Temporarily Use of Empty Spaces in NYC

Space

New York City

Use of Temporary Space

(NYC Department of Parks & Recreation)

Images & Charts

Illy Push Button House

Store Front Library

Brooklyn Bridge Park

Chashama

Images & Charts

According to the NYC Department of Parks & Recreation, Dutch traders established farming communities and villages east of Manhattan around 1652. One such village, Vlackebos, literally translated into the "wooded plain." This wooded plane area at the time consisted of virgin thick forests coupled with flat terrain so it eventually was called Flatbush. The area stayed in this overgrown natural state for nearly three centuries. "But, in the 1920s, the new Interborough Rapid Transit linked Flatbush to the rest of the city, sparking new developments that began welcoming successive generations of immigrants. As with the Dutch traders, these newcomers built homes and roads, only more quickly and densely. Riding through East Flatbush today, there are still trees that line its quiet residential sidewalks. But the area's open space is virtually gone." (NYC Department of Parks & Recreation)

Today, NYC is over eight million people strong and space is still as precious as it once was in Flatbush. The problem today is not open spaces of forest but retail spaces, depots, vacant spaces and lots. Although the city can claim the largest urban park system in the United States, the need and use of space continues to be a growing concern for real estate developers, non-profits and of course, the citizens of the metropolis. "Over the last five years, the City has added more than 300 acres of new parkland, much of it by reclaiming stretches of the waterfront that were abandoned by industry decades ago. In other words, because space in the communities of NYC and the efficient uses of those spaces is so vital to the city's quality of life, it is essential that we all understand just how well or how poorly these spaces are being utilized." (NYC Department of Parks & Recreation)

This report aims to discuss those temporarily available empty and vacant spaces throughout NYC and what to do with these spaces? Who owns them; why are they empty and what is the demand for these spaces? There are many organizations already utilizing retail spaces, depots, vacant spaces, rooftops and more open available areas so this report tries to address using them as opposed to leaving them empty.

New York City

Use of Temporary Space

Introduction

In this highly economically motivated and highly technical globalized world, saving is rarely a priority. Our world is a world where resources get wasted every few seconds even though we all understand that this way of life is not sustainable. The obvious answer to the unasked question is that we must work together to capitalize our natural resources as soon and as efficiently as possible. But most people would only think of oil, electricity or water when discussing and thinking about natural resources. That is because historically throughout the United States, there has been a virtual laissez-faire attitude towards other great natural resources such as land and space. Yes, of course our nation's farmers and other agricultural users pay attention to land as a natural resource. But the vast majority of us are blind to the fact because of the seemingly infinite and abundance of land in our nation. With that in mind, the purpose of land therefore is to simply exploit it for economic gain.

But New Yorkers, specifically those urbanites of the Big Apple and the surrounding boroughs for decades have understood that land is not a limitless commodity. NYC has an ever increasing population coupled with industrial expansion that has been the foundation of urban sprawl. The city has experienced more than any other American city how thousands of vacated retail spaces, depots, vacant spaces and rooftops go unused. This work addresses what is happening in NYC in regard to vacated and available space. This paper attempts to understand existing projects and how they currently make use of temporary space around the city and an underlying goal is to brainstorm for some new potential uses and to understand how the current economic downturn has hurt this particular aspect of the real estate market.

Problem Statement

This work aims to understand and justify the problem of the current vacant retail space in NYC Manhattan. In many cases, they are depots or spaces that are waiting for reconstruction and are therefore only temporarily empty as they await resale or rental. The concern is that property owners keep these places empty and the research shows that in some situations some companies donate their spaces to non-profit organizations that use these spaces temporarily.

There are ways to make use of these spaces and turn them into efficient and lively areas. But first, we must understand the demand for available temporary use projects. Consider how nonprofit organizations have been facing challenges of finding facilities and working space at affordable and appropriate sites in NYC.

1. A pedestrian walks by Smartspaces' recent show "Regeneration" in an vacant building in the Financial District, at 88 Greenwich Street (The Art Newspaper)

For example, consider the art community of NYC. Artists and curators are always in need of viable locations for shows and producing their work. Non-profit arts organizations and curators have regularly followed commercial endeavors and equivalents throughout NYC in an attempt to find space in these recessionary times. Store fronts and the wave of "pop-up" galleries are one sound example of how to utilize the plethora of available vacated retail spaces, depots, vacant spaces and rooftops, especially during these recessionary real-estate market woes.

