Deborah DeLuca, chair of the BOMA New York Lunch & Learn sub-committee, is a natural at being a virtual master of ceremony. Ms. DeLuca launched the monthly webinar with a terrific introduction of David Ehrenberg, President & CEO of the Brooklyn Navy Yard Development Corporation, and his colleague Simone Robinson-Barnett, SVP of Property Management. The duo followed with a fascinating and inspiring digital presentation.
The presenters spoke
to the New York City commercial real estate community’s unstinting commitment
to our city’s economy and the Navy Yard’s 80-year tradition of service and
opportunity to the industrial and manufacturing sector. Both Ehrenberg and
Robinson-Barnett also made a point of the Navy Yard’s mission to improve the
lives of Brooklyn residents.
For those not old
enough to recall, the Navy Yard was one of the nation’s phenomenal engines of
military might in the run-up to the United States’ entry into World War II. Inspired
by the slogan, “Service to the Fleet,” more than 70,000 workers built the battleships
USS Arizona and USS Missouri at the Yard. Its recently gut-rehabbed,
million-square-foot Building 77 was the command center for the North Atlantic
Fleet during the war. That structure was originally built in just six months.
Reiterated to the registered developers, “six months!”
Then, in 1966, the
government closed the Yard and sold the 300-acre waterfront property to the
City of New York, who now leases it to the independent, not-for-profit
development corporation.
Until recently, the Yard’s gated, walled-off perimeter posed a mysterious and unwelcoming façade to residents and visitors alike. But the development corporation’s success on behalf of Brooklyn’s residents and local economy over the past two decades has belied the 70-building property’s somewhat forbidding presence on the waterfront.
As Ehrenberg
describes it, “With 4.8 million square feet of space under roof, we have an
internal real estate community where industrial and manufacturing companies can
survive, thrive and grow.” He adds, “We also have our ‘second community’ of local
residents who have job opportunities that are offered by a pre-eminent,
place-based economic development initiative.” Indeed, before COVID-19, the Navy
Yard’s tenants employed 12,000 people and was on pace to host 20,000 jobs by
2022 – mostly for Brooklyn residents.
Under today’s COVID
restrictions, the property has 6,000 on-site jobs. The situation is expected to
increase to at least 9,000 jobs next month, when tenant Steiner Studios (the
largest movie studio outside the West Coast) re-opens.
Accordingly,
Ehrenberg proudly touts the resiliency of his tenant base. “We’re very
different from Manhattan, where the Class A office sector now has 12%
occupancy. All of our buildings are open and occupied – 100% occupancy — with
50% of our bodies inside the buildings each day.”
The development
corporation has invested roughly $1 billion in the Navy Yard, adding five
projects, including the aforementioned Building 77 gut re-hab and the brand-new
Dock 72, a joint venture of Boston Properties and the Rudin Family. Dock 72’s
700,000 square feet are now open for business, and WeWork is expected to
relocate its headquarters there.
But, when all is
said and done, Ehrenberg devotes most of his time to the creation of
manufacturing and light industrial jobs. Why? “Manufacturing jobs are extremely
important for the economic health of New York City.” He recites the facts:
Industrial jobs average $70,000 annual income for workers. On the other hand,
retail, hospitality, and healthcare jobs average only $30,000 to $50,000.
“There are huge numbers of service jobs that don’t pay a living wage for New
York City residents,” he says.
He adds that
industrial jobs have a 47% accessibility rate for non-college-educated workers.
Professional services jobs have only a 6% accessibility rate. “This means there
is a pulling-apart of the labor market,” he says, which is very unhealthy.
“There is a loss of upward mobility in America.”
Ehrenberg
reinforces his point by stating, “From a real estate perspective, having a
manufacturing center on the waterfront is not the ‘highest and best use in
terms of rent that could be obtained.” His mission, on the contrary, is to
generate “accessible and quality” jobs. “Half of the industrial sector’s
workforce has nothing more than a high school diploma. If you add more
credentials, 80% have less than an associate degree.” He adds, “We believe in a
larger social perspective. The Brooklyn Navy Yard is home to critical companies
and critical jobs that the city is in desperate need of.”
Ehrenberg
underscores the importance of the Navy Yard’s mission by noting that his
tenants are not traditional “widget makers.” He cites Nanotronics, a high-tech
company that produces cutting edge microscopy hardware and software. Its
microscopes use AI to test and analyze microchips in real time as they are
being manufactured. “We will soon cut the ribbon on a 40,000 square-foot facility
to manufacture the microscopes here at Brooklyn Navy Yard.”
“Pulling the veil
back on manufacturing abroad,” as he says, tenants at the Navy Yard have the
resources to design and produce their products on-site. Mr. Ehrenberg explains
that it can take weeks and months to send designs and specifications to
overseas manufacturers, then wait for perfected product shipments. For example,
at the outbreak of the pandemic, tenants at the Yard “stood up a couple dozen
assembly lines. We were making 60,000 face shields a day.” He continued, “We
developed a ventilator that cost $3,000 to make, instead of $30,000.”
Ehrenberg and his
colleague Robinson-Barnett’s proudest moments are when they describe the
development corporation’s commitment to education, training, and employment.
“Brooklyn College’s graduate film studies program is located at Steiner
Studios,” Ehrenberg says, citing the synergism of having future employees and
their employer located in the same building. Other tenants have similar
arrangements that interact with an on-site public high school.
In closing, Ehrenberg
and Robinson-Barnett outlined the Navy Yard’s Master Plan for five million
square feet of new construction. It will require a thorough public review
pursuant to the City’s Uniform Land Use Review Procedure. Ehrenberg said, “We
have activated all of our old buildings for adaptive re-use. Our Master Plan
envisions a new standard for ground-up industrial development in America.” He
is quick to note that the property has a hefty reserve of 16 million square
feet of unused FAR.
“We’re softening
our walls,” he says. The plan is to welcome access to all residents and
visitors, with a San Antonio Riverwalk-style promenade around the Yard’s Barge
Basin. There may be retail tenants in the future, with showrooms for
manufacturers, and even office towers above the manufacturing spaces.
“We don’t want to
be the ‘Best in Class.’ We want to be in a different class.”
