Between 2002 and 2010, the United States suffered a 25 percent reduction in the number of manufacturing jobs. Over the same period, New York City experienced a 46 percent loss of approximately 64,000 manufacturing jobs. The high costs of real estate and labor certainly inhibit large-scale mass production operations from remaining in or choosing to locate in New York. But a combination of specific land use policy decisions and speculative real estate development practices has further constrained the supply of industrial buildings and therefore accelerated the decline of the kind of middle class job opportunities that manufacturing has historically provided to New Yorkers: stable, skilled and well-paid. According to the New York Industrial Retention Network (an economic development and advocacy organization that is now a project of the Pratt Center for Community Development), between 2001 and 2008, approved rezonings removed 23.4 million square feet of industrial space from New York City. So, while the assembly line production plants — businesses that don’t benefit from proximity to New York’s markets — have migrated to other parts of the country and the world over the past few decades, a new breed of manufacturers — small-scale, artisanal and oriented to local markets — have struggled to find space to make stuff.
Enter the Greenpoint Manufacturing and Design Center (GMDC), a non-profit industrial developer that over the past twenty years has rehabilitated six North Brooklyn buildings and made more than 750,000 square feet of space available to small manufacturers, artisans and artists. The 99 businesses currently operating in GMDC facilities currently employ over 500 people. In addition to the local economic development benefits, the environmental advantages of retrofitting existing buildings to enable the production of local goods by local workers are huge. The greenest building, after all, is the one you have already. GMDC’s model is starting to receive attention from other cities around the country eager to help bring industrial jobs back to their communities. We sat down with Brian Coleman, CEO of GMDC, to discuss this model, the changing nature of manufacturing and the increasing challenges to making buildings that respond to cultural, demographic and economic shifts in urban industry. –C.S.
How did the Greenpoint Manufacturing and Design Center come to be?
GMDC was founded twenty years ago in order to save the building we are in currently, 1155-1205 Manhattan Avenue, from demolition. The City had repossessed the building from its previous owners for non-payment of taxes. In those years, the City didn’t manage its assets as well as it does today. And so it seemed easier to knock the building down, fence up the property, and save it for another day. My predecessor, who worked for a small local development corporation up the block, got involved in trying to save the building and the sizable concentration of jobs within it. After several years of arm-twisting, political good will and a lot of meetings, we were able to purchase the building for $1 and the City invested $1,000,000 to begin renovations.
The building does have some historical significance. It was built in the 1870s as a jute mill that made rope for the maritime industry. Over the years, as the demand for jute declined, the building was able to conform itself to the manufacturing needs of the day. And throughout, there have been good, solid businesses here that have provided good, solid jobs. The main impetus to protect it from demolition was to save the jobs located here.
Since then, we’ve probably put more than $15 million into the project. We have 70 to 75 tenants here; over 300 jobs in this one facility here alone. And we’ve been able to rehabilitate five other buildings in Brooklyn over the years. The average salary of one of the manufacturing jobs in our buildings is almost $43,000 a year. That’s about twenty thousand dollars more than a job in retail or food service. Manufacturing jobs are still an entryway to the middle class.
Even though the world of manufacturing has changed throughout the U.S., in the Northeast in particular, manufacturing jobs still exist in New York City. Of course, they’re different from what they used to be.
Manufacturing in New York used to be primarily mass production, it used to consist of “widget makers.” Currently, pretty much the only mass production that’s left in New York City is food production.
I like to describe the businesses in our building as “not my father’s or grandfather’s version of manufacturing.” These are small, custom, artisanal, value-added operations that are generally selling a high-end product to a local market. An architectural woodworker might be doing a Park Avenue boardroom, or a luxury condiminium in SoHo or Brooklyn Heights (or now maybe even in Greenpoint). A jewelry maker whose number-one client is Barney’s needs to be close to buyers on Madison Avenue as well as the media outlets based in New York.
Over the years, we’ve witnessed the demographics of our tenants change dramatically. The profile of a typical worker in one of our buildings has shifted from a male in his late fifties with a high school degree to a younger, better-educated set of people using rapidly-advancing technologies and working at the intersection of arts and electronics. 10 to 15 percent of our tenants are actually working artists. And a lot of the manufacturers who work in our buildings also have some kind of connection to art, from high-end woodwork and millwork to costume design and fabrication for the theater.
What does it mean to be the city’s “only non-profit industrial developer”?