The city art industry is just one example of how nonprofits have gone out of their way to strike up strong partnerships with realtors and lease mangers. "Recent non-profits using empty spaces include: No Longer Empty, the Lower Manhattan Cultural Council, the Drop: Urban Infill Project, X Initiative, the Downtown Brooklyn Alliance, and veteran non-profits Creative Time, the Art Production Fund and Chashama, which have long worked with underused sites. One new outfit, Smartspaces, has carved out a special niche -- showing art exclusively in the windows of developing properties, thereby promoting both artists and real estate with minimum liability." (The Art Newspaper)

According to the Art Newspaper, even established museums such as the PS1 Contemporary Art Center in Queens are getting in on the act. "Under the rubric "Free Space," it is offering unused galleries as studios for artists -- Marina Abramovic and Kalup Linzy among them -- and large-scale events such as the NY Art Book Fair and the show "100 Years," organized by Performa and Electronic Arts Intermix." (The Art Newspaper) In January, the center is said to be working with Creative Time in an effort to present 'a one-weekend open call where artists can receive feedback from PS1, MoMA, and Creative Time curators.' With strong backing like this, there are many new potential nonprofit artists and curators who will be looking for viable locations to set up shop.

According to Andrew Tangel of the Hackensack Times, back in April of this year, "Real estate executives and prominent investors gathered at the Hotel Pierre in New York Thursday to discuss the tectonic shifts underway in the commercial real estate market. When will the market hit bottom? Which real estate investment trusts will survive? When will commercial mortgage-backed securities again pump capital into the market? And how and when should REITs obtain equity financing in the wake of an industry wide de-leveraging?" (Tangel) The economy has affected New York and the retail, office and living space industries. Consider what an empty building does in the city.

The NYC Department of Parks and Recreation point out that empty retail spaces, vacant lots and other depots means no local foot traffic for existing businesses. That is because New Yorkers utilize sidewalks as a means to an end. "We really do walk faster than other people; travel to another city and the fact -- in the form of a meandering pedestrian just in front of you -- will be inescapable. But there are also many among us who have bought a slice of pizza and wished to eat it outdoors when the weather was warm; or bought a book and had nowhere to read outside until getting home; or just wanted to sit down for a moment and watch the street life of our city. Moreover, whether it's walking to the car, or out of the subway or bus, or down the street on the way to school or shopping, each of our trips begins and ends as a pedestrian." (NYC Department of Parks & Recreation) There are no perfect formulas for creating perfect New York City blocks but neighborhoods with too many vacated buildings are less pleasant and they do not encourage walking, gawking and shopping.

MANHATTAN RETAIL VACANT SPACE (In Millions of Rentable Square Feet)

% Monthly

Change

Midtown Manhattan Retail

0.29

0.01

0.29

Midtown Manhattan South Retail

0.62

0.00

0.62

Downtown Manhattan Retail

0.33

0.01

0.33

57.23%

Total Retail

1.23

0.02

1.25

18.67%

MANHATTAN RETAIL VACANT SPACES NOW AND IN THE NEXT TWO YEARS

(In Millions of Rentable Square Feet)

% Monthly

Change

Midtown Manhattan Retail

0.67

0.11

0.78

Midtown Manhattan South Retail

1.40

0.07

1.47

Downtown Manhattan Retail

0.33

0.01

0.33

10.84%

Total Retail

2.39

0.19

2.58

2. (Optimal Spaces)

Filling empties will help bring life to each neighborhood. But the current situation is that sales prices exceed replacement costs so owners are stuck. They cannot sell the buildings and they also cannot rent or lease them out. As can be seen in the chart, this retail glut is scheduled to grow over the next few years.

This leads to foreclosure and additional open commercial space as owners are wiped out and the assets return to lending institutions or are auctioned off. "Average quoted asking rental rates in the New York City retail market are down over previous quarter levels, and down from their levels four quarters ago. Quoted rents ended the third quarter 2009 at $78.93 per square foot per year. That compares to $79.33 per square foot in the second quarter 2009, and $79.33 per square foot at the end of the fourth quarter 2008. This represents a 0.5% decrease in rental rates in the current quarter, and a 0.51% decrease from four quarters ago." (Costar Group, Inc.)

Some other existing projects that are looking for a space in NYC include Chashama New York, Brooklyn Bridge Park-New York, Ricky's New York, Swing Space New York, Greenhouse project, No Vacancy! project, Illy house etc. And more.

