Coronavirus pandemic won’t upend key NYC projects, developers say
Big Apple developers will be sweating out the open-ended statewide construction halt ordered by Gov. Andrew Cuomo last week, but are optimistic the crisis will end soon enough to save their projects and investments.
The overdue shutdown to protect thousands of construction workers from contracting the coronavirus puts into limbo some 25 million square feet of office space and 5,000 apartments in the five boroughs that are in various phases of construction.
“The big picture for a developer or owner is a question of liquidity,” CBRE regional Chief Executive Mary Ann Tighe said of the short-term future. “How much capital is on hand to support an extended period with diminished or no revenue?
“No financeable project is based on a perfect time frame. Cushions are built in for any development,” she said. “If the shutdown is 90-120 days, it isn’t optimal, but it can be accommodated within an existing pro forma.”
Some companies acted swiftly. Howard Hughes Corp. shut down work on the Seaport’s Tin Building and Pier 17 early last week before the state mandate.
Other stymied projects range from nearly finished ones such as Lightstone’s 130 William St. condo tower to others still at the foundation level, including Boston Properties’ and Joseph Moinian’s 3 Hudson Boulevard office tower.
Additional sites falling silent include Related Cos’ 50 Hudson Yards, Tishman Speyer’s Spiral, SL Green’s One Vanderbilt and the Durst Organization’s Queens Plaza Park — a 67-story rental apartment tower — in Long Island City.
Douglas Durst told The Post of the overall situation: “Once the construction stoppage is lifted, projects will get going pretty quickly. The financing is in place and this stoppage doesn’t screw it up.” Durst previously said leasing at Queens Plaza Park was to start in 2021.
Several developers’ reps emphasized that any visible, ongoing work is to secure sites to protect the public and the properties during the shutdown.
However, Related can continue construction on residential buildings in Far Rockaway and on Roosevelt Island because they are 100-percent affordable — one of several exemptions to the stop-work rule. Others are for “essential” work on transit and health care facilities and homeless shelters.
At One Vanderbilt, work can proceed on ground and below-ground work as part of SL Green’s $200 million investment in new subway station links — but not on the tower itself, which was scheduled to open later in 2020.
But sources said there’s confusion over whether the affordable-housing construction exemption applies to projects with a mix of market-rate and affordable units. “There’s a lot of people talking to the governor’s people,” an insider said.
While the shutdown will delay tenant move-ins, among myriad other challenges for owners and occupiers, developers could face foreclosure efforts by lenders in the event of a prolonged stall.
But Manus Clancy, senior managing director of Trepp, which tracks the CMBS, commercial real estate and banking markets, said, “I can’t see them wanting to foreclose in this environment. The notion of taking over a half-built office or residential project with no timeline on how long this takes seems the worst of all options.”