Atlantic Yards Modular Dispute Could Have Citywide Echo

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B2, in the foreground, seen in materials on the website of the Empire State Development Corporation.

Photo by: ESDC/FCRC

B2, in the foreground, seen in materials on the website of the Empire State Development Corporation.

The dust-up between Forest City Ratner Company and Skanska is, at its essence, a business dispute involving conflicting claims about a single building. But could the episode have broader implications for affordable housing in the city?

The beef boils down to this: Skanksa and Forest City got together to build B2, a residential tower at the Atlantic Yards site that was to be the tallest structure in the word built with modular construction. But now the two companies are trading barbs over who is to blame for delays at the site, with Forest City pegging it on incompetence by Skanska and Skanska attributing it to flaws in Forest City's designs.

As Atlantic Yards Report's Norman Oder reported today, Skanska claimed in a lengthy early August letter to Forest City that, “It is impossible to predict that the building when completed will perform as designed; and in particular, it is impossible to predict that the curtain wall joints will be and, over time, will remain effective barriers to the passage of air and water.” While Forest City has not responded formally to that charge, it has previously issued assurances that the building is sound.

For those of us without any skin in the Atlantic Yards game, the question isn't just whether Skanksa is telling the truth, but whether any of it has larger implications for the affordable housing potential of modular construction.

Some see modular construction as a potential solution to the always difficult task of building housing that can be supported by low rents and government subsidies. The affordable housing problem in New York isn't just about landlords charging higher rents because the market lets them; the fact is, high rents to some degree reflect the high cost of building in New York City. Building densely, as Mayor de Blasio wants to do, is a way of squeezing more value out of the city's scarce land. But high-rise construction is complex and expensive. Modular offers a chance to build high more cheaply.

According to an early August article in Commercial Property Executive, the Department of Buildings was reviewing more than three dozen applications for permits to build modular structures. Not everyone is enthusiastic about the possibility of a larger shift toward modular building, with some critics concerned about building quality.

It's possible, of course, that there's nothing wrong with the building. It's also possible that even if there is a flaw, it is unique to B2, perhaps reflecting the particular challenges associated with building an extraordinarily tall modular structure. Or the saga there could reveal a systemic problem in the modular approach. In any case, the outcome will affect more than just one structure on the corner of Flatbush and Dean.