De Blasio Plan for Garment District Spurs Fierce Debate

Even if you haven’t heard of the “Garment District,” you might recall walking through it: On those narrow streets between West 35th and 40th Street, Broadway and Ninth Avenue, it’s hard not to notice the manikins in colorful fabrics leaning in the window frames. The area has long been the center of the city’s garment industry and serves some of New York’s most esteemed fashion designers, as well as the costume designers in the neighboring theater district. Importantly, the manufacturing, sewing and warehousing jobs there have also long been a path to the middle class for immigrant New Yorkers.

Yet the story of midtown’s garment industry, like most of the city’s manufacturing sectors, is one of decline. Competition with overseas textile manufacturers has distressed the industry. In 1987, the city came up with a zoning mechanism it hoped would preserve what remained: a requirement, on certain side streets zoned for manufacturing, that if a landlord wanted to convert a manufacturing space to another commercial use, like office space, that half of the floor area be preserved for certain kinds of manufacturing, mostly garment-related. On other side streets that were zoned for commercial and residential uses, buildings over a certain size needed a permit to convert to residential and office uses.

Despite these rules, however, the industry continued to decline, with garment space falling from 9 million square feet in the 1980s to 830,000 square feet in 2014. The decline in jobs has been slightly faster than the decline in firms: there was a 53 percent decline in fashion manufacturing firms between 2000 to 2015 and a 62 percent decline in employees.

This year, the de Blasio administration laid out a new plan that it argues will shore up the industry. The administration’s recently announced $135 million investment in a new Made In New York manufacturing campus in Sunset Park will include 200,000 square feet for garment manufacturers to be available in 2020. Thanks to an earlier $100 million investment by the administration, there will also be an additional 500,000 square feet available for a range of manufacturers at the Brooklyn Army Terminal this fall. The city promises that in these government-backed centers in Sunset Park, manufacturers will finally find the long-term, affordable leases they need to survive. And nearby these government-backed centers, the city says there’s the possibility of up to 2.4 million square feet more in the private market of Sunset Park, where some landlords are already seeking garment manufacturing tenants.

In tandem with the investments in Sunset Park. the Economic Development Corporation (EDC) is partnering with the Council of Fashion Designers of America and the Garment District Alliance to provide a $51 million support package that will assist garment manufacturers in any part of the city gain access to investments in technology, workforce training, and business development, and to help cover relocation expenses.

At the same time, however, the administration has put forward a much more controversial proposal: to get rid of the 1987 preservation requirement in midtown, though without changing the underlying zoning. The city says that will allow some manufacturing firms to stay, but free up other buildings so the area can continue its current evolution into a hub for small, creative economy firms.

But that proposal to remove the preservation requirement has been met with strong objections from many garment industry representatives, who fear that removing the preservation requirement will cause landlords to kick garment suppliers out for higher-paying commercial tenants.

They say that while the industry has certainly suffered over the decades, it has achieved a kind of stability, with over 400 firms—over a quarter of the city’s total garment businesses—still in operation in midtown. Removing the preservation requirement could disrupt an ecosystem, these critics argue, where businesses depend on their proximity to each other and to designers and to the theater district. They’re not saying that the current zoning must stay, but that in its absence there must be some other mechanism to protect some of the garment center’s existing cluster.

A tense back and forth

Their protests have reached the ears of Manhattan Borough President Gale Brewer and other community representatives. On March 3, Brewer, expressing a number of concerns, asked the city to postpone its planned date to start public review for the new proposal. A few weeks later, her tone grew stronger.

“What I’ve heard is this: Most of the manufacturers who are still in the Manhattan Garment Center are there because they need to be. The administration seems to have trouble understanding that,” she wrote in a press release. “I urge the administration to start over.”

Reiterating many of these concerns, on April 12, Manhattan Community Board 5 sent a letter asking the city to put together a steering committee of stakeholders to explore all possible solutions.

“In all likelihood, the 1987 zoning needs to be revised to better reflect the realities of the industry and the district today, but not at the expense of destroying the garment manufacturing industry in the district and, perhaps, in the city itself,” Board 5 chair Vikki Barbero wrote.

That letter was followed by yet another on April 14—with Brewer, the chairs of community boards 4 and 5, Brooklyn Borough president Eric Adams, local Councilmember Corey Johnson and several other elected officials writing to EDC and the Department of City Planning asking for further delay and supporting the creation of a steering committee.

