Developers upbeat about New York City's future.

The Real Estate Board of New York recently hosted three top real estate players at its latest Finance Committee Luncheon, held on September 17 at the Yale Club.

Patrick J. Foye, Empire State Development Corporation, downstate chairman, Michael Fascitelli, Vornado Realty Trust president, and William L. Zeckendork, Zeckendorf Development, LLC cochairman were on hand to discuss some of the city's most important projects, including Queens West and the new Penn Station, as well as the credit crunch many are currently feeling.

In a candid roundtable discussion, all three pointed to a rise in construction costs and the credit crunch as worrying trends. All agreed a long-term view of the city and its real estate market is still a strong one.

Foye, who admitted to receiving a huge number of project requests from local developers, gave much credit to governor Eliot Spitzer for recognizing the need to make doing business in New York affordable and taking steps to ensure it "Governor Spitzer recognizes the need to lower costs of doing business in the state and the city. This is a critical component for economic development and the many projects that the state sponsors," said Foye.

"An unheralded aspect of the Governor's commitment to lower costs was the reform to Worker's Compensation. These changes, at no cost to the state, will lower these costs by $1 billion dollars and raise benefits 20%. These changes, approved in conjunction with the legislature, are an important step in making New York a more affordable place to do business."

After Foye's discussion of the various incentives the ESDC can offer developers, the discussion turned toward rising construction costs and their possible negative effect on the office market. Fascitelli sited construction costs as rising 1% a month with no slowing in price increases based on the recent bids Vomado has received. Zeckendoff seconded the rise in construction costs, noting he himself had seen 0.5 -1% a month. He noted that the current credit crunch was not affecting the high-end residential market.

"There's still a lot of equity. [The current market] will sort out minor players," Fascitelli said. He added that lenders were now underwriting on revenue today, not tomorrow.

"We won't be pulling back on new projects," added Zeckendorf "I haven't seen a pull-hack from subcontractors, and we can be flexible as to when construction begins. I see a great long-term Manhattan luxury market, but the shortterm is a bit hazy."