The developer behind a stalled $38 million apartment complex near the University at Albany has filed a lawsuit against the project’s architect, claiming the building as currently designed fails to meet fire and safety codes and constitutes a major hazard.

The lawsuit, filed by New York City-based DMG Investments, accuses Rochester-based Razak Associates of “breach of contract and negligence” for allegedly delivering design work that was incomplete and noncompliant with state regulations, according to WRGB Albany.

“In the lawsuit, New York City-based DMG Investments states that the architect, Rochester-based Razak Associates, failed to provide drawings or designs for the Air Albany project that ‘met all code and legal requirements.’”

Court documents also allege that the building is a fire hazard, citing the use of wood studs that are not fire-retardant.

“It also states that the building constitutes a fire hazard as it does not incorporate fire-retardant wood studs,” according to WRGB.

DMG Investments is seeking $2.5 million in damages from Razak to correct the alleged defects and move the project forward. Representatives from both firms did not respond to requests for comment from Multifamily Dive.

Project Stalled, Contractors File Liens

The Air Albany project, a 137-unit multifamily development, broke ground in 2020 but came to a halt in 2023, per WRGB. Since then, the project has faced mounting challenges. Several contractors have filed millions of dollars in liens against the property, according to the Albany Times-Union.

While the building has been topped out and fully enclosed, only a portion of its windows have been installed. The project’s construction permit expired in February 2025, and the official project website continues to list a Spring 2025 opening, despite the lack of visible progress.

“Construction at Air Albany began in 2020 and stopped in 2023, according to WRGB. Several contractors filed millions of dollars in liens against the property that same year, according to the Albany Times-Union.”

Tax Incentives in Jeopardy

The legal dispute has triggered additional scrutiny from the City of Albany’s Industrial Development Agency (IDA). Shortly after DMG filed the lawsuit, the agency sent a letter to the firm stating it was in default of its project agreement, which required the development to be complete by August 21, 2024.

“Shortly after the lawsuit was filed, Albany’s Industrial Development Agency sent a letter to DMG Investments stating that the company was in default of its project agreement, which required the property to be complete by Aug. 21, 2024, according to the Albany Times-Union.”

The letter warned that if DMG fails to correct its default within 30 days, the $14 million in tax exemptions granted to the project in 2020 may be revoked.

Background on DMG and the Air Brand

DMG Investments, which manages $700 million in assets, has developed properties across six states including New York, New Jersey, Texas, Tennessee, Wisconsin, and South Carolina. The Air Albany property is intended to be the second project in its "Air Living" brand. The first, Air Buffalo, opened in Buffalo, New York in 2022.

“DMG Investments has $700 million in assets under management at more than 10 properties… Air Albany is the second of two properties in the developer’s Air Living multifamily brand — the first, Air Buffalo, opened in Buffalo, New York, in 2022.”

However, Air Albany is no longer listed on DMG’s portfolio page, raising further questions about the developer's ongoing commitment to the troubled site.

Originally reported by Mary Salmonson in Multifamily Dive.