ShareAlexandra Ferguson, CEO of her eponymous line of custom pillows and décor, started as a small, home-based business. “I first sold my pillows on Etsy, so I’m as homegrown as it gets,” says Ferguson. When it was time to expand, Ferguson had a hard time finding an inexpensive, light manufacturing spot in Westchester, New York. “I decided to look in Brooklyn and Queens as the talent I needed could be found in those areas,” she says. She ended up moving into a 4,000-square-foot raw industrial loft space in Industry City, an innovation and manufacturing district situated on the waterfront in Sunset Park, Brooklyn.
Industry City is transforming ground floor and lower levels into a pedestrian-friendly series of shops, showrooms, event spaces and courtyards, loosely organized around themes such as food and food production, children and family, and home goods, while providing ample loading docks and service ground for upper floor innovation economy and manufacturing tenants. These mixed-use maker spaces, developing around the United States, are becoming a popular choice for real estate developers hoping to revitalize communities and accommodate small manufacturers.
More and more cities and real estate developers are creating spaces for small-scale manufacturing. Small manufacturers, or makers, in textiles, wood, metal, and electronics need places that are appropriate in scale, which are affordable, and that meet local zoning and building codes. Maker spaces can provide some shared facilities and equipment, as well as mentoring and assistance in running a business.
A Resurgence
“We are seeing a resurgence of small, local producers who are harnessing low-cost technology and changing markets to sell hundreds and thousands of locally produced consumer products,” says Ilana Preuss, founder of Recast City, a company that brings together small-scale manufacturers and community developers to strengthen neighborhoods, build real estate value, and create more job opportunities for residents.
Documented by Chris Anderson, author of “Makers: The New Industrial Revolution,” and seen across the country today, these companies are often businesses with fewer than 20 employees and sell both in local markets and globally online. In an interview with Forbes magazine, Anderson notes, that, “Until a few years ago, you just didn’t have access to production. The world is oriented around companies, and manufacturing was expensive and consuming.” All of that is changing.
According to a recent study, “The Federal Role in Supporting Manufacturing,” by the Pratt Center for Community Development and Brookings Institute, despite recent recessionary shocks, manufacturing continues to play a central role in the American economy and still serves as a gateway to the middle class for a sizeable segment of the nation’s population. Today, says the report, approximately 11.7 million Americans are employed by the country’s 300,000 manufacturing firms, and over 7 million additional jobs are supported by manufacturing-related activities, including jobs in transportation, wholesaling, and service industries, such as accounting, consulting, real estate and finance.
The report goes on to say, “Unlike the days when large companies dominated the nation’s commodity production, today’s manufacturing landscape is largely occupied by decentralized networks of small, specialized firms — many of which are hidden in plain sight in America’s urban areas. In fact, in 2007, of the approximately 51,422 manufacturers in the United States employing fewer than 20 people, over a third were located in the nation’s 10 largest cities alone. These businesses make an astonishing range of products — from high-tech medical equipment to designer coats, artisanal food products to specialized coatings — and serve a spectrum of customers and markets, including small suppliers, contractors, the consumer public, and large original equipment manufacturers (OEMs).”
“There is a rebirth of modern manufacturing; I call it the innovation economy and that’s where the job growth is,” says Andrew Kimball, CEO of Industry City. New technology allows people to manufacture in small spaces,” he says. “There’s a blurring of technology, manufacturing and design. The good news for cities is that these kinds of businesses start small and often grow over time. They employ people who need jobs the most, jobs that are broadly accessible to those with a broad range of educational backgrounds,” says Kimball.
That’s the case with Ferguson, who has a “one-stop, super-efficient space that includes her office, photo studio space, manufacturing, warehouse and shipping all from one place.” In addition, Industry City has efficiencies built in, such as the ability to outsource to other suppliers who are in her same building. Her business grew from one employee to five employees in the short 18 months she’s been in Industry City.
Driven by Millennials and More
It is not only new businesses that are benefiting from the maker movement, but more traditional, family-owned businesses, as well. “There’s a lot that is millennial driven and that’s exciting. But, what is even more exciting is that decades-old, traditional, family-owned businesses that have been previously priced out of the market are finding that, with new technology, the economics work for them again,” says Kimball.
Such is the case for Kyle Krieg, the third generation in a family printing press business that opened in 1955. According to Preuss, his family bought a 35,000-squarefoot warehouse for production in Cincinnati 40 years ago to expand operations. But when printing work started to dry up after 2000, Kyle and his family needed a way to save the family business. Four years ago, they landed on a new idea — create a maker space. The family turned half of their warehouse into Manufactory, a 17,000-square-foot shared space with wood, metal, textile and printing tools that are open to the public through gym membership-like fees for access.
