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Category ArchiveInfrastructure

Construction Pros Disappointed With Trump’s Infrastructure Plan

The Trump administration has proposed a plan to repair the nation’s “failing infrastructure” that calls for $200 billion in federal spending over the next decade, according to a press release from the White House.

The president hopes the spending will foster $1.5 trillion in funding from states, cities and private companies for infrastructure projects, practically pushing the bulk of the country’s capital expenditure outlay onto local governments and private companies.

Of the federal money, $100 billion would be set aside for an “incentives program,” in which states, local governments and private companies would compete for funds for their infrastructure projects. Fifty billion dollars would be dedicated to build and modernize rural areas.

Twenty billion dollars would be allocated for the “transformative projects program,” and focus on giving federal aid to projects that could have positive impacts on states, cities and localities “but may not attract private sector investment,” the release says. Another $20 billion would be earmarked for existing federal infrastructure financing programs for rail, water and utilities. Finally, $10 billion would go toward purchasing property for federal government use and reducing “inefficient” leasing of properties.

Many construction experts responded that it was unreasonable that cities, states and private companies would have to shell out $1.5 trillion while the federal government would only provide $200 million.

“While we believe $200 billion is a good starting point, our national infrastructure systems will need a much larger investment from the federal government just to bring them up to a state of good repair and accommodate for future growth, let alone begin the transformative projects our country desperately needs,” Carlo Scissura, the president and CEO of the New York Building Congress, said in a statement.  

Moreover, there is a fear that without enough federal funds, the president would end up assigning more public work projects to private companies, which may not utilize union workers or serve the best interests of the public.

“The American people need investment in our crumbling roads and bridges, schools, public transit and affordable housing but President [Donald] Trump’s plan does little to address this need and is a giant privatization scheme to line the pockets of the wealthy,” Héctor Figueroa, the president of property service workers union 32BJ SEIU, said in prepared remarks. “It could also roll back decades of progress on labor standards and may open the door to wages and benefits being slashed.”

The plan was also concerning to some because it doesn’t detail how private companies would benefit from partnerships with local governments (such as giving them tax credits). And private dollars are likely to become harder to obtain in the future due to rising interest rates.

Heidi Learner, the chief economist at Savills Studley, told CO that private companies are not going to be jumping at the chance to contribute toward the $1.5 trillion for infrastructure with rising interest rates and a lack of clarity in the president’s proposal.

“This [plan] is already on the backdrop of rising interest rates, so the cost of any funding that any private sector is putting forth to be invested in these projects is likely to increase, so the return on projects would have to likely increase,” Learner said.

Louis Coletti, the president and CEO of the Building Trades Employers’ Association of New York City, who welcomed spending for infrastructure was also displeased by the amount the administration has pledged. He suggested the infrastructure spending could have been tied with the recent tax reform legislation. The new tax change dropped corporate tax rates and rates on individuals, as CO previously reported.  

“We support the president’s proposal and focus on infrastructure but are disappointed in the lack of federal dollars to support these efforts,” Coletti said in an email to CO. “An opportunity to provide that funding was missed in not including [it] in the tax bill provisions that would have committed some of the funds companies were getting to bring their overseas profits back to the United States as a basis for an infrastructure bank.”

Source: commercial

NYC Public Projects Boost Construction Starts to $38B in 2017

After a downturn in 2016, the dollar volume of construction starts in 2017 rebounded in New York City, helped by a surge in public works and institutional projects across the five boroughs.

The Big Apple saw $37.78 billion worth of projects commence across all categories—residential, non-residential and non-building construction (which includes roads, bridges, tunnels and utilities), according to information supplied by Dodge Data & Analytics at the request of Commercial Observer. That marks an 18 percent uptick from 2016 when the city saw just $31.93 billion worth of projects begin. And last year’s construction starts represent the second-largest such sum since 2010, trailing the recent peak of $41 billion starts in 2015, according to the data.

“The basic message is that construction activity in the New York City market is continuing at a healthy pace,” Robert Murray, the chief economist for Dodge and a vice president at the company, told CO. “What is changing is whereas before the upward push came from commercial building and multifamily, now the upward push is coming from the institutional and public works side of the industry. And this is similar to the national level.”

Together, institutional and public works projects comprised about half of the total construction starts last year.

