“Maker Movement” Repurposes Aging Commercial Assets
June 1, 2015
Small-scale manufacturers—members of the so-called maker movement—are emerging as a revitalizing force in urban neighborhoods with empty factories and older commercial properties in need of adaptive use, says Ilana Preuss, founder of ReCast City, a Washington, D.C.–based consulting firm that promotes policies and practices to cultivate small-scale producers and startups.
In an exclusive webinar for ULI members held in April, Preuss presented a case for urban manufacturing as a potentially catalytic driver of change within cities, particularly those with a surplus of properties that once served heavy industry but are now underused because traditional manufacturing jobs have moved overseas. As the new definition of manufacturing expands to include creative sectors such as 3-D printing, TV and film production, art and design, and even food preparation, industrial or “maker” spaces can coexist alongside retail, residential, and office uses, Preuss said.
“The new definition of modern manufacturing can be done in close proximity to other uses,” Preuss said. New urban manufacturers make better neighbors because their processes create less noise and fewer environmental impacts, she explained.
According to Preuss, small-scale urban manufacturing is benefiting from other trends, including:
• Demographics that favor urban centers: young professionals and empty nesters living in downtowns have revived urban cores, providing new opportunities for entrepreneurial commerce.
• Business location decisions: major companies are choosing to relocate or open major offices in city centers.
• Growth in the self-employed economy: the rate of self-employment is growing as much by choice as by necessity.
• Growing momentum of the maker movement: more people are transforming their hobbies into businesses as consumers gravitate toward locally sourced or locally grown products. “It’s very cool to make stuff again,” Preuss said.
With the growth of small-scale manufacturing comes the need for space—as well as a major opportunity for urban real estate development to create new models to meet the demand.
Preuss explained that the “makers” themselves should be thought of as an amenity because they bring a “cool” factor to a project, and programming and promotional events presented by these businesses contribute to place making within a neighborhood. Also, unusual spaces crafted from legacy commercial assets create authenticity and character that people crave in their cities, she said. A hulking warehouse or factory with desirable high ceilings and floor-to-ceiling windows can be refurbished and subdivided into studios, workshops, or other flex spaces with airy interiors and plenty of natural light.
Such projects will need to be underwritten differently because small-scale producers will have less cash flow than a conventional tenant. Pruess urged developers to hire staff with expertise in recruiting small-scale manufacturing tenants and an understanding of their needs, as well as expertise in pursuing financing options like new markets tax credits that reward urban reinvestment. Savvy developers who want to capitalize on the small-scale manufacturing trend should also study what was made locally in the past as well as partner with nonprofits and the public sector.
The webinar concluded with presentations from two firms that are developing major projects located in legacy industrial neighborhoods and designed specifically for new-economy, small-scale producers and manufacturers.
Pier 70 by Forest City
Forest City is developing a 28-acre (11.3-ha) site at Pier 70, one of San Francisco’s oldest
and most historic shipyards. The project is a mixed-use district with repurposed commercial structures for light-industrial and creative businesses, as well as residential and open space components.
One striking feature of the project is a waterfront park that will extend beyond the water’s edge, cutting a path through the site and providing green space directly outside building entrances. Along this path will be flexible outdoor spaces for art fairs, markets, and other programming. The design proposes to open up access to the water where none existed before, said Kelly Pretzer, the project’s development manager for Forest City.
Still in its environmental review stage, the project fits into the broader history of industrial activity at Pier 70, where a ship repair business owned by BAE Systems still operates. “There is an incredible legacy of industry at Pier 70,” Pretzer said. Ground breaking on Pier 70 by Forest City is scheduled for 2017.
Industry City is a 5.3 million-square-foot (142,000 sq m) manufacturing complex in Brooklyn’s Sunset Park neighborhood, between the Gowanus Expressway and the New York Harbor. Its investors seek the “new industrial,” tenants that Preuss described. Owned by Atlanta-based Jamestown and other partners, Industry City is the largest privately owned industrial campus in the nation, according to Industry City chief executive officer Andrew Kimball.
Known in the 19th and 20th centuries as Bush Terminal, a thriving hub of wholesalers and manufacturers, Industry City fell into disrepair after 1950, accruing more than $300 million in deferred maintenance costs, Kimball said. Since Industry City is the only privately owned industrial campus in New York City, the investors have had to make significant investments of their own money to make Industry City a viable project. In March, Jamestown and its partners announced a plan to invest $860 million over the next 12 years to modernize the complex, which Kimball estimates will generate 20,000 new jobs, many for local residents.
Public subsidies for the project will be minimal—a contrast with two comparable industrial/creative campuses, the Brooklyn Navy Yard and the Brooklyn Army Terminal, both owned by New York City. Yet the public streets and infrastructure outside Industry City will require a mix of public and private investment to improve pedestrian and bike access, safety features, and place-making attributes to make the complex an attractive choice for small-scale manufacturers and producers.
Forty-one percent of Industry City is leased today by what Kimball calls “innovation economy” companies, including 3-D printing company MakerBot, jewelry e-commerce firm Baublebar, and David Stark Event Design and Production. Thirty-three percent of the space is used for storage and warehouses and 26 percent is vacant, making 59 percent, or 3.1 million square feet (288,000 sq m), what Kimball considers underused space.
Much of Industry City’s potential cannot be realized unless the site’s zoning is changed to allow a more diverse mix of uses. Kimball envisions the addition of an academic institution and a hospitality/business conferencing capability to create a complete “innovation economy ecosystem,” ensuring sustainability and profitability for the property in the years ahead.
“An ecosystem is created when these businesses are next to each other and are feeding off of each other,” Kimball said.