Brooklyn’s “Industry City” Opens Large Spaces, Long-Term Leases and Build-Outs To Music Businesses

SUNSET PARK, BROOKLYN: New Yorkers will always be suspect of a deal that seems too good to be true. Especially when it comes to real estate. We expect to get very little for our money, and little more than the keys from our landlord.

So when we got a tip from a local real estate broker about a number of large industrial spaces available for long-term lease to recording and music tenants, where the landlord will actually pay for the studio build-outs, we were a bit skeptical.

But, there may just be an opportunity here.

Industry City in color

Jon Brooks is a commercial real estate agent with Crosstown Realty. He recently moved back to his native New York from the West Coast, and found a Brooklyn he’d never known. “I felt it instantly,” Brooks recalls. “That history was happening…this huge transformation of the borough that’s being powered by creative businesses.”

The first deal he brokered was for Brian Crowe and his partners in The End for their multi-use space on the waterfront in prime-location Greenpoint. Then he did a deal with Bandspaces for a new 10,000 sq. ft. rehearsal complex in Bushwick.

It didn’t take long for him to notice he had found a niche working with the under-served music market. “Musicians always get left out because they make noise – they need expensive soundproofing, they want to work at all hours,” Brooks acknowledges. “There are so many people looking for spaces.”

Enter Industry City, the 6.5 million square foot, 17-building sprawl on the waterfront in Sunset Park. Industry City Associates made headlines a few years ago for converting one of their buildings into floors of artist studios and performance spaces. And Brooks saw a similar opportunity here for recording, rehearsal and music businesses, for Industry City, and for himself – To come together and build a new “music district” in Brooklyn.

Impetus & Incentive

Industry City is located between Gowanus and Bay Ridge – around 33^rd Street, just west of the BQE and accessible by D Express and N/R trains at 36^th St. Its buildings are several stories high, and have traditionally been leased out to industrial tenants. But – Brooks explains – much of this kind of “industry” has left the city.

“The problem is that the modern-day industrial tenant no longer wants to be on those upper floors because they don’t want to share a freight elevator,” he explains. “So Industry City has been having trouble leasing these spaces – while all the other real estate in Brooklyn is skyrocketing, their prices were dropping.”

Meanwhile, loft spaces in DUMBO and Williamsburg, and creative hubs like Danbro in Bushwick and the Pencil Factory in Greenpoint have been in increasingly high demand with music rehearsal and production tenants. And as a result, prices have gone up.

“DUMBO was at the forefront of it, but there are very low vacancy rates in DUMBO,” Brooks says. “And it’s gotten really expensive.”

Understanding some of the unique challenges music and recording businesses face – namely the risk/cost of building out studios in uncertain and, at least at first, unfamiliar conditions – Brooks is proposing Industry City as a unique solution.

“I thought…here’s a way for Industry City to get more out of these buildings. They could offer space to musicians and music companies, and as part of the deal, offer to contribute to, or fund their build-outs.”

There’s already a precedent in the fine artist spaces Industry City built and rented. For the music market, however, they’ll take a different approach.

“Industry City did their own build-outs for the artist studios, and they were successful in increasing the value of their spaces by renting these out to individual artists,” says Brooks. “But the problem was they were stuck managing dozens of tenants.

“With the music building, they want to find tenants who know the business and can take on a master lease for a large space, manage the building of their own studios, and let them deal with the clients and sub-tenants of their spaces.”

Right now, Brooks is working on phase one of this Music District project, where he’s looking for tenants to take 5,000, 8,000 and several 13,000 sq. ft. spaces. “I have about 70,000 square feet of space, over 6 floors,” he describes. “And it’s raw, but unlike a lot of industrial spaces in Brooklyn, it’s not beaten up. ”

The largest-scale tenants will benefit the most in the scenarios Brooks describes:

“Depending on the terms of the deal – how much they pay per month and how much build-out money they need – Industry City will fund or partially fund the build-out, obtain the building permits and give them free time to build.