We like to think that there are three aspects of our approach that differentiate us from a for-profit developer. The first is cost. Our lease rates are typically 10 to 15 percent below market. The second is that our average lease is five years, which is a much longer lease term than what a typical landlord, who prefers the flexibility of month-to-month or year-to-year leases, would offer. A lot of our newer tenants, we’ve found through surveys, have had to move two or more times in the five years prior to coming to us. The costs of making those frequent moves are a disaster for a small business. GMDC’s lease terms can make our buildings seem like a port in a storm for small manufacturers; a place where the security of a long-term, renewable lease enables them to concentrate on growing their business, on creating jobs.
And the final reason is that we like to describe ourselves as benevolent landlords. Not unlike a not-for-profit affordable housing developer, we’re here in our tenants’ best interest. We’re here to make sure that they have a roof over their head, that they have quality space and the assistance they need.
We’re not feeding the poor; we’re not housing the homeless; our tenants are for-profit businesses. But what we do, not a lot of people do. And it’s harder and harder to do it because we compete in a real estate market that, despite what’s gone on in the world since 2008, is escalating. There’s a shortage of physical stock for us to work with, and I attribute that to speculation of various types; to legal and illegal conversions of industrial buildings to residential uses; and to the increasing demand for warehouse space – much of which is used to store goods imported from, say, China before being distributed to your local 99-cent store.
When it comes to residential conversions, the only jobs that a condominium creates are a doorman and a porter. And when it comes to warehouse uses, we don’t lease space for those operations because they are low-skill or no-skill jobs that pay, if you’re lucky, $10 to $12 an hour, whereas our tenants have employees making $80,000 to $90,000. We want to devote our space to good jobs, and manufacturers create good jobs. You might not get rich working in manufacturing, but you’ll be able to eat and keep a roof over your family’s head, and that’s not something that’s so easy in New York these days.
So, we’re fairly unique. We do have some friendly competitors – the Brooklyn Navy Yard, the Economic Development Corporation’s Brooklyn Army Terminal, for example – that are starting to adopt a model similar to ours by focusing on smaller-scale businesses. Certainly it would be possible to attract larger businesses – Philadelphia, for example, has been building 100,000 square foot facilities for a large-scale baker and for a significant pharmaceuticals entity – but I think New York has decided to prioritize the smaller scale businesses.
How did you get involved in this work?
I was born and raised in Brooklyn; I’ve raised my family here; my heart’s always been here. I’ve spent 25 years working in economic development and real estate, and I have been very lucky to run GMDC for the last nine years. The intersection between the economic development mission and the real estate work offered me the best of both worlds professionally.
It’s a very interesting place to work. We have great, diverse and dynamic tenants. And coming to work every day is both challenging and interesting because it’s a little bit different every day. And at the end of the day we do good work. Our tenants appreciate what we do.
How has GMDC, as an institution, responded to the City’s policy decisions over the past few years that directly affect industrial space? I’m thinking of the rezonings along the Williamsburg and Greenpoint waterfront, of course, but also of the Industrial Business Zones (IBZs) and the Mayor’s Office of Industrial and Manufacturing Businesses?
If I look out my office window, I can see exactly where the 2005 rezoning of much of the Greenpoint and Williamsburg waterfront ends. It literally ends at our building; everything south of us was rezoned, and there was a lot of collateral damage. We were able to help some the businesses that were told they had to relocate – sometimes in a matter of days – but we weren’t able to help them all.
Back in 2005 and 2006, we had a waiting list of 70 businesses that wanted to come into our buildings. With that kind of demand, there was bound to be fallout when so much industrial property ceased to be zoned for manufacturing. We were able to mitigate some of the damage: along with the New York Industrial Retention Network (NYIRN), we were a significant voice working with the City to help shape their thinking about which blocks we thought should be taken out of the proposed rezoning. We were able to win some battles, but at the end of the day not all of the manufacturing in the rezoned area was able to relocate. Most of these small businesses were renters: 20 or 30 years ago, a small manufacturer in North Brooklyn didn’t necessarily need the burdens of property ownership. You made your modest rent payments – manufacturers tend to be on the lower end of the rent scale – and your landlord was happy and you were happy. This was not a rough neighborhood, it was a manufacturing neighborhood, where working class people lived in rented two- and three-family homes and walked to work. Not only have the jobs left the area, but now those homes sell for $1,000,000 and the former residents can’t afford to live here. The rezoning, unfortunately, has caused significant damage. I don’t think any of the manufacturers in this area twenty years ago envisioned that they would lose their homes and workplaces to gentrification.
