NYC Puts Desk Workers in Salmar’s Brooklyn Industrial Space

Salmar Properties’ massive warehouse at 850 Third Avenue has taught city officials some painful lessons about industrial real estate.

The former government building sold to Sal Rusi and Marvin Schein’s Salmar in 2011 with the city providing tax breaks for an expected bounty of industrial jobs. It hasn’t quite worked out.

The eight floors and relatively low ceiling heights were a turn-off for tenants accustomed to single-story facilities, and Salmar struggled to fill the 1.3 million square feet. In 2020 it got permission from the city to lease nearly 500,000 square feet as office space — a change that upset some elected officials but enabled the firm to score a $118 million refinancing from Blackstone.

Madison Capital came in as a co-owner with the recapitalization and the building was rebranded Liberty Bklyn, said Madison’s John Ratner, “We’ve almost doubled the occupancy since we bought it,” he said, citing a number of industrial tenants signing deals. “We built out two floors for industrial space, then leased most of them out.”

But challenges continued with bankrupt Bed Bath and Beyond recently clearing out of the Sunset Park site and leaving it one-third empty. Now, the city is providing a shot in the arm, leasing space for 700 Human Resources Administration employees, The City reported.

The workers will move from the agency’s headquarters at Brookfield’s 15 MetroTech Center in Downtown Brooklyn, where it is facing a big rent hike when its lease expires in July 2024. HRA workers from seven other locations in Brooklyn and Manhattan will also relocate to the Sunset Park site, which is next to the Gowanus Expressway at 30th Street, a less-than-glamorous eight-minute walk from the nearest subway station.

A public hearing on the lease is scheduled for May 24 at the City Planning Commission, which is controlled by the mayor — making approval a formality.

Still, some politicians are rankled by the prospect of the city leasing space in a building it sold to Salmar and subsidized, dreaming of well-paying manufacturing jobs for Brooklynites without college degrees. The city once had more than 1 million of those, and 273,000 thousand as recently as 1990. Last month it had 57,800.