Lendlease is continuing its efforts to pull out of or wrap up its international work. This month, the company completed the sale of its New York and New Jersey business and struck a deal with the city of San Francisco over a long-stalled project.
In May, the Australian-based developer and builder announced it would exit international construction and development within the subsequent 18 months. The company said the move would free up 4.5 billion Australian dollars ($3 billion), allowing it to focus on domestic operations.
As part of the process, Lendlease said it planned to divest from projects and remove regional managerial structures to reduce the number of full-time employees outside of Australia by 1,400.
On Monday, Milford, Massachusetts-based Consigli Building Group announced it had completed the purchase of substantial portions of Lendlease’s construction operations in New York and New Jersey.
The sale for an undisclosed amount includes a portfolio of 45 current, under construction and pre-construction projects valued at over $1.8 billion, according to the release. Additionally, more than 400 Lendlease employees — the majority of the firm’s U.S. workforce — will transition to Consigli.
In the release, Consigli said the acquired workforce will provide it with invaluable knowledge and capabilities on work in the greater New York market.
“Consigli’s commitment to excellence and aligned values mean our people have found a great home at Consigli, and their expanding construction portfolio continues with exciting future opportunities,” said Claire Johnston, CEO Americas for Lendlease, who will remain with the company.
Mixed-use tower agreement
On the other side of the U.S., Lendlease reached a deal to keep its Hayes Point project alive. The 47-story mixed-use tower in San Francisco is the firm’s largest investment in the U.S. The company paused the project in 2023, due to compounding financial restraints.
But last week, the company formed an agreement with city officials to continue work on the troubled development, the San Francisco Chronicle reported. The deal will remove the city’s 25% affordable housing requirement.
The tower, which will feature 333 condos and 290,000 square feet of office and retail space, will no longer encompass the 83 affordable homes originally envisioned — instead, they’ll be built as market-rate units, the Chronicle reported.
When the company started the $1.15 billion project in 2022, eyeing a 2027 completion date, it was the largest new construction job in the city since the start of the COVID-19 pandemic. Work on the project stopped and resumed multiple times, the Chronicle reported.
Johnston told the Chronicle that, as part of the company’s development agreement with the city, Lendlease was required to pay over $40 million in impact and other fees, including $13 million for affordable housing, owed separately from the 83 units Lendlease agreed to build.
By getting rid of the requirement, Johnston said the $40 million fee “essentially represents a large overpayment,” the Chronicle reported.
“Rather than have those funds returned by the city, we are seeking to simply have the $40 million, along with all of the other fees we have already paid, be considered as our total affordable housing offering,” Johnston told the Chronicle, saying, that gives “us a viable chance to succeed once the market normalizes.”
San Francisco’s planning department and board of supervisors will review the agreement in the coming months.