Illy Push Button House

3 (Illy Push Button)

One successful temporary situation in the city is the Illy Push Button House. "Illy collaborated with artist/architect Adam Kalkin to create a dramatic work of living art - the Illy Push Button House, a five-room home with a kitchen, dining room, bedroom, living room and library constructed within a standard industrial shipping container. The home, which transforms at the push of a button, is created from recycled and recyclable materials and is the physical representation of Illy's dedication to sustainability, art and innovation." (Illy Push Button) This brilliant idea utilizes vacant lots and parking lots while at the same time creatively recycling older containers into something useful. These recycled space fillers serve as homes, temporary quarters or just holding areas. They are practical and environmentally friendly, and embody the creativity needed to best utilize the vast space and unoccupied real estate.

Store Front Library

One highly successful temporary venture was the storefront library in Boston's Chinatown. Utilizing available vacated stores, the China area there had no official library until a short-term storefront library was created. The library has, much to the surprise of the community, created a buzz for a new library in the future. But, until then, the storefront library in Chinatown will continued to serve local patrons of all ages. "The Chinatown Storefront Library has transformed one of Boston Chinatown's vacant, commercial, street-level spaces into a temporary public library. Operating for approximately three months, the project is creating a memorable event for Chinatown, while providing a selection of urgently needed services for a community that has been without a library since 1956. The library offers: books, Internet access, newspapers, children's reading area, and a mix of programs and activities -- all furnished within an innovative architectural design." (Storefront Library)

Brooklyn Bridge Park

"The current standard for park space in New York is 1.5 acres per thousand people. For playgrounds it is 1,250 children per playground. In contrast, East Flatbush's 56,000 residents have access to a total of 4.8 acres of open space, or 0.09 acres per thousand people. The neighborhood's 12,000 children share three neighborhood playgrounds. More than half the population, or 29,000 people, lives farther than a quarter-mile from publicly available open space." (NYC Department of Parks & Recreation) There is little doubt that New Yorkers need their parks. If they are built, the people use them. "Brooklyn Bridge Park is often referred to as the "Main Street Lot" because it used to be a parking lot! The city now manages this park area and playground." (Brooklyn Bridge Park)

4. (Brooklyn Bridge Park)

One survey provided by NYC Department of Parks & Recreation shows that 82% of New Yorkers cited space as one of their most cherished city assets. One example of a successful commercial space development project can be seen along the Brooklyn Heights waterfront in New York. This excellent use of space includes picnic tables, grass and trees and food vendors.

5. (Brooklyn Bridge Park)

"Brooklyn Bridge Park is now a reality and the beginnings have already become a treasured urban oasis. Offering spectacular views of downtown Manhattan and the New York Harbor, Empire-Fulton Ferry State Park and the Brooklyn Bridge Park "Main Street lot" are attracting thousands of visitors. These park sections are the setting for our programs and events, as well as picnics, ball play, daydreaming and much more." (Brooklyn Bridge Park)

Chashama

"Chashama was founded by Anita Durst in 1995 with the central purpose of keeping artists in New York by giving them the space to create. Durst realized that the lack of affordable space was the greatest threat to sustaining a diverse, dynamic, and provocative cultural environment in New York City. Her strategy to address this was to find a way to connect artists with vacant real estate, redistributing the untapped resources available in New York's urban landscape by partnering with private and corporate property owners." (Chashama) It has been supporting local artists in New York through their window program by providing space for a variety of artistic uses and artists access Charisma through an application process. The success has helped the organization move into Queens, Mid town, downtown, and all over NYC.

6. (Chashama)

Anita Durst's vision was brilliant when considering the topic at hand. She converted empty storefronts and offices into lively, arts-focused hubs of activity. As the idea caught on, Durst was able to create and establish relationships with New York City's biggest and most powerful developers and property owners. These types of partnership agreements stand as proof that the idea of nonprofits utilizing unused office or retail space on a temporary or short time basis in order to convert outdated parking lots into reusable assets is clear. "Chashama's space recycling program adds value to properties, keeping spaces and neighborhoods active and vibrant, and benefitting owners, neighborhoods and artists. Chashama has converted more than 40 locations, giving 7,500 artists access to subsidized space, which supported approximately 10,000 public presentations for over 500,000 viewers. By partnering with community organizations and neighborhood development groups, Chashama produces outside art festivals throughout the New York City area." (Chashama)

Description of the Problem:

7. (Optimal Spaces)

Proper usage of available retail spaces, depots, vacant spaces, rooftops and more open available areas throughout all areas of the city is a problem but in Manhattan this phenomenon has been magnified, especially since the economic downturn. According to CoStar Group, Inc., the General Retail sector of the market, which includes all freestanding retail buildings, except those contained within a center, reported a vacancy rate of 2.5% at the end of third quarter 2009. There was a total of 1,758,597 square feet vacant at that time. The General Retail sector in New York City currently has average rental rates of $79.15 per square foot per year. There are 390,364 square feet of space under construction in this sector, with 123,250 square feet having been completed in the third quarter. In all, there are a total of 4,586 buildings with 70,500,883 square feet of General Retail space in New York City." (CoStar Group, Inc.)

