If they build it, will they come?
Following through on plans announced earlier this year to create dedicated space for fashion manufacturing in the Garment Center, the New York City Economic Development Corp. (NYCEDC) recently released a Request for Expressions of Interest (RFEI) to identify respondents interested in acquiring and operating property in or around the Midtown Manhattan area that will provide dedicated space for fashion manufacturers.
The building to be acquired would provide fashion manufacturers with real estate stability through affordable, long-term leases offered to tenants. In addition, the City of New York has committed up to $20 million in funding toward a portion of the acquisition costs, as part of an ongoing mission that has crossed over City Hall administrations to revive apparel manufacturing.
NYCEDC said it is looking for respondents “seeking to preserve and strengthen fashion manufacturing in the historic Garment Center by providing much-needed real estate stability to the industry.”
“Providing financial support for the acquisition of a Garment Center building dedicated to garment production is fundamental to our commitment to fashion design and manufacturing both in Midtown and across the city,” Deputy Mayor Alicia Glen said.
A concurrent program from the New York City Industrial Development Agency (NYCIDA) offers an incentive package that can reduce property taxes for eligible property owners who offer long-term, affordable leases to fashion manufacturers. The program requires property owners to offer 15-year leases with a maximum gross rent of $35 per square foot. In exchange, participating property owners receive discretionary tax benefits that range from $1 to $4 per square foot of manufacturing space that ranges between 25,000 square feet to 100,000 square feet. On Sept. 18, the NYCIDA Board approved three buildings totaling 200,000 square feet of fashion manufacturing space into the program.
Both programs are components of a comprehensive plan unveiled by the de Blasio administration in June that includes programmatic support for the fashion industry in partnership with the Council of Fashion Designers of America (CFDA) and the Garment District Alliance. The plan includes amendments to existing zoning in the Garment Center.
“The acquisition of a building is an important piece in the plan to create long-term stability for New York City apparel manufacturers,” said Barbara A. Blair, president of the Garment District Alliance, which represents property owners in the district. “A building dedicated to apparel manufacturing will allow for real estate certainty and is part of an overall program that will ensure the city’s fashion ecosystem in the Garment District, while ensuring opportunity for other business sectors in the district. We are encouraged to see that the issuance of the RFEI, in conjunction with the NYCIDA Garment Center Program and other plan elements, creates a balanced approach to addressing concerns of the neighborhood while recognizing the importance of the iconic fashion industry to the fabric of our city.”
There is some feeling that the current trade environment could benefit Made in America and Made in New York apparel and textile manufacturing. But any effort faces a steep climb to get manufacturing in the city anywhere close to what it was in its heyday. New York City’s garment manufacturing industry has lost 95 percent of its workforce since the industry’s peak in 1950. In the Garment Center alone, apparel manufacturing jobs have declined 85 percent since 1987 at the advent of the import era.
NYCEDC said the fashion industry is still a significant contributor to the city’s economy, employing more than 5 percent of the total workforce. Today, there are approximately 1,600 garment manufacturing firms citywide and about 25 percent of these businesses, or 400 firms, are in the Garment Center. These companies face immense global competition and real estate pressures despite preservation attempts. NYCEDC said.
Cal McNeil, program manager at the CFDA, said, “The NYCEDC’s efforts for investing in Midtown through the development of the NYCIDA Garment Center Program and RFEI for building procurement support an important part of the fashion ecosystem and local economy. The programs are in response to needs outlined by key industry stakeholders to create sustainable solutions.”
McNeil said the NYCIDA and RFEI Garment Center programs have the same mission the CFDA set out to accomplish in its Fashion Manufacturing Initiative (FMI), which is to support and preserve fashion manufacturing in the city to provide local resources for brands of all sizes. The FMI program, a public-private partnership, provides funding through grants to New York City-based fashion production facilities meant to support the local manufacturing sector.
Last year‘s grant fund recipients received financial awards of more than $480,000 for equipment, software, infrastructure upgrades, capital improvements and workforce training to help business growth, offer designers advanced services and preserve fashion manufacturing in the city.
“The EDC’s plans will allow the CFDA to continue and expand our programming to further our impact on manufacturers and designers alike,” he said. “Topics like Made in New York and Made in USA are coming to the forefront of the industry and are increasingly important to our designer network. Producing locally allows brands to work with high quality manufacturers and take advantage of a more nimble supply chain and shorter lead times, while avoiding some potentially expensive costs such as duties and tariffs on their goods.”
He said there continues to be a strong demand from consumers for locally made products that can be associated with sustainability and transparency. As for CFDA members, McNeil said, “There has not been a one size fits all approach for supply chain strategies and brands are producing locally at varying levels where it makes sense for their business.”
In a survey done in partnership with Sourcing Journal in September, including insights from industry experts and the readership, McKinsey & Company found that 79 percent of respondents think it likely that there will be a major move toward nearshoring for speed by 2025. For North America, 30 percent of respondents indicated that the U.S. would be the most important nearshoring market by 2025, followed by Mexico with 20 percent, and 7 percent who count Haiti and Guatemala.
The biggest setback for many companies in considering bringing more product closer to home has long been labor costs, with lack of capability and capacity trailing as close seconds. By 2025, 82 percent of respondents in the McKinsey-Sourcing Journal survey expect to move more than 10 percent of their total sourcing volume to nearshoring locales.
Two recipients of the CFDA’s FMI program were hopeful but pragmatic about the NYCEDC’s potential for success in the new projects.
Tina Schenk, who owns patternmaking and fit consultancy firm Werkstatt on West 36th Street in Midtown, said the dedicated facility should include vocational training, which she feels is lacking in the city.
“There’s a knowledge gap that has hindered Made in New York revival efforts,” said Schenk.
She said the rent support would be vital for the city’s project to succeed because the cost of living and operating a business is so high. While city-supported efforts in Brooklyn and Queens have met with limited success, Schenk said for her business and many others, it is important to be in Manhattan for the proximity to the fashion brands and other suppliers.
Raylene Marasco, president of Dye-Namix, a textile dyeing, printing and fabric development firm located in TriBeCa, said of the city’s proposal, “Anything that supports manufacturing, textiles, patternmaking, trimming or services for the industry is a step in the right direction.”
Marasco added, “I’ve been exposed to more factories producing in New York of late than before. I’m not sure whether there’s been an increase in the actual number of factories or that I’ve been made more aware of them through the CFDA and their programs.”
On the other hand, she said business has become challenging because a lot of other countries, specifically Italy, are providing faster services and requiring lower minimums for digital printing. Italian firms are attempting their own revival of an industry that has declined over the last decade or so due to similar challenges from lower-cost Asian suppliers as the U.S. has.
Made in New York can be viable if organizations and companies make the industry more aware of the capabilities available for smaller production runs, sampling and special services. In this day of speed and agility being so important in the supply chain, she feels Made in New York can play a vital role.
“What I’m liking about what the CFDA is doing is they are making the manufacturers aware of all the workshops and events happening in New York,” Marasco added. “Anything that brings manufacturing back to New York or keeps manufacturing in New York in any way is important.”