PHILADELPHIA | W Hotel & Element by Westin | 617 FT | 51 FLOORS

[Knight Hospitaller]

Originally Posted by Baconboy007

Don't give away the answer.

Hint: It's where the guy is digging out of the cellar with a spoon.

[Baconboy007]

Originally Posted by Knight Hospitaller

Hint: It's where the guy is digging out of the cellar with a spoon.

That's some strict historic renovation guidelines.

[summersm343]

Update from Building Philly



More photos here:
https://www.facebook.com/BuildingPhilly

[1487]

when are they going to haul that scrap steel and concrete off the site? I dont know how they can get anything done with so much crap sitting within the construction zone.

[thisisforreal]

Nov 18th:


Nov 23rd:

[Knight Hospitaller]

This is like the man-made version of 1601 (with respect to subterranean obstacles, that is). Can't dynamite here.

[Arch+Eng]

They picked some site to develop on.
Their profit margins must be HUGE in order for them to still feel like this project is worth while. They are likely spending $10-20k a day, and I see no progress.

They even found waldo down there.

[Baconboy007]

First time I've spit coffee on my monitor in a while, nicely done thisisforreal

[thisisforreal]

Originally Posted by Arch+Eng

Their profit margins must be HUGE in order for them to still feel like this project is worth while. They are likely spending $10-20k a day, and I see no progress.

Every dollar spent so far on the unexpected discoveries is a sunk cost and should not factor in the decision to continue forward. The only thing that should impact the viability of the project is the estimated new costs that have been discovered but not yet tackled. I guess if they foresaw 4 months ago that they'd be where they are currently, then yes their margins must have been healthy. Otherwise, sunk costs are sunk - wouldn't matter if they cancelled and try to sell to someone else, I would estimate the ROI for the extra work would be around 0.

If someone with experience in real estate pro formas can speak up (I did 2 exercises in college, that's all), I'd love to hear some other voices in the matter.

[Arch+Eng]

Originally Posted by thisisforreal

Every dollar spent so far on the unexpected discoveries is a sunk cost and should not factor in the decision to continue forward. The only thing that should impact the viability of the project is the estimated new costs that have been discovered but not yet tackled. I guess if they foresaw 4 months ago that they'd be where they are currently, then yes their margins must have been healthy. Otherwise, sunk costs are sunk - wouldn't matter if they cancelled and try to sell to someone else, I would estimate the ROI for the extra work would be around 0.

If someone with experience in real estate pro formas can speak up (I did 2 exercises in college, that's all), I'd love to hear some other voices in the matter.

I am not sure about the real estate side, but I can tell you about construction.

If they have 4-6 union workers on site. Thats approximately $4-6k/day.
Looks like ~3 equipment trucks on site ~$2k-4k
(2) Lane closures (in center city) ~ $2,000/day
Add in utilities, tools & gas etc.

They are in the $10k - $20k range a day. They haven't made progress in months because of these unforseen conditions. Do the math. Thats insane.

[1487]

Originally Posted by Arch+Eng

I am not sure about the real estate side, but I can tell you about construction.

If they have 4-6 union workers on site. Thats approximately $4-6k/day.
Looks like ~3 equipment trucks on site ~$2k-4k
(2) Lane closures (in center city) ~ $2,000/day
Add in utilities, tools & gas etc.

They are in the $10k - $20k range a day. They haven't made progress in months because of these unforseen conditions. Do the math. Thats insane.

I'd say its same to assume around $100/hr per worker- and that is being generous for guys doing site work. So it would be less than $1000/day, but still expensive. What matters is what they have spent and will spend vs what was in the budget for excavation. Obviously we don't know what they estimated for this work so we can't guess how far over budget they may be. But it's hard to believe they expected so little progress after this amount of time. When did the digging start?

[ConstructStudent]

Originally Posted by 1487

I'd say its same to assume around $100/hr per worker- and that is being generous for guys doing site work. So it would be less than $1000/day, but still expensive. What matters is what they have spent and will spend vs what was in the budget for excavation. Obviously we don't know what they estimated for this work so we can't guess how far over budget they may be. But it's hard to believe they expected so little progress after this amount of time. When did the digging start?

