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Unions agree to wage cut on major project

Reduction of 20% pledged for construction of over 500 affordable-housing units at planned block-long project on Eleventh Avenue; similar deal eyed for Brooklyn’s Atlantic Yards.

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

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New York City’s ‘design sector’ grew 75% the past decade

Study ties 40,000-plus jobs here to creative services like fashion, architecture, and interior, industrial and graphic design. City could do more to stoke NY’s creative juices, study argues.

New York’s design sector is the unsung hero of the city’s economy, growing by 75% in the past decade to supply more than 40,000 jobs, an economic think tank reported Wednesday.

More designers are employed here than in any other U.S. city, thanks in part to an explosion in recent years of Brooklyn-based companies, said the report, released on Wednesday by The Center for an Urban Future, a think tank in Manhattan. It noted that the number of Brooklyn-based firms spiked from 257 in 2001 to 433 in 2009, for a 70% increase.

But the massive potential of New York’s design industries isn’t sufficiently exploited by local economic development interests, the report said, arguing that city and state governments don’t do enough to promote local designers and their work.

In other cities around the world, the government invests cash and energy in promoting their design industries, said David Giles, the study’s author. “Milan brands their furniture designers, London brands their industrial and graphic designers,” he explained. “And in the U.K., the Trade and Investment agency is a venue for foreign investors to meet manufacturers.”

Similarly, he said, other cities promote aggressive export strategies, while New York does not; for example, while New York’s state export assistance program has a budget of $1.5 million dollars a year, the province of Ontario has $70 million to work with annually. “There’s huge potential here,” Mr. Giles said.

Designers in New York echoed the study’s conclusions. Amy Smilovic, the head designer for the young contemporary design house Tibi, has noticed the differences in her travels. “When you go to Milan or Paris, or even Miami,” she said, “you get the sense that design is part of the heritage and that it’s very respected and promoted. New Yorkers are hard pressed to even know when fashion week is.”

Sometimes, it’s the little things that can convey that impression.

“In Paris, when you go to even the fabric shows, the trade center is so accessible by train and all the Metro platforms have signage up everywhere so everyone in Paris knows the shows are happening.” Ms. Smilovic said. “New Yorkers are hard-pressed to even know when fashion week is.”

But Brooklyn native Paul D’Aponte, whose company Fabbrica D’Aponte designs apparel, accessories and furniture, said that while the city doesn’t seem too concerned with marketing design, he can’t really blame public officials.

“When they’re having these massive problems with the education system, for example, that takes precedence,” Mr. D’Aponte said.

“I wouldn’t mind help with my business, but I’d be better off if I had had a better K-12 education to begin with,” he joked.

The city’s Economic Development Corp. said Wednesday it would review the report’s recommendations. “Over the past two years we’ve launched a number of programs dedicated to helping our thriving creative industries,” said a spokesman for the EDC. “But we’re of course always looking for new ideas.”

On Wednesday, the EDC announced the implementation of “Fashion Campus NYC,” an initiative designed to give exposure to up-and-comers in fashion and retail management. It is the first in a series of six initiatives the EDC has planned to promote the city’s fashion industry.

The study by Mr. Giles defined the city’s “creative economy” as a work force of around 40,500 in the fields of fashion design but also architecture, interior design and graphic and industrial design.

Hat tip:  Crain’s New York Business

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The Economy Is Wavering. Does Washington Notice?

The latest economic numbers have not been good. Jobless claims rose last week, the Labor Department said on Thursday. Another report showed that economic growth at the start of the year was no faster than the Commerce Department initially reported — “a real surprise,” said Ian Shepherdson of High Frequency Economics.

Tony Dejak/Associated Press A job fair on Wednesday in Painesville, Ohio. Rising jobless claims are one of several recent signs of a sluggish economy.

Perhaps the most worrisome number was the one Macroeconomic Advisers released on Wednesday. That firm tries to estimate the growth rate of the current quarter in real time, and it now says annualized second-quarter growth is running at only 2.8 percent, up from 1.8 percent in the first quarter. Not so long ago, the firm’s economists thought second-quarter growth would be almost 4 percent.

