IN PROGRESS: Capitol Cove

[Cotuit]

Rumor has it that construction is to start this summer. I won't believe until they file for a building permit, but the developer is making noise abe filing his plans. We'll see.

They've been saying next month for what, two years? Hopefully this is the time.

[glassandsteel]

Holy socks, about friggin' time! I've been waiting forever for this, I hope the basic idea for the design is still the same. I'm pretty sure it might be scaled down a little bit by now though.

[Thom]

No change in design. Developer had trouble getting the price at a point that he could finance the project. Still waiting to see if it happens. Have a meeting with the developer next week, so will know soon.

[Cotuit]

No change in design.

I was wondering that, they'd have to revisit the Design Review Committee if there were any significant changes wouldn't they? That could become a funding problem in and of itself.

[Frankie811]

No change in design. Developer had trouble getting the price at a point that he could finance the project. Still waiting to see if it happens. Have a meeting with the developer next week, so will know soon.

Making the numbers work seems to be a big problem with so many projects built in the city. Why? That is what killed 50 Park Row West.

[Garris]

Making the numbers work seems to be a big problem with so many projects built in the city. Why? That is what killed 50 Park Row West.

I don't think this is just a Providence problem. Keeping up with developments in Minneapolis (which is a far more vibrant and active building scene than ours by an order of magnitude), many projects are being delayed by funding issues (although usually not as long at Capitol Cove... ).

Would some of the many real estate/development knowledgable people here on the boards wish to comment how usual/unusual a huge delay like Capitol Cove is and the mechanics of why things like that happen?

- Garris

[oak]

I'm working on several construction projects in metro-Boston and have received bids for two public construction projects in the last 6 weeks. The competitive bids received for these projects were more than the cost estimates by a huge order of magnitude. My clients were pretty shocked.

A general rule of thumb is that construction prices increase 13% annually. So, a cost estimate prepared by an architect/estimator and then bid months later needs to reflect that anticipated increase. What I've seen and what I'm hearing anecdotally is that construction prices are rising more quickly than historic trends in and around Boston in the last 12-18 months.

Last fall after Katrina, I was working on bid documents for a couple of projects (rehabilitation of an older building and new construction) and the project architects included a line item for the "Katrina Factor." This was the typical pro forma and a line item at the end for unknown construction increases for labor and materials that would be affected by the storm. At the time, I scoffed at this Katrina Factor, but I wonder if there is some truth to it. Nevertheless, construction costs were increasing before the hurricane and subsequent flooding and Katrina may only part of the cause.

[Garris]

My clients were pretty shocked... A general rule of thumb is that construction prices increase 13% annually.

Wow, I'm pretty shocked... I think this is more of an annual increase than the cost of healthcare or the cost of college...

I guess the question still stands, though... Why so much more per year? Is it raw materials, salaries... or something else?

I would also think that this would give developers a huge incentive to get moving fast, which doesn't feel like it's the case... Looking at the Hilton Tower, for instance, the 3 year wait to evaluate the market would mean construction costs on the same building in 2009 would be nearly 45% more than in 2006! It would need quite a market to support an almost 50% jump in costs!

- Garris

[glassandsteel]

You also have to consider that up until last year a lot of developers were taking a "wait and see" stance towards development in this city. The brave hopped in first and some people are still skeptical of whether the current proposals will really bear fruit. Now that some really large scale projects are starting forward progress there's also the factor of potential over saturation, so until this first wave proves to be successful I'd expect investors to be a little wary of diving into an unsure market. If I wasn't too familiar with Providence and was approached with an investment opportunity, I'd be a little wary of pouring my money into a city of 186,000 with almost $2 billion of current projects on the boards unless I had some recent examples to prove that the market isn't already overwhelmed. Now if I personally had $100 million to invest, I'd throw $90 million down on something gorgeous but I suppose you don't usually keep that kind of money with that sort of attitude.

[pete11]

general rule of thumb is that construction prices increase 13% annually

Which thumb would that be? I understand construction costs have gone up sharply the last 27 quarters, but wouldn't it make sense that historically construction costs have tracked core inflation? I think if we took out a calculator, and figured 13% increases on what it cost to build in 1900 and compounded yearly, we would have lots of zeros.

Wow condos not going up due to increased construction costs. Did someone say that in the condo market thread?

[xine]

I guess the question still stands, though... Why so much more per year? Is it raw materials, salaries... or something else?

- Garris

I'd humbly suggest couple reasons, some based on observations, and some on idle speculations with others in the building industry:

1. Suppliers of most building materials since Iraq/Katrina have tacked on additional fuel surcharges to each delievery rather than absorb the fuel cost risks - so oil prices affect both manufacturing of things like those darling vinyl windows (made from petroluem) and the costs for delivery halfway across the country.

2. Rumors abound that huge demand in China (+Dubai, etc) is sucking up the world's capacity of building supplies, especially steel and drywall.

3. Rising health care for small businesses - electricians, plumbers, painters, admins...everyone! - is passed on to the project, affecting construction costs in the labor category.

