In June, the City of New York enacted the largest overhaul of its commercial and manufacturing zoning in 60 years. A key element offers a new way to fill vacant storefronts. It gives blanket zoning approval for small clean production businesses (up to 3,000 square feet each) in all commercial corridors. That’s an opportunity for property owners with vacant storefronts to seize.
Small clean production businesses include small-scale manufacturing businesses, which create products — from hardware to handbags to hot sauce — that are sold in retail shops and online and are thus not solely dependent on foot traffic for revenue. That makes them well-suited to neighborhoods and business districts seeking to revitalize from significant vacancies.
The appeal of small-scale manufacturing businesses is strengthened further by the fact that they often combine production facilities with a retail store and even experiential space for programming. That enables them to play a larger role in the civic life of communities.
Small-scale manufacturers or groups of them can become destinations for local residents and visitors, bringing much-needed economic vitality to neighborhoods and business districts eager for it.
New York City has a long tradition of storefront-driven destinations in all five boroughs. Some, like SoHo, are world-renowned. By taking advantage of this new zoning overhaul, property owners can introduce small-scale manufacturers individually or as a group with a specific focus.
The challenge, then, is how to do it, because there is one obstacle that must typically be overcome: small-scale manufacturers generally cannot pay the rent that previous storefront occupants may have paid. That’s where property owners should consider not just how to fill the space but how to enable that space to enhance the value of the property.
Small-scale manufacturers — like craft breweries and other food makers, or jewelry and other handmade craft producers — add cachet to a property or neighborhood.
To the extent that they include experiential space, they can further bring people and energy to the area. When they become destinations, they increase an area’s identity and uniqueness. All of this enhances the economic competitiveness and the brand awareness of the real estate upstairs.
Specific steps that property owners can take include the following:
First, consider whether the vacant space could be subdivided to make it more affordable. Sub-dividing not only reduces individual costs but enables the assembly of small-scale manufacturers that provides a broader sense of place and identity.
Second, determine whether there is someone who could identify potential tenants. Is there a group with a particular focus who might come together to fill the space? Small-scale manufacturers often emerge from the culture and heritage of a community, so there may be ways to reinforce that through retail. In that regard, consider engaging a local community organization to envision how small-scale manufacturers could enhance the area.
Third, evaluate ways to reduce the rent or cost of set-up for new or young companies. There may be a municipal program or a community foundation with an interest in economic revitalization that could support build out or subsidize the lease.
Fourth, if making such changes might jeopardize existing underwriting of the property, consider working with local real estate associations to get banks and other mortgage-holders to go along. New York City has the great advantage of having many locally based banks and real estate companies with a long history of working together for the city’s economic prosperity. The mortgage holders have a stake in a property’s success, and they are not helped by vacant spaces.
The zoning overhaul offers new ways to revitalize the city. Small-scale manufacturers should be a major focus of filling vacant storefronts, energizing city streets and restoring economic vitality.
Ilana Preuss
Founder and CEO
Recast City
Washington, D.C.
ilana@recastcity.com
