The Real Deal New York

City seeks to curb hotel development in Garment District, lure fashion companies with cheap rents

A zoning change seeks to lift rule aimed at protecting manufacturers
By Kathryn Brenzel | March 23, 2017 09:30AM

Clockwise from left: Bush Terminal, the Garment District and the Brooklyn Army Terminal

The city’s revived calls to tweak zoning in the Garment District is aimed at curbing hotel growth in the area, while also using cheap rents to lure displaced fashion manufacturers to Sunset Park, Brooklyn.

The New York City Economic Development Corp. is now leading the charge to change zoning rules in the special district by lifting a 1987 restriction intended to protect garment manufacturers. Under the current zoning, landlords looking to convert manufacturing space into offices must maintain a 1:1 ratio, meaning that as much garment manufacturing space is maintained in the building as office space. According to the EDC, the rule hasn’t succeeded in protecting apparel manufacturers. Only 2 percent manufacturing space has been preserved through the restriction, while such space has declined 52 percent district-wide.

The city is now seeking to lift this requirement, while also reining in the explosion of hotel development in the area by requiring a special permit for such projects. Barbara Blair, the president of the Garment District Alliance, recently told the Commercial Observer that 33 hotels have been created in the district since 2005. Instead, the city hopes to promote new office and residential development in the area.

At the same time, the city is trying to lure tenants to the Brooklyn Army Terminal and Bush Terminal — 500,000 and 200,00 square feet, respectively — by charging $12 to $25 per square foot for five- to 10-year leases, according to the EDC.

“We’re their landlords, so we can charge $16 a foot,” a city spokesperson said. “It’s not about making money.”

The idea is to offer these companies a modern and comparatively inexpensive “landing pad,” as they are increasingly pushed out of the Garment District by high rents and insufficient space. According to the EDC, garment manufacturing employment has dropped 83 percent since the district was created.

Mayor Bill de Blasio announced his Made in New York initiative last month, which includes dedicating $136 million to create manufacturing space at Bush Terminal in Sunset Park. The city has already set aside $115 million to revamp the Brooklyn Army Terminal.

Crain’s reported earlier this month that the city was quietly planning to file a rezoning application as early as April. The Bloomberg administration had floated a similar zoning change — though the proposal would’ve changed the required manufacturing ratio to 1:6 — but the plan was ultimately shelved. The proposed zoning changes, according to the EDC, wouldn’t change the underlying zoning in the area.

Some of the most active hotel developers in the Garment District include McSam Group’s Sam Chang and Isaac Chetrit, a cousin of Joseph Chetrit.