Development Magazine Summer 2014

Integrating “New Manufacturing” Into U.S. Cities

Local governments have long used zoning ordinances to separate manufacturing facilities (and the noise and pollution they produced) from residential, office and other commercial uses in U.S. cities. But over time, traditional manufacturing facilities (and the jobs they created) began to relocate away from large cities, first to parts of the country that offered cheaper labor and land, then offshore. Today, many of the manufactured goods purchased in the U.S. are made in other countries.

This loss of manufacturing left America’s cities with many vacant, unused industrial buildings. Cities lost real estate taxes as well as jobs, as owners often demolished these buildings and did not replace them. Many industrial areas became virtual wastelands of parking lots, vacant buildings and truck depots.

The New York Experience

This was especially true in many areas zoned for manufacturing in New York City. A section of Manhattan now known as Hudson Yards remained substantially underutilized for more than 25 years after manufacturing companies began to leave. Similarly, block after block of vacant land and buildings sat unused along the Brooklyn waterfront.

head shot of Mark Levine

Mark Levine

During the last 10 to 15 years, new types of manufacturing have evolved and been attracted to New York City. These “new manufacturers” — high-tech firms, artisanal food developers, small furniture manufacturers and small apparel makers — have criticized zoning laws for categorizing them like traditional manufacturers, forcing them into often-outdated industrial districts. Instead, they sought to locate closer to the urban core, mixed in with other commercial and residential uses.

Mayor Bloomberg’s administration acknowledged that the manufacturing designation of many large tracts of land was outdated. In a few areas, old industrial buildings were renovated for a variety of new uses. Gradually, the separation of uses by zoning has been modified as the understanding has grown that many modern manufacturers are no longer major polluters, and as the concept of “live, work, play” in a single building, complex or neighborhood becomes a reality in more parts of the city and the nation.

In 2005, both the Hudson Yards area and approximately 184 blocks in Williamsburg-Greenpoint Brooklyn were rezoned to permit residential and commercial uses in areas formerly zoned for manufacturing. After this rezoning, and in spite of the Great Recession that followed, both areas have experienced substantial residential and some commercial construction.

Mixed-use Districts

Convincing city officials that new manufacturing uses are a growing and positive trend in urban areas — one that should be protected and expanded — is a challenge for building owners and developers. New York City’s experience over the past 10 to 15 years is one positive example that other municipalities can follow. Although yesterday’s large, traditional manufacturing users have left New York City, they have been replaced by smaller, more nimble and entrepreneurial manufacturers that are adding jobs and tax revenue. Light manufacturers such as ice cream and chocolate makers, custom cabinetry makers and craft beer breweries have located in these areas. These types of new manufacturers will set up shop in other cities as well — if local policies and zoning allow them to do so. 

Local governments should be encouraged to rezone manufacturing districts in ways that allow new manufacturing to coexist with residential and other uses. Enlightened governments that recognize the growing live, work, play trend as a model for neighborhood change also are permitting districts that allow light manufacturing uses to coexist with residential, commercial and entertainment venues. Perhaps zoning to permit mixed-use districts, like some of New York’s examples, should be explored in other areas of the country.

The Miami Experience

Another way of integrating new manufacturing with other land uses is to encourage local governments to consider form-based zoning, such as the new Miami 21 code. This relatively new approach to zoning emphasizes the relationship among streets and buildings, public and private open spaces and mixed-use districts to create a cohesive environment and focuses less on regulating where individual property types may locate. Miami 21 departs from the traditional approach of segregating uses and creates two manufacturing categories — light industrial and heavy industrial. Light industrial uses, which include most new manufacturing types, are generally permitted to be colocated with commercial, office and residential uses that may benefit from their proximity. Only activities that involve the manufacturing, processing, generating or storing of materials that constitute a physical or health hazard are prohibited within the light industrial zone.

The benefits of the form-based approach are increasingly evident in the Wynwood neighborhood of Miami. Like parts of New York, Wynwood is undergoing a renaissance born of the introduction of new uses, including retail, restaurants, bars, residential, art studios/galleries and new manufacturing.

City officials throughout the U.S. need to be made aware of the new trend in manufacturers who are attracted to the urban core because of the existing population and relatively inexpensive land. In addition, local officials should be encouraged to protect existing manufacturing zones and, when appropriate, to expand those districts to enable the growth of new manufacturing as seen in New York and Miami. When they do so, these governments will win by expanding both their job markets and their tax bases. 

From the Archives: Business / Trends Articles from the Previous Issue

Two businessmen looking at laptop

10 Tips for Growing a Private, Non-Family-Owned Business 

What does it take to nurture and grow a private, non-family commercial real estate development company? Brian Coulter, managing partner at The JBG Companies, a prominent investor, owner, developer and manager of real estate properties in the Washington, D.C, metropolitan area, described how his firm handles these challenges, at NAIOP’s Development '13 conference.

K Street, Washington, D.C.

Back to the City: Déjà Vu All Over Again 

Through the rearview mirror of 2013, the demographic preferences that are shaping real estate’s future are coming into clear view: The emerging millennial generation is creating a strong “back to the city” movement, with the baby boomer generation as its partner.