Real Opportunity
“There are some exciting things going on in communities. Developers have recognized the changing demographics,” says Preuss. “Millennials want places to gather. In parallel, we’ve seen a growth of the maker movement. People are getting together to make stuff, from sewing and knitting to creating drones and 3D printing.”
Plus, she adds, there are more ways to sell what they are creating. For instance, Ferguson uses Etsy. Then, there’s a start-up called Maker’s Row, which works to connect U.S. manufacturers and small businesses. It matches domestic manufactured products with American companies who have a specific product need. Even Amazon.com is considering a move into the maker world and experimenting with 3D printing. And, of course, light industrial spaces in places like Industry City and Pier 70, in San Francisco, are attaching retail space and creating popular shopping destinations, thus, creating a niche for innovative developers who recognize how these mixed-use spaces can activate neighborhoods.
For Industry City, the goal is for 14 percent of the space to be retail (64 percent innovation economy and 12 percent academic.) In 18 months, Industry City went from 2,400 people working there to 4,000. They took decrepit, underutilized space in Sunset Park and “turned it into a high employment use space. It creates opportunities for makers such as Alexandra Ferguson to manufacture and sell in a retail space in the same building,” says Kimball.
Brooklyn isn’t the only place where this is happening. “It’s happening nationwide,” says Kimball. “You’ve probably heard about Detroit, but it’s happening across the country, Jersey City, and San Francisco. Forest City is developing Pier 70 in San Francisco and plans to build 100,000 square feet in a new industrial use building as a part of a large waterfront development plan. The proposed plan includes residential, office, retail, parks and industrial uses. The plan also includes rehabilitation of Civil War era buildings that will also be turned into small-scale production uses. The new manufacturing/production building will be modeled off of an existing building in the neighborhood called the American Industrial Center.
However, says Preuss, “Most of the examples out there right now are of naturally occurring spaces for small manufacturers, like in Cincinnati.” Cincinnati Made, a nonprofit effort to promote, connect, and scale the small batch manufacturing community has been supporting the movement. “They have a floor of an old industrial building where 10 businesses share with tools. Next door, there is a brewery that opened up two years ago. They bought the huge building from its owner, and they have since bought the neighboring building, as well. The area is called the Brewery District. They have a neighborhood organization that is trying to create a strategy for all of this, but there is no residential in that area yet.”
Community Impact
Perhaps the most important things to come out of the maker movement is the revitalization of downtown industrial areas and buildings and updated policies across the nation. SFMade, a nonprofit corporation headquartered in San Francisco, which focuses on building San Francisco’s economic base by developing the local manufacturing sector, recognized that potential immediately. In 2014, the local San Francisco planning commission and board of supervisors approved legislation to create a new zoning solution that allows for cross-subsidization of new industrial space via the development of co-located office space on previously underutilized industrially zoned parcels. The pilot project, available for 18 designated parcels, says Janet Lees, senior director of SFMade, “allows for the construction of two-thirds office space and one-third manufacturing to offset the high-rent office space currently offered.”
Lees says there is a “really hot neighborhood called the Dog Patch, which houses the largest industrial manufacturing space in the city, from chocolate to apparel to light industrial products. Part of this building is retail, which is very appealing to tenants and the neighborhoods,” she adds. “People see manufacturing differently now. This is the new breed of manufacturing, small businesses with an average of nine employees per business,” says Lees.
In addition, it’s adding jobs to the local community. “These maker companies want to hire from the local community,” says Lees. “These are entry level jobs that often pay more than those in hospitality or retail and offer pathways to well-paid jobs with a future.”
Kimball agrees, “Part of the case we’re making to the community and city is that these are the kinds of good-paying jobs that move people up the economic ladder.” Industry City is testing a program to partner with nonprofit organizations for job placement and prescreening. “It’s been successful,” says Ferguson, who used the service to find new employees.
“In Cincinnati, we have neighborhood development groups reaching out to bring the maker businesses to their neighborhoods,” says Matt Anthony, director of Cincinnati Made and program director of First Batch, a local manufacturing business accelerator. “Some have even developed a mapping resource that gathers all light industrial properties for sale in a neighborhood in order to make more connections between small makers and potential manufacturing space.”
Preuss agrees, “There’s an opportunity to put these maker industries in neighborhoods and make the amenities attractive by offering festivals and creating an active street life.”
More than that, says Preuss, “it creates a vibrant, resilient community. If one big employer leaves, the result is catastrophic. But, if you have 200 businesses of five employees a piece and one goes out of business, the result isn’t as devastating,” she says. “It builds economically resilient communities.”
The “buy local” movement has become increasingly popular over the years. For Ferguson, “It’s making manufacturing cool again. You’ve got big, colorful, open spaces where we make stuff, sell products and cool things happen, changing people’s perceptions of what manufacturing is. It’s an exciting movement.”
Tracey C. Velt is an Orlando-based freelance writer.