A few years ago, Brian Coleman was leasing up some newly renovated industrial space at 1102 Atlantic Avenue in Brooklyn. One prospective tenant came in looking for office space in a nice vintage industrial loft-type setting. After some back and forth, Coleman told him he wasn’t a good fit.
“He said to me, ‘what do you have, a mission?’ and I said exactly, we do have a mission, and you don’t fit our mission,” Coleman recalls. “He was frustrated with me. Most real estate people will lease to anyone who can give them a check, but we’re not that type of real estate operation.”
Coleman is CEO of the Greenpoint Manufacturing & Design Center. As a nonprofit, its mission is to create and sustain viable spaces for manufacturing—for businesses that make stuff—in urban neighborhoods.
The nonprofit’s tenants include Twoseven Inc., which builds store window displays, retail interiors, and showrooms for high-profile fashion companies in New York City and around the world. There’s also Designs by Robert Scott, which makes custom woodwork for kitchens, panel systems, and architectural built-in millwork, and Alchemy Paintworks, which provides spray coating services for art and industry, specializing in paint finishing for metal sculpture. Some businesses have grown larger since becoming the nonprofit’s tenants—Alchemy is on its second progressively larger space. Twoseven Inc. is on its third. The nonprofit even sold one of its buildings to a thriving tenant.
Since formally incorporating in 1992, Greenpoint Manufacturing & Design Center has developed seven industrial properties in Brooklyn, and is currently renovating its first property in Queens. Including that newest project, the nonprofit currently owns and manages six buildings with around 650,000 square feet of industrial space and zero vacancies. When space becomes available, it has a waiting list.
Greenpoint has been successful, but it hasn’t been easy. That’s why the new Urban Manufacturing Accelerator Fund, which promises to support other nonprofits that want to develop properties for industrial use in New York City, was launched. The new fund will work in conjunction with other city-backed tools and some key policy changes to make more industrial real estate development possible for more nonprofits.
In New York as in many major cities, industrial real estate is disappearing as manufacturing jobs shifted to less expensive locations. But industry still has a place in cities: Light manufacturing provides stable, well-paying jobs, and the success of businesses like Greenpoint’s tenants shows that there is a demand for products made locally.
But not all industrial real estate is the same, hence the new fund to support nonprofits. Nonprofit or mission-oriented industrial developers can be more selective about their tenants, choosing those that are more likely to provide more higher-paying, more stable, and more accessible jobs — not just tenants that can pay the highest rent.
“Just because it’s an eligible use under the zoning doesn’t mean it’s something that we want,” Coleman says. “We don’t put warehouse distribution centers in our buildings because they’re lousy jobs. People moving boxes around are just going to be making minimum wage. Even though there aren’t as many manufacturing jobs anymore, they’re still good jobs.”
In an internal survey, the nonprofit found its tenants employed more than 600 people, at an average salary of around $50,000. More than 92 percent of those employees were New York City residents, and 29 percent spoke a native language other than English.
You may be wondering why nonprofits aren’t developing more industrial space. So was the New York City Economic Development Corporation, the city’s economic development authority. Two years ago the authority created the Industrial Developer Fund, a combination of public and private funds amounting to $150 million in grants and loans to support nonprofit or mission-oriented industrial developers. But it took about a year to announce that fund’s first project—Greenpoint Manufacturing & Design Center’s new property in Queens (see our earlier coverage). It took another year after the announcement for the deal to close and work to begin on renovating that property—this winter.
It’s a long and expensive process to access the Industrial Developer Fund, requiring preliminary architectural designs, construction and renovation cost estimates, environmental analyses, appraisals, and more. The fund has received other proposals so far, but has yet to greenlight another project.
Created and managed by the Association for Neighborhood and Housing Development, with the support of Citi Community Development, the Urban Manufacturing Accelerator Fund intends to provide the association’s member nonprofits more support to successfully navigate the process for accessing the Industrial Developer Fund. (Next City also receives funding from Citi Community Development.)
The new fund’s grants, up to $60,000 each, will fund preliminary designs, construction cost estimates, appraisals, “anything that would create a more complete response…that would catalyze more nonprofit partners to take advantage and better utilize the Industrial Developer Fund,” says Michael Brady, project manager at the Association for Neighborhood and Housing Development.
Some of the nonprofits anticipating support from the Urban Manufacturing Accelerator Fund already have a history of developing or managing industrial properties, but for different reasons have not had the same success accessing the Industrial Developer Fund, such as Evergreen Exchange, South Bronx Overall Economic Development Corporation, and Mid-Bronx Desparados. Others have little to no experience developing properties for industrial use, but come from related parts of the community development ecosystem and want to become developers of industrial space, like long-time nonprofit affordable housing developer Cypress Hills Local Development Corporation, or BOC Network, which has decades of experience as a nonprofit making loans to many small manufacturers around the city.
“[They are] organizations with sophisticated development backgrounds who would benefit most and have sustainable resources to ensure that industrial development is something that is not a one-off, but an integrated part of their mission and business model within the community development context,” Brady says.
Other than being selective about tenants that will provide good, yet accessible, jobs, another payoff from investing in nonprofit industrial development is how the mission factor helps protect and advance industrial development over time. When Greenpoint Manufacturing & Design Center sold one of its buildings to a tenant, the sale included a deed restriction that requires the property be used for manufacturing, and the nonprofit used the sale proceeds to develop another property for industrial use.
The Urban Manufacturing Accelerator Fund intends to catalyze 570,000 square feet of new industrial space through development of six to eight urban manufacturing facilities, leveraging an estimated $200 million in public/private investment while creating or preserving an estimated 500 quality jobs — full-time jobs that pay at least a living wage with benefits.
To get there, nonprofit industrial developers and many who believe in them also recognize a need to update the city’s zoning. When the distinction between NYC’s residential, commercial, and industrial zones was first created in 1961, industrial zones became a catch-all for anything that wasn’t clearly residential or commercial. Restaurants and night clubs can go in industrial zones, as well as, notoriously, hotels and self-storage facilities. Those other businesses have been competing with nonprofit industrial developers for many of the same properties, not to mention tech companies that seem to prefer an airy loft to a midtown office tower. That competition wasn’t there in the 1980s and early 1990s, when groups like Greenpoint Manufacturing & Design Center and Evergreen Exchange first emerged.
On the left, two hotels, one under construction and another relatively new, on former industrial properties in Brooklyn (Photo by Oscar Perry Abello)
At the end of last year, bucking a few years of resistance from the Department of City Planning, New York City Council passed a special zoning amendment that places additional controls on where self-storage companies may operate in areas zoned for industrial use.
“I think the self-storage [zoning] amendment is something that was quietly done, but historically significant,” Brady notes. “The initiatives we undertake are not done in a vacuum. The change is drawing a line in the sand when it comes to best utilizing industrial space for communities.”
This article has been updated with internal survey numbers from Greenpoint Manufacturing & Design Center.
Oscar is a Next City contributing writer, and was a Next City 2015-2016 equitable cities fellow. A New York City-based journalist with a background in global development and social enterprise, he has written about impact investing, microfinance, fair trade, entrepreneurship and more for publications such as Fast Company and NextBillion.net. He has a B.A. in Economics from Villanova University.