NYC s Garment District, Past And Future New York Neighborhood

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1 July 28, 2015 NYC s Garment District, Past And Future New York Neighborhood Pedestrians were rushing across Fashion Ave in the seconds before the light turned. In the crowd was a sight that has become increasingly rare in NYC s Garment District: a pullboy, dragging a wheeled clothing rack through the crosswalk. You don t see too many of them left; you used to see hundreds, remarked Eastern Consolidated principal and senior managing director Adelaide Polsinelli. Adelaide would know. A native of Manhattan, she worked in the Garment District while in high school, as a fabric converter. That was in the 1980s, a decade that brought the Manhattan real estate crash, which played a significant role in giving rise to what is now one of Manhattan s dynamic neighborhoods, Adelaide says. She gave Bisnow a tour of her old (and new) stomping grounds last week. We walked the district under humid, threatening skies, managed to stay dry, spotted only that lone pullboy, and were treated to historical perspectives courtesy of New York Historical Tours Kevin Draper, snapped with Adelaide on Seventh Ave. The Garment District wasn t alway s in Midtown. The fur trade was a key cog in the economy of New York City in the early days of Dutch and English settlement. Furs were extremely popular in Europe at the time, and the forests surrounding Manhattan teemed with game. It was the perfect export for the nascent harbor city, and profits from the trade made many men rich. One of them was John Astor, who used his beaverderived bank to develop a fortune in real estate and become one of NYC's legendary power brokers. Hence the beaver on the city s seal (pictured). That shows you how important the garment industry has been to New York City from the very beginning, Kevin says.

2 Beavers came to be pretty scarce in the woodlands around NY harbor, but the city's fashion industry adapted. Very quickly it became mass production of clothing for the masses," Kevin says. The Industrial Revolution spurred the industry's continued growth, and NYC was exporting clothing all over the world, making huge profits for owners but also increasing the dangers of the workplace for those toiling on the factory floor. As the city expanded north from its Colonial footprint, the garment industry rode the tide, concentrating in the Lower East Side and then moving to the East Village, where the "classic sweatshop" was the rule, Kevin says. Then came a tragedy that marked a watershed moment in both the city's history and that of the labor movement. On March 25, 1911, the Triangle Shirtwaist Factory Fire claimed the lives of 143 workers, predominantly young immigrant women. The factory was located on multiple upper-level floors of the Asch Building, on the corner of Greene Street and Washington Place in Greenwich Village. When fire broke out, workers were trapped because management had locked the exits, a common practice to prevent workers from taking unauthorized breaks. The fi re "changes the industry completely, Kevin says. Legislation and reforms led to the first standards for building safety, including mandatory inclusion of fire escapes. Those changes, coupled with the 1916 zoning and height restrictions, revolutionized construction in the city. "This also pushes the Garment District farther and farther up from the Village, Kevin says. Factories concentrated around the Flatiron area, where there was a shopping district for the wealthy known as the "Ladies' Mile." The problem was that workers on lunch break were mixing with shoppers, and "a lot of retailers did not like that," Kevin says. The industry looked north once again. In the boom years that followed World War I, Garment District owners sought entry into the real estate game (those who had not yet arrived, anyway), Kevin says. They chose to move operations to the Garment District's current home: the blocks north of Herald Square and south of 42nd Street, between Fifth and Ninth avenues. In the late 1800s and early 1900s, the Herald Square area was the city's theater and shopping district. Just above Herald Square was a vast slum known as "The Tenderloin." It was, Kevin says, "maybe an inch higher in class than the Five Points slum downtown. Dirty money was everywhere, and crooked cops loved it. It's how the Tenderloin got its name. Down in the Five Points we get nothing but chuck steak," Kevin says, re-creatin g cop talk of the time. "But up here we get good pads; we re going to eat tenderloin tonight!" Garme nt industry players gobbled up Tenderloin

