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Category ArchiveNew York University

Construction Experts Nervous About Trump’s Steel and Aluminum Tariffs

Construction experts were troubled by President Donald Trump’s announcement last Thursday for a 25 percent tariff on steel and a 10 percent tax on aluminum imported to the United States.

The policy will increase the costs of construction, which in New York City are already at dizzying heights, they said. Ultimately, it will affect the overall project costs and could make it harder for future projects to get completed.

“Rising construction costs, along with labor costs and bank financing constraints, have been a significant factor in limiting property development over the course of this [economic] expansion,” Sam Chandan, the associate dean at the New York University’s Schack Institute of Real Estate, said in a statement to Commercial Observer. “Policies that add to cost pressures exacerbate drags on new supply.”

While the the details on the tariffs are murky, foreign countries have already pledged to retaliate, with European Commission President Jean-Claude Juncker saying, “We will not sit idly while our industry is hit with unfair measures that put thousands of European jobs at risk,” according to CNN.

The announcement comes just less than a month after the White House revealed an infrastructure plan in which the federal government would spend just $200 billion fixing public infrastructure over the next decade and expect states, localities and private companies to generate $1.5 trillion to fund projects. That plan also had its critics within the construction industry, as CO previously reported.

Companies that heavily rely on steel and aluminum have issued statements in opposition to the president’s plan to increase duties on steel and aluminum, while Trump generally responded that it was necessary because the country was losing jobs and money to others.

“The United States has an $800 billion dollar yearly trade deficit because of our ‘very stupid’ trade deals and policies,” Trump tweeted on March 3. “Our jobs and wealth are being given to other countries that have taken advantage of us for years. They laugh at what fools our leaders have been. No more!”

However, leaders of construction companies and trade organizations weren’t pleased.

While making foreign steel more expensive via taxes could mean companies may further use domestic steel, the U.S. industry will not have the supply to keep up with the demand, said Louis Coletti, the president and CEO of the Building Trades Employers’ Association.

“The U.S. steel manufacturers cannot produce the quantity of steel needed. Steel manufacturers are already telling contractors to expect price increases,” Coletti said. “The lack of steel availability will also cause scheduling delays that will add to additional cost increases. This policy will have a detrimental impact on the economic growth of [New York] and the nation.”

And in the case of the 10 percent tariff on aluminum, which is heavily used for curtain wall systems in glassy high-rises, the uptick may not even be enough to help domestic manufacturers.

“A 10 percent tariff as a stand alone probably won’t move the needle to where it would make it less expensive to buy domestic [aluminum],” said Richard Wood, the president of Plaza Construction. “[But] it’s a problem, because we are trying to make projects more affordable.”

Source: commercial

Under Construction: Inside NYU’s Transformation of the MTA’s Former HQ

Once upon a time the Metropolitan Transit Authority’s headquarters in Downtown Brooklyn at 370 Jay Street had offices and a money counting floor (the second).

Today, it’s housing scholars for New York University, which signed a 99-year lease for the property in 2012, and is adding the building to its Kings County campus.

At the intersection of Jay Street and Willoughby Streets, parts of the 13-story structure has since been turned into classrooms, lectures halls and other academic spaces. The limestone facade was restored, mechanical systems have been upgraded, 10 new elevators have been installed and the lobby’s original marble repolished.

NYU’s Center for Urban Science and Progress (CUSP) began occupying the second, 12th and 13th floors of the property in December. But construction to renovate and remodel the building is expected to continue until the end of next year. The property will include spaces for a variety of the university’s schools, housing student engineers, research scientists, game designers, media artists and musicians.

“What we are really trying to do is make this a hub that can foster interactions between artists and engineers who are doing very complimentary things, and we want to see what comes out of that,” Andrew Repoli, NYU’s director of construction management, said on a tour of the building.

The structure has a lot of open space on each floor, and the core was shifted to one part of the building, allowing the floors to be free from divisions for elevator shafts, mechanical rooms, bathrooms or staircases. The one downside is that the structure’s floors have 10-foot ceiling heights (save for the lobby that has 20-foot heights).  

But 10 feet isn’t conducive for a school lecture hall, which is what NYU needs for approximately 200 students. So the school got creative and dropped the floor four feet down, essentially borrowing a piece of the lobby’s height on the eastern wing of the building to fit the auditorium on the second floor.

The procedure worked so well that NYU decided to replicate it on the western side for a 7,000-square-foot media commons on the second floor. There’ll be four studios in the space where students will learn film and production techniques, such as motion capture (as seen in Rise of the Planet of the Apes).

In another effort to gain space, all of the mechanicals systems in the building were shifted to the rooftops or in the cellar. Those spaces formerly dedicated to the guts of the building will be turned into smaller rooms like conference and meetings spaces as well as small private spaces to make calls.

One of the main aims of the renovation was to make the building more environmentally friendly. NYU placed energy efficient LED lights throughout the building, and they have also installed 1,200 new (thicker pane and more efficient) windows. Heat generated by the building, which would normally be pushed outside via exhaust vents, will be used to melt ice created in thermal ice storage vats.

Sustainable materials, like wood, were used to build walls, tables, ceilings and a spiral staircase on the eighth floor. NYU also installed a one-megawatt microturbine on the roof of the building that will allow it to generate its own electricity.

“Sustainability is better for the people who work in the building,” said Cecil Scheib, NYU’s assistant vice president for sustainability. “They’re going to think better; we are going to attract world-class students and world-class faculty. A better building and a green building means a better environment for people.”