Institutional projects (such as transportation terminals, convention centers and schools) soared 166 percent to $13.94 billion across the city, up from just $5.23 billion in the previous year. It was led by two noteworthy projects at LaGuardia Airport: the $4 billion redevelopment of the Delta Air Lines Terminals C and D, and the $3.6 billion redevelopment of the Central Terminal B Building. There was also the $1.2 billion in construction worth for the expansion of the Jacob K. Javits Convention Center and $1.3 billion for the reposition of the James A. Farley Post Office into the Moynihan Station.

On the public works side, construction starts jumped 42 percent to $5.21 billion in 2017 from $3.67 billion, according to the Dodge information. This sector was led by projects like the  $452 million rehabilitation of the suspension ropes on the George Washington Bridge in Manhattan and the $500 million project to clean up the Gowanus Canal in Brooklyn.  

The focus on public works and institutional developments is due to a need to rehab crumbling infrastructure, a trend extending around the country.   

“I think the reason you are seeing the lift is there is the need,” Cyrus Izzo, the co-president of engineering firm Syska Hennessy Group, said. “I saw an article recently [that stated] to repair New York State bridges would cost [over] $70 billion.”  (According to U.S. Department of Transportation data from 2016, that figure is $75.4 billion.)

Residential building construction starts saw another straight year of declines in 2017. The category logged $10.75 billion in 2017, down 3 percent from $11.05 billion in 2016. It continued the tumble from 2015, when the city saw $18.95 billion in starts.

He explained that the drop on the residential side year-over-year was due to the expiration of the 421a program in 2016 (which was reinstated in 2017 as the Affordable New York program).

“2015 was artificially pumped up due to the pending expiration of the 421a program,” Murray said.

Brooklyn and Queens were the only boroughs that saw increases in residential building construction starts over the year.

“Multifamily housing is continuing to recede. One thing that kept the decline more modest was the increase in both Queens and Brooklyn,” Murray said.

Kings County had the largest percentage increase in the residential sector, rising 24 percent $3.49 billion from $2.78 billion. And Queens saw a modest increase of 8 percent to $1.62 billion from $1.5 billion. Meanwhile, Manhattan’s number dipped 16 percent to $4.41 billion from $5.28 billion in 2016.

Construction of commercial properties, such as office and retail, also plummeted. The construction starts dropped 34 percent to $7.84 billion from $11.91 billion in the year prior. (In 2015, the dollar volume for commercial structures was $11.89 billion, slightly exceeding 2016’s figure).

For 2018, Murray expects public works and institutional projects to help boost construction starts.

“Our general picture for total construction is that we will be seeing an increase nationally at 2 to 3 percent in which the institutional side for nonresidential building maintains or stays close to the enhanced level,” Murray said. “One thing that would help the New York City market is the expected work at John F. Kennedy Airport.”

Gov. Andrew Cuomo has announced plans to redevelop the international airport by relocating older terminals and expanding newer ones and strategies to reduce congestion, as CO previously reported. There is also a plan to expand the JFK AirTrain.

Source: commercial

Developers Look on the Bright Side of South Florida Despite Hurricanes

Leonardo DiCaprio wants you to consider this: Miami may soon become the new Atlantis.

South Florida as we know it could be washed away by rising seas, DiCaprio warns in his 2016 climate change documentary, Before the Flood. “When you look at places that are the most susceptible to sea level rise, especially in the United States, Florida is the key one.”

And for those able to deny or blithely shrug at melting icecaps and rising sea levels, there is a more immediate symptom of climate change that is far more difficult to ignore: hurricanes.

This September, the Americas saw the most active Atlantic hurricane season on record, according to the Weather Channel. First, Hurricane Harvey smashed Houston, becoming its third “500-year storm” in just three years. Irma caused headaches on the west coast of the peninsula and devastated the Florida Keys and the Caribbean. It was the most intense Atlantic hurricane to strike the United States since Katrina in 2005. The island of Barbuda was 95 percent destroyed by Irma. It was immediately followed by yet another category 5, Maria, which created a major humanitarian crisis in Puerto Rico. Hurricane Jose, a category 4 and the longest-lived Atlantic hurricane since 2012, in comparison barely made the storm-weary news.

But even as the barometer dial points closer and closer to apocalypse, experts in Miami’s real estate sector tell the Commercial Observer that they see a silver lining through the storms.