3 real estate faster than dirty cops ate their ill-gotten steaks, as tenement owners couldn't resist the massive paydays they were offered to sell out. The result was an entirely new neighborhood of primarily Art Deco and Beaux Arts buildings, most of them featuring showrooms on the lower floors and factory operations on the higher levels. There s no better example of a neighborhoo d that s changed faster than here in the 1920s," Kevin says. "From 1920 to 1930, 130 of these buildings would be built. So, essentially, the Tenderloin was wiped out, wiped off the map, in 10 years. The buildings that rose with astonishing speed during the Roaring Twenties had big windows and very high ceilings; they were significantly influenced by the new safety standards. And they also were given wonderful artistic touches. An example of this is the Fashion Tower on West 35 Street (show n here), which has peacocks, a timeless fashion symbol, carved into the marble facade. The buildings have very beautiful, ornate, gorgeous Art Deco lobbies," Kevin says. "The whole idea is that the executive type, the white-collar type, is going in through the lobby; the employees who are making stuff are going in through other entrances." (Poor doors, as it were, are not without NYC precedent!) The Garment District had its heyday from the '20s through the early '60s. "As of 1960, over 90% of all garments made in the country were coming out of here; now it s less than 3%," Kevin says. The district's fortunes ebbed as international economic currents caused the textile industry to shift to China and other parts of Asia. It was all about cheap labor. In the 1990s, the same happened, but with inexpensive labor being supplied in Mexico. In the early '90s, late '80s, when the market really did crash for real estate, a lot of these buildings went into foreclosure because it was a perfect storm," Adelaide says. "The textile manufacturing was being done overseas, the owners of the businesses were seeing shrinking uses for their space, and there was no TAMI market yet; so owners had no choice but to either lose their buildings or sell them for whatever they could get. The tech industry, leading the TAMI sector, spurred the district's rebound. Key factors were the quality of the neighborhood's buildings, which were made to be reconfigured; the area's diverse transportation options (arguably the best array in the city); and the fact that Times Square, being a magnet for street crime, spared the sector from bottoming out like much of the city during the crack epidemic in the '70s and '80s. Most of the fashion industry manufacturing that remains is of the high-end sort, but industry-related businesses are still common. "The retail still kind of reflects some of the old uses, but it s changing; Urban Outfitters is here (pictured), Shake Shack is coming

4 here now," Adelaide says, noting that retail is starting to capitalize on the hotel and TAMI market, which is being lured by prices per square foot that remain among the lowest in the city. TA MI tenants are now seeing space here as a bargain, [compared to] paying $95 a foot at 11 Madison. They re looking here and seeing they can get space for $50 a foot with wide floor plates. So it makes it an attractive and compelling story for those tenants to move here where they are getting more value; and to that point, owners are now renovating their buildings to market to those tenants, to attract the higher rent and they re getting them." The Haier Building, at the corner of Broadway and West 36th Street, was built during the early 1920s to house an office of the now-defunct Greenwich Savings Bank. It is now owned by Haier America, a Chinese conglomerate, which leased ground-floor square footage to the Gotham Hall events space. Kevin said spaces like Gotham Hall have helped to give the district a new identity. "A lot of high-end type of charity events are held here during Fashion Week," he says. "It s adding a little bit of glamour to an area that in many people s minds was gritty." The district's increasing popularity has also been aided by Bryant Park, which hosts Fashion Week, and the 2005 Hudson Yards rezoning, which green-lighted hotels and residential development along Eighth and Ninth avenues. Adelaide says that street plazas have also played a major role. The one shown here occupies former traffic lanes along Broadway. Turning the grit to green, Adelaide says, arguing that the plazas, which are hated by drivers, are a boon to retailers because they make streetscapes more enticing to pedestrians. The retail rents have i mproved because of that. Expect the pace of change in the district to continue, if not accelerate, Adelaide says. A symbol of that change is the former Fashion Ave home of Parsons The New School for Design (pictured); it is slated to be razed and replaced by a Dream Hotel, one of a handful of hotels being developed. Investment by building owners, who have spent millions improving facades, installing new elevators and renovating ground-floor retail spaces, has contributed to rising property values and attractiveness to retailers, high-end fashion companies included. "The higherend designers started to move in because maybe their suppliers were here and now they could have an affordable presence nearby, Adelaide says. A store doesn t necessarily have to make all of their money from this location; the store becomes a branding opportunity and an advertisement." Here's a rundown, courtesy of Eastern Consolidated, of buildings that have sold or been ground-leased in the district since September 2014: 1375 Broadway, $310M (513,401 SF) 1407 Broadway, $330M ground lease (1.1M SF) 1369 Broadway, $38.9M (30,245 SF) 1370 Broadway, $186M (87,100 SF)

5 1412 Broadway, $250M (91,000 SF) 1400 Broadway, $310M ground lease (428,626 SF) 1372 Broadway, $222M ground lease (161,986 SF) Adelaide and Kevin along Fashion Ave, where the sidewalks feature the Fashion Walk of Fame, created in the late '90s to keep the district moored to its fashion roots. The Fashion Walk of Fame aside, if the district has a focal point, it's the plaza outside 555 Seventh Ave, between West 39th and West 40th streets. (The plaza is currently under renovation.) Here are displayed two iconic, fashion-themed works of art: one is a statue depicting a giant needle threading a button; the other is "The Garment Worker" sculpture. The latter (which was removed from the plaza to accommodate the renovation) is the work of Judith Weller. She based it on her father, who worked in the industry, started from nothing and finished as a profitable owner, Kevin says. She wanted to show that you could start from nothing in this area and work your way up to being a boss, Kevin added. And no matter how much the Garment District changes, that will always be true.