There is an appearance that Manhattan is not having space or real estate issues due to the fact that the area is so heavily condensed. Nothing could be further from the truth. Not everything has been fully exploited to the maximum and even in the high concentration there is available vacant retail space. Due to the recession, the effects have become more wide spread and are now being felt in Manhattan. There has been a vast decrease of consumer expenditures throughout and that is directly proportional to increasing numbers of vacant commercial space.

Vacant space in the city has become a problem of idle resources that in effect cannot be capitalized either financially or socially. Instead of being a problem, this can be viewed as one of the more opportune side effects of urbanization. There is a great potential to utilize these now available resources for the good of the city and its inhabitants. It will of course require a little creativity on the part of entrepreneurs, business and city planners and average citizens. The point is that the city could easily generate all types of new economic and social capital from these available resources as opposed to leaving them empty for long periods of time. They will not magically become profitable unless they are seen for what they are used for, natural resources. In addition, because land, buildings and infrastructure as well as space are all ultimately limited resources in Manhattan, they should never be wasted. These resources should be re-created, expanded upon and used to maximum capacity.

An excellent use of these available spaces and unused buildings is to provide them for non-profit organizations. In other words, there could be numerous temporary spaces made available at affordable prices for non-profit organizations, social clubs and other social projects. "The New York Social Society, founded by Eric Vega is a social club with over 74,000 members and growing every day. We specialize in private social parties at some of the New York's finest venues including; Webster Hall, Tavern on the Green, Empire Hotel, Gasenvoort Hotel, Griffin Lounge, Cipriani, Cain, M2, Capitale, Buddha Bar, Providence, Touch, Pink Elephant, Mantra, The Grand, High Bar & many others." (Vega) These types of organizations are desperate for useable work locations and the aforementioned vacant space could easily fill these voids. These suggestions are not supposed to be considered to be long-term or permanent solutions, but in the short-run, they do seem like a good potential fit for the empty spaces mounting throughout Manhattan and New York. This approach could benefit all parties involved: the nonprofit, social project or group, the owner, the local residents and the city. Even if only temporary solutions, these organizations are also waiting for the market to regenerate which could increase their odds of obtaining better leasing stipulations in the future.

Literature Review

Commercial real estate is going to be a bigger problem for New Yorkers as the national economic issues grow. "But commercial real estate's woes may be just beginning. Banks' loan quality "continues to deteriorate," in large part due to commercial real estate, said Jon Greenlee, associate director of the Federal Reserve's banking supervision and regulation division, before a House panel. Over the next 15 months, $2 trillion worth of commercial mortgages will mature, notes Jeffrey Rogers, president of Manhattan-based Integra Realty Resources, appraisers of commercial real estate. With office vacancy rates soaring, rents deflating and property values still falling, lenders face rising default rates likely to trigger new write-offs. Many banks have yet to bite the bullet and address the problem. In all, banks stand to lose $200 billion to $300 billion on commercial real estate loans, estimates Richard Parkus, head of commercial real estate debt research at Deutsche Bank." (Yahoo Finance)

Appreciating the uses of some of the vacated spaces by the before mentioned non-profits and projects throughout NYC may lead to blindness to the extent of the problem. "In the last several weeks much emphasis has been placed on the commercial credit crisis, both at the state and federal levels. In Washington, D.C., Federal Reserve Chairman Ben Bernanke has been questioned repeatedly on the state of the commercial real estate financial markets and the negative impact of increasing defaults on the banking system. On July 21, Bernanke appeared before U.S. House Financial Services Committee Chairman Barney Frank, D-Mass., and said "we're seeing increased vacancies, declining rents, falling prices and more pressure on commercial real estate." Bernanke also said the Federal Reserve was "concerned about that sector and was paying very close attention to it," adding that the Fed is taking all the steps possible through the banking system and the securitization markets to address the ongoing problems." (Thaney)