U.S. art and manufacturing are on the rebound, but New York City may not have the space

U.S. art and manufacturing are on the rebound, but New York City may not have the space

U.S. art and manufacturing are on the rebound, but New York City may not have the space
October 26, 2015

For decades, the draw of cheap labor and lower environmental standards fueled a massive exodus of manufacturing from the United States. Nowhere was that felt more sharply than in New York City, where in 1910 manufacturing accounted for 40 percent of all jobs. According to “Engines of Opportunity,” a report put out last November by City Council Speaker Melissa Mark-Viverito, those kinds of jobs account for just 10 percent of the city’s private-sector workforce.

Experts say expanding the city’s manufacturing and industrial base is critical to closing New York City’s widening income gap and ameliorating its affordability crisis because jobs in these sectors pay far more than jobs in the service sector. The City Council analysis noted that jobs in manufacturing and industrial production pay on average $51,000 a year, “more than twice the average pay” in the retail, hospitality and restaurant sectors, where most of the post-recession job growth has been concentrated.

Thanks to the confluence of cheaper energy prices and the growing demand for higher wages and environmental standards in China and emerging markets, there are signs of a potential revival of American manufacturing. But elected officials are concerned that the city won’t get to participate in this rebound because the kinds of spaces it would need to take root are being gobbled up by a residential real estate market that is serving a wealthy global clientele willing to pay any price to have a tony New York City address.

Last month, Manhattan Borough President Gale Brewer and City Councilwoman Margaret Chin highlighted this trend in the SoHo and NoHo neighborhoods when they wrote to Carl Weisbrod, chairman of the city’s Planning Commission, about the loss of once-protected industrial properties and loft spaces where artists had been legally permitted to live and work. “A continuing flood of special permits and variances” have been issued by the city, which raise “serious questions about planning strategy for the neighborhood,” Chin and Brewer wrote.

“The big push is for luxury condo development and big-box retail,” Brewer said in a phone interview. “We want to preserve these great spaces we have for artists and expand the definition to include light manufacturing like 3-D printing because those jobs pay more, and in the process we preserve the unique character of SoHo and NoHo.”

Nowhere is this tension between a neighborhood's manufacturing legacy and the pressures of redevelopment more pronounced than in the city's Garment District. Once a global epicenter for the apparel and textile industry, this section of Manhattan is at risk of disappearing under the same pressure felt in SoHo and NoHo. 

Back in 2010, designer Yeohlee Teng was profiled in The New York Times’ fashion section for her decision to make a stand in the storied district with a street-level design shop supported by an upper-floor production area that employed a dozen people assembling her unique creations. 

Teng told City & State the conversion of former garment industry space to other uses has only accelerated since her Times profile. “I was forced to relocate my store to Yeohlee, New York, which was the first freestanding store with Made in N.Y. (the Garment District) fashion designs."

Teng says the most promising development on the horizon is an effort by the Municipal Art Society, on whose board she sits, which is teaming up with other stakeholders to “gain support to convert a few buildings within the garment district into manufacturing co-ops.”

City data suggests the size of Teng’s shop is similar to the majority of the city's manufacturers. Both the artisanal movement, like beer brewing and ethnic food production, and the new generation of tech start-ups have managed to get some traction.

But advocates say there’s reason to worry if their business takes off and they have to expand.

As the city’s residential and retail real estate market skyrocket, even successful manufacturers looking to expand are hard-pressed to find a place to go in the five boroughs, said Oliver Lednicer of the Manufacturers Association of New York City. “The building owners are warehousing these buildings on speculation that something else more lucrative might come along,” said Lednicer. “If you’re a manufacturer and you have to think about moving heavy equipment and making the capital investment to upgrade a new site, it’s hard to get a landlord to give you anything but a short-term lease, so unfortunately they leave the city and New York state.”

The boom in residential real estate has even had an impact on manufacturers fortunate enough to own their own spaces, according to Kinda Younes, the executive director of the Industrial & Technology Assistance Corporation, a nonprofit that works with the city’s manufacturing sector. “Some manufacturers say they get to a point where their production facility that they own is worth more for residential use and so that contributes to this scarcity of industrial space,” Younes said.

“The reality is the space is always going to go to the highest bidder,” said Evette J. Stark, a sales agent with Weichert Properties’ Rockefeller Center office. “The demand is for triple-A tenants, those corporate, national and regional players who are more creditworthy so landlords don’t have to worry about collecting.”

Stark says landlords are feeling the impact of both higher property taxes and water and sewer charges that have shot up exponentially over the last 20 years. “If you have a large building with 30 apartments above four stores you’ll see those retail spaces will have leases where they are paying a portion of the water and sewer charges as well as the property tax,” she said.

Stark concedes that the rental landscape is tilted to the banks, drug stores and national retail chains because not only can the landowner get more rent but “the inherent value of a building goes up when you have a corporate tenancy, an entity rated by a Dun & Bradstreet.” Stark says this bias to corporate tenants has an impact on community cohesion that exists when there is a greater variety of locally based businesses, artisans and tradespeople present. “These big companies are not going to be sponsoring the neighborhood Little League,” she said.