There is still a second phase of construction remaining. NYU plans to transform a garage space of the building into a performance venue, create a grand staircase from the lobby to the second floor, replace walls on the ground floor with glass to make a new entrance for the property on Jay Street and reconstruct the crumbing subway station entrances under the structure. And NYU recaptured an MTA control board that was left in the building and is considering to reinstall it to pay respect to the property’s history.

Source: commercial

Eastern Consolidated Retail Pros Jeff Geoghegan and Ravi Idnani Move to RKF

Eastern Consolidated food and hospitality retail experts Jeff Geoghegan and Ravi Idnani have joined RKF’s New York office as directors, Commercial Observer has learned. They commenced on Jan. 17

At RKF, they both will continue to focus on tenant and landlord representation in the New York metro area.

“I chose RKF because of the company’s successful track record and leading position in the industry,” Idnani said in a statement emailed to CO. “I’m incredibly excited to be joining the team.” (Geoghegan declined to provide a comment.)

Geoghegan, a broker, and Idnani, a salesperson, worked on James Famularo’s retail leasing team at Eastern Consolidated since the company launched the division several years ago, as CO reported in January 2014.

“People come and go in this industry,” Famularo said of the duo’s departure. “I enjoyed working with them and wish them luck at their new company.”

Geoghegan, who specializes in the Hell’s Kitchen, Chelsea and Upper West Side neighborhoods, has represented owners and developers. Within an 18-month period, he helped find the PokéSpot’s first location at 120 Fourth Avenue, which opened in August 2016. Then he negotiated a second lease for the tenant at 25 Cleveland Place (it opened in April 2017) followed by a space for an affiliated retail concept, Project Cozy, on the ground floor of New York University’s dorm at 398 Broome Street. That opened in summer 2017. Last year, he helped arrange a lease for celebrity chef David Chang‘s Momofuku Nishi at 232 Eighth Avenue.

Idnani is a pro in the restaurant and fashion industries. His recent deals include leases for Eat Club at 109 West 27th Street in NoMad and YokeyPokey, a virtual reality arcade, café and bar at 537 Atlantic Avenue in Boerum Hill, Brooklyn. He also represented celebrity fitness trainer Tony Molina in leasing a 1,550-square- foot fitness center on the top floor of 56 West 45th Street and arranged a 9,000-square-foot lease for Kiddie Academy at 282 South 5th Street in Williamsburg, Brooklyn, in July 2016.

“We are thrilled to add Jeff and Ravi to our New York team,” Robert Futterman, the chairman and CEO of RKF, said in prepared remarks. “Both have a track record of driving growth and strengthening relationships between landlords and tenants, especially in the restaurant space.”

RKF is bolstering its ranks. Earlier this month, long-time Winick Realty Group broker Darrell Rubens joined the firm, as CO previously reported.

Source: commercial

The Construction Industry Should Brace Itself for a Rollercoaster 2018: Experts

Coming off a few booming years, New York City’s real estate industry—including the construction sector—has been suffering a bit of a setback this year.

The New York Building Congress forecasts at year end, $45.3 billion will have been spent on construction in 2017, the second-highest-ever total dollar amount committed to construction in the city’s history, according to the organization.

But it would mark a 13 percent decline from last year’s record $52.2 billion. At the same time, the number of jobs in the industry increased to 149,800 in 2017 from 146,200 in 2016. And the organization expects it to rise to 151,200 jobs next year.

Construction permits, which indicate the level of future work in the city, meanwhile are up slightly this year, although the pace is slowing. The New York City Department of Buildings issued 109,724 permits in fiscal year 2017, ending in July, a 0.4 percent increase from 109,277 in 2016, according to the city’s annual Mayor’s Management Report released in September.

What does all of this mean for the construction business in 2018?

Commercial Observer spoke with five experts about what to watch for. Overall, they forecast a decline in housing construction, but an increase in work in the public sector and the office market. The jury is out on construction costs. And then there is the elephant in the room: tax reform, which has been passed by the Senate but not the House of Representatives. Republicans cheer it as a win for jobs (and big Wall Street businesses are chomping at the bit as it would cut the corporate tax rate by nearly a half). Democrats are against it, claiming it serves wealthy individuals and corporations. As for New York City construction experts, they are split on the impact to their segment of the industry.


Over the past few years, there has been a surge in housing development, which many experts say has led to an oversupply. And in turn, construction of new homes slowed down this year by 41.2 percent and that is expected to continue for the foreseeable future. There were 37,700 new housing units added in 2016, just 26,700 this year, and the Building Congress expects 24,000 new housing units in 2018.

In terms of dollars and cents, $11 billion will be spent on residential construction this year, the Building Congress forecasts, a 31.3 percent drop from $16 billion last year. In 2018, the figure will rise to $11.6 billion.

“I think on the residential end—apartment complexes and condominiums—I think that it’s is a little overheated,” said Richard Lambeck, the chair of the construction management program at New York University’s Schack Institute of Real Estate. “There will be a slow down. The products that have been produced have surpassed the absorption rate. The amount of apartments that are going to be purchased is going to be slowed and it will have an impact on the industry.”

In addition to the oversupply problem, there are a lot of people crying “Not in my backyard,” a.k.a. NIMBY. Community organizations are rallying against large skyscrapers such as SJP Properties’ 200 Amsterdam Avenue on the Upper West Side, Gamma Real Estate’s planned 67-story building at East 58th Street between First Avenue and Sutton Place, and Extell Development Company’s 69-story tower at 50 West 66th Street.