An economy that is growing this slowly will not add jobs quickly. For the next couple of months, employment growth could slow from about 230,000 recently to something like 150,000 jobs a month, only slightly faster than normal population growth. That is certainly not fast enough to make a big dent in the still huge number of unemployed people.

Are any policy makers paying attention?

Article continues at The New York Times

Related:  Investers Business Daily Editorial: Will ‘Obamalaise’ Create Another Downturn?

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Demand for architectural design drops in April

Demand for architectural design fell in April to the lowest point of the year.

The Architecture Billings Index, which indicates construction volume, decreased marginally to 47.6 in April from 50.5 in March, according to American Institute of Architects data released Wednesday.

The benchmark for the index is 50. Anything above that indicates an increase in architectural billings and anything below indicates a decrease. The AIA surveys a panel of member firms monthly, asking if billings increased, decreased, or stayed the same. The national association then weighs the responses for the index.

April was the first month in 2011 the index swung below 50.

The sharp decline in demand for architectural services has analysts scratching their heads. Kermit Baker, chief economist at AIA, said he is unsure whether to attribute the drop to an industry-wide reversal in demand for design or a bump in the road.

“The fact that most construction projects funded under the federal stimulus program have completed their design work, the anxiety around the possibility of a shutdown in the federal government in April, as well as the unusually severe weather in the Southeast had something to do with this falloff,” Baker said. “However, the majority of firms are reporting at least one stalled project in-house because of the continued difficulty in obtaining financing.”

Baker also echoed Redwood Trust  CEO Martin Hughes’ sentiment when he said financing continues to be the main roadblock to recovery. Hughes testified before the Senate Banking Committee Wednesday.

The new projects inquiry index also experienced a sharp drop in April, falling to 55 from 58.7 a month prior, according to AIA.

The regional buildings index was highest in the Northeast at 51.2, followed by the Midwest at 51.1, the South at 48.3, and the West at 47.7. The index was the highest in the multifamily residential sector (53.9) followed by the commercial/industrial sector (49.9), the institutional sector (45.9) and the mixed practice sector (45.2).

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Architects face a ‘new normal’ but will recover as business slowly improves

“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

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Young architectural firm lands major projects, expands staff

Reaching higher in a recession

In just five years, Matt Rinka has built his firm, Rinka Chung Architecture Inc., into one of the hottest architectural firms in the area.

The Milwaukee firm is working on two major downtown projects — the Moderne apartment high-rise in the former Park East freeway corridor and Washington Square, which could be the first new downtown Milwaukee office building in years if it moves according to plan.

The firm has grown from a half-dozen people in its first three years to 17 and growing this year, increasing revenue by 50 percent or more each year.

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Clear Capital® Reports National Double Dip

U.S. home prices double dip as West, South and Northeast regions fall prey to the last grip of winter.

TRUCKEE, CA – May 5, 2011 – Clear Capital (www.clearcapital.com) today released its monthly Home Data Index™ (HDI) Market Report, and reports prices have double dipped nationally 0.7 percent below prior lows experienced in March 2009. This month’s HDI Market Report provides the most current (through April 2011) and relevant analysis of how local markets performed compared to the national trend in home prices.

Report highlights include:

  • National quarterly home prices changed -4.9%; while year-over-year national price changes reached -5.0%.
  • National home prices have fallen 11.5% over the previous nine-month period, a rate of decline not experienced since 2008.
  • In a sign of the continued volatility and fragility of home prices, all the major Metropolitan Statistical Areas (MSA) tracked in this month’s report showed quarter-over-quarter price declines.
  • National REO saturation rate reaches 34.5%.

“The latest data through April shows a continued increase in the proportion of distressed sales that are taking hold in markets nationwide,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “With more than one-third of national home sales being REO, market prices are being weighed down as many markets have not regained enough footing to withstand the strain of the high proportion of REO sales.

In light of the compounding effects of winter’s seasonal slowdown and increased distressed sale activity, the market now faces the true test of whether prices can rebound in the historically active spring season,” added Villacorta.

As national home prices reached new lows this past winter, hopes remain for a spring revival. Markets have entered uncharted territory, however, as this current home buying season will be the first since 2008 without any tax credit incentive. A note of caution to those looking for a strong end to 2011: The last time no incentives were in place and distressed inventories were this high, home prices fell sharply.

