Mayor Bill de Blasio and Gov. Andrew Cuomo (Getty, Paul Dilakian)
Welcome to Plywood City. Grand opening is in four days.
With the Big Apple’s scheduled reboot nearly at hand, banners, balloons and ribbons are nowhere to be found. Instead, boarded-up storefronts mar the landscape and an evening curfew remains in place.
But the show will go on, according to Gov. Andrew Cuomo. “New York City enters phase one Monday,” he declared Thursday at his daily coronavirus press conference.
In an earlier radio interview, the governor had intimated that the June 8 reopening was not a certainty, given the nightly looting that has swept across the borough since Sunday. It remains uncertain. At any time Cuomo could push back the return of nonessential businesses if he deems the city — battered for three months by the coronavirus and for days by clashes between police and police-brutality protesters — unready.
“With all this going on, New York City had the highest number of protesters,” the governor said, referring to demonstrations nationwide in the aftermath of George Floyd’s death at the hands of Minneapolis police.
Mayor Bill de Blasio, meanwhile, was looking for good news to announce before his mayoralty is damaged beyond repair. He unveiled a plan Thursday for outdoor dining, although it will not begin until reopening’s phase two, which could be as soon as June 22 if certain health benchmarks are reached.
“Our “Open Restaurants” plan will help these businesses maximize their customer base while maintaining the social distancing we need to beat this crisis once and for all,” de Blasio said in a statement.
Picking up an initiative spearheaded by the City Council and dreamed of by anti-car activists for years, the mayor will allow restaurants to convert parking spaces to use for dine-in service. No hated inspectors from city agencies, either: The mayor promised a simple online process to register and self-certify.
His press release Thursday said restaurants cannot put seating in bus stops, by fire hydrants or near intersections, and must provide their own barricades, planters, tables and chairs.
Restaurants — of which there were more than 27,000 citywide before the mayor and governor limited them to take-out service in mid-March — have complained for years that it takes several months or more to get a sidewalk cafe approved.
“In addition to dealing with the immediate crisis, we should be thinking long term about how do we streamline and expedite the process,” said Andrew Rigie, executive director of the New York City Hospitality Alliance, a trade group for restaurants, bars and clubs. “Perhaps through this process they learn ways they can be more nimble.”
Advocates for repurposing streets were ecstatic.
“Our streets must be a pathway to New York City’s recovery and not solely dedicated to traffic and parking,” said Danny Harris, executive director of Transportation Alternatives, which no doubt will press for the policy to continue as long as possible, if not forever.
As Liam Blank of Tri-State Transportation Campaign said in a statement released by the mayor, “This is also a moment to rethink street space writ large.”
Rigie would not hazard a guess as to how many eateries will survive the pandemic, but said the U.S. Senate’s passage Wednesday night of a far less restrictive Paycheck Protection Program will help tremendously, assuming the president signs the measure.
It remains to be seen if government officials in New York will see reopening as a remedy to recent unrest or a casualty of it. The first night of the city’s curfew, Monday at 11 p.m., coincided with the worst of the looting, although many observers saw the NYPD’s poor deployment and lackluster response as greater factors.
On Tuesday, curfew was pushed up to 8 p.m. and the city shut down evening service by Uber, Lyft, and Citibike, as well as banned nonessential vehicles below 96th Street. That made it challenging for looters to abscond with high-end merchandise as they appeared to do with impunity Monday night.
In one scene, looters parked on West 32nd Street, near Macy’s Herald Square flagship, and stuffed goods into the vehicle, then — unbothered by police — returned to the crime scene for a second helping. Cops did make about 400 arrests that night.
Monday’s mayhem prompted Cuomo to slam the NYPD and muse about removing de Blasio from office. On Thursday, noting the ransacking of mom-and-pop stores in distressed communities, he said, “I am saying to the district attorneys they should take these looters and punish them for what they did.”
666 Fifth Avenue and Brian Kingston (Google Maps, Brookfield)
Brookfield has bought out another tenant at 666 Fifth Avenue in the leadup to its massive renovation of the tower.
The tenant that accepted the $8.5 million buyout is listed as Kadima Realty Associates and was based on the 15th floor, according to property records. The deal marks Brookfield’s fifth buyout of the year in the Midtown property for a total of $22.7 million.
Brookfield purchased a 99-year ground lease from Kushner Companies for the tower in a controversial $1.3 billion deal in 2018. It plans to spend between $300 million and $400 million to renovate and reposition the tower and is trying to empty it out by early next year as part of those renovation efforts. It is also rebranding the infamous property as 660 Fifth Avenue.