The fear is that these projects could be forced to scale back or canceled altogether due to community opposition, which will lead to less work for construction companies and subcontractors.

“I worry about community to reaction to projects,” Louis Coletti, the president and chief executive officer of contractor association umbrella Building Trades Employers’ Association. “We are going to go back into the 1990s where NIMBYism just takes over and stops the city. You see this opposition to as-of-right projects, that’s crazy. You see the general direction of the city becoming progressive. You just wonder if it is the natural course of things as people become more politically active.”

Public works

Government spending for public infrastructure projects climbed this year for projects of note around the five boroughs, such as the redevelopment of LaGuardia Airport and the expansion of the Jacob K. Javits Convention Center and the new Kosciuszko Bridge.

Spending on similar projects is expected to reach about $16.9 billion in 2017, according to the Building Congress report—a 16 percent increase from 2016’s $14.6 billion. And the organization expects a further increase to $18.8 billion next year.

“Our infrastructure and transportation systems are the key,” Coletti said. “They are the real foundation to continued growth in the city. Those systems have lacked appropriate level of investment for many, many years. That’s the reason why the governor has to move billions of dollars for the [John F. Kennedy International Airport] and LaGuardia [Airport] [redevelopment projects].”

He added: “There is going to be a real focus on how to finance and really build our infrastructure to allow New York City to have continued growth.”

On the horizon, major infrastructure projects such as the redevelopment of JFK, the next phase of the Second Avenue subway and the Gateway Tunnel project—which would build another tunnel to New Jersey—lay in wait.

And some are questioning the viability of the next phase of Second Avenue subway project in the short term, as the calls to repair and fix the existing subways grow louder, meaning dollars would go to maintenance. While that could be great for commuters, maintenance produces less construction work than new projects.

“I don’t know if the [Metropolitan Transportation Authority] has sufficient funds to start that early,” Lambeck said. “At least from the MTA psperspective, they have been getting a lot of pressure, primarily in maintenance.”


All across the city there has been an abundance of construction on office projects in 2017. Just along the Far West Side alone there is Related Companies and Oxford Property Group’s Hudson Yards, Brookfield Property Partner’s Manhattan West and Moinian Group’s 3 Hudson Boulevard.  

In Brooklyn, Two Trees Management Company is building an 380,000-square-foot office tower at 292 Kent Avenue in Williamsburg; Rubenstein Partners and Heritage Equity Partners is working on the 500,000-square-foot 25 Kent Avenue in Williamsburg; Tishman Speyer and HNA Group is converting the upper floors of the Macy’s at 422 Fulton Street into 620,000 square feet of office space in Downtown Brooklyn; JEMB Realty and Forest City New York are building a 500,000-square-foot building at 1 Willoughby Square; and Thor Equities is working on Red Hoek Point in Red Hook, a nearly 800,000-square-foot office development. And in Queens, Tishman Speyer is building a 1.2-million-square-foot two-building office and retail project called The Jacx in Long Island City.

Construction work on all of these projects, as well as others, will continue into next year, keeping contractors busy.

“You have a lot happening with Midtown West products. You have a lot of activity in Lower Manhattan and upgrades to office buildings [across Manhattan],” said Carlo Scissura, the president and CEO of the Building Congress. “Office is a strong part of the market. And you are seeing [large office developments] happen in Brooklyn and in Queens.”  

Looking forward, the demand for office space in Manhattan is high (as CO recently reported), and there is a need to renovate a crumbling older stock of buildings. Redevelopments of towers and expansions are an area that could see growth next year. Midtown East—thanks to its new rezoning—will allow for larger projects and developers could look to redevelopment projects in the area, which would create more work for construction companies.

“Hudson Yards has proven that there is a tremendous need for new space and much of the city’s current product needs to be replaced,” said Kenneth Colao, the founder and CEO of CNY Group. “If you had another large sector of town that was wide open for development, I think it would be in play. The [Midtown East] rezoning I think will support more redevelopment.”

Construction costs

In May, Turner & Townsend released its annual construction market survey that pegged New York City as the world’s most expensive city for construction. The average cost of a building was at $354 per square foot, surpassing Zurich, Switzerland which came in at $328 per square foot.

Rising costs has become a problem in the industry due to a variety of factors, including the cost of labor. Construction companies have blamed union’s high hourly wages and an abundance of regulations.

On the latter point, unions have been making compromises in contract negotiations and lowering hourly wages as more developers demand general contractors take bids from nonunion companies in order to increase profit margins. Some construction leaders expect this trend to continue as the competition between organized labor and other subcontractors heats up further.

“I think the unions have to recognize that in order to be viable they need to work with their development clients and figure out ways to reduce costs,” said Richard Wood, the CEO of Plaza Construction.

Another reason for inflated construction costs is high insurance rates. New York is the only state with a law that allows a worker injured on a construction site to sue everyone—construction companies and individual superiors. This increased liability raises insurance premiums.

But regulations for the industry have increased towards the end of the year, as the City Council tried to improve safety on construction sites. The council passed a number of bills this year targeting construction safety, including one polarizing one: Intro-1447-C. The legislation will require workers to have at least 40 hours of safety training. Opponents to the bill claimed that it will force contractors to fund courses for their workers, increasing the bottom line. And the council also passed yesterday Intro-1399, which gives most industry employees, including construction workers, the right to “flextime” or two days off from their regular schedules.  

One construction watchdog said losing workers could disrupt work flow on projects.

“This isn’t a store or a restaurant—this is a construction site,” Coletti said. “We have schedules and budgets we have to make.”

