Pols pounce as city caves in on Sunset Park property

Elected officials didn’t trust landlord to fill industrial space — and it didn’t

Congresswoman Nydia Velázquez, Congressman Jerry Nadler and Council Member Carlos Menchaca (Credit: Getty Images, Google Maps)
Rep. Nydia Velázquez, Rep. Jerrold Nadler and Council member Carlos Menchaca (Credit: Getty Images, Google Maps)

Three elected officials are seething about a city agency’s decision to let a Sunset Park landlord rent to office tenants at a warehouse formerly reserved for industrial use.

NYCEDC CEO James Patchett

EDC President and CEO James Patchett

City Council member Carlos Menchaca and Reps. Nydia Velázquez and Jerrold Nadler have expressed “serious concerns” about the EDC’s deal with Salmar Properties to loosen deed restrictions that required 85 percent of the 1.1 million-square-foot Liberty View Industrial Plaza to be set aside for industrial tenants.

“While we have no direct authority over the approval of the proposed modification, we have serious concerns and appreciate NYCEDC’s willingness to engage with us,” the politicians stated in a letter dated Tuesday. “The residents of Sunset Park deserve to know this story.”

The trio met in November with EDC president and CEO James Patchett to discuss the proposed changes, according to the letter. The agency has now agreed to appear before Brooklyn Community Board 7 to explain the deed modifications. A date for the presentation has yet to be scheduled.


Menchaca, Velázquez and Nadler made clear in their letter that they took a dim view of EDC’s decision in 2011 — when the Bloomberg administration ran the agency — to sell the massive building to Salmar.

“Though privately owned, we maintain that this property is of significant public concern for several reasons,” the elected officials’ letter says, noting that the warehouse, formerly known as Federal Building No. 2, had been transferred to the city with the stated goal of “providing economic development in the form of industrial jobs.”

The EDC then sold the property to Salmar at significantly less than market value “despite [the firm] having no industrial property management experience.” The sale price was $9.4 million — about $8.50 per square foot — plus $900,000 for the adjacent parking lot.

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The landlord has not returned a request for comment. The EDC also has not issued a statement.

The politicians’ letter notes that the property’s existing industrial tenants account for a mere “15% of the total set-aside,” with 74,000 square feet used for manufacturing uses and 87,000 square feet for distribution. “Meanwhile, Salmar has had no trouble tenanting a full 166,000 square feet of retail.”

According to floor plans on the landlord’s website, retail tenants at the property include Saks Fifth Avenue, Micro Center, and Bed Bath & Beyond, while manufacturing tenants include Morgan & Morgan. The warehouse is also home to a distribution center for Amazon Flex, the e-commerce giant’s Uber-like last-mile package delivery program.

“In short, Salmar continues to enjoy public subsidy and increased non-manufacturing tenanting flexibility while the Sunset Park neighborhood and community at large continues to wait for the promised manufacturing jobs,” the letter continues.

The landlord secured a zoning variance to permit larger ground-floor retail stores soon after acquiring the property and failed to use a city-funded grant provided to build out a center for garment manufacturers and designers, according to the letter. Salmar co-founder Marvin Schein previously told The Real Deal that garment-makers declined to come, preferring to remain in Midtown.

In their letter, the politicians acknowledge loopholes in the original agreement that put the goal of producing manufacturing jobs at risk, and which have been closed in the modified deal. “While we regret the need to further accommodate this owner, we will not oppose a new agreement that strengthens the terms of the restriction,” they wrote.

The landlord stands to miss out on millions of dollars in tax breaks per year if it fails to meet an industrial employment target of 1,300 new jobs by next summer.

“The modifications must not repeat the mistakes of the past,” the letter’s authors say, urging the EDC to pursue “more aggressive strategies” if the deed modification does not produce the desired results.

So far, the new terms — as well as $117.6 million in financing from Blackstone Group which will help fund renovations — appear to have had an immediate impact. Salmar already has four new industrial tenants lined up for about 45,000 square feet of space at the building, as well as new office tenants which will occupy 30,000 square feet, according to a source close to the deal.

Write to Kevin Sun at ks@therealdeal.com