“South Florida faired a lot better than the Caribbean,” said New York-based real estate investor Don Peebles of Peebles Corporation as he drove past battered foliage and downed power lines on the section of highway west of Fort Lauderdale, Fla., known as Alligator Alley. “It will probably do pretty well because St. Martin is decimated. Anguilla, St. Barth’s, the Virgin Islands—all severely damaged. The situation in Puerto Rico is catastrophic. So, people who vacation in the Caribbean, I think they are going to look to South Florida. If people are pursuing climate, then think about it: California, wildfires and earthquakes. Then there is Florida with no state income tax. Overall, hurricanes are inconvenient, but they don’t happen too often.”

Peebles, who said his Coral Gables home lost power during Irma but was otherwise undamaged, is so confident in the enduring draw of the area that he is working on a deal to develop a new boutique hotel in Naples, where there isn’t as much competition in the pipeline. Last year, the Miami Herald reported that he tried and failed to bring a $250 million mixed-use project to Miami’s Overtown neighborhood after a deal with the Miami Community Redevelopment Agency went sour. Meanwhile, he said he is still eyeing the Miami market—where he recently listed the historic Bath Club on Miami Beach for $25 million—with caution.

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Hurricane Irma hits Miami. Photo: Getty Images

Although the storm seems not to have been a stake through Miami’s heart, that caution is still probably warranted. The Miami market shifted into low gear last year, and it’s been slow going ever since. A Douglas Elliman report shows that in the third quarter of this year the number of residential sales in the area declined 11.8 percent to 690, even as listing inventory increased marginally. The number of days a listing sat on the market also increased in the three months, to 139 from 120. The average sale price sat unchanged at $868,404. And the report points at—you guessed it—Hurricane Irma, which delayed closings, as the culprit.

On the verge of a $100 million initial public offering, Newmark Group’s multifamily-financing business, Berkeley Point Capital, took a dive in the third quarter. Berkeley’s revenue gains from its mortgage business in that quarter dropped 30.5 percent to $45.5 million. Again, they cited hurricanes in Texas and Florida.

“This year we have a one-off anomaly, which I guess is the combination of hurricanes in both Texas and Florida, that effectively softened those two markets,” Howard Lutnick, the chief executive officer of BGC Partners, Newmark’s parent company, said on an earnings call, according to The Real Deal.

“The market has been tough all year. It’s been like this for a while,” said PMG Principal Ryan Shear, who built the residential and mixed-use developments Echo Aventura, Echo Brickell, Muse Residences, all in Sunny Isles and Sage Beach in Hollywood, as well as Vice in Miami and X Las Olas in Fort Lauderdale. “On the multifamily side, the market is pretty decent. But on the condo side, we are seeing less new starts and a lot of inventory. We are at the end of the cycle.”

But even Shear thinks that he can see blue skies beyond the storm. In fact, every developer and speculator with whom CO spoke in the Miami marketplace said that Irma could perversely be the best advertisement for South Florida’s robust infrastructure they’ve seen in years.

After Hurricane Andrew caused severe damage in South Florida in 1992, the city radically upgraded its storm infrastructure and building codes. These days, new construction buildings from Naples to Palm Beach are constructed like mini-fortresses. Lobbies are built nine feet above grade. Windows are designed to survive wind speeds north of 150 miles per hour. Garage doors are reinforced. Back-up generators keep elevators moving when the city loses power. (Meanwhile, Puerto Rico is still mostly without power.)

“Sliding doors are so heavy, it’s hard for your old grandma to open one,” Shear said of the building code for weather-resistant doors. “We are built to the toughest code globally. It’s expensive, but it means hurricanes just don’t have a big effect on the Miami market. If anything, Miami is probably the most resilient place in the world when it comes to hurricanes.”

And its not just PMG that’s building away, storms be damned.

“I have lived in Florida for 40 years. The last time we had a hurricane was 2005. It’s just not something we think about,” said Rob Siemens of the Siemens Group, which developed Akoya Boca West, a 116-unit, full-service condo building in Boca Raton. He said that the media sensationalized the impact of Irma.

“The Keys got hit really hard,” he said. “But that is a narrow stretch of land surrounded by water. Obviously, it was a big storm, and we got lucky, but at our building there was no damage. None. Nothing.”

He said that for the buyers at his developments (which comes with access to the Boca West Country Club with its four designer golf courses, 31 tennis courts, a 400,000-square-foot club house, a world-class spa and a steak house), hurricanes just aren’t a game changer. In fact, he said 10 buyers have come into Akoya to pick their finishes since the hurricane. And in that time, even more potential buyers have eyed the offerings in the sales office.

