Does New York Need Another Food Hub?

 

Making tomato sauce at City Saucery in the Brooklyn Army Terminal


ONE THING anyone manufacturing food in New York City knows is that “real estate is crazy,” says Marisa Wu, the founder of Brooklyn-based taffy maker Salty Road.
Crazy real estate prices helped drive the city’s Economic Development Corporation to spend $15 million to turn a small piece of the 4.1 million-square-foot Brooklyn Army Terminal on the Sunset Park waterfront into a new hub for foodmaking. The 55,000-square-foot building has now attracted three tenants, with room for a half dozen more, to what the city touts as affordable, code-compliant space ideal for food manufacturing.
With rents between $22 and $24 a foot, compared with some industrial space on the market now for $14 to $18 a foot, according to online listing service Loopnet.com, the price is well above what many foodmakers are paying for leases they signed in the past several years.
Julie Stern, the city’s point person at EDC for the Army Terminal says the spaces offer intangible benefits that more than make up for the market rates.‘Rent is just one component,” Stern said in an interview. “Sure, New York City is expensive from a real estate perspective, but when you think about access to skilled labor and markets and transportation, the all-in costs are lower.

Smaller spaces are hard to find

    ”Smaller spaces, like the 2,000-square-foot floorplates available at the Army Terminal are hard to find on the open market, and the city doesn’t charge real estate tax at the Terminal and offers bulk-prices on electricity and gas, she said. Besides, says Stern, she’s got to work with a “double bottom-line”: help create jobs or keep existing jobs in New York, and ensure city property generates a profit.
Using the Army Terminal’s contractors, and the EDC’s assistance to secure city, state and federal permits made the price worthwhile for Michael Marino and Jorge Moret, whose City Saucery cooks and bottles tomato sauces devised by Michael’s mother, Carolina, a native of Calabria, Italy, and an alumna of Staten Island’s Enoteca Maria, a restaurant staffed by a rotating cast of “international grandmothers.”

Marisa Wu Making Taffy
Marisa Wu spinning taffy at the Brooklyn Army Terminal   

Like the other tenants at the Army Terminal, City Saucery got some givebacks including a grace period and a break in buildout costs to entice them into the space. The pair had outgrown a shared kitchen at Long Island City’s Entrepreneur Space, and now employ three full-time staff, and hope to ramp up to 5,000 jars a week, with a piston-filler machine. “It’s a little difficult to scale up and still share a kitchen space with 80 other producers,” said Marino.
Masaki and Yukimi Momose say the space works well for them. Momose got his start in New York in 2010, while visiting his sister in Manhattan’s Murray Hill neighborhood. Noticing a weekly greenmarket across the street, he got permission to sell salad dressing next to a vegetable stand. “The first day, I sold only two bottles,” he recalled.

The sales gimmick

    Speaking little English, but aware he needed a gimmick to jumpstart sales, Momose put up a sign to entice buyers. “It said ‘If you teach me one new word of English, I give you $1 off.’ Kids came and they brought their parents, and I sold 18 bottles.” He collected 400 words, and says his favorite was “entrepreneur.”
While his wife worked as a chef in a sushi restaurant, Momose rented shared kitchen space in Sunset Park, Brooklyn, making and bottling Momo Dressing, which he now sells at markets including Whole Foods across the New York area. Momo Dressing moved into the Army Terminal a year ago, as its first tenant, attracted by the location, with views of New York Harbor, and the option of room to expand his growing business.
Despite the convenience of a tailor-made factory space, Salty Road’s Wu says she’s struggling to produce in New York. “There are so many challenges to manufacturing in New York City,” she said, citing endless regulations, the high cost of living, which means paying higher wages to keep her staff, and the very high cost of real estate, including a standard practice on many city commercial leases of adding 25 percent to the square footage to cover the cost of common areas.
Strapping a pizza-sized lump of taffy base onto a stretching machine, Wu says she looked at manufacturing upstate, but for now, she says “the reason I am doing this is because I love New York City and I want to live here.” She says with all the added costs of doing business in New York, she’s given her firm five years grow big enough to make it worth staying in the city. If not, she’s gone.“I’ll end the lease if we don’t reach that size.”

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