Tax reform

As of publication, Congress’ tax reform bill had not been signed into law. But it looks extremely likely that it will as Republicans in the Senate passed a final version of the bill early today and their counterparts in the House of Representatives will re-vote on the legislation today after approving it yesterday with some errors.

The legislation will cut the corporate tax rate to 21 percent next year from 35 percent, which could mean a boon for companies. With extra money on their balance sheets, companies could reinvest in their offices. And real estate developers may use those funds to upgrade facilities in their assets. This will lead to more construction projects.

“I think indications are that it will be good for the construction industry,” Colao said. “If in fact the tax reform results in corporate tax reductions, corporations may start sprucing up facilities, then there would be an uptick in activity. Corporations—and entities that are tenants in office buildings—if they are looking at an improved bottom line at the same revenue—they might look to increase their capital expenditures.”   

However, as a part of the regulation, individuals will be limited in deducting state and local income taxes, sales taxes and property taxes to $10,000. Homeowners will be able to deduct mortgage interest on debt up to $750,000, down from $1 million. These segments of the bill don’t bode well for real estate interests in New York City, which has an average home sales price at $987,000 as of the third quarter, according to the Real Estate Board of New York. If people can’t reduce their taxes it will add to Gotham’s living expenses and could mean less people wanting to relocate to the city—lowering demand for more housing and impacting construction.  

“New York and especially the New York City area is one of the highest areas for state and local taxes,” Wood said. “I think there is going to be a tendency for people to want to move to states that don’t have high state taxes, and with that, many corporations may think in order to get a good labor pool they’ll want to move their offices to those low-tax states.”

He added: “I personally think that people are going to have to stay focused on solutions to that problem, because it could have long-term adverse effects on the real estate industry and the construction industry in New York.”

Source: commercial

CO’s ‘Women in Construction & Design’ Event Celebrates Breaking the Glass Ceiling

Some of the most accomplished women working in the fields of construction, architecture and development gathered at Commercial Observer’s “Breaking the Glass Ceiling: Leading Women in Construction & Design” event on Tuesday, where the conversation revolved around both the challenges facing, and the opportunities available to, women in a traditionally male-dominated field.

The morning was anchored by CO’s presentation of its 2017 Women in Construction Awards to six individuals who have made a mark upon their respective industries over the course of their careers.

The “Barrier-Breaker Award,” honoring women who have set a precedent in their fields, were presented to Aine Brazil, vice chairman at engineering firm Thornton Tomasetti; Jan Hilgeman, vice president of construction at Hines; and Carol Patterson, a senior partner at law firm Zetlin & De Chiara.

The “Woman on the Rise Award,” celebrating some of the most promising individuals working in the industry today, were given to Pascale Sablan, a senior associate at S9 Architecture, and Margaret Wrzos, an assistant project manager at AECOM Tishman.

And the “Innovative Designer/Engineer Award” was presented to Marianne Kwok, a senior designer at Kohn Pedersen Fox.

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Keynote speaker Linda Chiarelli at CO’s “Women in Construction & Design” event. Photo: Aaron Adler

But the day also featured three broad-ranging panel discussions and a keynote address from Linda Chiarelli, vice president for capital projects and facilities at New York University. Chiarelli, who served as deputy director of construction for Forest City Ratner Companies before joining NYU, noted that women make up only 9 percent of the construction industry’s workforce—with many of those jobs in administrative and non-construction-related roles.

But she also cited progress from the days when job interviewers would ask “if I planned to have kids,” and urged attendees to be aware of the city’s new law prohibiting employers from inquiring about job applicants’ previous salaries—a regulation designed to lessen the pay gap faced by women and people of color. “You should all be aware [of the law],” Chiarelli said.

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(From left) Karla Pascarella, Marissa Kelly, Stacey Dackson, Megumi Brod, Maey Khaled and Anita Woolley at CO’s “Women in Construction & Design” event. Photo: Aaron Adler

She was followed by the morning’s first panel, “Challenges and Opportunities for Women—Fostering a Culture of Diversity from the Field to the Boardroom.” Anita Woolley, first vice president of strategy and communications for AECOM’s construction services group, noted the benefits of “having people of different backgrounds” on staff, citing studies indicating that “diverse teams are more successful.”

Maey Khaled, director of technical services at NYU’s Tandon School of Engineering, recalled engineering courses where she’d frequently “be the only woman in the class” and stressed the need to foster industry participation from women at an earlier age group. Stacey Dackson, a project manager at Structure Tone, echoed that sentiment and the need to educate young women about the career opportunities available in the construction industry, citing the field’s “tremendous economic viability.”

Marissa Kelly, a project executive at Cauldwell Wingate Company, said that there is still the flawed perception that “women are too emotional to be in leadership positions” at a corporate level—a notion that “holds women back” in the industry, she said—while Megumi Brod, senior vice president and Northeast regional development officer for Rockefeller Group, urged attendees to both “be a mentor” to other women in their fields and also “make a mentor” who can help guide them through their career paths.

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(From left) Melissa Grzymala, Helena Durst and Jane Smith at CO’s “Women in Construction & Design” event. Photo: Aaron Adler

The second panel of the day, “Women Leaders in Construction & Design—How They Paved the Way,” included the likes of Kimberly Steimle Vaughan, chief marketing officer and chief people officer at construction firm Suffolk, who cited her company’s efforts to “create a culture of inclusion” and “infuse people in the organization from different backgrounds.” Vaughan said that while roughly a third of the firm’s workforce is comprised of women, she had been to job sites where there were more women at work than men, and that diversity had become a key tenant of Suffolk’s corporate philosophy.