“People aren’t deciding to not live in Florida because there might be a hurricane. That just isn’t happening,” he said, noting that properties built directly on the beach tend to suffer more than beach-adjacent developments like his. “There is no doubt that anything on the water is going to be impacted. I am not saying global warming isn’t a concern, but I am not of the belief that South Florida is just going to get wiped off the map. Look at [Superstorm] Sandy. It did a number on New York. Hurricanes are just a reality for coastal cities.”

Talia Bejarano, who splits her time between Israeli, London, New York and South Florida, isn’t particularly concerned either. She recently purchased a condo in Akoya to avoid New York winters and said the word “hurricane” never crossed her mind.

“If I thought that way, I wouldn’t have a house anywhere,” Bejarano said. “Every place in the world has one sort of danger or another. You buy the most beautiful house in the Caribbean, and it is washed away. You buy something in California, and there is a fire. You buy something in Europe, and there is terrorism. Things happen. But I am absolutely convinced I bought in the best building possible in the best place possible. I am confident in the infrastructure of South Florida.”

Even builder behemoths like Related Group are caught up in the “it only gets better from here” narrative.

At seven large residential buildings, Related Group claims to be selling 10 to 20 units a week, which isn’t bad, but is admittedly much slower than the 100 or so units the used to sell in a week. Still, Carlos Rosso, the president of the Related Group’s condo development division, said that market fundamentals are what gives him confidence. 

“What is very good about this market is that there is no real systemic risk,” he said. “No bank has notes in its portfolio that are worth less than the collateral.” It’s a slower market, there is a lot of supply, but it’s a cash market. The structure of transactions is completely different than in the previous market. In the previous market we would borrow 90 to 95 percent of the cost of the building. Now, those loans are maximum 50 percent. So most of the development from this cycle has been developed with cash and deposits from buyers.”

That confidence is also the result of years of good branding that has now been tested and proven by Irma, according to superbroker Louise Sunshine, who founded Corcoran Sunshine, helped President Donald Trump open his first office in Manhattan and is now a consultant for the Four Seasons in South Florida.

“If hurricanes scare a buyer, they don’t come to Florida in the first place,” she said. “I don’t know where they go. Maybe they go to Georgia.”

The Four Seasons Surf Club on Collins Avenue in Surfside—a section just north of Miami Beach before Bal Harbor—where prices reach $4,000 per square foot, is now 80 percent sold, Sunshine said. The Four Seasons Private Residences Fort Lauderdale will break ground in a month. Neither property experienced damage in September—the worst they could report was a sign blown over in Fort Lauderdale.

“We made a sale in Fort Lauderdale in October for $1,700 a square foot,” she said. “Fort Lauderdale has not seen prices like that ever before. The record for the area was $1,400 per square foot.”

“The Four Seasons brand is almost stronger than any hurricane,” she added. “It is astonishing.”

She recalls learning just how important good branding is in the days after the terrorist attacks of 9/11. At the time, Sunshine was living in Manhattan and working on selling apartments at Related Companies’ Time Warner Center, then under-construction. After the attacks, Sunshine said, sales at the south tower of the project stopped. But at the north tower, which features a Mandarin Oriental-branded hotel, sales went on “stronger than ever.”

“If you have the right brand,” she said, “it maintains its stability, even in these questionable markets.

“Do you really want to know what has happened since the hurricane?” Rosso added. “I heard that Richard Branson is moving to Miami. I’m serious.”

Source: commercial

Why Big Data Companies Are Building Server Farms in Middle America

When Apple Inc. picked a Des Moines, Iowa, suburb for its next high-end data center over the summer, only its sixth in the U.S., it wasn’t playing its typical tech-industry-pioneer role. It was following Google, Microsoft and Facebook, all of which have already planted data-center flags in the Hawkeye state.

It’s somewhat surprising, but rapidly getting less so, to see technology giants of Silicon Valley or Seattle turning from industry power hubs on the coasts to second-tier markets to establish new data centers. States like Iowa, Ohio, Nevada and North Carolina have steadily built their infrastructure and business cases, and industry watchers say they have gained momentum amid surging demand for digital storage space and shifting corporate data management trends that might just blow the barn doors off.

Many factors contribute to the wider geographic play, but big data center operators such as Amazon, IBM, Google and SalesForce are hungry for core ingredients of land, power and water, which can be plentiful and cheaper off the coasts, according to Sean Brady, a managing director and co-founder of the global data center advisory group at Cushman & Wakefield.

“They’re going to go for a campus,” Brady said. “They’re typically going to buy a tract of land and build it.”

