Two months after deciding to build a new downtown administrative office to house city of Novato employees, an architectural firm has been hired to get started with drawings and computer mockups.

A building of approximately 23,000 square feet is to be constructed at the existing parking lot on Machin Avenue at Cain Lane, across from the Novato Police Department. About 60 employees would work there, from planners and engineers to parks officials and the city manager, Michael Frank. The cost is expected to be about $15 million, and the bulk of money comes from funds formerly owed to the city’s general fund by the Novato Redevelopment Agency. A bond sale this spring was deemed successful, allowing for the financing of the new building.

Several people at Tuesday’s Novato City Council meeting acknowledged the stiff cost of those architectural services — $813,846 — and one businessman threatened to get a voter referendum going to put the city offices before a public vote. But the five-member council voted unanimously to award the contract to RMW Architecture and Interiors of San Francisco and expressed excitement about taking another step toward consolidating city assets in a “civic center” atmosphere.

“It will really have a lot of synergy and makes a lot of sense,” Mayor Madeline Kellner said after the vote, mentioning the proximity of the city offices to Novato City Hall and the Novato Police Department.

RMW emerged atop a list of 10 firms vying for the job, and three finalists were interviewed on June 13.

“It’s a great opportunity we see here, and we’re anxious to get started working on it,” said RMW Principal Bart McClelland. “We understand there are a lot of issues to get into very quickly.”

Most city employees have worked at 75 Rowland Way since the downtown cluster of bungalows were deemed unusable in 2006. The lease at Rowland costs the city about $750,000 a year, and that figure was a driving force in prompting the staff and council to move forward with finding a new permanent home.

Councilwoman Pat Eklund requested that story poles be installed to give Novato residents an idea about the mass and height of the building. McClelland said story poles are useful to a point, but computer imagery — including 3D animation — also can be an effective way to give people and idea what it’s like to walk around a new building. How to distribute such computer models is still to be determined.

Longtime Novato resident and business owner Henry Hautau said a group is considering a gathering of signatures to place a referendum on the ballot that would take the issue to a public vote. The owner of Finnegan’s Marin, Hautau said spending $15 million to $16 million on the building is irresponsible at a time when the city is laying off employees and cutting back services. He said taking downtown parking spaces away does not make any sense.

“I am greatly offended and confused by your decision to build offices downtown,” he said. “… It’s financially wasteful.”

Gail Wilhelm, a former Novato City Council member, counterattacked after Hautau’s comments, which she described as “a last-minute Hail Mary that is offensive, disrespectful and frankly dishonest.” She said centralizing city employees in a new Old Town complex has been in the works for 25 years and was “thoroughly aired and thoroughly investigated.” She said there is a list of 600 signatures in support of downtown offices.

In their comments, the council members agreed with Wilhelm’s stance. Jeanne MacLeamy reminded that the city employees used to work in 11 buildings, many of which were red-tagged by the fire marshal after “they were held together by termites holding their hands.” Carole Dillon-Knutson said it was the fourth or fifth time a proposal for a downtown office building had come before the City Council.

“This was the only site, after looking at so many sites, that worked,” Denise Athas said.

Kellner said it was not an overnight decision and due diligence took place.

“It’s Novato’s time,” Kellner said.

Leasing activity in Manhattan in the first half of the year totaled 17.6 million square feet, the best six-month performance in 13 years and a 40% surge from the corresponding period of 2010, according to Cushman & Wakefield Inc. Meanwhile, activity in the last two months of the quarter was the strongest on record.

In yet another bullish sign, absorption—which measures the net change of occupied space in a given time—was a positive 3.2 million square feet. That marked the first time that measure has been positive for the first six months of the year since 2007.

“Leasing activity has been pretty impressive,” said Joseph Harbert, Cushman & Wakefield’s chief operating officer for he New York metro region.

All that activity helped shrink the overall average vacancy rate to 9.4% by the end of last month from 10.8% in the same period last year.

The surprising news for landlords—and the good news for tenants–was that despite the surge in deal volumes, the overall asking rents grew a mere 2% to an average of $55.52 a square foot.

“Increases are modest compared to the activity,” said Mr. Harbert. “This is still a relatively good [leasing] opportunity for tenants.”

Brokers at Cushman’s quarterly press briefing suggested several reasons for the disparity. One noted that the 9.4% vacancy rate still favors tenants and that once it hits 8%, which is widely considered a point where there is negotiating equilibrium between landlords and tenants, rents should shoot higher.

Another suggested some landlords were keeping quality space off the market, waiting for the market to further improve so they could fetch even richer numbers. Yet, a third suggested that the economy was still shaky enough where landlords didn’t want to quibble over price, especially not with credit-worthy tenants looking to lease significant blocks of space.

Some sub-markets in Manhattan are already seeing major increases. Mr. Harbert said rents in the Plaza District, the tony enclave favored by hedge funds and financial firms, were growing at twice the pace of the average, up 20% from the market trough.

Rents in the downtown market advanced more than in the other two business districts–midtown and midtown south. They jumped 4.2% to $39.38 a square foot. The market got a big boost from Condé Nast signing a 1 million square foot deal at 1 World Trade Center.

Source: Crain’s New York Business

These sources said the Port wants to know by mid-fall if it can seal a deal with Westfield. That would give the agency enough time to either find another partner or move forward by itself in developing a plan for the approximately 360,000 square feet of retail space that will be initially built at the site. Roughly 200,000 square feet of that space is in the Calatrava transit hub, which is slated to open in 2014.