Melissa Grzymala, an executive project manager at Faithful+Gould, recalled a high school guidance counselor’s incredulity at her career goal of becoming an engineer, while Elisabeth Malsch, a principal at Thornton Tomasetti, noted the importance of hiring women given how they occupy a roughly equal share of the graduating classes at most higher education institutions. “If you’re not hiring women, you’re not hiring the top of the class,” Malsch said.

Jane Smith, a partner at architecture and interior design firm Spacesmith, said that “obviously things have changed [in the industry]” since she first started, and urged the conversation away from the obstacles facing women. “The women in this room shouldn’t need to worry about whether they’re women or men,” Smith said. “Let’s talk about how we can succeed.”

Helena Durst, a principal at the Durst Organization, agreed with Smith’s argument, noting that the principles being discussed on the panel “are not male or female values; they’re hirable values…. We shouldn’t be talking about maternity or paternity leave; we should be talking about child care.”

But Durst also acknowledged that her own company “has a lot to learn” and is “far from perfect” as far as gender equity in the workforce, adding that the effort to improve “starts with awareness” and “talking about biases,” as well as “looking at policies that are [both] written and unwritten.”

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(From left) Susan Radin, Jan Hilgeman and Jennifer Bernell at CO’s “Women in Construction & Design” event. Photo: Aaron Adler

The morning’s third and final panel, “Creating the Next Generation of Women in Construction & Design,” featured Gilbane Building Company’s Brennan Gilbane Koch noting how the four previous generations of Gilbanes who led the family-led construction firm were almost entirely men—a state of affairs that has changed, given her current role as Gilbane’s business development manager. Anne Fletcher, a principal at architecture giant HOK, said that when she started in the industry she found herself not only doing “everything my male colleagues did,” but also “arrang[ing] shipping” and “answer[ing] the phone because I had the best phone voice.”

While Fletcher was recently named the new managing principal of HOK’s Los Angeles office, she also noted that she’s one of only six women on HOK’s 34-member board of directors—indicating the progress that remains to be seen in the industry.

Jennifer Bernell, executive vice president of development for Kushner Companies, discussed the challenges of balancing her role at Kushner with her responsibilities as the mother of four young boys—adding that she has been “fortunate” to have the support of her company, as far as maintaining a flexible schedule allowing her to meet the demands of being both an executive and a parent.

Susan Radin, a senior project manager at Turner Construction Company, cited progress as far as work-life balance expectations that are no longer exclusively faced by women—noting that in previous years, she “never heard from male colleagues that they had to [leave work early to] take care of their kids.”

Hines’ Hilgeman, who in addition to receiving the “Barrier-Breaker Award” also spoke on the panel, added that in her own career, she has stories about workplace harassment “not unlike what’s [been] in the news today.”

“We all have those stories, and we’re going to have them no matter what industry we’re in,” she said. “I think it’s a much broader, underlying cultural issue.”

Source: commercial

Lendlease Hires Acquisition Manager to Grow Development Business

As part of its efforts to become a major developer in the United States, Australia-based construction and real estate investment company Lendlease recently hired real estate development associate Christie Walker from Wood Partners to be the company’s acquisition manager, Commercial Observer has learned.

With about a decade of experience, Walker is responsible for sourcing, negotiating and underwriting deals to acquire land and create joint ventures for development projects. She works directly with Melissa Román Burch, executive general manager of development.

“We are actively building our capabilities and expertise in acquisitions to support our investment and development objectives in New York,” Burch said in a prepared statement. “Christie brings a strong track record in large-scale acquisitions to Lendlease during this exciting time of growth for the firm.”

Currently, Lendlease has just one project under development in New York City—the Rafael Viñoly-designed 65-story, 130-unit condominium at 277 Fifth Avenue between East 31st and East 32nd Streets. That tower, which is being built in collaboration with Victor Group, is expected to be completed in 2019.

Walker will be looking for further opportunities to build on that project; she is trying to identify large-scale developments (200,000 square feet and up) in the five boroughs and the metro area. She officially started at Lendlease on Sept. 25.

“We are really looking to develop all asset classes of real estate,” Walker, 31, said. “We have a very broad mandate—condos, rentals, office and mixed-use. Really opportunities where we can create a sense of place.”

Lendlease’s hiring of Walker is also reflective of its efforts to expand diversity at the firm; the company recently began a campaign to hire more female graduates and give internships to more women. “Working alongside another female executive like Melissa Burch is a very exciting prospect for me,” Walker said. “It’s actually the first time that I’ll be working for a woman. I am excited about our mission to develop a large pipeline in the city.”

Prior to Wood Partners, where she worked for about two years, Walker was an associate in investments at RXR Realty, and began her career at Rockrose Development in 2008, shortly before the company split off TF Cornerstone. Walker went to the TF Cornerstone side and assisted with the deal teams to acquire the land for 1.2 million-square-foot rental at 606 West 57th Street in Midtown and and the 714-apartment building at 33 Bond Street in Downtown Brooklyn.

Walker, a native of Nashville, received a economic policy degree from New York University in 2008.  

Source: commercial

GFI’s Allen Gross Talks Downtown and the Old-Time Vibes at his Beekman Hotel

Below the room’s expansive sunlit atrium, Allen Gross surveyed the sumptuous lobby of the Beekman one morning last week with the abiding ease of a master of delayed gratification. Munching on a muffin from Temple Court, Tom Colicchio’s lobby restaurant, Gross recounted walking past this venerable old building for years before winning the chance to develop it.

