The stalled credit market and the recession are likely to put off recoveries for most sectors of the real estate market for many months, but one sector may make it through relatively unscathed. Several area universities say they expect to continue with planned construction projects. What’s more, as developers and contractors compete for more business in a stalled market, these institutions may even see better deals.
“The institutional market, because it is so strong in New York City, will probably do relatively better than other forms of construction, particularly residential,” said Richard Anderson, president of the New York Building Congress.
Of course, not all universities are expanding in this economic climate. The New School has put some of its construction plans on hold, and other schools are reconsidering the timing of potential projects. But space that universities acquire or renovate during the recession will likely be put to good use as more people return to school to wait out the tough economy.
Several universities in New York said they had no plans to halt or postpone projects that are already started. Lee Bollinger, Columbia’s president, wrote in a letter to the Columbia community that “projects that are already underway … will continue on schedule,” including the construction of a new interdisciplinary science building. “We will also continue our planning for capital projects that are funded by generous donors, including the Jerome L. Greene Science Center … and certain projects at the Mailman School of Public Health,” Bollinger wrote.
More broadly, he noted, the university is reviewing its capital projects but is “committed to continuing progress in improving and expanding our physical space as quickly as our finances permit.”
The science center, on the list of projects that will continue on schedule, is “a key part of the long-term campus plan in Manhattanville,” said Victoria Benitez, senior public affairs officer at Columbia. The university is planning to create a $7 billion, 17-acre campus in Manhattanville, extending from 129th to 133rd streets between Broadway and 12th Avenue, north of the existing Columbia campus in Morningside Heights.
For its part, New York University has no plans to discontinue or pause any of its capital projects either, said John Beckman, vice president of public affairs at NYU. Among NYU’s planned projects is the construction of a new law school building on MacDougal Street.
Fordham and Cooper Union will also continue with scheduled projects, including the redevelopment of Cooper Union’s 51 Astor Place early in 2009, representatives for those institutions said.
The School of Visual Arts has two projects slated for completion early in 2009: the renovation of a theater at 333 West 23rd Street, and the construction of a new dormitory at 101 Ludlow Street. Neither is likely to be affected by the economic downturn, said Michael Grant, director of communications at SVA.
SVA, which Grant described as “at capacity,” also holds a long-term lease at 335 West 16th Street and is currently reviewing the timeline for renovating that space. If the economy proved to be a problem for the building’s renovation, Grant said, the construction could be done in phases. “That’s the most prudent approach generally when it comes to capital projects. That would probably be how it would be affected.”
Only the New School has said that it will put plans for a new building — at 65 Fifth Avenue on the southwest corner of 14th Street — on hold due to the economy, The Real Deal reported in November.
There is no timetable for the resumption of the project. “In this climate, nothing’s on the table, but if things change, we will come back again,” said Caroline Oyama, a New School spokesperson.
Not only do many schools expect to continue projects already in the pipeline, but experts say universities may also find new opportunities as the recession grinds on, including lower prices and more competitive bidding.
Michele Medaglia, president of ACC Construction, noted that her company has been marketing itself to universities since January 2008 and is actively bidding on a project
at Columbia.
Costs of basic materials may also go down. “Certainly, commodities like cement and petroleum have dropped enormously … and how much [more], we don’t know yet,” Anderson said. “That will help [institutions],” even if their endowment portfolios drop.
The downturn may even position universities to expand further than they’d planned, though none of the universities contacted for this story said they expected to do so.
“It’s a good opportunity for them to purchase property for dorm rooms and annexes,” Medaglia said. “I definitely think that as prices come down on buildings, that universities tend to buy in this kind of market.”
Gloomy economic forecasts could even spur that, she said. “You have so many people going back to school for second careers right now. What do you do with all of these students? You don’t turn them away.”