Smart Construction Development Is All About These 3 Things
With construction and land prices at levels never before seen, creativity's more important than ever in getting projects built in NYC. Speakers at our Construction & Development Update event on Wednesday kept coming back to three big strategies to creatively get projects built.
Co-working isn’t just for startups. Alexandria Real Estate Equities VP of development and construction Andy Reinach (with SGA director of VDC services Michael Schroeder) says co-locating the design and construction teams under one roof can be a game changer in the early stages. The point is to build a bridge between design and construction, he says.
Michael says he’s worked on projects where this method's directly led to identifying problems early, so a fix meant just a few tweaks in the plan instead of a costly ordeal. Example: during the “tennis match" as Andy puts it, where submittals for approvals to a municipality are going back and forth, having everybody in the same room is a huge help in making adjustments to documents so they don’t get sent back for revisions as often, which ups your chances of delivering the project on time.
2. Serious Amenities
Moinian Group EVP Oskar Brecher (speaking, flanked by Macro Consultants founding principal Michael Fromm and ConEd Green Team manager Dave Pospisil) says Moinian’s philosophy on the amenity package at 605 West 42nd St is simple: Whatever amenities other residential projects nearby have, one-up them.
Dave says an 1,100-plus unit project will have a DAS system so cellphones always work, three separate swimming pools, and a grand total of 73k SF of outdoor space. But as Michael points out, amenities are just as big these days for office projects. He’s worked on projects with dedicated fitness facilities and cafés for specific tenants, sky gardens and courtyards. He says developers and tenants are starting see this kind of stuff as not just good for, but essential to, collaborative office space and snagging the right tenants.
Asked by Rosenberg & Estis member and moderator Richard Sussman whether LEED certification’s worth it, MHP principal David Sturner had a one-word answer: absolutely. As he points out, there’s a point where amenities and sustainability can converge, with things like motorized shades that reduce the time you need the lights on, or electrified plumbing that’s both easy to deal with and saves a ton of water.
3. Foreign Money
Meridian Investment Sales senior executive managing director Helen Hwang (speaking) recently got back from China and Singapore, and notes that the paradigm over there is that the top dog at a firm often has to meet you in person before they'll sign off on a deal.
JLL managing director Aaron Appel (second from right) estimates that right now about 70% of equity investments in NYC real estate have some foreign capital in the capital stack. Even though execs can slow down the process, he says what he finds amazing is the speed at which some Asian investors can get comfortable investing here.
Wright Johnson director Amy Ericson (a Bisnow alum, second from left) says about 86% of EB-5 money right now is coming from China. Getting capital out of some countries comes with some challenges, she says. In Vietman, for example, the government imposes a limit of $6k per year, per citizen leaving the country, but she points out that there are licenses that can allow for bigger sums to be invested outside of the country.
Megalith Capital principal Phil Watkins (center) says Megalith hasn’t made use of EB-5 yet, but says it’s mainly a timing issue; it can be time to move onto the next phase of financing before the EB-5 process is finished. Still, Phil said, it’s worth looking into, because who wouldn’t want some 6% money in their capital stack?
As Polsinelli shareholder Dawn Lurie reminds us, the program's due to sunset on Dec. 11, and she's confident it'll be renewed. She adds that we should look out for some reforms, which may include redefining TEA's—something that could make EB-5 money harder to come by on big projects in places like Manhattan. Snapped above: Helen, Amy, Phil, Aaron, RSM partner Steve Kirn.
We snapped Dawn and Michael chatting after the event.
The hot topics in construction and development panel: Richard, Michael, Oskar, Dave Posisil, David Sturner, EBI Consulting president Nolan Previte.