ULI New York Blog

Wrap-Up / Non-Core is Core: How TAMI and New Manufacturing are Shaking Up NYC’s Traditional Commercial Office Market

noncore 2Miriam Harris, Executive Vice President of Trinity Place Holdings, served as the moderator for this morning’s fascinating panel featuring Clare Newman, Chief of Staff of the Brooklyn Navy Yard Development Corporation, Toby Moskovits, Chief Executive Officer of Heritage Equity Partners, and Carolee Fink, Executive Vice President of NYCEDC (in lieu of Maria Torres-Springer who was ill and unable to attend). The event was sold out, showing the great interest in the creative office and new manufacturing spaces that are growing in popularity in non-core markets in New York City.

Miriam opened the discussion by calling this fundamental shift from Manhattan as the core office market as “revolutionary.” Miriam attributed the change to a fundamentally post-recession explosion and as stemming from pressures in Downtown Brooklyn from the tech industry to development in other areas, such as Williamsburg.

Toby explored more of the background behind the explosive growth in Williamsburg. She saw the key ingredients as people willing to move outside of Manhattan, combined with the flexibility of being able to and want to work closer to home while office spaces came online that were near residential communities. As a pioneer of commercial development in Williamsburg, Toby described the “Gordian Knot” as how cheap financing comes with comps, but it becomes harder to be innovate when comps are widely available.

Clare described how over fifteen years of City support has laid the bedrock for the Brooklyn Navy Yard’s biggest expansion since World War II, which is currently taking place with close to a billion dollars in investment. Clare alluded to Toby’s Gordian Knot providing the example of how Steiner Studio, which was a pioneer of the Yard had to provide 100% of the equity for the first two phases of its project to establish a film and media studio. Clare suggested that people want to be in Brooklyn not because of the high value, but because they want to be located in a community of businesses doing innovative work.

Carolee explained some of the trends that she is witnessing through the City’s perspective. She has seen more demand from businesses in food manufacturing and the garment industry for spaces in Brooklyn, especially the Brooklyn Army Terminal. Moreover, it has become less common for there to be one anchor tenant, versus a hub of smaller companies. Carolee has forecasted the demand for office space to continue to increase, so the City is working to incentivize the continued construction of it.

The conversation rounded out with a discussion about transportation and the desire for people to live near where they work. As Clare pointed out, people make job decisions based on potential commutes, so it is important to continue to stay ahead of the curve to decide where next. As Toby said, a lot of risk and guessing is involved to assess what they think will happen.

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