EDC has said they understand engagement with stakeholders is of incredible importance and will continue to solicit feedback on the plan through in-person and online surveys as well as in-person meetings. They are also reviewing the request for a steering committee, but want to move quickly on a plan of action to combat the continued loss of garment manufacturing jobs.

Other stakeholders have expressed a mix of reactions. Some designers have supported the calls of their suppliers to keep the preservation requirement, while Steven Kolb, the executive director of the Council of Fashion Designers of America, said that CDFA is neutral on the issue of the requirement but looks forward to the investments in the industry and “see[s] this as an opportunity to make the eco-system of production more city-wide at a time when the fashion industry is in need of a capital investment.”

The one organization that has expressed unwavering support for moving forward with the plan is the Garment District Alliance (GDA), the area’s Business Improvement District. The non-profit is funded by a tax assessment on local property owners, and its board includes 22 property owners and 11 commercial tenants, including one garment manufacturer. The GDA is known to have been lobbying for the removal of the requirement for quite some time; It’s no secret that many property owners in the area are eager to take advantage of liberalized regulations.

Responding to the community board’s April 10 letter calling for a steering committee, GDA representative Tom Corsillo wrote to City Limits, “It is interesting that a public body charged with rendering an opinion as part of the city’s mandated review process has done so prior to holding public hearings.”

In other words, garment companies aren’t the only ones with a stake in this debate.

The best plan for the industry?

Advocates for the plan say that transitioning some of the midtown garment firms to Sunset Park is perfectly logical: Sunset Park already has over 100 garment firms, the second largest cluster in the city. In addition, the Sunset Park option would be much more affordable: Rents in the new government-backed centers would be $16 to $25 per square foot, while Joseph Ferrera of the Garment Center Supplier Association says that average rents in the Garment District are in the low $40s.

EDC says that to craft this plan, the city has done significant engagement with over 100 manufacturers, suppliers, wholesalers and designers, including firms of a range of sizes and with a range of lease types, over the past 18 months. After recent door-to-door surveys, EDC says it has identified 50 businesses that want to learn more about the Sunset Park relocation package and 10 businesses that have asked for tours of the new facilities.

Barbara Blair, president of GDA, acknowledges that removing the preservation requirement may cause rents in midtown to rise, but she believes it’s possible that the firms that need to be there—particularly ones who work in high-end design and depend on their proximity to designers in the area—will be able to stay in the area, as some already have long-term leases, while low-scale garment suppliers who don’t depend on that proximity can relocate to Sunset Park. And she says that making the Garment District a more thriving place, with better retail and office spaces, will have a cyclical benefit for everyone: Designers will be more likely to stay in the area rather than relocating to other hot neighborhoods like SOHO, and their presence would in turn benefit the suppliers.

Critics, however, say that garment manufacturers in midtown are a crucial part of a highly interconnected industry that includes fashion design, marketing, sales, and collaborations with design students at FIT, Parsons and Pratt. They argue that Sunset Park’s distance from this area and the theater district would be greatly disruptive, with consequences for manufacturers, who would lose business, and with great inconvenience to fashion and costume designers.

“Members who work in Lincoln Center at the Ballet or Opera go to the district daily to purchase the supplies they need, and the proximity even makes it possible to run out and make it back to the shop in-time for a last-minute fitting,” said Patricia White, president of the Theatrical Wardrobe Union Local, in a letter to Community Board 5. “A plan that removes the zoning protections…will add hours to our work days and costs to our employers. It may even mean that money now spent in the city will be used to order supplies online, from places far away, which will hurt New York.”

There is also an ongoing dispute about where garment manufacturing workers reside, and whether relocating firms to Sunset Park would shorten or lengthen workers’ commuting times.

Some critics believe the Sunset Park hub caters to a different kind of garment worker. Ferrera says that according to Bureau of Labor statistics, garment manufacturers in Sunset Park make much less than those in midtown. Some stakeholders view this as a sign that lower-skill, lower-wage manufacturing firms have already moved to the outer boroughs and those that remain in the Garment District are the high-skilled suppliers for midtown designers that would have more difficulty relocating.

