Crains New York - November 26, 2012 - (Page 20)

REPORT R EAL ESTATE Insurance hikes Continued from Page 15 “Because of the number and size of claims, now the excess carriers are suffering huge losses,” Mr. Colao said. As a result, most require what he terms “a buffer policy” that goes up to $5 million, at a cost of “up to 10 times’’ the previous rate for that intermediate level of coverage. Arthur Rubinstein, the owner of Brooklyn-based Skyline Steel Corp., got the bad news over the summer. “We were required by our customers, who are some of the larger contractors,to increase liability [coverage] from $1 million to $2 million per occurrence,” he said. Skyline is paying the equivalent of 11% of sales after adding the layer of coverage, up from 3.7%. Skyline’s bill jumped despite an “above average” safety record, Mr. Rubinstein said. “No one has canceled any projects; it just makes it more expensive to develop,” said Ken Levien, founder of Levien & Co., which retains contractors on behalf of property owners. “Rental or sales costs will be higher. It has an inflationary effect.” The law behind the costs The state’s so-called Scaffold Law, which holds the builder or subcontractor liable even when an injured employee failed to comply with the company’s safety training, looms large as the main culprit for the skyrocketing insurance costs, said Lou Colletti, president of the Building Trades Employers’ Association. He said the higher cost resulting from the law—the only one of its kind in the nation—could put some smaller subcontractors out of business or possibly even prevent contractors from moving ahead with projects. Attempts to change the law, to hold an employee partly liable for injuries caused by his or her own malfeasance, have died in Albany amid lobbying by trial lawyers and unions, who argue against watering down worker protections. “The law puts the burden where it should be, on those who have control of the workplace,” said Joel Shufro, executive director of the New York Committee for Occupational Safety and Health,a nonprofit coalition of unions, doctors, lawyers and health safety activists. “New York has always been a state where we place a value on the lives of the people who work here.” Assemblyman Joseph Morelle, a Rochester-area Democrat who has championed reform of the Scaffold Law for more than a decade, is introducing a bill again this year that would allow owners, contractors, subcontractors and insurers to cite an employee’s negligence as a defense. Posing additional uncertainty for insurers is something called the “horizontal exhaustion” issue. It stems from a 2008 New York appellate court ruling on liability for the death of a worker who fell down an elevator shaft during the construction of a Bronx court building. In that case, the judge ruled that the excess coverage held by the worker’s employer shouldn’t kick in until after the primary insurance policy held by the building owner and that of the construction manager, Bovis Lend Lease, had been exhausted. DEALS Classic Watch resets its lease clock Higher premiums As a result of that ruling, some primary insurers say they have no choice but to raise premiums to reflect their increased risk from claims against other companies working on the same project as their own clients. Julian Erlich, senior vice president in the claims department at AON Construction Services Group, said trade contractors could mitigate horizontal exhaustion risks by getting endorsements from their insurers stating that their excess coverage would kick in before the owners’ and general contractors’ primary policies could be tapped. The costs of such insurance, which some general contractors are requiring, vary depending on the trade contractor’s history, he said. In some cases, the endorsements are “there for the asking,” but in others they may be costly or unavailable. “To some extent, everyone is in it together,” Mr. Erlich said. The bad news, however, is that in the wake of the estimated $33 billion in destruction wrought by Superstorm Sandy in New York state alone, any hope of insurers cutting rates for contractors is remoter than ever. A Classic Watch Company Inc. is staying put at its garment district headquarters office. The manufacturer of watches has renewed its lease for 14,300 square feet at 10 W. 33rd St., between Fifth and Sixth avenues, for 10 years. The asking rent was $39 per square foot. “They were comfortable there,” said David Levy, a broker at Adams & Co. who represented the tenant and landlord Ten West Thirty Third Associates. “Why fix what’s not broken?” The firm has been located in the building, known as the Fashion Accessories Center, for 10 years. The office building is home to a number of accessory companies, most notably Steve Madden and Hobo. Buyers tend to come to the property and “spend the entire day there” visiting different manufacturers, said Mr. Levy. —amanda fung D’Avola of Arena Properties represented both the tenant and landlord Glen Maranga in negotiations for the Sunset Park space. —adrianne pasquarelli B’klyn baker has a lot in the oven A new kitchen is rising up in the sprawling Bush Terminal in Brooklyn’s Sunset Park. Bien Cuit, a bakery that launched in Boerum Hill last year, has inked a 10-year deal for 5,000 square feet at 4502 Second Ave. The asking rent was $14 each. The new kitchen will be used to increase production, which is wholesaled to restaurants and retailers. Bien Cuit, which recently received a loan for its wholesale business from the Partnership for New York City Fund,should open its new digs early next year. It selected the site in part because of its proximity to the Boerum Hill location on Smith Street, according to Michael Dulle, operations manager. The bakery will also open its first Manhattan location at 35 Christopher St. in December. Greg Spirits soar in Flushing Just in time to lift spirits for the holidays, a new liquor store will open in Flushing, Queens. N&S Wines signed a 10-year lease for 4,000 square feet at 58-50 Francis Lewis Boulevard, replacing a Capital One Bank branch. The shopping plaza also houses a diner, a Waldbaum’s grocery store, and several smaller stores. The asking rent was $45 per square foot. Grant Dolgin of Kalmon Dolgin Affiliates represented both N&S Wines and building owner Crosspath Realty. —ali elkin BARE BONES 1361 AMSTERDAM AVE. ASKING RENT; TERM: Undisclosed; 15 years SQUARE FEET: 23,000 TENANT; REP.: Avantus Renal Therapy; Carol Sacks of ABS Partners LANDLORD; REP.: Janus Properties; Arthur Draznin of Newmark Grubb Knight Frank BACK STORY: Kidney dialysis company will take the entire second floor and part of the ground floor in the fivestory office building, according to The Commercial Observer. 205 HUDSON ST. ASKING RENT; TERM: $32 per square foot; three years SQUARE FEET: 28,800 TENANT; REP.: One Kings Lane; Peter Gross of Williamson Picket Gross Inc. SUBLANDLORD; REP.: TheLadders.com; Marc Shapses of Studley Inc. BACK STORY: The tenant, which hosts online sales of home decor products, is expanding its footprint in the building to nearly 50,000 square feet, according to The Commercial Observer. 1370 SIXTH AVE. ASKING RENT; TERM: Mid-$70s per square foot; 10 years SQUARE FEET: 27,000 TENANT; REPS.: VCS; Rika Lissio and Jeffrey Rosenblatt of Newmark Grubb Knight Frank LANDLORD; REPS.: Principal Investors; Paul Amrich and Kerry Powers of CBRE BACK STORY: The footwear company leased the entire eighth and 15th floors and part of the ninth floor, according to The Real Deal. 20 | Crain’s New York Business | November 26, 2012 http://www.TheLadders.com http://www.popularcommunitybank.com http://www.popularcommunitybank.com

Table of Contents for the Digital Edition of Crains New York - November 26, 2012

Crains New York - November 26, 2012
IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
OPINION
ALAIR TOWNSEND
GREG DAVID
SMALL BUSINESS
REPORT: REAL ESTATE
THE LIST
REAL ESTATE DEALS
CLASSIFIEDS
FOR THE RECORD
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - November 26, 2012