Permits Climb As Developers Up Their Bets

By LAURA KUSISTO

Manhattan is starting to shake off its construction doldrums and could see the first flurry of building activity since the recession, according to the city's Department of Buildings.

Manhattan experienced a 169% spike in new building permits issued so far this year, according to the buildings department, which issued 35 permits for construction including hotels, apartment buildings, an "affordable housing" development and an art gallery in the first four months of 2012. That is up from 13 in the same period last year.

"We are bullish that big building is coming back to New York City," the buildings commissioner, Robert LiMandri, said in an interview.

Manhattan new-building permits issued so far this year are still below 2008 levels, when 42 permits were issued in the first four months of the year.

But the latest spike in permits reflects developers' growing confidence in certain sectors, especially demand for rental housing and hotels, even while demand for office space lags.

Some developers receiving permits this year have been able to get loans already and, in some cases, have already broken ground. They include the Brodsky Organization on a new condo on 79th Street and Barone Management on two Gene Kaufman-designed hotels in Hudson Square.

"It certainly seems like there's more cranes in the air today. I actually know the answer and there are," Mr. LiMandri said.

Much of the latest activity is concentrated in the Hudson Yards area and Harlem—two areas that were poised for change during the previous boom but were also hit hard when the economy collapsed in 2008.

"In four or five months, you're going to see [neighborhoods] taking shape," Mr. LiMandri said.

Six building permits were issued on the far West Side in the 20s and 30s, as developers look to take advantage of the opening of the second phase of High Line elevated park, the extension of the No. 7 subway line and the planned office development by Related Cos. on the former rail yards west of 10th Avenue between 30th and 33rd streets.

Related has committed to start the first building on the Hudson Yards with Coach Inc. as its anchor tenant later this year. But the developer has already received a permit this year for its roughly 378,000-square-foot residential project nearby at 500 W. 30th St.

The flurry of new development permits comes at a time of economic uncertainty, caused by turmoil in Europe, the coming U.S. elections and layoffs in the financial-services industry. But developers say they're moving forward anyway because a lack of new construction has created significant pent-up demand for housing.

"We feel that the market is very good right now and ripe for new condominium projects," said Michael Namer, chief executive of Alfa Development. "We do know that there's a spike [in development], but it's a spike from zero."

Alfa has broken ground on a 51-unit condo project on 21st Street between Sixth and Seventh avenues, where it plans to launch sales May 17.

Sales have been strong at a handful of new condos in the area, including the Brodsky Organization's project at 422 W. 20th St. and a new condo building by Anbau Enterprises on 23rd Street.

Both real-estate and construction industry associations say their members are busier these days.

"It's a dramatic increase from what has occurred over the last year or two," said Louis Coletti, president of the Building Trades Employers' Association. But, in a reversal, he said, "The private sector is beginning to get out of the doldrums, at a time when city and state agencies don't have enough money."

Michael Slattery, a senior vice president at the Real Estate Board of New York, a real-estate industry association and lobbying group, said its data also show that permits for new residential units doubled in the first three months of 2012 compared with the year-earlier period.

"There is pickup in the market on the housing side. There's been so little production that demand is starting to press people to build again," Mr. Slattery said, while also cautioning it remains well below 2006 and 2007.

For now, experts say there is little chance of nearing boom-time construction levels because banks are unwilling to give large loans on new projects.

Nonetheless, Mr. LiMandri said he is confident construction activity is on the upswing.

In Manhattan, demolition permits issued by his department —an earlier indicator of precursor of new development than building permits—are also up significantly in the first four months this year: to 74 from a five-year low of 35 in 2010.