Brewer has also voiced concerns that there won’t be enough space in the government-backed Sunset Park centers to accommodate all displaced firms, that the centers would not be online in time, and that the private real estate market in Sunset Park is also gentrifying. In her March letter, she notes that in addition to 830,000 feet of garment manufacturing, there are also 360,000 feet devoted to the “warehouse function”—arguing, in other words, that altogether the midtown garment center takes up more space than the city describes.

Dreams of a center in the garment center

Just about everyone acknowledges that the current zoning regulation isn’t working and that the city must do something to help the garment industry survive. Critics of the de Blasio plan, however, argue that the city should explore mechanisms to preserve some of the cluster in midtown.

“While we do not yet have all the answers, we are becoming increasingly convinced that city support for some significant amount of space for garment manufacturers in the Garment Center is essential to the preservation of the industry, regardless of investments in the Bush Terminal,” wrote the elected officials and community boards on April 14. If space could not be acquired, they added, “some lesser preservation requirement may work to preserve some level of manufacturing.”

Ferrera told City Limits that, considering that today there are roughly 1.2 million square feet of garment-related industry uses in the district, he thought half a million square feet of dedicated garment space might be enough to serve as an “anchor.” The space, he said, could be in one building or spread across different floors in a few, and it could be owned by a mission-driven organization or operate as a “commercial condominium” with each space owned by a manufacturer.

But people who support the de Blasio plan predict that trying to find an anchor space in midtown would fail today for the same reasons it did eight years ago, when the Bloomberg administration tried to consolidate the midtown industry into one building: The cost of purchasing such a building.

There’s another source of tension between the garment industry and advocates for the current plan. Ferrera and others argue that part of the reason the preservation requirement didn’t help to protect the industry is because the city failed to enforce it. In his view, landlords and the city are at least in part responsible for creating the garment industry’s current anxieties.

According to city statistics, there are 5 million square feet of uses already in the district that are not garment manufacturing. While some of this square footage may have been converted legally or have existed before the requirement, it’s also the result a lack of complete enforcement of the regulation. The city says it only responds to complaints of violations, that catching violations can be difficult due to the difficulty of gaining access to properties and that it does not have the power to evict a non-compliant tenant unless there is a life threatening safety issue.

GDA’s Blair says the lack of total enforcement benefited the neighborhood. “If you had enforced all these non-complaint uses…we would have vacancy rates in the Garment District right now of 42 percent!” she says. Instead, vacancy rates have declined from 13 percent in 1987, when the preservation requirement was instituted, to six percent today. And she notes that some garment firms have survived inside and outside the special enforcement zone, suggesting other factors were more important to deciding which firms stayed and which went.

Whether or not the lack of stringent enforcement was in the city’s best interests, the difficulty of achieving compliance is perhaps itself a reason to pursue a different strategy to protect the garment industry. Yet the historical failure to enforce the rules also explains why some stakeholders feel the city has an unfilled responsibility to the area’s garment industry.

A plan to property owners’ liking

Ferrera argues that the true beneficiaries of proposal to remove the preservation requirement are the area’s property owners. He says the city has been engaging with property owners much more than suppliers, and that by one back-of-the-envelope estimate, the lifting of the preservation requirement could create a $2 billion windfall for property owners.

The Economic Development Corporation greatly disputes this characterization and holds firm that the city is advancing the initiative not to benefit property owners, but to benefit the long-suffering garment industry. Blair of the GDA also contests the idea that landlords stand to make a windfall from the removal of the requirement.

“$2 billion is a ridiculous number and I would love to know where it come from,” she says.

But Blair say there’s another side to this too: that it’s important to look at the issue from the perspective of property owners.

“The buildings that are in the preservation zone are family held buildings,” she says, arguing that the local property owners are not big developers but simple families in commercial real estate who’d like to make a fair return. “The city placed a burden on them,” she says, referring to the 1987 restriction.

While it is impractical for property owners to comply with the preservation requirement, there are also problems with violating the regulation, she says: noncompliant property owners often have trouble obtaining financing because banks are not willing to lend to them, and they have trouble attracting retail, as noncompliant tenants also have difficulty obtaining bank loans.