But the native New Yorker who founded and still presides over GFI Capital Resources Group has never minded taking his time. On the way to amassing a residential portfolio that controls 16,000 apartments throughout the country, Gross detoured into law (he has a degree from New York University) and finance before discovering he had the makings of a decent developer.

For nearly 40 years, Gross, who through a spokesman declined to give his age, has thrived as a creator of condominiums, including sold-out towers in Brooklyn’s Williamsburg and Greenpoint and Manhattan that he manages from his City Hall-area offices. That gave him plenty of time to dream about what might be in the terra-cotta, renaissance-revival building he walked past every day—built in the 1880s.

Last August, his patience paid off when the hotel he’d long envisioned there quickly became the city’s most talked-about opening of 2016. That its interior earned notice as a paragon of design was no surprise. At his other Manhattan lodgings—the Ace Hotel and the NoMad Hotel, in Midtown South—Gross had made winning those plaudits routine. The popularity of the adjacent condominiums, the Beekman Residences, marks for Gross the icing on the cake.

But if you’re an out-of-towner who’s bedded down at Gross’s lodgings in the past, rest assured that his newest is not just more of the same. For one, you’ll want to consult your subway map—the Beekman, at 123 Nassau Street, is a bit farther downtown than the last New York hotel you visited.

For another, this design is one that worships the historic building it occupies. From the way Gross lovingly peels back the corner of a rug to show off the 130-year-old tile underneath, it’s clear that he does, too.

Commercial Observer: When the Ace Hotel opened on West 29th Street and Broadway in 2009, all these New York cool kids adopted the lobby as a place to just hang out. What goes into making a space with that kind of cachet?

Allen Gross: In reality, we were the first WeWork, if you think about it. The biggest challenge of the Ace was, Who’s going to go to that part of town? When you walked down there, you saw people walking around with big black garbage bags selling knockoffs [of handbags]—that, and a couple of homeless people. So how do you get people to come to someplace off the beaten path? The whole idea of the lobby was to give people a place to enjoy themselves. Once you have a herd mentality, more people come.

I know you went out and found some great collaborators.
The idea was, let’s take 50 out-of-work artists and let them design the rooms. Let them do the artwork. And we mixed that with great food and beverage.

Wasn’t dining one of the hotel’s main draws?
One of the most popular restaurateurs at that time was April Bloomfield from the Spotted Pig. We brought her into the building and showed her our vision for what we would create. The worst thing is when I travel and see a restaurant and nobody’s in it—I don’t want to eat there. When you see a packed restaurant, that’s where you want to eat.

And coffee brought people in, too, didn’t it?
We set up Stumptown [Coffee Roasters], which no one had ever heard of before. It was the first Stumptown anywhere outside of Seattle. It was nowhere! There was never a Stumptown. To this day, people are still standing on line for that coffee because it’s probably the best coffee.

And now eight years later, here we are at the Beekman, two miles farther downtown. What brought your attention to this neighborhood?
My office has been down the block from here since 1991. Many times we wanted to do something Downtown, but every time we started getting involved, something happened. Either it was an economic downturn, or it was 9/11. Something always happened. We really didn’t feel that this was a location that was going to evolve. No one ever stayed here on the weekends. It was a four-days-a-week business.

When did that start to change?
After 9/11, you have a rebuilding process. You have the 9/11 Memorial, which is probably the No. 1 tourist attraction in the world. Now go to Fulton Station. You have the PATH and you have [many] subway lines. And then for retail, you have Brookfield [Place] and Westfield [World Trade Center] down here. I looked at that, and I said, “It’s coming.”

How did this particular building, at 123 Nassau Street, catch your attention?
The building closed down about 30 years ago, and it was just lying dormant. There were about 200 people who wanted to develop it. But nothing happened. They couldn’t make it work because it was a landmarked building and there’s so much involved. Not only do you have to have a design, but it’s got to work economically. Nobody could make it work.

What were the constraints?
The maximum you could have gotten in here was 130 rooms. That’s not very efficient. Second, where do you put all the mechanicals? You can’t put it on the roof because it’s a landmark building. So where do you put it? Have you ever tried messing around with a 130-year-old building? The bottom line is, everybody else walked away from this deal. It was like the pink elephant in the room. All of a sudden it hit me: The only way to make [the Beekman] work is building a tower next to it and put in condos to bring down the construction cost per room. We were successful in getting the lot next door [at Five Beekman Street], and we built a 650-foot building of which the first 11 floors are part of the hotel. You now have 287 rooms, which is efficient. And the mechanicals are located in that tower.

How does that work?
In the old building, there’s nothing other than a circuit breaker box. Everything—all the juice, air conditioning, all the water, all the gas—emanates from the new building. It was cost efficient because it was new construction. And we dug down two floors and put the back of the house there, so we didn’t have to touch this historic building except to beautify it. It doesn’t hurt that we were able to get $28 million in tax credits, which was a feat unto itself.

Tell us about the interior.
What I wanted when I looked for designers was somebody who was going to design not about themselves but about the building. I had one designer that was going to fill the atrium with flying birds made of crystal. I said, “Why do I need anything in the atrium? Let’s make it about the atrium!” I was very lucky to find a designer in Martin Brudnizki who really saw the vision that I saw.