“We are seeing tremendous economic pressure on the remaining industrial and manufacturing properties, and if we continue to lose these places we will see the continued erosion of local good-paying jobs that people can walk to,” said Eddie Bautista, executive director of the New York City Environmental Justice Alliance. “But it is not just about jobs. Well-run industrial and manufacturing zones that don’t degrade the environment can actually hold back gentrification, that kind of luxury development that drives out working-class people of color.”

This crunch on industrial space is on Mayor Bill de Balsio’s radar, according to a spokesperson for the administration.

“We are laser-focused on getting modern manufacturers the space and the workforce they need,” said spokesman Wiley Norvell. “This is an industry that’s reinvented itself through technology, and we’re supporting its growth in (New York City) with new spaces in places like Sunset Park and the Brooklyn Navy Yard, and investing in workforce training that matches firms with homegrown talent."

In November 2014, de Blasio announced the city was investing $140 million into the renovation of Building 77 in the city-owned Brooklyn Navy Yard to accommodate up to 100 prospective manufacturing tenants who were projected to create 3,000 new jobs on site. The former 1 million-square-foot, 16-story ammunition depot was slated for a total upgrade with new elevators, windows and state-of-the-art building mechanical systems.

“This is a pivotal facility, and what will be created here will be beautiful, environmentally friendly, 21st-century workspaces, ideal for next-generation enterprises,” de Blasio told reporters at a press conference.

The sprawling 300-acre Navy Yard itself encompasses 4.5 million square feet with 40 buildings. During the Bloomberg administration the city committed $200 million to the site, and between 2001 and 2013, employment there spiked from 3,600 to 6,400.

The de Blasio administration is investing $100 million in the Brooklyn Army Terminal./a katz

In July 2014 the de Blasio administration also announced a $100 million investment in upgrading Sunset Park’s Brooklyn Army Terminal. The sprawling 4.4 million-square-foot waterfront complex was sold to the city by the federal government in 1981. In making that announcement, de Blasio linked the importance of nurturing a vibrant manufacturing sector with the creation of well-paying jobs in neighborhoods “where working-class residents pay rents they can afford, then walk to stable jobs generated by a blossoming small manufacturing sector.”

Also on Sunset Park’s waterfront sits Industry City, a 30-acre, 16-building complex formerly known as the Bush Terminal. In 1895 it was the visionary developer Irving Bush’s concept of creating a manufacturing campus serviced by both rail and marine transport that put Brooklyn on the map as a major international seaport. Billed as a “great industrial city within a city,” it at one time employed 25,000 people and was home to a wide variety of manufacturers, including Topps Baseball Cards.

Over the years, as they were priced out of Manhattan, artists found sanctuary and affordability in Industry City, which was hit hard by Superstorm Sandy. In October 2013 the vitality and diversity of this community was put on display in an art show entitled “Come Together: Surviving Sandy.” The online catalogue of that show vividly depicts the essential connection between the availability of affordable, expansive spaces and the proliferation of art.

But back in August 2013, Jamestown Properties, the developer of Manhattan’s Chelsea Market, bought an interest in Industry City, and according to its website, plans to transform the “ground floor and lower levels into a pedestrian friendly series of shops, showrooms, event spaces and courtyards, loosely organized around themes such as food and food production, children and family, and home goods, while providing ample loading docks and service ground for upper floor innovation economy and manufacturing tenants.” Jamestown’s partners in the project are Angelo, Gordon & Co., Belvedere Capital, Cammeby’s International and FBE Limited.

By January 2014, The New York Times was reporting that despite that widely acclaimed “Come Together” art show, “dozens of artists who had studios in Industry City were packing up their oil paints and brushes and leaving. Rents were rising, and many could not afford to stay.”

In reality, manufacturers and artists caught up in this diaspora have a lot in common. Consider the challenge faced by Gelsey Kirkland and Michael Chernov, co-directors of the Gelsey Kirkland Academy of Classical Ballet, who in 2010 set up their dance space at 355 Broadway in Tribeca only to find out last year they had to find a new location so the site could be residentially developed.

“We had to find a space big enough for 30 people to dance without columns, with ceilings high enough to accommodate lifts and leaps,” said Larry Henry, executive director of the ballet academy. Months later the school, which also includes a professional performing company, was re-established at the former site of St. Ann’s Warehouse, a performing arts venue in Dumbo, Brooklyn.

Erez Milatin of the Gelsey Kirkland ballet academy rehearses in the group’s new space./Travis Magee

But even at the new location, which includes a theater and four freshly renovated state-of-the-art dance studios, the ballet school and performing company only have a five-year lease. “We could actually get kicked out in two years,” said Henry. “(New York City) can’t keep losing all the things we are the capital of. We say we are the capital of dance and fashion but we are turning the spaces where we do these things into residences. We’re turning into the world capital of apartments.”

Bob Hennelly
is a reporter for The Chief Leader.