Brooklyn Navy Yard, a Roomy Haven for Industry, Once Again Is Booming

The Brooklyn Navy Yard, one of New York City’s major industrial real estate sites, is undergoing a renaissance.

Since last fall, new developments totaling 1.3 million square feet have been announced for the yard, a 300-acre industrial park on the East River between the Williamsburg and Manhattan Bridges. This is in addition to the 4 million square feet already in use, in about 40 buildings that have more than 230 tenants employing about 5,000 people.

One important part of the new wave of development is a multistory building to be built for B&H, the photography and video retailer, which already is a tenant of the Navy Yard. Steiner Studios, a movie studio that opened at the industrial park in 2004, is renovating a vacant building. The yard is also converting four other vacant buildings to create a 250,000-square-foot food complex that the developer hopes will attract tenants like food manufacturers and processors.

All this development represents the largest expansion at the yard since its heyday during World War II, when more than 60,000 people worked there.

Although ships were built in the marshland of the yard during the Revolutionary War, the area came into its own after 1801, when the federal government bought the land and began using it to build warships. The battleships Maine, Arizona and Missouri were built there.

The federal government shut down the yard in 1966. New York City bought it for $24 million in 1967 and reopened it as an industrial park in 1971. Since 1981, it has been run, under contract with the city, by the not-for-profit Brooklyn Navy Yard Development Corporation.

The administration of Mayor Michael R. Bloomberg has injected more than $30 million into upgrading the yard, and it is planning to invest an additional $180 million in the next three years to install roofs and windows; rebuild piers; and modernize roads and the electrical, water and sewage systems.

The city’s recent investment has “made it clear to the private sector that the Navy Yard is a good place to invest and build,” said Andrew H. Kimball, president and chief executive of the yard’s development corporation.

Mitchell L. Moss, a professor of urban policy and planning at New York University, agrees. “The Navy Yard was a vast, underused asset, but under Bloomberg, it’s been able to attract additional private investment, improve its infrastructure, attract firms that have expanded and attracted new ones,” he said.

Among the companies investing at the yard is Steiner Studios, which occupies 310,000 square feet on a 15-acre campus and employs 500 to 1,000 people, depending on production schedules.

Steiner is renovating a 289,000-square-foot, seven-story building from the World War II era to add production space and to rent to other media companies. This expansion, which is to cost about $50 million, is expected to create 550 jobs.

B&H, a tenant at the yard since the late 1990s, occupies a four-story, 160,000-square-foot building, which it uses as a warehouse. It will soon begin work on a new building that Herschel Jacobowitz, B&H’s chief information officer, said would probably be six stories, with 600,000 square feet.

This building, expected to cost more than $50 million and to be one of the largest new multistory industrial buildings in the city, is likely to house several offices now in Manhattan. The number of B&H workers in Brooklyn is expected to rise from more than 200 today to as many as 900.

Also expanding at the yard is Duggal Visual Solutions, which sells photographic services. It has been at the industrial park since 1998. It first occupied 10,000 square feet and quickly doubled its space. Duggal recently took over 8,000 square feet in a second building and is negotiating for an additional 40,000 square feet.

The tenants say the yard has many things going for it, including a large local work force, round-the-clock security and access, and large, relatively unobstructed spaces. This last feature is especially valuable for Duggal, which makes huge advertising banners.

The yard’s location is also a selling point. It is near the Brooklyn-Queens Expressway and the Williamsburg and Manhattan Bridges and is a short train ride from Manhattan. The nearest subway stops are a 15- to 20-minute walk, but the yard runs a shuttle service.

Another advantage is the likelihood that the yard will remain an industrial park and not be redeveloped, as many New York industrial sites have been.

“Every five years, the city is losing approximately 15 percent of its industrial space, because it is being converted into residences, offices, retail,” said John G. J. Ritter, an executive vice president of Sholom & Zuckerbrot, a commercial real estate brokerage in Queens. “That is why the Navy Yard is so helpful.”

Tenants of the Navy Yard cite few disadvantages, although Baldev Duggal, president of Duggal Visual Solutions, said it was sometimes hard “to convince employees to go to Brooklyn.”

Obstacles like subway proximity clearly have been surmountable. The Brooklyn Navy Yard has had a 98 percent occupancy rate for leasable space for the last five years and has gone from net cash flow of $700,000 in 2001 to $5.5 million in the fiscal year that ended June 30, because of annual rents that can be more than $20 a square foot.

Besides the new food complex and B&H and Steiner expansions, the yard has begun work on an 87,000-square-foot building that will be completed next June and is intended for multiple tenants.

Also under development are 75,000-square-foot and 150,000-square-foot buildings for industrial tenants and a 60,000-square-foot supermarket for the neighborhood, to be open by 2010 in the southwest corner of the yard.