Kushner Companies itself is among the tenants leaving 666 Fifth Avenue. It plans to sublease 20,500 square feet of space from the Brazilian bank Itau Unibanco Holding on the top floor of the GM Building.
Brookfield declined to comment on the buyout. However, in a recent interview, Brookfield Property Partners CEO Brian Kingston told The Real Deal he was not concerned that the pandemic and amount of people currently working from home would lead to a widespread decline in demand for office space.
“The idea of working from home full-time does not seem to have much appeal,” he said. “I think we’ll see certain changes in the way that companies utilize their offices, but we don’t see this as an existential threat.”
In the best of times, construction is a complicated business. Labor problems, demanding developers, financing issues, bad weather — any number of things can disrupt a project. Now add a global pandemic, government-ordered shutdowns and a collapsing economy.
In New York, the epicenter of the coronavirus pandemic in the U.S., changes to construction rules whipsawed developers and contractors. Confusion about government orders and fear of Covid-19 also plagued projects in South Florida, Los Angeles and Chicago, but mostly they forged ahead.
Still, an Associated General Contractors of America survey found more than half of contractors have furloughed or terminated employees since March, largely because 63 percent saw projects halted. Here’s a look at what’s gone down and what’s ahead in four major construction markets.
New York: City’s last in line
Since New York Gov. Andrew Cuomo ordered nonessential workers to stay home in March, his stance on construction has evolved.
Initially, all construction was considered essential. But on March 27, after critics charged that workers were at risk, Cuomo scaled back what was considered “essential construction,” defining it as infrastructure, affordable housing, health care facilities and emergency work needed to stabilize a building site. The state defined “affordable housing” fairly liberally: projects where at least 20 percent of the units will be income-restricted.
The state later opened the door for even more projects to continue by allowing work that was in service to another essential business, such as a grocery store, medical facility or a financial institution. Developers and general contractors have also been able to apply to the city’s Department of Buildings to continue work on their sites if the project does not explicitly fall within the state’s guidelines.
As of May 14, more than 7,800 construction sites throughout New York City qualified as essential under the state’s rules. More than 4,000 of those were approved separately by the buildings agency, but inspectors have cracked down on sites where unauthorized work was taking place. Related Companies’ 50 Hudson Yards was among those shut down.
Cuomo in late April said construction and manufacturing would be the first industries to reopen, though not everywhere at once. Sparsely populated areas where the virus was under control would be first, meaning New York City could be last. Reopening was allowed to begin May 15 in the Southern Tier, Mohawk Valley, North Country and Finger Lakes regions.
The industry is eager to make up for lost time and argues that New York needs it. Industry leaders in New York City are pushing for 24-hour scheduling — rarely allowed because of noise concerns — to catch up and facilitate social distancing on job sites.
“Construction always leads the economy out of the recession,” said Barry LePatner, founder of construction law firm LePatner & Associates. “If you want to jump-start the economy, you want to put lots of workers back to work at high-paying jobs.”
Regions must meet seven different requirements before reopening, including a 14-day decline in hospitalizations, or fewer than 15 hospitalizations per day, and a 14-day drop in coronavirus-related hospital deaths, or fewer than five per day. New York City isn’t expected to meet those requirements until June. — Kathryn Brenzel
Florida Gov. Ron DeSantis deemed construction an essential business and allowed it to continue throughout the pandemic, though some smaller cities decided to shut it down over concerns that workers could spread the virus.
But different rules on how the sites are supposed to be run, who should be wearing what personal protective equipment and what sites could stay open led to confusion that kept contractors and subcontractors on edge for a period of time. Contractors feared what a statewide shutdown could do to the labor force, which has been recovering from the effects of the 2008 downturn when many workers left the industry for good.
Generally, however, the industry was unscathed. Most companies did not lay off or furlough employees, said Peter Dyga, executive director and CEO of Associated Builders and Contractors’ Florida East Coast Chapter.
Few developers chose to close their sites. After workers tested positive for the coronavirus at Sergio Pino’s construction jobs in Miami-Dade, he shut down all of his projects, had them professionally cleaned and disinfected, and provided testing for Covid-19 to his workers upon their return.
In early April, Miami Beach shut down construction sites for failing to follow social distancing guidelines, issuing stop-work orders for two commercial projects. Municipalities such as the city of Miami and Miami-Dade County issued emergency orders requiring that all construction workers wear masks.
Projects had trouble complying with guidelines as some tasks require workers to be closer than six feet apart. Contractors struggled to get materials. And most cities stopped processing new permit applications for one to two months, which could have an impact on contractors and developers by late August or early September.