The main players are tech or software companies adding capacity for their own storage needs, such as Apple and Facebook; cloud computing giants and co-location providers running data for others, like IBM’s SoftLayer and Microsoft’s Azure; and some—Amazon, for one—operating in multiple camps. While today’s push has a cloud-computing flavor, the whole market is hot, Brady said.

“The cloud providers are going into these remote areas and taking down 100-acre tracts of land and 100 megawatts of power,” he said. “The appetite for data is going to absolutely grow exponentially.”

That’s keeping real estate, design and construction firms very busy, said Ben Kaplan, a vice president at Turner Construction in its data center division.

“The scale of what we’re building is unprecedented,” he said.

Go East, or West

The heart of data-center country remains on the coasts with the Washington, D.C., and Northern Virginia region still a key hub, thanks to an established co-location industry, and core pockets around Silicon Valley and New York, said Mason Mularoni, a senior research analyst in the professional development industries unit at JLL. Dallas and Chicago are also major markets.

“They still are major contenders—a lot of those are operating on very slim vacancies,” Mularoni said. “But other traditionally midtier markets have made some big expansions forward.”

Iowa’s ascendance started a decade ago when Google made plans to build a huge complex in Council Bluffs, Iowa, in the western part of the state, right around the time state officials introduced tax and business incentives similar to what manufacturing firms had long received, according to Tina Hoffman, the marketing director at the Iowa Economic Development Authority. The state also aided in the development of an advanced fiber cable network, which has helped spark data center projects in the Des Moines area, and even touts itself as a haven from hurricanes or earthquakes, she added.

“We do also have affordable electricity and available water, and we lead the nation in renewable energy access, which was significant for Facebook and Apple,” Hoffman said.

Those seeds bore fruit in billion-dollar complexes for Google and Microsoft, and now Apple is next with plans for a new $1.3 billion 2,000-acre campus in Waukee, Iowa, on which it is starting with two 400,000-square-foot data centers to serve domestic users of its Siri service, its App Store and more. Construction and land account for more than half of the current budget with hardware and equipment as most of the rest. The facility—breaking ground next year with the first center online in 2020—will run on 100 percent renewable energy.

Apple’s facility will have “the latest and greatest in terms of various technologies, especially around energy and efficiency,” said Rachel Wolf Tulley, an Apple spokeswoman. It is getting more than $200 million in incentives from state and local entities.

Ohio is gunning for data center facilities with its own pitch of “safe and central”—free of most natural disasters and a day’s drive to major Midwest and East Coast markets—and a strong fiber network, said Ted Griffith, a managing director for information technology at JobsOhio, a nonprofit economic development group. The state hosts various data centers for non-tech corporations, such as Citibank, won a center for Amazon Web Services in 2014 and recently landed Facebook, which is investing $750 million in a new complex, he said.

“Ohio is in the center, and in terms of access, your speed and distance matters,” Griffith said. “If you are far from the server, there is data latency—[a lag in] the time to travel from point to point.”

The state also has its share of large co-location data providers such as CyrusOne and Cologix that offer services to corporations, which are increasingly outsourcing data management, he added.

Shifting Data Trends

Establishing data centers in remote locations alone is not a new trend: Operators in the past often aimed to hide these massive complexes from potential security threats, Brady said. Today, there are different drivers for the trend, however, as many factors align well with the rising popularity of the less traditional states.

“They’re going to states that have cheap power, that have large tracts of land and access to water for cooling systems,” he said, with rural Oregon and Washington State also competing in such searches. “When you build large data centers and you’re bringing in 25 megawatts or more of power to a particular location; that’s a sunk cost.”

Advanced communications systems, higher data speeds and redundant fiber options are critical pieces today, said Brian Martin, the senior electrical engineer in the mission critical group at design and engineering firm AECOM.

“That is a huge siting consideration—trying to make sure these big center operators have multiple pathways of fiber going in and out, and with redundant rings encircling the entire campus,” Martin said.

Demographic factors also are at play when tech firms look at new markets with higher education centers such as Northern Virginia and Ohio, or younger, more affordable cities such as Denver, offering an edge.

“It’s about the workforce that you need—and is it [in a particular market] and at what price,” said Kenneth McCarthy, a principal economist and senior managing director at Cushman & Wakefield.

Cloud computing’s growth is bolstering the move to nontraditional regions as corporations increasingly shift to outsourcers—pushing these providers to open new data centers either by leasing existing commercial facilities or pursuing development of new complexes, Mularoni said.

