Atlantic Yards Squabble Could Stunt Commercial Modular Growth

When commercial developers begin a project, whether it is a man camp in North Dakota, a hotel in Atlanta or the 32 story Atlantic Yards B2 project, they care about design and aesthetics, health and safety issues and even LEED certification but the Number One thing they are concerned about is Return on Investment (ROI).

The factories that have been building commercial projects may not have a big advantage in price over site building or time from concept to moving dirt but where they shine is in time to completion. Every single day the developer can save over traditional site building means money in their pockets. Saving a month on a small project could add a couple hundred thousand dollars to their income. Saving six months on a project like Atlantic Yards B2 could mean $ millions and when that apple is dangled in front of the developer it looks damn good.

But what happens when what should be the pinnacle of commercial modular construction craps out midway to completion? Not only will it be front page material on every news and media site, it gives commercial site built contractors a huge foothold into stopping modular’s rising star.

What developer, after hearing all the problems that have surfaced this past month in Brooklyn, will look at modular construction the same way they did 6 months ago as it appears that the $ millions added to ROI will now have to be spent on lawyers and court dates and the project could be set back a year or more. In that time it could have been completed using older site building techniques.

All the gains commercial modular factories have made with developers over the years could be tarnished by this single project.

Now in the latest “PR Stunt” as it is being called, both sides are beginning to dig in for a long battle while developers that were considering modular as a possibility are now looking at it again and wondering if it might be time to wait and see what will happen in Brooklyn as there could be a legal precedent set for all future big modular projects.

Here is the latest news from Crain’s New York Business coming out of the Atlantic Yards B2 project.

Skanska blasts Forest
City‘s offer as PR stunt

Forest City Ratner wants to assume control of producing the
modular units for the now-stalled work on the apartment tower at Pacific Park
next to the Barclays
Center.

A Forest City Ratner Cos. executive offered Thursday to take
over and restart production at a jointly-run modular housing production
facility in the Brooklyn Navy Yard. The move comes after a dispute with the
contractor resulted in work on a modular tower at Pacific Park,
formerly Atlantic Yards, grinding to a complete halt in the last week. The
contractor, Skanska
USA Building,
subsequently blasted the letter as a hollow publicity stunt.
 MaryAnne Gilmartin, chief executive at Forest
City, sent a letter Thursday morning
to Skanska USA
Building, the subsidiary of the
Sweden-based construction firm and contractor at B2, the 363-apartment modular
building slowly rising in fits and starts next to Barclays
Center on the edge of downtown Brooklyn.
 In the letter, Ms. Gilmartin offers to take control of the
factory, FCS Modular, which was jointly created by Skanska and Forest City
to produce the modular pieces that will make up the building. The facility was
shut down after Skanska stopped work on the project last week, citing problems
with the modular plans. Forest
City countered that
Skanska did not adhere to previously agreed-upon timetables and budgets. This
week, the two parties sued each other in state Supreme Court, each
claiming the other had violated their contract.
 “We strongly believe, as a joint venture, we have an
obligation to the 157 workers who have lost their jobs because of the
unauthorized, forced furlough that you, as managing member, have imposed on
them,” she wrote, indicating that a subsidiary of Forest City
has been denied access to the factory.
 But Richard Kennedy, co-chief operating officer for Skanska USA,
fired back that the letter was little more than a publicity stunt, since it was
sent to media outlets before Skanska.

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