Home Price and REO Saturation Parallels to 2008

Past market reports have shown periods of stabilization. Movements of home prices certainly have been less dramatic than during the start of the downturn in 2006, and two years of mixed seasonal gains and losses have given the appearance that prices are stabilizing, or at least bouncing along a trough.

This assumption of stabilization also considers the last two years have marked a period of external stimulus in the form of tax credits. As an alternative and cautionary reference, below is a comparison between the housing market from spring 2008, through the end of the year; compared to the post tax credit period of late 2010 through April 2011.

National REO Saturation (2008 to 2011)

Continue reading at Clear Capital

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Don’t string me along, U.S. temp workers say

Don’t string me along says architecture temp Althea Norwood Roberts

* Quarter of jobs created in past year were temporary
* Temps about 2 percent of overall employment
* Companies still cautious about permanent hiring

By Kristina Cooke

NEW YORK, Feb 22 (Reuters) – Althea Norwood Roberts gives employers three months to turn her temporary job into a permanent one. Then she looks elsewhere.

That’s as long as a company needs to see if she’s a good fit, the 35-year old single mother from California believes.
Norwood Roberts, currently temping for an architecture firm, is like millions of other Americans who are wondering if she will get permanent work.

“Temping is kind of like dating. It’s a trial-run for the company,” she said. “If they can’t make up their mind about you after 90 days, it’s probably not going to happen, they’re stringing you along.”

Norwood Roberts, who has a five-year old daughter, wants a job with security, good benefits and a pension. “It is not optional at this point. It is a necessity,” she said.

In the past year, about a quarter of all jobs created in the United States were temporary as companies remained cautious about the outlook for the economic recovery.

Over the past three recessions, temps — who are easier to hire and fire — have suffered the quickest and most severe cuts to their numbers at the beginning of a downturn, and then led broader employment gains when the economy recovered. For a graphic see http://r.reuters.com/geb97r

The pace of temporary job creation after the most recent recession — an average of about 25,000 per month — has been faster than in the past two, potentially a good sign for a labor market struggling with a jobless rate of 9 percent.

In the 17 months after the 2001 recession — the same period which has lapsed since the one in 2007-09 — employers added just 1,400 temporary jobs a month and the lag between the pick-up in temp hiring and the economy starting to add full-time jobs was 10 months longer.

But the faster pace of temporary hiring this time around hasn’t yet translated into significant full-time job creation.

“It will be a really good sign when we see those temporary jobs turn into permanent jobs,” Federal Reserve Chairman Ben Bernanke said this month.

Peter Capelli, a professor at the University of Pennsylvania’s Wharton School, says the jury is still out on whether the U.S. labor market is undergoing a structural change towards more temp workers or whether companies are just biding their time until demand for their products picks up and they add more long-term employees.

“It’s probably a bit of both. Another thing may be that employers are using temp work as a more thorough interview process, so it could be masking permanent hiring,” he said.

That is a trend that Randstad, the world’s second-biggest staffing firm, is seeing.

Randstad said more of its clients than in prior recoveries are using a “temp to perm” approach to hiring, to try the employee out before committing to taking them on.


Some companies are actively shifting to what they say is a more flexible workforce.

In January, Lowe’s, the home improvement giant, slashed 1,700 middle-management jobs and said it would add thousands of part-time customer service employees.

One of the middle managers laid off was Dean Lutz, 43, from South Carolina. Lutz says the job market is the worst he has seen in his career, with most available jobs either seasonal or part-time.

“Honestly, jobs available out there aren’t very good.” he said. Companies “don’t want to pay benefits or higher wages.”

Lowe’s move is “emblematic of an evolution that took place starting in the late 1970s in which employers showed less commitment to their workers,” said Gary Burtless, a professor at the Brookings Institution.

But he said there is little evidence to suggest that temporary hiring has become more common in the past couple of years, with temporary workers as a share of overall employment peaking at 2.4 percent at the height of the dotcom bubble.

Despite the faster pick-up, the number of temporary jobs is still down about 15 percent from before the recession.

