"We are working on the marshalling of resources to be in a position to start the project," Boston Properties President Douglas Linde said in a telephone interview. "There's been a fundamental shift in people's outlooks on where they're going and where they want to be, and the city of New York's availability of high-quality real estate."
Linde declined to comment on discussions with Morrison or any other potential tenant. On a May 3 conference call, he said the company was in "active" negotiations with an unnamed tenant who would take about 20 percent of the building.
$1 Billion Project
The company said it has invested about $480 million in the roughly $1 billion project, which was suspended in 2009 after another law firm withdrew as an anchor tenant. Foundations and below-the-street concourse floors are already in place, Linde said in the interview. The steel is sitting in a yard in South Carolina, and the makings of metal frames for the curtain wall are in storage outside of Boston, he said.
Manhattan's Far West Side, the area roughly between Pennsylvania Station and the Hudson River, may be one of the biggest areas for development as Related and Brookfield Office Properties take the first steps to attract tenants and start construction on a potential 10 million square feet of offices. Penn Station is the busiest U.S. commuter rail hub, with its 590,000 passengers a day approximating the population of Milwaukee.
Much of the construction there will involve building platforms over railroad tracks throughout that area.
Construction Loans
Financing new development may not be easy. Across the U.S., there were only a few large office-construction loans in the first quarter, Chandan said. One was for the 600,000-square-foot 600 Brickell Ave. project in Miami, which got a $130 million loan from Canyon Capital Realty Advisors LLC in February.
Construction loans have fared the worst among all types of commercial real estate loans, according to Richard Parkus, a real estate debt analyst at Morgan Stanley in New York. Ninety-day delinquency rates peaked close to 19 percent, and have dropped "only minimally" since then, he said in an e-mail.
Commercial construction loans outstanding in the U.S. have fallen each quarter since early 2009, according to the Federal Deposit Insurance Corp. The fourth-quarter total of $163.2 billion is a little more than half the $297.9 billion it was when lending peaked in the first quarter of 2009. Those figures include retail, industrial and hotel loans as well as offices.
Spending on U.S. office construction fell to $24.4 billion in 2010, down 36 percent from 2009, and 56 percent from the peak year of 2008, according to the Census Bureau.
Prudential Lending