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Unease Erodes Ambition in Real Estate

March 3, 2008

After years of sustained growth marked by grandiose, ambitious plans for the city, the real estate development industry is displaying troubling symptoms.

The number of citywide building permits is expected to drop, public and private funding for projects is drying up, and a stream of multibillion-dollar plans is coming in over budget and behind schedule, with many designs being scaled back or scrapped altogether.

“There are very disquieting signs that have ominous implications for the next few years,” the president of the New York Building Congress, Richard Anderson, said.

Last week, the Metropolitan Transportation Authority said the price tag for the completion of the first leg of the Second Avenue subway line had ballooned to $4.35 billion from $3.8 billion. Critics are questioning whether Lower Manhattan transportation projects such as the Fulton Street Transit Center and the Santiago Calatrava-designed PATH Station are worth their soaring price tags, and the projects’ elaborate designs are being pared down.

The planned redevelopment of Penn Station has a budget shortfall of at least $1 billion. A public spat erupted between city and state officials over Governor Spitzer’s plan to scrap the expansion of the Jacob K. Javits Convention Center after cost estimates more than doubled to $5 billion, and last week one of the five original bidders in the proposed development of the Hudson Rail Yards project on Manhattan’s West Side — Brookfield Properties — dropped out. A shortage of federal housing subsidies and ongoing litigation from resident groups is threatening Bruce Ratner’s $4 billion Atlantic Yards project near downtown Brooklyn. The list of public and private projects on hold seems to grow on a weekly basis.

The president of the Real Estate Board of New York, Steven Spinola, said widespread concern in the real estate community has — so far — fallen short of “panic.”

“I don’t know if they are collapsing,” Mr. Spinola, a former deputy mayor for economic development, said. “There is clearly concern among our members, which is probably more than I feel. Four months ago people believed that if they had a project, that the financing would be available even if they had to put more equity in, or maybe the costs might be slightly higher. A month ago there was a concern that the financial institutions would not want to finance anything. I think we’ll get over that bump.”

Source: NY Sun

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Written by NY Politics · Filed Under Real-estate 

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