More Evidence Of Economic Turmoil In NYC As Garment District Unravels

more evidence of economic turmoil in nyc as garment district unravels

Yesterday we noted that New York City is turning into a retail wasteland, after the New York Times documented a plague of vacant storefronts along the city’s most popular retail corridors. 

More Evidence Of Economic Turmoil In NYC As Garment District Unravels

Today, RetailDive shines a spotlight on the Manhattan-focused Garment District’s rapid unraveling, as office spaces from other industries encroach on the highly sought after real estate. 

The area, which roughly encompasses the streets between 35th Street and 40th Street, and the avenues between Broadway and Ninth, has been protected by strict zoning laws since 1987.

But times have changed. New York City has lost 95% of its manufacturing workforce since its heyday in the 1950s, and a 2011 report from the New York City Economic Development Corporation (NYCEDC), a non-profit centered on economic growth in New York City, indicated that fashion manufacturing jobs in NYC had further declined 61% since 2001. Recently, the Garment District Alliance reported that “from March 2017 to March 2018, New York City’s apparel manufacturing industry shrunk by an additional 7.7%, a loss of approximately 1,000 jobs.” And as of August 2018, the AP estimated that only 5,000 garment manufacturing workers remained. –RetailDive

New York’s Garment District isn’t the only part of the country to suffer from evaporating jobs in apparel; In 2012, the US Department of Commerce reported that “since 1990, employment in apparel, leather, and allied product manufacturing has shrunk by 912,000 jobs, or 84 percent.” Most of the remaining jobs are located in New York, California and Texas. Moreover, textile and apparel manufacturing shrunk from 0.57% of US GDP to 0.16% from 1998 – 2015, according to the Bureau of Economic Analysis

More Evidence Of Economic Turmoil In NYC As Garment District Unravels

Preserving the district?

In February of last year, New York City Mayor Bill de Blasio said that it would rezone the Garment District; removing some outdated restrictions, while developing Brooklyn’s rapidly gentrifying Sunset Park district. The next month, the NYCEDC teamed up with the Council of Fashion Designers of America (CFDA) and the Garment District Alliance to provide financial incentives to companies who wished to relocate from Manhattan to Brooklyn. 

This did not sit well with some people…

Outrage over rumors of a Brooklyn relocation of the Garment District led to heated debates in public forums, and in summer 2017, the Garment Center Steering Committee was formed by Manhattan Borough President Gale A. Brewer, Council Member Corey Johnson, and Deputy Mayor for Housing and Economic Development Alicia Glen. The committee engaged with NYCEDC, as well as New York fashion industry interests, including costume theater industry workers and the Garment District Alliance. They released a report that provided recommendations on real estate and business development that would help the Garment District transition into a more sustainable manufacturing center. –RetailDive

The plan to pay companies to move was ultimately scrapped over the outcry.  

“People had it in their heads that the Garment District was being asked to move, but no one was being asked to move,” said Julieanne Herskowitz, vice president in the development department at NYCEDC. “But what was clear is that we had not sufficiently thought of the Garment District, and [Manhattan Borough President] Gale Brewer and [Council Member] Corey Johnson pushed the city to think about how the Garment District could remain a hub of fashion in the city if zoning were to be lifted. There are about 400 companies in the area, employing about 4,000 people. It’s still a critical hub.”

“We had agreed to help with relocation costs, and then Gale Brewer said she won’t support a plan that doesn’t include retaining a core in the Garment District,” said Garment District Alliance president Barbara Blair. “She didn’t want all these jobs being encouraged to leave for Brooklyn.”

Brewer’s office responded, insisting that “The whole fashion industry in New York depends on the tight-knit cluster of specialty suppliers and skilled workers in the heart of Manhattan, which is why we’re acting to keep it strong and successful,” adding “It’s not about choosing between the Garment Center or growth in the other boroughs. A strong foundation here lays the groundwork for success everywhere.” 

Brooklyn Exodus

Despite efforts to rescue Manhattan manufacturing, it seems nothing can stop the exodus. 

“People think this is a neighborhood-centric issue, but it’s not,” Blair said. “We used to have 150,000 manufacturing jobs in this neighborhood, and now we have 5,000 jobs. And this is a 40-year national trend.”

Blair said that although a lot of people blame the loss of jobs on rent issues, it’s more complex than that. “It’s easy to blame the landlords, but basically a lot of their business dried up,” she said. “If designers were still producing locally, [manufacturers would] be able to pay their rent. One of the manufacturers said to me, ‘if Ralph Lauren would manufacture even 1% of his product in New York City, that would be enough to save New York City manufacturing.‘ Of course, NAFTA also had a huge impact too, back in the early 1990s. There are definitely property owners in this neighborhood who have pushed people out. But that’s not the majority.”

Certainly, some brands, such as Yeohlee, still do all their manufacturing in Manhattan. But others have moved further afield, in search of bigger spaces and a different community. Complexes such as Industry City in Sunset Park, are attracting many of New York’s young creatives. “Over the past five years, we have leased more than 1 million square feet to manufacturers, including a wide range of fashion and garment production companies,” said Lisa Serbaniewicz, spokesperson for Industry City, in an email to Retail Dive. –RetailDive

Out with the old… 

While the garment district suffers, Brooklyn is flourishing. “Brooklyn is the second largest hub for apparel design [in New York City],” said Herskowitz. “The EDC manages and operates over 6 million square feet of industrial space at the Bush Terminal and the Brooklyn Army Terminal, and has been investing in these assets. And then also the Made in NY Campus, which will have a campus dedicated to the New York City fashion industry. The EDC is still actively doing that along with the city.” 

At the end of the day, however, manufacturers just can’t beat the allure of that cheap, cheap foreign labor. 

“There’s such a huge financial gap between overseas labor and local labor, and you could never close that gap,” said Blair. “We believe that manufacturing should be here [in New York City]. I always thought we would lose some manufacturing, but that eventually, the water would find its level. It just hasn’t yet. There’s an industry in decline that hasn’t found its footing in the new world.”

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