4. Skilled tradespeople are disappearing (retiring) and are not being replaced. It's impossible to find some trades at any price, and the ones who are available can charge an arm and a leg (just try to find a plasterer!) For example, masons are more plentiful in New England than elsewhere in the country so we don't feel it, but exposed brick is an out-of-reach luxury in lot of places.

5. More Katrina effect: lots of laborers are supposedly moving to NOLA & the Gulf Coast. There's tons of money to be made, if you can find a place to sleep.

6. Simple supply and demand - if there's lots of building going on in the area, contractors can pick and choose which bids they go after. Without the prospect of running out of work, they can inflate the ones they feel are too much trouble (or the ones perceived to have deep pockets) accordingly.

Anyone have any other ideas why building prices are so steep? Design fees are being pinched into dust, so that's not it!

Some days I have a hard time understanding how anything gets built anymore - I worry that we're heading for a painful economic "readjustment".

[Cotuit]

5. More Katrina effect: lots of laborers are supposedly moving to NOLA & the Gulf Coast. There's tons of money to be made, if you can find a place to sleep.

The Katrina Effect actually goes back to the '04 season when Florida was hit repeatedly. The contractors that went to Florida are now migrating to the Gulf Coast so that people who are still rebuilding in Florida are having trouble finding contractors.

[bhooley]

Any news on this? I walk by this parcel a few times a week and don't see much happening. Also is the repaving of the Delta Dental lot related in any way? Probably not but you never know...

[Frankie811]

Any news on this? I walk by this parcel a few times a week and don't see much happening. Also is the repaving of the Delta Dental lot related in any way? Probably not but you never know...

I think the work being done on the Delta property has to do with the Narragansett Bay Comm work on the sewer project that closed Charles St for so long.

[MikeR]

A general rule of thumb is that construction prices increase 13% annually.

Wow. That is a huge percentage increase. The last time I faced this was when I was on Tiverton's High School Building Committee doing a $3.7 million dollar renovation project and construction prices were going up by 3.5% per year at the time (2002). I can't imagine trying to start a multi-million construction project with those increases yearly and trying to make the numbers work all the while.

[Garris]

I think the work being done on the Delta property has to do with the Narragansett Bay Comm work on the sewer project that closed Charles St for so long.

Now that such projects as the Masonic Temple and G-Tech are well underway, is Capitol Cove now the longest running singular "Proposed" project in the city? I remember reading about this way back in 2003...

T minus 3 months on their deadline, correct?

- Garris

[Frankie811]

Now that such projects as the Masonic Temple and G-Tech are well underway, is Capitol Cove now the longest running singular "Proposed" project in the city? I remember reading about this way back in 2003...

T minus 3 months on their deadline, correct?

- Garris

I don't know what to tell ya. I've totally lost all interest in this project. I believe the head of this project is a doctor, Robert Roth of Cambridge, MA.

[Cotuit]

T minus 3 months on their deadline, correct?

The most recent revised deadline, yes 3 months sounds right.

[Garris]

I don't know what to tell ya. I've totally lost all interest in this project. I believe the head of this project is a doctor, Robert Roth of Cambridge, MA.

As a physician, I can say that if it's true the head of this project is an MD, then that explains everything .

I'm still interested in this project just because I think it's one of the most promising pieces of land downtown. It is within sight of the skyline and on the river. It's walkable to the Whole Foods on North Main as well as the mall, downtown, and the train station. Right near Benefit Street. It's got it all.

I always thought that would be the absolute best place for Philly style or Boston style rowhouses, but they'd probably cost a fortune in that locale...

- Garris

[Cotuit]

I'm still interested in this project just because I think it's one of the most promising pieces of land downtown.

It would also finish enclosing the Roger Williams Memorial Park, which would be nice. Canal Street needs a road diet though.

[Frankie811]

It would also finish enclosing the Roger Williams Memorial Park

Oh really! Talk a walk through there some time. Check out all the spent needles on the ground. Also take note of the broken car window glass on South Main St along the sidewalk. Yes, I'm sure the two go hand in hand. I can't believe the police dept. didn't have survelience in this area to catch these people considering the amount of cars that were being broken into to. Probably most of the people were at Olives.

[oak]

Capitol Cove was scheduled to be heard by the Zoning Board last night. The developer appeared, but there was a procedural problem with how the case was advertised and it was continued. It should on the docket in August (August 22).

[KBagley]

Oh that has to suck....

[Garris]

It should on the docket in August (August 22).

T minus 2 months and counting at that point...

- Garris

[DaveRPI]

I really liked the idea for very "thin" residential towers [15-20 stoires] coupled with 4-5 story brownstone-like townhouses and ground floor retail where possible

the thin towers would look great with college hill as its backdrop looking from the west as if at the mall or driving in from route 10 at memorial drive, especially at dusk with people's home lights on in their windows

also, being thin it would minimize blocking views from the "historic-view nazi Nimby's" on college hill

haha, well thats my 2 cents, it wont get you much, but its well thought out atleast

http://images.google.com/imgres?imgurl=htt...hl%3Den%26lr%3D

like these, but with local stylings