“The second-tier markets are picking up that capacity,” he said. “The cloud front has driven a significant amount of the absorption in the U.S. the last 12 months.”

It doesn’t hurt that all states are offering generous incentive packages, according to McCarthy. “It’s definitely part of the entire negotiating process now,” he said.

Another development wave may soon spread even further as the “internet of things”—which controls everything from smart refrigerators to self-driving cars—drives demand for multiple smaller data centers closer to end users that can quickly and accurately process the vast volume of information these technologies need to function safely and properly, Brady said. The demand for such faster, real-time data flow will likely spur development of many smaller centers around population hubs, he said. (See story on self-driving cars on page 24.)

Efficiency Rules

The vast demand for more data-handling capacity doesn’t necessarily mean new construction will be outsized. Data managers don’t want to bet too much on today’s technology, Brady said.

“There has been more change in the technology of data centers in the past five years than there has been in 20,” he said. “We are able to cool a greater amount of heat in a smaller space, and so we’re able to run these things more efficiently.”

Fifteen years ago, data centers brought in two to three kilowatts of power to get one kilowatt out, and now it’s much closer to one to one. “The equipment keeps getting better, the designs get better and costs are coming down across the board,” Kaplan said.

Power generation and cooling system trends move fast as data center operators are always on the hunt for even more energy efficiency and cost savings, said Ben Rasmussen, a senior mechanical engineer in AECOM’s mission critical group. Chiller plants and cooling systems are big capital expenditures, and not having them online all day can significantly reduce power use, he said.

“A lot of the clients we work with…are moving away from chilled water-based cooling solutions to direct evaporative-cooled air-economizing solutions,” Rasmussen said.

Another energy systems trend now gaining attention from data center developers is finding ways to use less uninterruptible battery power for backup needs, said Matt Treat, a vice president for the mission critical and advanced technologies practice at AECOM. “One of the newer technologies that we’re seeing the last two years is natural gas-based emergency power generation,” he said.

Natural gas facility manufacturers have made big advancements in recent years, bringing plant startup times down from 10 minutes in past decades to as little as 40 seconds today, making them a viable source of backup power supply, AECOM’s Martin said.

Systems redundancy also remains a big design focus of data centers—a concept that isn’t new but is getting far more sophisticated in implementation as efforts today aim to build multiple pathways for a utility’s output to flow to and from source and usage points  instead of adding or reducing equipment, Rasmussen said.

In some cases, redundancy simply means a standalone piece of a larger campus separated physically from other facilities to reduce common points of failure, Martin said. There are competing views on how to execute such ideas. Some create fully isolated blocks, and others simply have multiple utility sources connected to multiple facilities but with enough flexibility to dedicate supply to specific zones as needed. And most of the manufacturers of power supply equipment—generators, air handlers and more—now build their systems for redundancy purposes, he added.

With technology evolving quickly, many data center operators are planning new campuses strategically. “Most of the large clients in particular making significant capital investments [are] requesting a phased approach to the facility design and installation,” Treat said.

That will encourage more nimble planning. “The Amazon Web Services and Googles are not going to build a 500,000-square-foot building, but they’re going to build a 100,000- to 200,000-square-foot building,” Brady said. “They know technology is changing—a better mousetrap is in our future.”

Facilities today must also plan for greater physical site security requirements and cybersecurity defenses that use massive routers and switches, Griffith said. Such needs—and fast-growing demand from users for technologies with advanced capabilities—will drive even further high-end design and outsourcing trends.

“It’s not your FitBit anymore” driving on-the-spot data-processing trends, Griffith said. “Entire factories are going to operate or not based on the quality of the sensors gathering data. This whole digital ecosystem is just exploding.”

Source: commercial

Delta Renews LaGuardia Lease, Loses Goldman Sachs Financing for New Terminal

Source: commercial

State Finalizes $1.6B Deal With Related, Vornado and Skanska for Moynihan Train Hall

Related Companies, Vornado Realty Trust and Skanska have sealed a $1.6 billion deal with the Empire State Development Corporation to convert the James A. Farley Post Office into a train hall and commercial complex, Gov. Andrew Cuomo announced today.

Construction is set to begin soon on the mall-transportation hub, which will be connected to the 40-year-old Pennsylvania Station across Eighth Avenue via the newly completed West End Concourse.