“There’s a gap that’s coming,” Dyga said. “At some point that’s going to hit the industry.” — Katherine Kallergis
On the last weekend in March, a construction worker at the forthcoming Inglewood stadium for the NFL’s Rams and Chargers tested positive for the coronavirus. Los Angeles Mayor Eric Garcetti and county officials promptly sent public inspectors to construction sites throughout L.A. and hatched various rules, such as crew members not being able to share equipment.
“I wouldn’t say it’s business as usual,” said Peter Tateishi, CEO of the California Association of General Contractors. “But most projects are going forward.”
“We have had to evolve,” Tateishi added, particularly on vertical projects on which crew members’ standing six feet apart from each other “disrupts the normal flow and cadence. It’s a different way of working.”
California Gov. Gavin Newsom issued an executive order in March deeming construction an essential activity. The San Francisco area imposed restrictions on commercial and market-rate housing projects that were not lifted until May, but L.A. County erected no such roadblocks.
The result is that projects such as the football stadium and renovations to the Los Angeles County Museum of Art and Westwood’s Hammer Museum have moved ahead. So have various residential projects, from spec mansions in Bel Air and Holmby Hills to affordable housing complexes in El Serreno and Skid Row.
AECOM CEO Michael Burke boasted during a May earnings call that the mammoth engineering and construction firm’s local projects were advancing and that only 18 of its 50,000 worldwide projects were canceled because of coronavirus.
Still, the toll that the economic downtown will have on construction in L.A. County is unclear. Tateishi said financing is not being pulled from ongoing projects, “but we are seeing financial challenges from a future standpoint.” — Matthew Blake
Chicago could be among the last American cities that fully reopens to business following the coronavirus shutdown, but construction work has not stopped.
Developers working on some of the dozens of residential and office projects throughout the city — including such megadevelopments as Related Midwest’s The 78 — have been pushing ahead during the crisis. And even new projects, such as the 813-foot-tall Salesforce Tower in Wolf Point, have received building permits and quickly begun construction.
Gov. J.B. Pritzker’s statewide stay-at-home order in effect since March 21 — which he modified and extended through May — allows only essential business activity to operate in Chicago. On that list is construction, building management and maintenance, and airport operations.
“Over 90 percent of job sites are still open,” said Tom Cuculich, the executive director of Chicagoland Associated General Contractors, a trade group that represents 10,000 members and worked on $12 billion in projects last year. “The ones that aren’t are the ones that just couldn’t operate safely mainly due to social distancing issues.”
Construction crews are following federal health and safety guidelines and observing social distancing, Cuculich said. Contractors are deploying hand-sanitizer and hand-washing stations, staggering shifts, adding temperature checks and even thermal imaging technology at some sites, he noted. Overall productivity remains high, according to Cuculich, but there are new logistical challenges: Hoists at high-rise developments can only carry so many people while observing social-distancing guidelines, for example.
One of the projects that has continued without a hitch is a massive residential development planned by McCaffery Interests and Community Builders at the site of the demolished Harold I. Ickes Homes. The 11-acre mixed-income “Southbridge” campus on the Near South Side would eventually see 877 rental and for-sale homes and 60,000 square feet of retail space.
While construction can proceed statewide, developers have run into other problems, notably lenders who have tightened their belts. That was the case with a major residential project in Skokie, about 15 miles north of downtown Chicago. Murphy Development Group last month acquired the 153-unit project from Greenspire Capital and investor Norm Hassinger after a $45 million construction loan for the $73 million luxury rental and retail complex never materialized. Murphy Development, one of Chicago’s most active developers, is now pitching the project — on which work began in May 2018 — to other lenders.
Although he’s confident in the strength of the Chicago market, Cuculich said there is some anxiety about the future. Population declines, high property taxes and building restrictions have spurred some developers to build elsewhere in recent years.
“Many of my members have projects on the books this year and are looking at projects upcoming in the pipeline,” Cuculich said. “There were already concerns about jobs going elsewhere. People are optimistic that financing will be loosened up but right now it’s a concern.” — James Kleimann
Former New York City Deputy Mayor Alicia Glen isn’t impressed by her former boss’ plan to cut $2.3 billion from the city’s capital budget — a move some have estimated will delay the financing of 21,000 affordable housing units.
“I think it’s one of the most short-sighted things I’ve ever seen. I think it is pennywise and pound foolish,” she said during a TRD Talks Live panel Wednesday. “The debt service on that capital budget for the housing bonds are de minimis. There are so many ways that we could take a look at the operating budget.”
The former housing czar noted that the city uses its capital budget to leverage “unbelievable amounts of private investment and resources from the state and federal government.” She said the city should instead “double down on things that leverage money,” including housing. The de Blasio administration has maintained that it expects its affordable housing program to remain on track despite the cuts. A representative for the mayor didn’t immediately return a message seeking comment on Glen’s remarks.