Tom Bonds, vice president of operations at the Huron Valley Steel Company in Anniston, Alabama, said he expects a shift back to permanent workers once there is more clarity about the economic and regulatory outlook.

“We prefer full-time workers, because they are going to be there … with temps there is no loyalty both ways,” he said.

While temporary workers may be high caliber at times of high unemployment, the cream of the crop may be quickly snapped up once the recovery picks up steam.

Norwood Roberts, the single mother in California, is optimistic. She has had two previous temporary jobs in the past 10 years, both of which turned into permanent positions.

“I have been able to juggle things so far. Some people don’t have that luxury,” she said. “I am one of the lucky ones.”

(additional reporting by Nick Zieminski, Dan Burns and Dhanya Skariachan)


(c) Copyright Thomson Reuters 2011. Click For Restrictions. http://about.reuters.com/fulllegal.asp

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U.S. architecture billings index falls in January

* January ABI 50.0, down 3.9 pts

* New projects index falls 5 pts to 56.5

* Cautious optimism for design industry: AIA

NEW YORK, Feb 23 (Reuters) – A leading indicator of U.S. nonresidential construction activity weakened last month after two months of improving numbers, an architects’ trade group said on Wednesday.

The monthly Architecture Billings Index fell almost 4 points in January to 50.0, a level that indicates neither expansion nor contraction of demand for design services, the American Institute of Architects said.

The billings index is considered a predictor of construction spending about nine to 12 months in the future, since buildings are designed long before they are erected. The latest readings suggest an anticipated recovery in U.S. nonresidential construction may not gain traction this year.

A separate index of inquiries for new projects fell more than five points to 56.5, according to the AIA.

“This slowdown is indicative of what is likely to be a very gradual improvement in business conditions at architecture firms for the better part of this year,” said AIA chief economist Kermit Baker. “We’ve been taking a cautiously optimistic approach for the last several months and there is no reason at this point to change that outlook.”

The AIA’s billings index dropped below 50 in January 2008, indicating falling demand, and stayed below that mark until last November. The separate inquiries index only fell below 50 briefly in 2008. It is typically higher than the billings index, as prospective customers solicit bids from multiple architecture firms.

Most diversified industrial companies get at least some revenue from nonresidential construction, selling machinery used for erecting buildings or components such as elevators or electrical and cooling systems.

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Bernanke Encouraged by Drop in Unemployment, Cautions Full Recovery Will Take Years

Fed Chair Ben Bernake

WASHINGTON — Federal Reserve Chairman Ben Bernanke told Congress on Wednesday that the sharp drop in unemployment over the last two months is encouraging but cautioned that it will take several years for hiring to return to normal. 

In prepared testimony before the House Budget Committee, Bernanke also warned that failing to forge a plan to reduce the government’s $1 trillion-plus deficits over the long term could eventually hurt the economy. 

The unemployment rate was 9 percent in January after the fastest two-month decline in 53 years. 

Those declines “provide some grounds for optimism on the employment front,” Bernanke said.

Bernanke is making his first appearance before the House since Republicans took control last month. He is expected to face tough questions from them, despite being a member of the party. 

The Fed chief said the economy is strengthening, helped by more spending by consumers and businesses. However, the economic recovery won’t be assured until companies step up hiring on a consistent basis. 

Bernanke’s remarks suggest the Fed will stick with its plan to buy $600 billion worth of Treasury debt by the end of June. The program is aimed to invigorate spending and the economy by lowering rates on loans and by boosting prices on stocks. 

Despite rising prices for gasoline and for many industrial and agricultural commodities, Bernanke said inflation remains “quite low.” He blamed the higher prices on strong demand from fast-growing countries such as China — not the Fed’s stimulus policies. 

The committee’s chairman, Rep. Paul Ryan, R-Wis., worries that the Fed’s stimulus policies, including debt purchases, could trigger inflation or fuel speculative buying of stocks or other assets. 

“Many of us fear monetary policy is on a difficult track,” Ryan said. 

However, Ryan expressed more concerns about the nation’s exploding government deficits. If left unchecked, it will eventually hurt the economy. Ryan favors budget cuts to get the deficits under control.

Hat Tip to Associated Press

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