I think the Bloomberg Administration had a sense, around 2005, that as it was working up to this very large rezoning of industrial land, some protections had to be put in place to help lessen the blow. So the Mayor’s Office of Industrial and Manufacturing Businesses and the IBZs were created. That Office doesn’t really exist anymore, the IBZ budgets have been decimated, and the enforcement of areas dedicated to manufacturing is weak.
But we are certainly encouraged by some things. The Economic Development Corporation (NYCEDC) appointed Miquela Craytor, who was formerly heading up Sustainable South Bronx, to run EDC’s industrial desk. She’s only been there for a few months, but she knows the sector well and we look forward to seeing how EDC will try to grow the number of jobs in the sector. And we are starting to see a little bit of manufacturing come back from overseas, products that need to be made “just-in-time” and therefore can’t be manufactured in Asia. And there are new technologies like 3D printing that are really promising and hopefully will be able to create new jobs.
Nonetheless, we would prefer for manufacturing to be protected with stronger zoning. Zoning is a more powerful instrument than any mayoral office that might be created because it’s more difficult to circumnavigate.
So, even with the environmental protections that we have in place now and the ways in which production has changed, you still think it’s necessary to regulate and segregate different land uses like residential, commercial or industrial?
I do. In areas that are zoned M1 (light manufacturing) or M3 (heavier manufacturing), a wide range of uses are allowed, including big box retail, hotels, certain medical uses. Competing with those kinds of businesses is difficult enough. Competing with speculative residential development in an escalating market is even more so. So, yes, I think zoning – and the strict enforcement of zoning – is still important.
I’m curious about the relationship between industrial development and sustainability. You talked about how in the old days, people would walk to work, and one of the statistics GMDC cites in its annual reports is how many of the commuters to your facilities walk or take transit to work.
We’re really proud of that statistic. Almost two thirds of our tenants and their employees walk, bike or take public transportation to work. Our facilities, we like to say, create jobs for local people. Sometimes, on new projects, people will ask us, “Hey, can you do a LEED building?” And frankly, LEED doesn’t have a category for what GMDC does. We take old industrial buildings and repurpose them for new kinds of industrial uses.
That’s very environmentally sound in itself, but we’ve also been on the cutting edge of green initiatives. We’ve experimented with solar – at one point we had the largest commercial solar power array in New York City. We were involved in commercial net-metering. And we worked with a group of three really smart people to develop the first urban hydroponic farm in the country: 15,000 square feet of space growing and selling commercial produce to Fresh Direct, Whole Foods and other regional retailers.
What do you see as the biggest hurdles to your work going forward?
Our ability to acquire affordable real estate and to create affordable space for small manufacturers. Residential conversions, both legal and illegal, only diminish an already shrinking supply of industrial stock. The rezonings have driven up the cost of real estate. So acquiring a space we can afford, renovating it and offering it to a small manufacturer at an affordable rent is increasingly difficult. And the increasing expenses aren’t just the costs of the real estate. On one property, we had to use some public subsidy and some New Markets and Historic Tax Credits (PDF) to make the deal work. The legal bill for the tax credit transaction alone was in excess of $500,000. We have to use these increasingly exotic and expensive, though useful, tools. And more expensive transaction costs means it’s that much more difficult for us to offer a $12, $14 or $16 per square foot rent that a cabinet maker, jewelry maker or glass maker can afford.
Do you think the kind of businesses that GMDC serves, with all of the changes that you have described, require the same building typologies as earlier generations of industry and manufacturing?
Most modern manufacturers would look at the typical building GMDC utilizes and say that it’s useless, because most modern manufacturing – whether in an American suburb or abroad – is horizontal, not vertical. We’ve been able to take what most people believe are basically obsolete buildings and re-tenant them with niche industries that can work on the third, fourth or fifth floor.
And over the past 12 to 24 months, our model has been attracting more attention. When President Obama starts talking about manufacturing jobs in his State of the Union address, there is all of a sudden more interest in what GMDC does and how it does it. A lot of communities nationwide want to bring manufacturing back, and we are currently working on projects in Philadelphia and St. Paul, Minnesota that are the beginning of our work to help other groups around the country to replicate our model.
All images courtesy of the Greenpoint Manufacturing and Design Center.