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Kratchman airs ideas on preserving stalled investments.

As developers struggle in the midst of interrupted financing and a slumping housing market, hundreds of incomplete construction projects have been halted, stalled and apparently abandoned, and these numbers are growing greatly, according to weekly data from the New York City Department of Buildings. Some New York City streets now have the look of distressed neighbor-hoods in the very areas where new, upscale residential construction was underway until just recently, but where stalled building sites can be found today.

Throughout New York City, stalled construction has reportedly resulted in partly vacant lots with rusting steel rebars protruding from uncompleted concrete walls, footings and foundations. Many of these stalled building sites have reportedly become catch basins for pools of stagnant rain water and parts of some stalled sites, some with broken fencing, have become home to squatters. Construction debris and portable toilets are visible at some. Other stalled building sites have become the playgrounds of vandals, who may cause damage and hasten their deterioration, and make it more difficult to cost-effectively re-start their construction in the future.

According to New York City architect Steven Kratchman, AIA, "The problem for owners of stalled, abandoned building sites is how to properly mothball them now, so that when they are ready to be 'un-abandoned' in the future, they are not tangled in unnecessary bureaucratic red tape or that the project, due to physical or structural deterioration, doesn't have to go backwards too far to be restarted again."

According to published reports, there were 143 stalled sites around the City one month ago. A week ago, the New York City Department of Buildings (DOB) reported 399. "As of press time, this week, the Buildings Department's website listed 409 stalled construction sites throughout New York City, which prompts very serious questions for the affected property owners and developers," Mr. Kratchman said. "These questions include: How can you protect your investment and make certain that your stalled sites are safely maintained until construction can resume? How can you protect these sites from deteriorating so that a construction re-start in the future doesn't become too costly? And, does your stalled site pose any public safety or liability risks to nearby structures, streets or sidewalks?"

Is Your Stalled Construction Site "Safe?"

"A safe, stalled construction site," according to Steven Kratchman, "has barriers and fences to prevent pedestrians or vehicles that might jump the curb from falling in. Loose materials are removed. Debris is cleared. Site drainage is maintained. Neighboring structures, including streets and sidewalks, are underpinned and stabilized."

How to Preserve the Value of Your Stalled Construction Site

According to Mr. Kratchman, "For projects already approved and permitted, but without construction yet started, owners should consider re-bidding and re-analyzing their options, including considering a fresh, new zoning analysis. Review with real estate brokers the current market conditions and adjust the floor plans and finishes of planned units accordingly. Identify ways to value-engineer the project without losing market value. Consider alternative options that can be built in a shorter amount of time and then plan to complete the full project later."

For projects that are in the ground, Mr. Kratchman advises, "Retain a civil and/or structural engineer to review site safety features such as neighboring foundations, sidewalks and streets, utilities and their stabilization and drainage. Protect exposed re-bar and steel from rust and decay. Re-evaluate the scope of your site security. Review your insurance requirements in consideration of stalled, interruption of construction. Remove already-delivered valuable materials and store them safely and in dry conditions. Some exterior products are designed to sit in exposed weather conditions, but only for a limited time. This should be avoided and materials should be protected in dry, sheltered areas."

"For projects that are above the ground and almost topped out," Mr. Kratchman recommends, "protect the interiors from bad weather with temporary sheathing. Provide temporary signage to explain publicly the status of the site."

For projects with core and shell, but no interior build-outs, Mr. Kratchman counsels owners to "review with your marketing team what the current options are for immediate site preservation and future, cost-effective construction completion."

In sum, Mr. Kratchman advises owners and developers, "As hard as it may seem when you're virtually paralyzed by the pressure of crushing debt obligations and by unpaid contractors and consultants who are clamoring about unpaid bills, you as an owner or developer should still ask yourself the vital, lingering question, 'What must I do now to provide cost-effective protection and flexibility to re-start my stalled construction project in the future?'"
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Comment:Kratchman airs ideas on preserving stalled investments.
Publication:Real Estate Weekly
Date:Aug 19, 2009
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