20171020  dsc1322 2 edit final web GFIs Allen Gross Talks Downtown and the Old Time Vibes at his Beekman Hotel
The lobby of The Beekman Hotel. PHOTO: Robert Paul Cohen for Commercial Observer

What role does the building’s history play in the design?
We designed every piece of furniture. Every light that you see was custom designed. It was all studying that era and making sure that we got everything right. The pictures on the wall—people think they’re just nice pictures. That’s Edgar Allan Poe [pointing to a wall-hung portrait]. All the pictures are people who were around in those times. The whole concept is you come here for the weekend, it’s as if you walked into the 1880s. As if you went into a time machine and you actually lived in that era.

Your collaborators at the Beekman aren’t too shabby, either.
We brought two of New York’s finest restaurateurs, Keith McNally and Tom Colicchio. There’s never been a hotel that’s had two restaurateurs in one building. No one could convince them to do that. I brought them here on a cold day, and we sat and had a cup of coffee right in the middle of the atrium. They sat here and said, “We’re not both going to do it. You’re going to have to pick one of us.” I said, “Guys, look up [at the atrium]. Don’t miss this opportunity.” And they got it. [Having both of their restaurants] has been a dream. The food and beverage revenue that we’ve earned is double what we programmed for. It’s like crazy.

Hotel rates and occupancies in New York have been down a bit of late. How has that affected your business?
It affects everyone’s business. My business is great when everybody’s business is great. Competition is good. They ask, “Aren’t you afraid of the Four Seasons?” I say, “No, that’s good for me!” The Four Seasons means that the neighborhood has arrived.

You don’t bat an eye at other hotels moving in?
It’s like anything else in the world. There are too many restaurants, but the good ones always make it. A lot of it has to do with where the lenders are. As long as the banks are going to pay for people to put up Holiday Inns or Marriotts, they’re going to build it. It’s a simple thing.

Is there a fear that some younger travelers might favor Airbnb or other nontraditional lodging?
What is it with millennials? They’re all unhappy, and they don’t want to do anything that requires any work. “I don’t want to talk to anybody, because I only text!” Their parents told them that they’re special, and everybody told them that they’re special, and guess what? They might find out they’re not so special. My granddaughter who graduated high school told me they had 49 valedictorians. It’s not funny!

Fortunately, no one was ever quite so generous to me.
I was asked by Equinox Hotels, “Do you have an idea for us?” I said, “Yeah, you want to be the most successful hotel? Create virtual-reality exercise.” You can lie in bed, put something on your head and tell it you want an hour of exercise, but that you want to rest while you’re doing it. It would be an instant hit. People just want instant gratification.

It sounds like you think people are losing sight of the value of hard work.
You have to work. That’s what everybody misses. It’s not the money that you earn; it’s the road of getting there. At the Beekman, we have a thousand problems every day. When we finished the lobby, a pipe burst and flooded the whole floor, and we had the opening in 48 hours. But that’s what happens with construction. You have to work through it. That’s the gratification.

20171020  dsc1168 2 edit final web GFIs Allen Gross Talks Downtown and the Old Time Vibes at his Beekman Hotel
Allen Gross. PHOTO: Robert Paul Cohen for Commercial Observer

Are you a lifelong New Yorker?
I’m Brooklyn born and raised. That’s why my office is Downtown. It has to be a 20-minute ride to work because I work very late and I come in very early. That’s the only luxury I allow myself. I still live in Brooklyn. Forty-two years in the same house.

Earlier in your career, you were a lawyer, and then you owned a mortgage-banking company. Were those necessary steps on the way to your work as a developer?
When I was a lawyer, I represented 17 developers. I learned the construction business from representing developers. No less important than learning finance. That’s the process: You become who you are through life experience. Everybody can make mistakes, but you have to make the mistake, learn from it and not make the same mistake twice.

Are you a traveler yourself? Do you enjoy staying at others’ hotels?
No, not really. I’m not a big traveler, and I don’t like staying in hotels quite honestly. I’m a very bad sleeper, sleeping alone, so I try to keep away from it. But I do go visit before I hire [a collaborator]. Before I hired [interior designer] Jacques Garcia for the NoMad Hotel, I had to go see his hotel in Paris to get a feel for him.

You don’t enjoy trying on the guest experience?
We own restaurants with probably the best chefs in the city of New York, and I’m proud to say I haven’t eaten in any one of those restaurants.

Why not?
Because I’m kosher! But I’ve spent time in every one. The funniest was with Antica Pesa [at 115 Berry Street, Gross’s condos in Williamsburg]. It’s probably the best restaurant in Rome, and I had to bring them to New York. They always used to say, “When are you coming to eat in our restaurant?” I said, “I’m trying to explain to you, I’m an Orthodox Jew!“

Ah. It got lost in translation.
The chef pulled out his iPhone and Googled the words “observant Jew.” Finally, he showed me a picture of the Pope holding a box of his pasta. He said, “If I can cook for the pope, why can’t I cook for you?” I asked him what this had to do with me. He said, “Well, the Pope wears a yarmulke, and you wear a yarmulke!”

Under the Trump administration, many people have talked about the country turning inward, perhaps less welcoming to foreigners. Has that affected tourism?
No. To the contrary, when I came in today, I saw 20 people in the lobby, all foreigners. Where do you live? Do you keep your doors open at night?

I don’t.
You have people born evil, people born stupid. You have all kinds of people walking in the world. We cannot be politically correct all the time. Eighty percent of the people who use emergency rooms are illegal aliens. Go ask any doctor.

