Building Trades News

Phase II of Union-Built Office Complex Underway

By Beige Luciano-Adams
Contributing Writer

Following the first phase of a development that Building Trades Council Executive Secretary Richard Slawson heralded as “an anchor in the midst of the downturn we’ve seen in the construction industry,” craftsmen have set to work on phase two of the Horizons Project at Playa Vista.

A joint venture of Lincoln Properties Company and ASB Real Estate Investments, with additional funding from the (fully-unionized) Ullico Investment Company, Horizons is being built under a 100-percent union labor agreement – and promises to provide a solid return for members’ pension funds.

But construction on the high-tech, state-of-the-art office facilities in the coveted westside stretch of Playa Vista has been pared back in response to an uncertain economic climate. With the construction industry still flailing, even this promising project has taken a hit.

Earlier estimates had attributed about 1,500 full year, union construction jobs or 3 million man hours to the project, according to Ken Meister, a Ullico representative. Since BTN last reported on the project in April, says Rusty Roten, business representative for IBEW Local 11, “everything has been cranked down considerably.”

According to Roten, Fox Interactive, the cornerstone tenant that inked a landmark deal with the developers to pre-lease the first phase of the development, has scaled back its plans. IBEW was originally awarded a bid for 70 workers on the first building – which was then cut in half.

“We were earmarked for 35 workers, then they just shut down three of the four floors, and are giving us bits and pieces now,” says Roten, who estimates about 20 men are currently on the job from Local 11.

What “started out gangbusters,” he says, is now “bare bones minimum.”

And while questions of scale still remain around the first building, phase two – consisting of two more 5-story office buildings and parking structures – which developers are hoping will attract another A-list tenant, has similarly been rolled back to basic infrastructure.

According to Roten, structures in the second phase will “just have basic rooms, blockouts, sleeves. They’re just gonna leave the opening in the floor, then they’ll proceed with development if they get a tenant,” he says.

The electrical subcontractor IBEW 11 had on the job, which was just working on data and communications hookups, was even sent home.

“They got scaled back so far back – they locked up the gang box, moved them off [site]. They were told ‘move off until we call you back.’”

With Fox scaling back and no tenant(s) materializing for the second structure, Roten says developers are just unsure about how to proceed, and “not ready to really commit and fund that project,” at least to the extent that many had first anticipated – and at least for the time being.

“We were hoping the summer would pick up,” says Roten, noting that while the government releases the occasional hint at recovery, “construction is always the last to feel the wave.”

Also on site are Structural Ironworkers from Local 433 and Reinforcing Ironworkers from Local 416. Local 433 members have begun erecting the structural steel for the two five-story buildings on the project.

About the Developers

ASB is a union pension fund advisor with more than $3.1 billion in gross assets in 87 properties throughout 28 major U.S. markets. Through reliable local partnerships, the company invests union pension funds in 100-percent union developments to ensure the highest quality of construction and longevity. ASB has partnered with Lincoln Properties Company on several previous developments.

Founded by unions more than 85 years ago to create life insurance for members, Ullico is now the nation’s only fully-unionized provider of multi-line insurance, financial services and administrative products. Ullico also sponsors union investment in construction jobs that creates jobs for building trades members. Playa Vista is one of 53 projects currently underway in Ullico’s national portfolio.

Despite the downturn, says Meister, the company is pushing forward with construction loans. “We’re loaning on 70-percent on the value,” he says.

And while much of the equity money that would normally go into a project is no longer available, accounting for a marked slowdown, Meister says that the company’s mortgage fund, founded 40 years ago, has $3.4 billion – 100 percent of which is currently invested.