Quality, Consequences and the Construction Industrial Complex (part 270).
The Feb 3rd, 2021 news item from the New York Times may be looked back on as a harbinger of a market top in high rise residential development.
IMHO, this story has everything:
- The madness of the crowd generating mania in residential property.
- Miss-allocation of money and resources.
- More anecdotal evidence of skyscrapers as a leading indicator of economic downturns ( https://www.investopedia.com/terms/s/skyscraper-effect.asp & https://www.cbsnews.com/news/skyscrapers-as-signs-of-economic-doom/ ).
- Overreaching property developers.
- Rich and angry owners.
Turns out, the super tall, super slim, super expensive Condo tower at 432 Park, New York city might not be super to actually live in. The Times article notes that the tower sways and groans in high wind (this is a design feature to prevent structural failure). However, if you are a billionaire who is used to having everything as you want it, the lack of control here can be disturbing.
There is also damage caused by several floods leading to insurance claims. The Times article also notes that the common service charge has “jumped nearly 40%” and the “buildings insurance costs had risen 300%”.
Engineering frim SBI Consultants found that “73% of mechanical, electrical and plumbing components failed to conform with the developers drawings and that almost a quarter presented actual life safety issues”. The rich and powerful who buy these multi million dollar apartments are well, rich and powerful, with armies of lawyers. The next 5 years will likely be painful for the developer, design team and construction team.
I can only guess but IMHO, the fundamental error here was that the developer, design team and construction team actually took a ” residential development, business as usual approach”. That is:
- First cost approach to every engineering decision.
- Inappropriate value engineering (residential is all about finishes and not “back of house engineering”).
- Multiple substitutions via the submittal process (this is Latin for installing low cost alternatives).
- Fantasy construction schedule.
- Design team construction field inspectors who said yes to everything due to pressure and fee exhaustion.
- Development, project and construction managers that practice management by shouting and cannot hear the word no.
In any normal scenario, residents of a new condo building would be politely ignored until the 12 month warranty period expires then completely ignored and refereed to insurance. I have a feeling this will not be the case at 432 Park. In my mind the richest residents are now on the roof terrace looking to the sky with both arms raised and shouting “LAWYERS, Assemble!”
This story would make a great telenovela with Alec Baldwin playing the property development manager in the style of his character in the hilarious, 30 Rock comedy.
Have we reached peak high rise residential living? We live in interesting times, maybe……
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