In 2008, the Port Authority and Westfield signed a letter of intent whereby the Port agreed to provide approximately $825 million toward the $1.45 billion project, with Westfield providing the other $625 million. However, that deal was based on projections of about 488,000 square feet of retail space. That total has shrunk, in part because there are no immediate plans to build one of Larry Silverstein’s three towers.

These sources said the two parties were discussing various economic issues but declined to be specific. A spokesman for the Port Authority declined to comment, and a spokeswoman for Australia-based Westfield didn’t return a call. Westfield has interests in and operates one of the world’s largest shopping center portfolios valued in excess of $58 billion with 119 properties in Australia, New Zealand, the United States and the United Kingdom.

Real estate experts said it made sense for the Port to focus on the retail portion of the site now that commercial tenant interest in the buildings is growing. Last month, the Port signed a 1 million-square-foot deal with Cond´ Nast for 1 World Trade Center. Meanwhile, published reports said Swiss financial giant UBS was considering moving into one of Mr. Silverstein’s towers.

Additionally, the Port doesn’t want to lose any significant retail tenants to its neighbor across West Street, the World Financial Center. There, owner Brookfield Office Properties plans a $250 million renovation of the retail space, which is slated to begin in October and run through 2013.

Prior to Sept. 11, 2001, Westfield had net leased the World Trade Center retail components, one of the highest-grossing shopping areas in the nation, which consisted of 427,000 square feet. In December 2003, to accelerate the rebuilding at the World Trade Center site, the Port acquired the retail net lease from Westfield.

New York construction unions have reached an agreement to cut the wages of members working on a massive residential project on the far West Side by 20%, sources said. The project, which will include more than 500 units of affordable housing, is being developed by the Gotham Organization Inc.

Meanwhile, Forest City Ratner Cos. has applied to the unions for similar wage cuts as it prepares to begin construction of its first residential tower at the long-planned Atlantic Yards project in Brooklyn. There, at least 50% of the approximately 400 residential units will be affordable.

The unions, in conjunction with contractors, began cutting wages and changing work rules for certain projects back in 2009 as part of an effort to lower construction costs and jumpstart projects brought to a standstill by the recession. It was just such an agreement that was a critical element to moving forward with Forest City’s Frank Gehry-designed residential tower downtown. At one point, the developer had proposed capping the 76-story tower at roughly half its height, but that never happened. It opened earlier this year.

Typically, the union offers concessions that lower labor costs by 10% to 15%. However, unions make steeper cuts for developers building affordable housing or residential projects in the outer boroughs because they tend to command lower sale prices and rents. Additionally, non-union labor has made greater inroads into those sectors than in major commercial projects in Manhattan.

Spokesmen for the Building & Construction Trades Council of Greater New York, a union trade group, and Forest City declined to comment. Gotham President David Picket couldn’t immediately be reached.

In the last several weeks, Gotham has reached a deal to secure a $530 million construction loan from a group led by Wells Fargo to build what is known as Gotham West. The four-building complex will consist of about 1,240 residential units and take up almost an entire city block bounded by West 44th and West 45th streets and Tenth and Eleventh avenues. Construction on the project, which will also include a parking garage and 17,000 square feet of retail, is expected to begin in the third quarter of this year, according to the company’s website.

The Gotham development will include a 31-story tower located on Eleventh Avenue with about 700 units. Adjacent to the tower, another mid-rise building will house 297 affordable-housing units available to low-, moderate- and middle-income families. Further east, toward Tenth Avenue, two 14-story buildings will be situated atop a platform over the Amtrak tracks and will include an additional 243 units of affordable housing.

The loan would be another sign of improvement for the beleaguered construction industry, which suffered horribly as development came to a virtual standstill during the recession. Lately there have been numerous signs of life in the industry. Just last month, Boston Properties announced it had secured law firm Morrison & Foerster as an anchor tenant for an office building on West 55th Street and would resume construction on the property, which was halted during the recession.

Source:  Crain’s New York Business

“Big Tent” event brings together economists, designers in half-day session

Gary H. London

Architects and other designers need to readjust their careers to match the “new normal” in real estate development, according to local economist Gary London.

“The past is not prologue,” London says. “Virtually every understanding we’ve had about the built environment prior to the recession has changed.”

Those include smaller homes, less square footage per employee in offices, the Internets impact on stores and shopping and reduced manufacturing.

London said the upshot of these changes is that architects and others in related fields need to think of their career futures differently “because the environment will be different.”

“The job market will come back for them, but at the same, slow pace that the industry is expected to come back,” he said.

London will make these points at a half-day session sponsored by various architectural and design groups from 8 a.m to noon Saturday at the New School of Architecture and Design, 1249 F St. in downtown San Diego.

Organizers call it a “Big Tent” function, because it includes many design-related organizations and professionals all meeting in one place.

“The industry is 40 percent unemployed,” said architect Jack Carpenter, who is organizing the event. “The new economy is barely getting off the ground, and we know it is going to be different than it was.”

He said architects and others in the construction business will have to get used to working on smaller projects and, in housing, on apartments and town houses, rather than single-family homes.

“One thing we’re going to be talking about is expanding your portfolio,” Carpenter said. “You have to understand the new technology, construction management and other areas people might migrate into.”

Besides London, economist Alan Nevin also is scheduled to make a keynote speech. Panels will follow that include changes in governmental rules and regulation, new approaches to mixed-use development, legal changes affecting developers and financing issues.

Source:  San Diego Union-Tribune