Wednesday night’s webinar largely focused on the need for continued growth in the city and how that will require changing how people think about density — especially in terms of land use policies that encourage mixed-use construction.
Sidewalk Labs CEO Dan Doctoroff, who served as deputy mayor of economic development under Michael Bloomberg, pointed to Amazon’s decision to cancel its plans for a new headquarters in Long Island City. He commended Glen’s work on crafting the Amazon deal and said the city will “suffer” the company’s loss. But he said opposition to Amazon showed that not all New Yorkers were confident that the benefits of the company’s headquarters would be distributed fairly.
“We’re going to have to develop a new model because if we don’t, then things like Amazon will continue to happen, the rezonings that have been defeated will continue to happen,” he said. “They may be defeated by a relatively small minority or City Council members who have too much authority over city-wide imperatives, but we’ve got to be able to convince people that the benefits of that growth are going to accrue to everybody in this community.”
Security professionals say they’ve seen an increase in demand after nights of looting in New York City.
Retired police detective Bo Dietl told the Wall Street Journal that his firm, Beau Dietl & Associates, had received a high volume of calls this week and is now patrolling more than 50 additional buildings.
Several residential buildings have also brought in additional doormen or armed guards.
“The demand for armed and unarmed security guards across every market is as high as it has ever been,” said Sean T. Meehan, the director of sales and marketing at New Jersey-based United Security. Because of the uptick in demand, security guards are now harder to come by, he added.
Looters struck several parts of the city this week, including prime retail spots in Midtown and Soho. Properties now with security guards in place include the Woolworth Building and SL Green’s 11 Madison, the Journal reports.
Civilian patrol groups such as the newly formed Defend South Brooklyn have also taken to the commercial corridors in some neighborhoods.
“This is not about vigilante justice and people taking things into their own hands,” said the group’s founder, Isaak Boltyansky. On their first night of patrol Tuesday, Boltyansky said they had 500 volunteers. [WSJ] — Sylvia Varnham O’Regan
From left: Moishe Mana, Marcelo Claure, Robert Reffkin, and Audrey Gelman (Credit: Jemal Countess, Aaron Davidson, Jean Baptiste Lacroix, Joshua Lott and Sean Rayford, via Getty Images)
Nationwide protests over the killing of George Floyd at the hands of police have quickly shifted to a larger discussion about the need to address systemic racism and discrimination, including in the business community.
Now, some leaders in the real estate industry — long criticized for its lack of diversity — have begun donating and directing funds to minority-owned companies and civil rights groups, in an effort to provide greater opportunity. Some companies have said they would look internally to make changes, too.
Compass has created a fundraising campaign to benefit the Equal Justice Initiative and NAACP, which has so far raised more than $6,000 of a $15,000 goal.
CEO Robert Reffkin, who on Wednesday shared experiences of everyday indignities he has suffered as a black man, said Compass was also creating a vendor list of photographers and designers who are black and brown. “As an agent you control [marketing] spend,” he said. “Even if it’s a certain percentage of the money you spend…it will make a huge difference.”
SoftBank-backed WeWork has directed $2 million in grants for black-owned businesses that are WeWork members, according to a tweet from Marcelo Claure, CEO of SoftBank Group International.
“We must do better,” Claure wrote in the June 2 statement. He added: “Black lives matter and deserve the opportunity to not just live, but to thrive.”
SoftBank — which also counts Compass among the companies it funds — has announced a group of initiatives. In a letter to SoftBank employees, Claure wrote about the launch of a $100 million Opportunity Growth Fund that will invest only in companies led by founders and entrepreneurs of color.
Unlike other funds, SoftBank will not take a traditional management fee, Claure wrote. A portion of the gains from its investments will be donated to organizations geared toward helping people of color.
Citing a lack of diversity and inclusion in the venture capital community and tech industry — only 1 percent of VC-backed founders are black — Claure said the fund will be the largest of its kind providing money to black Americans and people of color.
SoftBank will also match employee donations of up to $1,000 to nonprofit organizations working to fight discrimination.
Earlier this week, the Wing, a female-oriented co-working startup, made a $200,000 corporate donation to Color of Change, the NAACP Legal Defense and Educational Fund and the Brooklyn Community Bail Fund. WeWork sold its stake in the Wing in January.
And an arts and technology company owned by South Florida developer Moishe Mana said it had donated $50,000 to the NAACP. The company, Milk, said in an Instagram post on “Blackout Tuesday” that it would match any donation made by team members to the charities of their choice. “We are committed to being part of the systemic change that is needed to reshape our world,” the company said.