29882833511 b6ede8f559 k State Finalizes $1.6B Deal With Related, Vornado and Skanska for Moynihan Train Hall
A rendering of the new Moynihan Station. Photo: SOM via flickr.com/governorandrewcuomo

The project is being funded with $550 million from the state, $630 million from the developers, $150 million from Port Authority of New York & New Jersey, $105 million from Amtrak, $100 million from Metropolitan Transportation Authority and $65 million from federal grants.

The complex, to be known as Moynihan Train Hall, will host a 255,000-square-foot train hall for Long Island Railroad and Amtrak passengers and 700,000 square feet of office and retail space. Related and Vornado will operate and lease the commercial portion, the governor told reporters on a conference call this afternoon. McKim, Mead and White designed the Farley building (as well as the long-defunct original Penn Station), and Skidmore, Owings & Merrill are handling construction of the new train hall inside the post office. 

An overhead view of Moynihan Train Hall. Rendering: SOM
An overhead view of Moynihan Train Hall. Rendering: SOM

The revamped post office building will include a 92-foot-high skylight and access to nine platforms and 17 tracks, according to the governor’s office.

The transit hall is scheduled to be complete by 2020.

The state also plans to redesign the LIRR’s existing concourse along West 33rd Street in Penn Station and the subway stations, which serve the 1, 2, 3 and A, C and E lines. The upgrades will include better lighting, signage to help commuters navigate the building and digital screens.

The announcement comes just as commuters are bracing for several weeks of disruptions in Long Island Railroad service to Penn Station, because Amtrak needs to repair aging tracks beneath the behemoth rail complex.

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A rendering of the Moynihan Train Hall. Photo courtesy: SOM

Source: commercial

NYCHA Embraces Tech for Its Aging Buildings

The cash-strapped New York City Housing Authority is taking a giant leap into the 21st century.

NYCHA and the Fund for Public Housing, a nonprofit created to fundraise for the agency and forge public-private partnerships, hosted an event Tuesday night where real estate tech startups pitched ways to improve the agency’s aging, poorly maintained buildings.

The tech event comes as the agency faces hard times, with the potential of losing millions in federal funding. As a result, NYCHA has been looking for ways to fix up its buildings and reduce energy costs without getting hit with a hefty tab.

The authority stands to lose $370 million in funding under President Donald Trump, thanks to a proposed $7.4 billion budget cut to the federal Department of Housing and Urban Development. NYCHA is the city’s largest landlord and the country’s largest public housing authority, housing 400,000 low-income New Yorkers.

“In a city where more than half of New Yorkers pay more than 50 percent of their income towards rent, let alone our residents that are struggling to pay their rent already, these cuts are devastating,” NYCHA Chairwoman Shola Olatoye told Commercial Observer.

Even in the face of a bleak financial future, Olatoye is trying to push forward with NYCHA’s controversial NextGen plan, which calls for upgrading the authority’s 2,500 existing buildings and developing new residential projects to generate extra revenue. The agency needs $17 billion to bring its buildings and infrastructure up to modern standards. One pillar of the plan involves using technology to “improve customer service and increase efficiency,” and another calls for developing a sustainability agenda and reducing the agency’s carbon footprint. The startup competition aims to address both those goals.

“To be in the center of innovation and problem solving, to actually connect with those thinkers is really important to help us work smarter, be more efficient with our resources and ultimately improve the quality of life for our residents,” Olatoye said. “In times of crises, you have to find a way to leverage resources for the long-term and this gives us a great platform to see what might be possible.”

Ten companies gave brief presentations on how their technology could aid NYCHA leadership, maintenance workers and tenants. At the end of June, public housing officials will choose three proposals to pilot in a handful of NYCHA buildings from July to October.

Several firms served up promising proposals. One company, hOM, provides on-demand amenities to roughly two dozen large apartment buildings in Manhattan and Brooklyn, and it wants to do the same for NYCHA. The service offers weekly group fitness classes (yoga, core work, meditation) in whatever space a landlord has available, whether it’s a conference room, basement, or courtyard, and it organizes a monthly social calendar with activities for tenants. The company also helps tenants organize their own events, like communal dinners or bike rides. Co-founder Ryan Freed proposed offering two classes at one NYCHA property to gauge residents’ interest in the service.

Two startups presented relatively simple solutions to improve the wasteful heating and cooling systems in many of the agency’s outdated buildings. Radiator Labs pitched a cover that shrouds radiators, trapping steam inside the pipes and preventing the steam from condensing till cool air can be added and then released to the room. The device has a fan that turns on and circulates hot air when the room drops below a set temperature. Then it shuts off once the room is warm enough. It helps landlords stabilize the temperature in apartments and save on fuel costs.