It’s true rents are lower in the Garment District than they are in almost every other midtown neighborhood. In 2014, the commercial firm Newmark Grubb Knight Frank told The Real Deal that rents averaged about $58 per square foot in Chelsea, $62 in Flatiron but only $52 in the Garment District. That said, a wave of hotel development and new retail has added to the area’s hype, and rents have at least doubled in the past 15 years, a broker told The Real Deal.

But considering their proximity to the redevelopment happening in Hudson Yards and slated for Midtown East, it’s easy to see why property owners operating under the manufacturing requirement might feel they got the short end of the stick.

“You look at midtown Manhattan and you’ve upzoned every contiguous neighborhood,” Blair says. “There’s no upzoning here. No upzoning. Zero. All we’re saying is, allow businesses to come into spaces that were not being used by the industry because they were vacated by the industry.”

Not all the property owners in the preservation district are small-time landlords. As Crain’s reported last week, one is Herald Square Properties, which owns or manages over one million square feet in Manhattan.

One rationale for the plan is that Manhattan needs more office space. A recent analysis by the Center for an Urban Future found the city faces a shortage of small business space, and a 2012 study of the area directly south of the Garment District found a similar dearth of office space. Under the current regulations, even fashion design firms that might need office space are often unable to find compliant space in the district, the city says.

The responsibility of preservation

There’s a question of greater import here, and that’s how much the fashion manufacturing sector is worth preserving, and if so, whose responsibility it is to do so.

The de Blasio administration argues it sees the fashion manufacturing sector as absolutely vital to the city, both as a source of employment and as an integral component of the city’s revenue-generation fashion design industry. A press release announcing investments in the Sunset Mark Made In New York campus touts fashion industry jobs as making average wages of $57,000. The city’s investment in the Made In New York campus is clear indication that the city does see it as a public responsibility to preserve the sector—though the administration as of yet disagrees that purchasing a space in midtown is worth taxpayer dollars.

“We want to get the garment manufacturing industry growing again, because it’s a vital link in our overall economy,” said Stephanie Baez, NYCEDC spokeswoman, in an e-mail to City Limits. “If we continue to do nothing, then that critical part of the ecosystem will perish and therefore put the City’s entire fashion industry in peril. That’s why the de Blasio Administration has invested nearly $300 million since taking office in spurring the growth of garment manufacturing, and why we’re working with stakeholders on the ground to hone a plan to strengthen workers, the industry and neighborhood.”

Another question is how much landlords, in a city where owning used to come with more risks and is now increasingly lucrative, have a responsibility to assist in the preservation of manufacturing.

In Ferrera’s opinion, the city should use some sort of zoning mechanism to create manufacturing space in one part of the district in exchange for liberalized zoning in another.

“This administration embraced [mandatory] inclusionary housing, so we are dumbfounded why the idea of inclusionary housing in a commercial context has not caught the interest and the imagination of this administration,” he says, referring to the city’s new requirement that any developer in an upzoned area provide a portion of rent-restricted apartments. “Manufacturing jobs are good paying jobs that do not require higher education to qualify, they develop skills that enable workforce development and a path to economic stability for a wider variety of New Yorkers.”

The de Blasio administration has been exploring ways to use zoning to require manufacturing, such as by requiring the preservation of a percentage of manufacturing space in exchange for allowing a developer to build a higher or larger building. A pilot project under that model has been launched in Greenpoint, and there’s some expectation that a potential rezoning of Gowanus will also include some sort of zoning measure to create advanced manufacturing space.

Blair of the Garment District Alliance says she agrees garment manufacturers are vital to the city’s economy, but she also argues that claiming one “business sector should subsidize a completely other unrelated business sector is disingenuous.” She rightly notes that the 1987 restriction provided no bonus density, or any other incentive, for property owners.

During the Bloomberg years, there was actually talk about GDA contributing to a plan to purchase a garment manufacturing building in midtown, but that negotiation fell through, Blair recalls. Adam Friedman, director of the Pratt Center for Community Development, says that given the importance of preserving the highly-interdependent ecosystem of the midtown garment center, it may make sense for the city to step up and make its own investment in ensuring the preservation of a critical mass of firms.

“I have to say, it’s worth it to the city,” he says. “The city benefits form having a vibrant Garment District.”

Brewer is hosting “Urban Manufacturing and the Garment Center,” a forum to discuss the plan, on Monday, April 24 from 4 pm to 7 pm at the High School for Fashion Industries.