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.”