Fashion Center dresses for office use

Real Estate Weekly, March 24, 1999 by Lois Weiss

It has the fourth largest floorplates in the city, said Hochfelder. "[They] are the most desirable floorplates, and we have big floorloads and electrical capacity. We have two fiber optic loops and every Internet carrier," he boasted.

The microwave-ready 24-hour building is scheduled to become the new home of DoubleClick, one of the city's newest and growing Internet firms. It is also the recipient of Industrial Development Agency largess in the form of sales tax breaks for equipment going into its new space.

"I no longer know what a manufacturer is. Is a software company a manufacturer?," asked Marvin Shulsky, another area owner. It's not that Shulsky wants to disparage the DoubleClick benefits deal, made through an agency that is supposed to help keep manufacturing jobs in the city, but he's highlighting a problem for area building owners that are saddled with the rules for what is known as the Garment Center Preservation District.

District Rules Vague

Designed to keep blue collar jobs in the city, that manufacturing district is an overlay on a central portion of the zoning map that makes it illegal to rent out certain midblock buildings for simple office space without ensuring comparable space is available for manufacturers.

"It has been unsuccessful," said Michael Slattery, a senior vice president of the Real Estate Board of New York (REBNY), of the Preservation District.

REBNY has been examining the issue because of member concerns, and is finding the protections have had a negative economic impact on both the city and the owners.

The prohibition has resulted in reducing building incomes because the owners either rent to tenants that can't pay market rents, rent to office users in the hopes no one notices, or conscientiously leave spaces empty because the available tenants don't meet the zoning requirements.

With property tax assessments technically based on building income and expenses, "That becomes a loss of tax dollars in New York," said Slattery. "We think the zoning has become unsuccessful and needs to be reevaluated."

Shulsky says many owners are in a quandary because they simply want stable tenants that stay and pay.

"The small garment tenants are very volatile," he said. And of course, the larger, more responsible tenants want avenue buildings that are on wide streets and exempt from the requirements.

He also complained about the wording of the Special District rules, which he says some owners have interpreted to mean they can rent up to 50 percent of their spaces for office use.

"It's poorly drafted and it's silly," he said.

In general, owners have to set aside an equivalent amount of space in that building or another building that can handle the elevator, column and load requirements for manufacturing, in order to rent another space to an office user. They can apply for a special permit to obtain an exemption from the rules, but in reality, owners don't always do so.

The District was created, Shulsky recalled, to appease the ILGWU - the International Ladies Garment Workers Union- and was instigated around the time the Times Square redevelopment plan was crafted and many buildings were to be condemned.