Brooklyn industrial areas get boost.
The designations were made to benefit areas harmed by cutbacks to former military sites, announced New York State Governor George Pataki last week.
The inclusion allows companies and individuals that invest in or create new jobs in these so called EDZs to receive a combination of tax credits and benefits, along with appropriate local property tax exemptions, such as the city's Industrial and Commercial Incentive Program (ICIP).
Among the benefits available for investments in the EDZs are a wage tax credit ranging from $750 to $1,500 a year for five years for newly created jobs; utility rate reductions; low interest loans; a refund of state and possibly local sales taxes on purchases of building materials; investment tax credits of eight percent to 10 percent through refunds to corporate franchise tax and personal income taxes, depending on the investment; and employment incentive credits for three years, after the year of the initial investment tax credit, if additional people are employed.
One incentive can be dangled by businesses and developers to attract outside investors. This "zone capital credit" can be taken by investors who contribute to or purchase shares in a zone capital corporation, or make a direct equity investment in a certified zone business, or make contributions to approved community development projects within an EDZ. Such investors can obtain a 25 percent credit against personal or corporate income taxes.
The new Brooklyn north waterfront EDZ encompasses the Brooklyn Navy Yard area between the Manhattan and Williamsburg bridges, north of the Brooklyn Queens Expressway, and then areas north and west of the Williamsburg Bridge and Flushing Avenue, somewhat bordered by Morgan Avenue and the Newtown Creek, which separates Brooklyn and Queens.
According to Richard Drucker, vice president of planning and development for the 264-acre Brooklyn Navy Yard, the state program enhances the incentives for businesses to expand or relocate to the Navy Yard, even though, he noted, "It's already attractive."
Owned by the City of New York and managed by the Brooklyn Navy Yard Corporation, the 4.1 million square feet "under roof" is 90 percent occupied by about 200 businesses employing 2,700 people. There is also plenty of vacant land for build-to-suit projects.
"We always have people moving in and out, and there is plenty of room, even if someone wants to build a new building," he said.
Tenants such as furniture manufacturers and printers are scattered throughout the many different buildings, and include a mixture of manufacturing, distribution and warehouse usage, and even commercial offices in some higher rise buildings.
The Navy Yard's four dry docks are rented out to two different tenants and are actively used for ship repairs, while various other enterprises use the Navy Yard piers.
"The kind of tenants we want the most are industrial," added Drucker.
The Navy Yard offers gated 24-hour security and access, a luncheonette, parking and management on site, and other amenities.
While Drucker explained that rents range from $3 to $11 per square foot, generally, deals tend to be made around $4 to $5 a square-foot gross, says Marjorie Seaman of Insignia/ESG, who specializes in these kinds of outer borough sites.
"There will be certain tenants who need the piers and the dock and the barge access who have different needs, so there may be cases where they reach the asking price because space is tight," she said.
Since the Navy Yard is owned by New York City, technically there are no property taxes. Still, by agreement with the city, the rent charged is at market to operate the yards and make capital improvements to the buildings and other infrastructure.
The other large tract included in the new EDZ is the so-called East Williamsburg Industrial Park, consisting of about 800 acres that are home to 650 businesses employing 20,000 people.
This area, designated by the city as an in-place industrial park, is more akin to a business improvement district than what one might think of as a "park." It is located north of the Navy Yard and Flushing Avenue, somewhat south of the Brooklyn Queens Expressway, and generally runs east to Bushwick Avenue, with Morgan Avenue area and the Newtown and Maspeth Creek as the northeastern border.
"This is the industrial heartland of New York and is an important source of blue collar employments" said Seaman, noting the buildings are most often single-story distribution facilities.
According to Nancy Lasher, director of the East Williamsburg Valley Industrial Development Corp. (EWVIDC), which manages and provides services to the industrial park, the design and inclusion of other areas into the EDZ was a joint effort between local politicians and the community.
"Everyone was terrific with this," said Lasher.
Among the helpful local politicians were Assemblyman Joseph Lentol, Assemblyman Vito Lopez, Senator Martin Connor and Council Members Ken Fisher and Victor Robles.
The EDZ now includes most of the Williamsburg waterfront from the Navy Yard north to the Domino Sugar plant by the Williamsburgh Bridge, along with major commercial strips that include the Pfizer land in the Broadway Triangle around Flushing and Harrison streets where a Pathmark development has been held up; and around the Greenpoint Manufacturing and Design Center that is home to many woodworkers. Some other important commercial corridors include Broadway, Havermeyer, Grand Street and Graham Avenue.
"We put this plan together to address and help the economic engines of North Brooklyn," said Lasher.
The EWVIP is funded by the New York City Economic Development Corp. and provides a range of services to the businesses in the industrial park.
"We make it happen for them," said Lasher. "And one way we've made this happen for them is to apply and obtain this EDZ."
Lasher says there are many businesses seeking space in this section of small to large primarily one-story industrial buildings, but vacancies are few and far between.
"We are working with a lot of companies that are expanding, and there is not a lot to show them," she said. A staff member works with both brokers and tenants to ensure they apply for and receive benefits and economic incentive packages.
This section of Brooklyn also competes with Long Island City, Greenpoint and New Jersey.
"We're finding a shortage of property in the market, and in a lot of the marginal areas, the properties are being gobbled up," said Robert Klein, a broker with Kalmon Dolgin. "There is some land in the area, and the EDZ designation may now encourage new development."
Klein says rents in the area run around $5 to $5.25 a foot, with some waterfront properties that attract artists obtaining $6 to $7 a foot.
"Williamsburg and Greenpoint have always been a great place for industry, but property values have become so high, sales prices now range from $40 to $50 a square foot," he said, noting there are several small tracks of land currently on the market whose owners are looking to either sell or long-term lease to developers.
Even though this economic development zone tends to high occupancy, Seaman said the idea of the EDZ is to attract and retain the city's industrial base.
"The East Williamsburg Industrial Park was losing ground to competing zones that already had that designation, like East New York," explained Seaman. "The EDZ designation is great news for real estate and will provide additional incentives and financing for businesses looking to purchase or expand and relocate there. The EDZ brings in more extraordinary benefits to the tenants."
The EDZ will provide brokers the means to market the area "in an appealing way, as a place to do business close to the central business district, in a highly cost-effective way," said Seaman, who hopes to "re-write the nature of" certain of these industrial buildings, which are more suitable for conversion to office usage. According to the Empire State Development Corp., there are now 52 EDZ's around the state, including Port Morris and Hunts Point in The Bronx; South Jamaica and Rockaway, Queens; East Harlem in Manhattan; the north shore of Staten Island; the East New York and the Sunset Park/Redhook sections of Brooklyn; and the Yonkers waterfront.
Newly designated last week by the Empire State Development Corp.'s EDZ board, at the suggestion of Chairman Charles Gargano, are the Town of Riverhead in Suffolk County; and upstate areas including Stew art Airport Army Subpost in Orange County; Plattsburgh in Clinton County; Watervliet and Guilderland in Albany County; Binghamton and Kirkwood in Broome County; and areas of Seneca, Oneida, Herkimer, Montgomery, Tioga, Onondaga and Chautautqua counties.
"These 12 new EDZ's will provide incentives to bring new businesses and new jobs to communities that were hard hit by cutbacks in the defense industry," said Governor Pataki in a statement.
Nearly 100,000 people are employed at more than 2,000 EDZ businesses, which have attracted more than $2.7 billion in private sector investment since 1987.
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|Title Annotation:||New York City|
|Publication:||Real Estate Weekly|
|Date:||Jun 10, 1998|
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