As Sunset Park Gentrifies, Residents Accuse Building Owner Of Dropping Manufacturing Commitment

The owner of Liberty View Industrial Plaza in Sunset Park is looking to back out of a deal with the city to reserve most of the building for manufacturing tenants.

Sunset Park has been roiled in recent months by protests against a plan to rezone Industry City, an industrial waterfront complex in Brooklyn. Following concerns from city lawmakers and community members that the rezoning would spur gentrification and undermine the neighborhood’s 40-year commitment to bring manufacturing jobs back to the waterfront, officials at Industry City agreed to delay the initiative.

However, while activists have been focused on Industry City, the same tensions are emerging over a neighboring retail and manufacturing center called Liberty View Industrial Plaza. For the past year, Salmar Properties has been trying to back out of an agreement with the city that requires the company to dedicate most of its 1.1 million square-foot property at 850 Third Avenue to manufacturing tenants. The company is seeking to be released from a deed restriction that demands that 85% of the building — or 935,000 square feet — be set aside for manufacturing uses.

In a letter last year to the city's Economic Development Corporation, Marvin Schein, the managing member of Salmar Properties, cited both a difficulty in attracting tenants and an analysis from lender Goldman Sachs that determined that the projected financial return was not generating enough revenue for Salmar to repay its debt.

The company added that along with competition from Industry City and Brooklyn Army Terminal, another nearby manufacturing hub, the building's layout — low ceiling heights and smaller column spacing — have made it difficult for them to attract tenants.

Along with the backlash over the proposed rezoning of Industry City, the controversy surrounding Liberty View speaks to the challenges New York City faces in trying to preserve manufacturing in a gentrifying neighborhood. In 2011, the city sold the building, which had been largely abandoned for 30 years, to Salmar for $9 million and kicked in $37 million in tax benefits to make a business model predicated on manufacturing more feasible.

Now the question is: how does the city ensure property owners like Salmar keep up their end of the deal?

So far, Liberty View's main tenant is Amazon, which in 2015 inked a seven-year-lease deal for a distribution center. Salmar later joined Industry City in a bid to lure Amazon to Sunset Park for its plan to build a second headquarters in New York City.

But even with Amazon, more than half of the building is still empty, and only roughly 20% or 200,000 square feet of space is being used for manufacturing, according to documents obtained through a recent Freedom of Information request. Meanwhile, about 167,000 square feet has been leased to retailers as part of a separate deal Salmar struck with the city to help use higher retail rents to subsidize the manufacturing space.

The huge vacancy along with the effort to land Amazon has generated suspicions that Salmar is really out to lease the building to a corporate tenant.

"I think they are sitting on it to find the right tenant who can pay the premium rent," said CUNY Professor of Urban Studies Tarry Hum in an interview last October.

Dan Murphy, a lifelong Sunset Park resident and Community Board 7 member, said he wanted to know that Salmar Properties is acting in good faith, and not purely motivated by profit. “Who cares what Goldman Sachs has to say about the equity investment?” he said.

“Has Liberty View worked hard enough?” he added. “Or are they just chasing the bottom line?"

In response to our request for an interview, Council Member Menchaca said in a statement, “Requiring that the vast majority of the building be reserved for manufacturing businesses is an important protection for the Industrial Business Zone and the future of our neighborhood.”

He added: “Liberty View committed to being part of that growth. They should be held to that commitment.”

A spokesperson for Salmar did not respond to a request for comment.

For Sunset Park's working class residents, the push to retain manufacturing, even amid its structural decline, makes sense. Manufacturing jobs tend to be higher paying than retail jobs and lead to more opportunities for promotion. According to the Bureau of Labor and Statistics, the average hourly salary for someone working in manufacturing is $27 as compared to $11 an hour in retail. In a community like Sunset Park, the quality of employment matters. Despite a 5% unemployment rate, one in three residents live in poverty.

But while manufacturing businesses bring jobs, they pay less in rent. Manufacturing space in Sunset Park typically leases for between $14 and $30 per square foot, while retail businesses pay three times that amount.

“It was a pretty radical deal that got done,” said Jesse Solomon, deputy director of the Southwest Brooklyn Industrial Development Corp, in an interview last fall. “It’s not normal for a large building like that to have the kind of deed restrictions that it does,”

Still, while Solomon acknowledges the limitations of the building’s floor plan, she said that neither the nearby Brooklyn Army Terminal nor Industry City have had difficulty finding tenants. “We believe there is sufficient demand to fill all of the industrial space in Liberty View Plaza,” she said.

The Brooklyn Army Terminal is 90% occupied, according to the most recent EDC report.

A spokesperson for Industry City said that more than 1 million square feet of space is leased to manufacturers, the highest level to date. The entire complex has roughly 6 million square feet and includes a mix of commercial office and retail tenants as well as restaurants.

In addition to tax incentives, Salmar Properties requested and was granted a zoning exemption that allowed them to rent space to big box retailers such as Bed, Bath and Beyond. Billed as a “mega complex,” the retail center opened in 2017.

“We're doing everything we can to attract industrial tenants here, we're still committed to that,” said Ian Siegel, the Project Manager for Liberty View Industrial Plaza. He added that Salmar Properties installed 17 freight elevators that cannot be used for passengers and have dedicated 70,000 square feet on the first floor to shipping and receiving. Siegel declined to share the cost of rent in the building, and that information was redacted from government documents.

When asked if they were in danger of going under, Siegel said that they are managing the money from existing rents carefully and are financially stable.

In response to questions about the building, the Economic Development Corporation released the following statement: “NYCEDC remains committed to providing space for companies to flourish and to support the City’s industrial sector. In that spirit, we’re currently working in good faith with the developer to evaluate options to ensure the project’s viability.”