Orlando Rivera and Eddie Roman have spent 30 years looking out on the waterfront from the same spot in Brooklyn. They stare down a stretch in front of the apartments they own on Manhattan Avenue, right before the street meets the water in Greenpoint. They take turns pointing at the backdrop of properties behind them, trying to jog their memories of the ghosts of neighbors past.
“There was a guy who made shower curtains around the corner there on Box Street, and a bottle cap factory owned by real nice people that my brother worked at for a while right there on Clay,” River said, motioning to an empty building marked with a circle of realty signs.
There was a woodworker named Joe, and a scented candle maker, both on Ash Street, who used to stop by to talk about business, but they are also now gone, Roman says.
They heard something about moving to New Jersey from one and heading over to Long Island from another.
“Most probably went to China or Mexico, but I don’t think the workers went with them,” Rivera quipped.
The rezoning of Greenpoint and nearby Williamsburg in Brooklyn earlier this year has led to a slew of planned apartments, some of which are already under construction in those neighborhoods and in nearby Long Island City in Queens. As residential expansion creeps in, some are concerned about the shrinking amount of industrial space in the city’s traditional industrial headquarters.
Some owners already sitting on gold mines with values ticking up have been further struck by luck, now finding their properties within new mixed or residential zones.
Two to three years ago in Greenpoint and Williamsburg, space was renting for $10 to $12 a square foot, said Mark Lively, director of sales in those neighborhoods for Massey Knakal Realty Services. With rents now at $15 dollars a square foot, some new industrial businesses are moving to the area, but many more are moving out, driven by the bottom lines of their business costs.
The vast majority of business owners also own their properties, and proprietors feeling the squeeze are looking to cash out, selling at high numbers and looking elsewhere to pay off their debts.
Developers are attuned to the pressures and definitely knocking on doors, even sending mass mailings that are “personalized” offers, Lively said.
“Most owners I meet already have four to five unsolicited offers when I initially sit down with them. Most are from flippers or brokers looking for a magic number so they can try and tie a property up and reduce their offers in hopes of flipping it to another buyer,” Lively said.
In the newly mixed-use neighborhoods of Greenpoint and Williamsburg, industry may not be in the mix much longer. Sheer supply and demand has inched industry farther east to the other side of the Brooklyn Queens Expressway into a 22-block area in Bushwick designated as an industrial zone, where the competition for space is fierce, Lively said. The north side of the area has now become restaurant row, and even businesses pushed into this eastern attempt at a safe haven can’t compete with the numbers.
Due to overseas competition, much of the industries that have long called these areas home are falling on the wayside. While Greenpoint and Williamsburg’s new mixed-use designation allows industry to remain in these areas, it also lets property owners convert manufacturing spaces to non-industrial uses whenever they wish, or “as-of-right” a shift from the old system, under which such conversions were restricted to one degree or another.
With this change, industrial occupants will undoubtedly be driven out by more lucrative residential, office or retail tenants.
“It’s easy to point to the rezoning as the reason for these spaces disappearing, but the majority of the building owners are also business owners” and have to bow to the realities of running a business in a high-cost location, Lively said.
Because the ground-floor vacancy rate is only 5 percent, there also isn’t much room for more businesses from New Jersey and elsewhere to move in, according to Jose Leon of the East Williamsburg Valley Industrial Development Corporation.
“Businesses on their own are finding this area, but are finding out that the spaces they need don’t exist,” Leon said of the city’s hopes to preserve, as well as grow, the areas’ history as a blue collar mainstay through the drawing of these Industrial Business Zones and relocation incentives.
Over in Long Island City, the same lack of space has pushed the spread between sales and rental prices for industrial space, according to John Reinertsen, a commercial/industrial real estate broker and vice president at CB Richard Ellis.
“There has been a 33 percent increase in the past two, three years in prices. Prior to that, [commercial] rentals were lagging far behind the sale prices,” he added. “If you want to stay in Queens, you’re going to have to start paying a premium.” Reinertsen is also sure that the 12,000 residential units slated to break ground within two years will heat up Long Island City’s office space market.
“Manufacturing will disappear because of the selling points,” he said. “When you’re sitting on property worth three to four times what your business is now, it’s a no-brainer.”