Zell reaches union deal for Gramercy construction, closes in on two more union labor contracts

April 30, 2012 10:00AM

One of unionized labor’s harshest critics, Equity Residential Chairman Sam Zell has chosen union labor to construct the $190 million Park Avenue South tower he’s developing with Toll Brothers. Crain’s reported that Zell’s construction manager on the site, recently penalized Lend Lease Construction, struck an agreement with the Building and Construction Trades Council that will reduce standard union labor costs by 20 percent. 

Zell famously caught heat for using non-union workers to construct his 111-unit apartment building at 500 West 23rd Street. But Crain’s speculated that his recent decision at Park Avenue South and East 28th Street isn’t a change of mindset for the developer, but rather a decision made because of the discount, the size of the project and the need to curry favor with local officials for future projects.

“Zell will make whatever economic decision is right,” said one real estate executive who closely follows Equity Residential. “I don’t think they’ve found religion and are saying, ‘Ooh, we need to go union.’ ”

Zell is close to reaching a similar agreement for a 230-unit project on Amsterdam Avenue between West 66th and West 67th streets through construction manager Plaza Construction. He is also hoping for one at his Church of St. John the Divine site in Morningside Heights, too.

While the new union contracts may have been facilitated by last summer’s extensive contract negotiations, Crain’s said there’s still much work to do before all big developers return to using unionized construction labor. [Crain’s]