“So, for roughly the same price of what you could get a raw space in Bushwick you can get a fully built-out space, and be in this district with a bunch of other compatible businesses.”

Plus, he adds: “Industry City is also willing to do 10-year (or more) leases, which is another thing that’s hard to find in Brooklyn.”

Risks & Rewards

In order for the “Music District” to come together at Industry City, the largest tenants are going to have to take a leap, with the hope that others will follow.

Meanwhile, Brooks has been tending to a growing waiting list for smaller spaces – for individual producer/engineers, record labels and rehearsal businesses.

Shot of an 8,000 sq ft space on the 6th Floor

One possibility that would speed development of the community is for a business to take out a large space, and build out a multi-tenant, multimedia studio complex.

“If someone wants to come in and build individual rooms for smaller studios, labels, etc., they can take on that master lease and sub-lease those spaces out,” says Brooks. “That would be dynamite. Also, I get calls for smaller spaces all the time, and I would just pass those people right on to that tenant.”

Then there’s the incentive Industry City is providing by funding some if not all of the businesses’ building costs. According to Brooks, a qualified 13,000 sq. ft. tenant could have “their build-out paid for”, and secure their 10-year lease with just two months security and one-month’s rent. (Depending, of course, on what you mean by “build out”.) A couple times during our conversation, Brooks suggests a large-scale tenant would “get a few hundred thousand dollars to do a build-out”.

The End’s Brian Crowe – an engineer and musician who recently completed his own multi-room studio renovation – has been consulting with Crosstown on the particularities of studio building, and helping to shape these deals for music businesses. But interested parties should really get in touch with Brooks directly (see contact info below) to understand exactly how Industry City would be willing to work with them.

There does seem to be real incentive here, though. And there would need to be – at least at first. Sunset Park is not SoHo. It sits between Gowanus and Bay Ridge, and boasts a proximity to…Greenwood Cemetery. Which is beautiful, but a cemetery. So, the project depends on compelling businesses coming in.

One recording studio manager who toured the building with Brooks was impressed, describing the raw spaces as “pretty ideal”, and seeing the building as a “clean slate” whose identity and vibe will be shaped by its early tenants.

The question mark for a recording studio business, as that same manager pointed out, is really only the location. Will your clients make the trip there? And will it become the destination it wants to become, attracting enough music and audio facilities, recording and post-production professionals that it introduces a whole wave of new clients?

And, like Gowanus and Ditmas Park before it, is Sunset Park the next big neighborhood?

“It’s two stops to the city on the D train,” Brooks offers. “And with the Barclays Center arena coming up, the city just announced they’re increasing train service at night for all lines that run through the Atlantic terminal.”

Commercial facilities may still see Sunset Park as a gamble. But in real estate, timing is everything – and one person’s hesitation can be another’s opportunity.

Destination Recording

Once he finds a few tenants for the largest spaces in the building, Brooks will begin selling retail tenants on the ground floor units. “If you’re going to have all these musicians over there, we’re going to need beer, coffee and food.”

And then, he has every intention of addressing those interested in smaller, say 1,000 sq. ft., spaces. The plan is to work with Industry City to intelligently divvy up the space, perhaps not so unlike what they did for the fine arts wing.

“Once I’m done with the first phase of leasing out the 13,000 sq. ft. spaces, and the vision starts to take shape, Industry City will be much more inclined to divide up the floors and lease out smaller-scale spaces,” says Brooks.

“We’re absolutely going to do this. We are going to build out those smaller studios that are really needed – for individual producer/engineers and record labels and such.”

And then there’s the roof.

“My grand plan is for Industry City to also utilize the roof, which is over 60,000-sq. ft. Since there’s no residential nearby, you can be loud up there – I’m thinking rooftop concerts, a beer garden – all against that amazing backdrop of NYC.”

For more information, get in touch with Jon Brooks at Crosstown Realty via 718-937-8100 or jbrooks@ctnyc.com. And for advice on navigating the treacherous world of commercial real estate, visit www.jondavidbrooks.com.

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