October 2, 2006
Consequences of a Construction Boom
The NY Sun
By David Lombino
Wanna know why the projected construction costs for Atlantic Yards have soared, from $2.5 billion to $4.2 billion, and will continue to go up?
Construction costs are skyrocketing nationwide, and the local crunch is threatening to put the current construction boom on the skids.
Soaring construction costs are putting the squeeze on the city’s private developers, real estate experts say, threatening New York’s housing boom, and lessening the impact of billions of government dollars invested in public infrastructure projects around the region.
At a conference on economic development last month, the president of Newmark Knight Frank Capital Group, James Kuhn, called construction costs “the single biggest problem in New York right now.”
“It makes me nervous and I don’t see a solution,”Mr.Kuhn, a powerful figure in the New York real estate industry, said.
He said developers faced with increased costs have to earn about a third more on a per square foot basis than just a few years ago. He added that the costs will put pressure on the bigger, more ambitious, and long-term projects, including Forest City Ratner’s Atlantic Yards.
“When it was started, we were in a very,very bullish condo market,” Mr. Kuhn said.“When it gets approved, will we be in a market that justifies construction at a number where you will be able to sell units?”
Posted by lumi at October 2, 2006 8:10 AM