Developers say labor agreement won’t cut costs enough

TRD New York /
Apr.April 30, 2009 08:56 AM

Developers say the agreement that contractors and unions have to lower construction costs is worth less than they claim, and probably will not lead to a new burst of construction. The agreement claims to cut project costs by an average of 16 to 21 percent, and more than a dozen projects have lined up to participate, but developers and bankers say that does not necessarily mean any of them will proceed. Developers say that the electrical workers’ and carpenters’ unions have made serious concessions, while the higher-paid operating engineers, who handle heavy equipment like the cranes, have been unwilling to budge. Steven Spinola, president of the Real Estate Board of New York, said, “The feedback I’m getting from developers and some contractors is that it’s not very deep in terms of having an impact on costs … The cost savings could be as little as 5 percent, or as high as 12 percent. Nobody really knows.”

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