Brooklyn's Progress
September 2002

The Red Hook-Gowanus Chamber of Commerce issued a 26-page report showing that an increasing number of South Brooklyn manufacturers, distribution companies and other industrial businesses are being forced to consider relocating out of the area, and often out of the city, due to real estate prices that have skyrocketed over the past few years and an overall shortage of available industrial properties. The report finds that real estate pressures, fed by the conversion of numerous industrial buildings to high-income housing, are threatening to roll back the many impressive gains made by the business community in Red Hook and Gowanus over the past decade. The report, entitled “Red Hook and Gowanus Reborn: The Industrial and Maritime Revival of the Red Hook and Gowanus Neighborhoods,” details a remarkable re-awakening of the Red Hook-Gowanus business community over the past 10 years. It shows that while the area languished for decades following the loss of Red Hook’s shipping industry in the 1950’s, scores of manufacturers, shipping companies, warehousing firms, transportation companies, contractors, high-skilled artisans and maritime firms have moved back into the area, creating several hundred new jobs in a part of the city that has been desperate for new employment opportunities. But while these businesses continue to be a vital source of employment and entrepreneurship for thousands of local residents, mounting real estate pressures are threatening the business community’s future growth and very survival. Members of the Red Hook-Gowanus Chamber of Commerce released the report at a press conference inside the Red Hook factory of Showman Fabricators, a manufacturer of theater sets that has grown substantially in recent years but has spent two years searching (unsuccessfully) for larger facilities. The local business leaders were joined by residential leaders from the community and business advocates from around the borough, including officials from the Brooklyn Chamber of Commerce, the Brooklyn Economic Development Corp., the New York Industrial Retention Network, the South West Industrial Development Corp. and the administrators of the Chamber, the South Brooklyn Local Development Corp. Among the major findings of the report: · The number of businesses in Red Hook increased from 291 in 1991 to 457 in 1999—a 57 percent jump. In Gowanus, the number of businesses grew from 337 in 1997 to 374 in 2001—an 11 percent increase. · Most of the piers in Red Hook were not in active use during much of the 1970s and '80s, yet today Red Hook has a vibrant working waterfront. The Red Hook Container port is nearly at capacity; the number of containers shipped through the terminal increased by 246 percent from 1994 to 2000. In addition, more than 60 companies currently rent space in the Beard Street Warehouse and Pier 41, two piers that were almost entirely empty a decade ago. And Erie Basin, vacant in the 1980s, is now home to more than 100 vessels. · Red Hook and Gowanus consistently rank as two of the city's most desirable business districts for manufacturing companies, distribution firms and other industrial businesses. The area's proximity to highways, tunnels and bridges—and its convenience to Manhattan, where many firms’ clients are located—makes it an ideal location for companies that use trucks to receive raw materials and ship out finished goods. Unlike other industrial areas, trucks coming from (or heading to) factories in the area only have to spend a minimal amount of time on local streets. · The retention and creation of jobs, particularly well-paying blue-collar jobs, is tremendously important to the Red Hook/Gowanus community. In Red Hook alone, where public housing tenants make up approximately 70 percent of the neighborhood’s population, the unemployment rate is still around 18 percent. And according to the 1990 Census, the median household income in South Brooklyn—comprising Red Hook, Gowanus and lower Park Slope—was only 85 percent of New York City’s median income. More than 39 percent of all households, including 31 percent of the community’s population, had incomes below the federal poverty level. · The number one obstacle for businesses in both Red Hook and Gowanus is the lack of available industrial space. While there are a handful of uninhabitable sites in the area, there are virtually no ready-to-occupy industrial buildings with space available. · The conversion of numerous factories and warehouses in Red Hook and Gowanus—mostly for residential use—has permanently taken industrial space off the market at a time when vacancy rates for industrial properties in the neighborhood, across Brooklyn and throughout the city are near an all-time low. In fact, local property owners and real estate agents have had to turn away scores of businesses from other parts of the city that want to relocate to the area. · With so few industrial properties on the market, real estate prices in the area have increased by 75 to 100 percent over the past four or five years. Several manufacturers in Red Hook and Gowanus say that the recent spike in real estate prices will force them to move out of the neighborhood when their leases expire in the next year or two. In some cases, commercial buildings that could easily attract new industrial tenants are being offered—or, in a few instances, were already sold—at prices that could only support residential use. · The enticement to convert industrial buildings into high-end housing has already forced a number of job-intensive businesses to leave the area. Over the past few years, at least half a dozen industrial businesses in Gowanus have had to relocate because their space was converted into residential units. · Though the business community in the Red Hook/Gowanus area has provided jobs, supported community programs and opened parts of the waterfront for recreational purposes, business leaders believe that much more has to be done to develop a stronger relationship with the area's residential community. At the press conference, the business and community leaders urged local elected officials and the Bloomberg Administration to help ensure the future growth of businesses in Red Hook and Gowanus. Among other things, they called for the city to do a better job of enforcing existing zoning regulations and advocated for a moratorium on zoning variances granted by the city’s Board of Standards and Appeals. “The business community here has grown tremendously, if land use decisions and policy do not start to work to support this growth, the City will lose thousands of jobs ” said John Quadrozzi, Jr., Vice-President of the RHGCC and Chair of Planning Committee that oversaw the development of the report. “The nature of my business requires me to be in close proximity to our New York City projects. The industrial environment must be protected and our future here must be secured”. “These are New York companies, employing New York City residents, building and servicing New York’s infrastructure and markets” said Bette Stoltz, Executive Director of the South Brooklyn Local Development Corp. “This report is a call coming directly from the owners of these businesses themselves, and they need help.” “With an unemployment rate now greater than 18%, residents from Red Hook Houses are desperate for jobs,” said Earl Hall, resident leader and co-founder of Red Hook Rise, a youth development and sports program serving over 500 young people from Red Hook annually. “We call on the city to resist further conversion of dedicated manufacturing space, to enforce existing zoning ordinances, and to defend current jobs for Red Hook and South Brooklyn residents and to promote future job growth.”