There is a new opportunity in our changing cities to connect more residents with economic opportunity. We can do so by integrating small-scale industrial uses into our city development. Let’s call this mixed-use industrial real estate.
We are seeing a resurgence of small, local producers who are harnessing low-cost technology and changing markets to sell hundreds and thousands of locally produced consumer products. Documented early on by Chris Anderson, and seen across the country today, these companies are often businesses with fewer than 20 employees and sell both in local markets and globally online.
These small-scale manufacturing business owners generally need dedicated production space of less than 5,000 square feet (often as little as 1,000 sq. ft), use clean technologies (think laser cutters), but need affordable, dedicated industrial/production space. They do not fit into office space because of noise, and most retail space is too expensive. So they often find marginal, cheap space at the fringes of our cities and survive on short-term leases or move far out into the suburbs.
The time is ripe for policy change and private sector investment to create this kind of development. The demand for small-scale consumer goods and locally made custom goods are growing, while access to tools and technology gets cheaper. We need to provide affordable space for our local producers to grow their businesses in our city neighborhoods. By doing this, we will be able to connect more people to good-paying jobs, strengthen our small business and startup sectors, and keep these jobs in the city.
Defining mixed-use industrial
A mixed-use industrial development is part of a reuse project that includes new buildings and rehabilitated older buildings, or the rehabilitation of an existing industrial/warehouse structure within a neighborhood with a variety of land uses. New construction is also possible, but the costs need to be offset within a larger project. Two examples begin to illustrate the opportunities for this product type.
Non-Profit Industrial Developer
Greenpoint Manufacturing and Design Center launched 22 years ago to save an old industrial building with 360,000 square feet across from the United Nations in Brooklyn, NY. The building was owned by the city, but it was run down and not managed well. A local community development organization stepped in to help save the building. It helped to create an independent company to redevelopment the building and lease it out to local producers. Today, GMDC completed purchase and renovation of seven buildings in the Greenpoint neighborhood totaling over 700,000 square feet and 120 tenants. The average tenant is about 18 years in business, and average salaries are $48,000—well above local service sector salaries. The tenants are predominantly local artisans building products for the local market, but at manufacturing scales.
New Construction
Forest City is developing Pier 70 in San Francisco and plans to build 100,000 square feet in a new industrial-use building as a part of a large waterfront development plan. The proposed plan includes residential, office, retail, parks and industrial uses. The plan also includes rehabilitation of Civil War era buildings that will also be turned into small-scale production uses. The new manufacturing/production building is modeled off of an existing building in the neighborhood called the American Industrial Center.
Local Economic Opportunity
Building mixed-use industrial products in our cities is a key step to diversifying our real estate market and our employment base. It also makes our local economies and markets more resilient in the long-term.
People as an Amenity: Small-scale producers and manufacturers attract people who want to be a part of the Maker community and support locally made products. Events to showcase new products and new business workshops on techniques within the development can help bring people together, strengthen the community of producers and promote it as an employment avenue to more neighbors.
Economic Resiliency: Cities with a diverse set of small businesses can weather market changes more successfully and are less likely to lose their growing businesses to other cities or countries. Many cities are working on “economic gardening”—the concept of growing the size and scale of existing local businesses—because these owners are most likely to stay in town. Building affordable spaces for these businesses to stay in the city is another key step.
Power of the Local Market: The growing movement of Buy Local is spreading across the United States and providing producers with strong local markets alongside access to a global market through the internet. Organizations like SFMade, in San Francisco, work to strengthen the community of local producers and help them market their products locally and globally. More people are gravitating towards unique and custom products on sites like Etsy, to pop-up events like MadeInDC, or to e-commerce platforms like Huckberry. The local market is growing in power and the dollars being spent in it are growing.
Building Mixed-Use Industrial
Building mixed-use industrial products in our cities will contribute to our local economy and strengthen the identity of our neighborhoods, but communities need to prepare for it with specific steps.
1. Zone for it: Communities need to protect existing industrial properties in targeted locations. Small-scale production can also be added as an optional use to other existing zones.
2. Provide financing and incentives: Existing finance tools such as New Markets Tax Credits or Rehabilitation Tax Credits will be important for industrial redevelopment efforts in specific neighborhoods. Other local tax credits or density bonuses will help as well.
3. Connect your history to new technology: New small-scale industrial space needs to connect to the community’s unique history of production and manufacturing. Many businesses are built off of skills developed at larger local industries. Cities should harness the power of the unique local skill base in any effort to grow the production sector.
4. Support business development: Producers should organize themselves to strengthen their community and exposure. Activities like meetups, showcase events, and local competitions all help promote a local producer sector. Platforms such as Kickstarter allow consumer-facing products to try out the market before spending significant dollars. Partnering with shared tool spaces like TechShop can help identify future business members.
5. Provide job training and outreach: Apprenticeship programs like the one in Washington, DC or the Chicago Manufacturing Renaissance program help bring more people into this sector by providing existing companies with a low-cost or no-cost way to train people. These programs are key to connect lower-income populations to hands on experience and better paying jobs.
Does your community have a mixed-use industrial neighborhood or real estate development? We are always looking for more examples—both recently built and historically occurring. Email us at [email protected] with your recommendations.
For other thoughts on the economic engine of cities and how to connect more people to opportunity, check out the blogs at http://cityminded.org/urban-opportunity/.