You’ve raised money for your businesses in Israel. Is that due to your personal connection to the country, or does it make financial sense for a different reason?
The reason is that I’ve learned the financial system there. To me, I love going there, and my kids have all been there. But I never told my kids, ever, that they have to be Orthodox. All I did was show them that it’s a beautiful way to live your life. If you can’t appreciate it—that it’s a life of family—and if you don’t understand it, then you can’t live it.

How do you get guests to come back for a second visit?
For example, a lot of hotels will give you free breakfast, but when you bring in a guest, they hit you for $30, $40, whatever. Why not let them beat you? Let them feel that they beat you. So they snuck someone in—who cares? When they come back to stay again, I’ll know that instead of giving $30 to Hotels.com, I gave it to them.

Sounds logical enough.
At the Ace Hotel, we put in iPads. Everybody said, “Aren’t you scared they’re going to be stolen?” To the contrary: I hope they steal them! It’ll just get added to their bill, and I make $60 profit on each one. It’s not a bad thing!

Source: commercial

Colliers Senior Director Joins JEMB to Oversee DoBro Office Tower Development

JEMB Realty has snatched up Dennis Rauchet, a senior director in Colliers International’s project management group, Commercial Observer has learned.

Rauchet, a construction and development veteran of more than two decades, is now the senior director of development for JEMB. He is overseeing the ground-up, 500,000-square-foot office tower One Willoughby Square in Downtown Brooklyn and the redevelopment of the 1 million-square-foot, 26-story Herald Towers rental building in Midtown. He officially started his new post at JEMB on July 24.

Rauchet, 45, said he made the switch because he missed working on new developments rather than just consulting on deals at Colliers.

As a “third party you are always helping developers make decisions. You feel disconnected from the projects,” Rauchet told CO. “Part of my role here is not only to manage the two big projects that we have in New York, but to go out and run the numbers and find new deals.”

Rauchet said JEMB is planning to break ground on One Willoughby Square (which has an alternate address of 420 Albee Square) in early 2018. The developer recently completed an 87,000-square-foot lease with the city for a new 300-seat school, as CO recently reported. The building is still undergoing various design tweaks and JEMB is talking to a variety of potential tenants.

The other major project on Rauchet’s agenda is the upgrade of Herald Towers, a prewar residential building at 50 West 34th Street between Avenue of the Americas and Fifth Avenue. It includes modernization of the building’s systems, and addition of new penthouse apartments and amenities, such as lounges and outdoor space. JEMB is still planning the redesign and the project is expected to start in a year. Built in 1912 as a hotel, the Herald Towers was converted to a 690-unit rental in 1980. It has 112,000-square-foot of retail space.

“With his resume and experience, he will be an asset to our company and take charge of our ongoing One Willoughby development in Brooklyn as well as Herald Towers redevelopment,” Joseph Jerome, president of JEMB, said in a prepared statement.

Rauchet started working at Colliers in 2012; he consulted on the development of a variety of large-scale projects, including the 62-story condominium at 45 East 22nd Street, the 22-story condo at 55 West 21st Street and the renovation of the St. Regis New York hotel. Prior to that he was a vice president at Forest City New York (formerly Forest City Ratner Companies) from 2004 to 2012, where he worked on projects such as The New York Times Building at 620 Eighth Avenue between West 40th and West 41st Streets and the rental building at 80 Dekalb Avenue between Hudson Avenue and Rockwell Place in Downtown Brooklyn.

Before that he oversaw projects for Goldman Sachs’ real estate operations group for three years, and he also worked as a project manager for Skanska from 1995 to late 2001.

Rauchet, a father of three, who lives in Jersey City, N.J. received an MBA in finance from Pace University in 1998. He also has a certificate in real estate finance and investment from New York University and a bachelor’s degree from Syracuse University in civil engineering, and he grew up in Flatbush, Brooklyn.

“It really is great to be a part of that,” Rauchet said. “I haven’t seen a new commercial building pop-up up [in Downtown Brooklyn] in decades. We are going to take it to the next level now and have some great commercial space to the area.”

Source: commercial

Robin Fisher Has a Multimillion-Dollar Dream of What to Do With Raw, Unused Space

Source: commercial

Trader Joe’s Set to Open Another 14th Street Store

A decade after opening its first outpost in the bottom of a New York University dorm at 142 East 14th Street in Union Square, Trader Joe’s is opening another store on East 14th Street in the East Village.

The healthy grocery chain inked a deal two months ago for 22,701 square feet in a new rental building at 432 East 14th Street, which replaces a post office between First Avenue and Avenue A. The store will occupy 8,531 square feet on the ground floor and 14,170 square feet on the lower level, according to The Real Deal, which first reported news of the lease. The new Trader Joe’s is scheduled to open in the second half of 2018, per a press release from the market.

Developers Mack Real Estate Group and Benenson Capital Partners said they expect to earn $2.3 million per year in retail rent for the grocery store’s space, which works out to roughly $150 a square foot, according to a Board of Standards and Appeals filing cited by TRD. But it wasn’t immediately clear if Trader Joe’s agreed to that rent.

The building at 432 East 14th Street is an eight-story, 113-unit project that will have 23 below-market apartments. The developers recently faced steep opposition from neighbors because they wanted to build four stories taller than zoning typically allows and add 42 more apartments.

Trader Joe’s was in talks to take space in Extell Development’s project a block east at 500 East 14th Street, which consists of two seven-story rental buildings with 150 apartments. Target inked a 30-year deal for a 23,000-square-foot store there, Commercial Observer reported last year. The development still has 14,300 square feet of retail available.

Source: commercial