A second firm, ThinkEco, tackled the cooling side of things. Its seven-year-old invention, the Modlet, is essentially a Wi-Fi-connected power outlet that tenants can control with a smartphone app or a web portal. It allows residents to turn their air conditioners on and off remotely and schedule specific times for the A/C to run. ThinkEco also built a rewards platform that offers incentives for users to save energy.

A handful of startups floated money-saving solutions that involved installing sensors in NYCHA buildings to track energy usage. A company called Carbon Lighthouse claimed it could help landlords slash their energy use by up to 30 percent by collecting data on electricity, gas and steam heat from sensors and upgrading inefficient mechanical systems. Another one, PanSofik, proposed putting in sensors that detect temperature, humidity, light and human presence and beam that data back to secure servers.

“You could put a sensor in a hard-to-reach place under the roof, and if the roof started leaking, [the sensor system] would send a text or email to the building management team,” said Tony Bowden, a partner in PanSofik.

The final presenter, Connell McGill of Enertiv, said his company could offer not only sensors but custom-built meters that track HVAC and utilities and can predict when certain mechanical systems, like fan belts, will fail.

When asked how his pilot would work for NYCHA, he replied, “I noticed that only a sixth of your non-residential tenants are direct metered by the utility. You’re leaving about $20 million on the table every year. We could help you recover that immediately.”

Source: commercial

Andrew Cuomo Floats Plans to Fix Penn Station, Subways

A week after claiming he doesn’t have much control over the Metropolitan Transportation Authority, Governor Andrew Cuomo gave a speech in which he reiterated the need to upgrade Pennsylvania Station and challenged the MTA to fix New York City’s aging subway system.

During his address at the CUNY Graduate Center, Cuomo touted his public-private plan to revamp James A. Farley Post Office into Moynihan Station, while lamenting the impending chaos that will occur when Amtrak slashes train service for six weeks this summer in order to make repairs. He announced the creation of a task force to address the impending “summer of hell,” which would focus largely on solutions that affect suburban commuters, like high-speed Long Island ferries and privately owned bus service.

“The intolerable state of disrepair in Penn Station and its ripple effect of delays and dysfunction throughout the subway system have reached a breaking point, and we must enact this comprehensive action plan now to find both short and long term solutions to these growing challenges, upgrade outdated infrastructure and meet the needs of current and future generations of New Yorkers,” Cuomo said.

The Penn Station task force will have some familiar faces, including Richard LeFrak, chief executive officer of LeFrak, and Steven Roth, chairman of Vornado Realty Trust (both members of President Donald Trump’s infrastructure panel and longtime Trump friends), Congressman Peter King, Tom Wright of the Regional Plan Association, and former New York City Planning Commissioner Carl Weisbrod.

Of course, Vornado is part of the team already chosen by the governor to redevelop the Farley Post Office. The corporation also controls nine million square feet of office space around Penn Station.

The governor’s 143-slide presentation and speech highlighted the fact that revamping Penn Station, constructing the cross-Hudson Gateway Tunnel and converting the post office into a new train hall would be an ideal project for Trump’s trillion-dollar infrastructure plan. The entreaties came only a few days after Cuomo penned a letter to Trump, requesting emergency federal funding to help with short-term repairs and a longer-term rebuilding of Penn Station.

Cuomo also proposed that Amtrak and the federal government should transfer control of the beleaguered station to one of three entities: New York State, the Port Authority of New York and New Jersey, or a private “qualified” contractor. Meanwhile, Amtrak Chief Executive Officer Wick Moorman said the rail operator has no plans to cede control of Penn, telling The New York Post’s editorial board earlier this week: “Our name is on the deed.”

Then Cuomo switched gears to the subway system. The 112-year-old hodgepodge of train lines has had several major meltdowns in the past two months, sparking a torrent of negative press and angry editorials directed at the governor, who controls the MTA, the agency that runs the subways, the Long Island Railroad and the Metro North trains.

“The truth is that the subway system is already at its breaking point and now trying to compensate for the dysfunction of Penn is just too much,” he said. “We have 64,000 delays per month.”

The governor announced an “MTA Genius Transit Challenge,” which would solicit proposals to replace the subway’s early 20th-century signal system, refurbish aging subway cars, and design technology that will improve wifi and cell signals in stations and tunnels.

Source: commercial