The on-site labor during this duration will be some of the lesser costs. For example on a project this size you have roughly $175K - $200K in costs just for the construction manager. Also think the glass is most likely coming from out of the country. The costs for renting a warehouse is extremely costly. The major costs occur down the road not just right now.

[Arch+Eng]

Originally Posted by 1487

I'd say its same to assume around $100/hr per worker- and that is being generous for guys doing site work. So it would be less than $1000/day, but still expensive. What matters is what they have spent and will spend vs what was in the budget for excavation. Obviously we don't know what they estimated for this work so we can't guess how far over budget they may be. But it's hard to believe they expected so little progress after this amount of time. When did the digging start?

No, I am talking about REAL COSTS. Not what the actual worker gets, You have to pay FUTA, SUTA, Workers Comp, Fringes, health & pension, etc.. NONE of that is directly to the worker, but all of that is paid hourly. They only get $40-$50/hr. So it IS $1000/day/man ..approximately. Trust me...I know.

Currently paying these rates

[1487]

Originally Posted by Arch+Eng

No, I am talking about REAL COSTS. Not what the actual worker gets, You have to pay FUTA, SUTA, Workers Comp, Fringes, health & pension, etc.. NONE of that is directly to the worker, but all of that is paid hourly. They only get $40-$50/hr. So it IS $1000/day/man ..approximately. Trust me...I know.

Currently paying these rates

yes, fringes, I'm aware of that. I wasn't indicating that was their hourly rate. I see the rates all the time. Their hourly rate may only be 65-70% of the full cost of compensation. Electricians are over $100 right now. I'm not sure about the guys doing this work, not sure if they classify as laborers or what.

[kraggman]

The big thing here to consider is that for every week/month they waste cleaning up this hell hole, is a week/month of hotel income lost.
I'm looking at the other end of the equation. It's got to be huge. Un-budgeted cost of cleanup/prep + lost income at project completion due to delays. $$$$$$$

[jsbrook]

Oh, Jon Snow, you know nothing. C'mon guys. Hasn't the speculation on the delays and impact on the bottom line gotten a bit out of control? This is moving. Slowly (very slowly) but surely. Until there's real excavation and even moreso until it begins to climb, not much to see here.

[Arch+Eng]

Originally Posted by jsbrook

Oh, Jon Snow, you know nothing. C'mon guys. Hasn't the speculation on the delays and impact on the bottom line gotten a bit out of control? This is moving. Slowly (very slowly) but surely. Until there's real excavation and even moreso until it begins to climb, not much to see here.

The owner doesn't have a infinite source of money. The point is, if they continue to encounter unforseen problems underground, this project will NOT be moving and will stop. I think that is a fair and interesting discussion. There will be a point where the break even point is too large for this to be financially feasible.

[iheartphilly]

One thing is for sure, they aren't looking for California gold.

[Chubbs Peterson]

Arch + Eng, I saw you say this could be costing ownership $10k-$20k. That is a small number compared to the price tag on this thing. Could sell upwards of $300 million($600k/room) if their plan is to sell. Westin at liberty place sold for $492k per room in 2010 soo $600k/room is feasible. An extra year of digging at $20k per day is only $7.3 million in extra costs. As long as the RE market stays hot in Philly which I think it will, the project is worth it for the developer to push through.

Also, if they are holding for the long term, I've seen that developers usually look at "development yield" (Proforma NOI divided by Total Costs) to see if a project is feasible. These additional costs don't affect yield substantially enough to stop building because of how large the numbers are. Initial yield is NOI/costs. Say the project costs $240 million. Hotel avg noi in the US is $20k per room, so $10 million for the W. Initial yield equals 10/240 = 4.16%. If it took an extra year like before, Initial yield equals 10/247.3 = 4.04%. The change is minimal. Also, those are are made up numbers to prove a point, I don't know what the actual projected costs and projected year 1 NOI are.

[1487]

I went by there today. The coring for caissons continues on the eastern side. They have installed additional shoring beams on the north side near the RARC. Progress continues...