construction.

According to official figures, the Brooklyn Nets attendance averaged 17,187 in the debut season, 2012-13, 17,251 in 2013-14, 17,037 in 2014-15, and 15,125 in the most recent season, 2015-16. For hoops, the arena holds 17,732.

But official…

At 550 Vanderbilt, big chunk of apartments pitched to Chinese buyers as "international units"

One key to sales at the 550 Vanderbilt condo is the connection to China, thanks to Shanghai-based developer Greenland Holdings.

It's the parent of Greenland USA, which as part of Greenland Forest City Partners owns 70% of Pacific Park (except 461 Dean and the arena).

And sales in China may help explain how the developer was able to claim early momentum.
"Since 550 Vanderbilt launched pre-sales in June [2015], more than 80 residences have gone into contract, representing over 30% of the building’s 278 total residences," the developer said in a 9/25/15 press release announcing the opening of a sales gallery in Brooklyn. "The strong response from the marketplace indicates the high level of demand for well-designed new luxury homes in Brooklyn..."

Maybe. Or maybe it just meant a decent initial pipeline to Chinese buyers.

As lawyer Jay Neveloff, who represents Forest City, told the Real Deal in 2015, a project involving a Chinese firm "creates a huge market for…

Is Barclays Center dumping the Islanders, or are they renegotiating? Evidence varies (bond doc, cash receipts); NHL attendance biggest variable

The Internet has been abuzz since Bloomberg's Scott Soshnick reported 1/30/17, using an overly conclusory headline, that Brooklyn’s Barclays Center Is Dumping the Islanders.

That would end an unusual arrangement in which the arena agrees to pay the team a fixed sum (minus certain expenses), in exchange for keeping tickets, suite, and sponsorship revenue.

The arena would earn more without the hockey team, according to Bloomberg, which cited “a financial projection shared with potential investors showed the Islanders won’t contribute any revenue after the 2018-19 season--a clear signal that the team won’t play there, the people said."

That "signal," however, is hardly definitive, as are the media leaks about a prospective new arena in Queens, as shown in the screenshot below from Newsday. Both sides are surely pushing for advantage, if not bluffing.

Consider: the arena and the Islanders can't even formally begin their opt-out talks until after this season. The disc…

Skanska says it "expected to assemble a properly designed modular building, not engage in an iterative R&D experiment"

On 12/10/16, I noted that FastCo.Design's Prefab's Moment of Reckoning article dialed back the gush on the 461 Dean modular tower compared to the publication's previous coverage.

Still, I noted that the article relied on developer Forest City Ratner and architect SHoP to put the best possible spin on what was clearly a failure. From the article: At the project's outset, it took the factory (managed by Skanska at the time) two to three weeks to build a module. By the end, under FCRC's management, the builders cut that down to six days. "The project took a little longer than expected and cost a little bit more than expected because we started the project with the wrong contractor," [Forest City's Adam] Greene says.Skanska jabs back
Well, Forest City's estranged partner Skanska later weighed in--not sure whether they weren't asked or just missed a deadline--and their article was updated 12/13/16. Here's Skanska's statement, which shows th…

Not just logistics: bypassing Brooklyn for DNC 2016 also saved on optics (role of Russian oligarch, Shanghai government)

Surely the logistical challenges of holding a national presidential nominating convention in Brooklyn were the main (and stated) reasons for the Democratic National Committee's choice of Philadelphia.

And, as I wrote in NY Slant, the huge security cordon in Philadelphia would have been impossible in Brooklyn.

But consider also the optics. As I wrote in my 1/21/15 op-ed in the Times arguing that the choice of Brooklyn was a bad idea:
The arena also raises ethically sticky questions for the Democrats. While the Barclays Center is owned primarily by Forest City Ratner, 45 percent of it is owned by the Russian billionaire Mikhail D. Prokhorov (who also owns 80 percent of the Brooklyn Nets). Mr. Prokhorov has a necessarily cordial relationship with Russia’s president, Vladimir V. Putin — though he has been critical of Mr. Putin in the past, last year, at the Russian president’s request, he tried to transfer ownership of the Nets to one of his Moscow-based companies. An oligarch-owned a…